Current and future relationship between self-efficacy, entrepreneurship and business opportunities

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Tables of contents

 

1.     Key concepts applied…………………………………………………………………………………. 2

 

2.     Overview of the current relationship between self-efficacy, entrepreneurship and business opportunities   2

 

2.1           Effect of self-efficacy on entrepreneurship intentions and behaviors…… 2

 

2.2           Relationship between self-efficacy & business opportunities………………. 3

 

2.3           Entrepreneurship and business opportunities…………………………………….. 4

 

3.     Critical thinking about relationships between self-efficacy, entrepreneurship and business opportunities forty years from now……………………………………………………………………………………………….. 5

 

3.1           Closed tie between technology self-efficacy and business opportunity… 5

 

3.2           Importance of entrepreneurship in looking for future business opportunities      8

 

4.     Conclusion……………………………………………………………………………………………… 10

 

Reference……………………………………………………………………………………………………… 11

 

1.        Key concepts applied

Self-efficacy refers to an individual confidence in her or his ability to work towards and attain a goal (Bandura, 1982). Bandura’s (1977, p. 193) influential theoretical paper on self-efficacy resulted in more conceptual clarity by naming two types of expectations regarding the self: outcome expectations which refer to “a person’s estimate that a particular behavior would result in certain outcomes” and the efficacy expectations which is one’s belief he or she is able to “successfully execute the behavior requested to produce the results. The self-efficacy model is actually based on the assumption that expectancy-value models are at work and staffs will focus on activities in which they feel efficacious.

Business opportunity could be defined as an idea with compelling commercial potential. And a business opportunity is not a guarantee of success but it does represent a likely prospect for creating a successful business (English & Moate 2009, p. 2).

 

And regarding the term corporate entrepreneurship which is introduced at the beginning of assignment one, it mainly concerns with innovative, risk-taking and proactive behaviors of the firms (McDougall & Oviatt, 2000).

 

2.        Overview of the current relationship between self-efficacy, entrepreneurship and business opportunities

 

2.1    Effect of self-efficacy on entrepreneurship intentions and behaviors

Self-efficacy could vary from individual to individual, based on our experiences and understanding, those who have a high self-efficacy will perceive the unstable and uncertain business environment as opportunities because in many cases they are confident that they could manage the situation and generate expected and desired results using their capabilities; and those who in contrast have a low self-efficacy will view the unstable and uncertain business environment as risky and costs. And because it is found out those entrepreneurs believe that they have the ability to influence the achievement of business goals, and they perceive a very low possibility of failure (Brockhaus, 1980), we can see that there is an enhancing effect of a high self-efficacy on the entrepreneurship intentions and behaviors in the business sector.

2.2    Relationship between self-efficacy & business opportunities

 

Maddux (1995) identified two types of self-efficacy: task self-efficacy and coping self-efficacy. Task self-efficacy refers to a person’s confidence in their ability to successfully accomplish the elemental aspects of a task. Coping self-efficacy refers to confidence in one’s ability to perform a task in challenging conditions (Cumming & Hall 2004). Studies have also indicated that different types of self-efficacy are important for the intentions to start a business and could be very helpful at the start-up stages (Kickul & Krueger 2004). In my own understanding, the high degree of self-efficacy does not create the business opportunities but instead it helps the people to identify some of the ideas as business opportunities. In a famous story, shoe representatives asked to go into Africa to assess the prospect of selling shoes to Africans. The first one returned saying that African did not wear shoes and so the prospects of selling shoes was poor. The second said that Africans did not wear shoes and so the potential was huge (africanir.com 2010). By reviewing this typical and educational story in the business text books, we can conclude that the business opportunities in the African countries where people did not wear shoes at all were there, the different market assessment results actually reflected that the different degree of self-efficacy of the two representatives made them come to different conclusions. The first shoe representative return with the conclusion that people in Africa did not were shoes and hence there was no market at all, this conclusion suggests that the particular shoe representative held a low self-efficacy and he or she did not even thinking exploiting the new market because it would incur great costs; and in contrast, the second shoes representative’s conclusions shows his or her personality which is marked with a high self-efficacy because of the demonstrated confidence in his or her ability to successfully accomplish the elemental aspects of a task. And it is the high self-efficacy that helps people to identify the business opportunities as business opportunities. Hence it could be concluded that

2.3    Entrepreneurship and business opportunities


Figure 1 Entrepreneurs, risk and innovation

Source: Sonfield & Lussiee 1997

 

As business opportunity is considered as a fundamental factor to help to begin a new venture, here we will examine the relationship between entrepreneurship and business opportunities. In the figure above which shows an entrepreneurial strategy matrix, the people in the field of I-r with a low risk and high innovation are considered as dreamers, i-R represents foolhardy and the true entrepreneurs fall in the I-R field featured by high risk and high innovation. In my understanding, the perception of the business opportunities needs both high risk taking and high innovation. In term of the degree of risk taking, it is well known to us that there are very few among us who will be highly interested in setting up new business and fulfill their dream by taking up risks of entering into the existing business opportunities because they have considered high cost and possible financial loss as unacceptable or fearful. That is why entrepreneurs are few in percentage in the whole population. And in term of level of innovation, the decision of taking a business opportunity in many cases involves trying new business model or creating new products, such behaviors would certainly need high level of innovation which involves significant changes. A lower innovation rate will be in contradiction with opportunity taking behaviors. For example, if we would like to introduce a Chinese local food into the Malaysia market which has never been done before, high risk and high level of innovation would be needed. On one hand, though the specific local food could be very successful back in the Chinese market, but while it is introduced in the Malaysian market, there could be changes in the taste of people hence there could also be changes of failure; on the other hand, in order to get adapted to the new market, innovations will also be needed. We can no copy everything in the Chinese market into the Malaysian market. Hence, the two traits, high risk taking and high innovation rate would be needed in order have a better perception of the business opportunities.

 

3.        Critical thinking about relationships between self-efficacy, entrepreneurship and business opportunities forty years from now

 

3.1    Closed tie between technology self-efficacy and business opportunity

 

Technology self-efficacy refers to the decision makers’ beliefs about their own skills in using the technology effectively to arrive at a better decision outcome (Burstein & Holsapple 2008, p. 328). Let’s review the development of personal computer as an example to see how rapid the modern technology is evolving.

 

l  The IBM 610 was designed between 1948 and 1957 by John Lentz at the Watson Lab at Columbia University.

l  In 1974, the first consumer computer was created, known as Scelbi & Mark-8 Altair & IBM 5100 Computers.

l  Since 1981, the Microsoft brought in dramatic changes and led the PC industry into the century of operating systems. (about.com 2010)

 

And now the most common personal computer would be able to help the people to handle many tasks in life and at work can not be done efficiently without the computers. What is more, with the faster and faster changes and technological evolution in term of more frequent update of the new generations of computers, technology innovation is playing a more and more key role in the personal computer development. As a matter of fact, in the past few years, there had been voices claiming that the personal computer products and even the industry had entered into the maturity stage of the product (industrial) life cycle, but in the recent one and two years, the appearance of the innovative touch screen tablet has revived the personal computer industry and create pressure for further innovations. Among this new innovation waive, one industrial leader that had initiated the change is Steve Job, who had mainly and majorly contributed to the world’s current most popular electronic products, the iPhone, iMac and iPad series, by reviewing the history of Apple Inc and his history as a entrepreneur, we can see that technology self-efficacy was of great importance to Steve Jobs’ great business success. Many reports and news have described Steve Jobs’ entrepreneur character as “Ultra-high Self-efficacy, Optimism and Reaching Out”. Here we focus on the first character of “Ultra-high Self-efficacy”. In his famous speech at Stanford Steve Jobs extended opposition to the audience by saying that “Have the courage to follow your heart and intuition. In a way, both already know what you really want to be. Everything else is secondary” (macmyth.com 2011), and Steve Jobs himself had followed his intuition so strongly and typical that not many people had agreed with his view. This can be seen from Steve Jobs’ departure with Apple in 1985 because his idea had not been accepted by the board, but he had insisted so firmly with his vision and technological innovation that he chose to leave rather than compromise. But in my view, it is just this technology self-efficacy which could be seen from his firmed beliefs in the new technology application future and concepts about what the future (personal computers and hand phone) would look like that brought him great success by seizing the excellent business opportunities and turn them into profits by creating a business mode.


Figure 2 The MacBook Air series notebook

Source: apple.com 2011

 

For example, before the release of the iPhone smart phone series, many people, competitors and even the engineers in Apple had not predicted the bright future that the phone has today and they criticized the design as not practical to have only a screen without physical keyboard. But from the beginning Steve Jobs had shown great confidence in his design and vision for the future popularity among the customers of the phone that kept him advancing in the research and development of the iPhone series. Another case which also belongs to Steve Jobs is the development of the so called “ultra book (laptop)” by introducing the “Apple Macbook Air” series ultra thin laptop. The concept of ultra book refers to the faster and more powerful laptop ever than before, yet it’s still incredibly thin and light and it’s everything that a notebook should be. But before the release of the “Apple Macbook Air”, even the personal computer industrial analysis had suggested the notebook products were fully developed in term of basic design and functions, but with strong beliefs of the consumers’ preference on the even thinner, more powerful and more convenient laptop, Steve Jobs’ strong technology self-efficacy had enable Apple Inc to produce the most innovative and successful notebook product in the development of the netbook computers. And both the mentioned iPhone and iMac products represent great business opportunities and they were identified by Steve Jobs with his ultra technology self-efficacy in term of strong believe about his confidence on his intuition about what the future high tech industry would look like.

 

And with the case analysis we have above, we can conclude that there has been closed tie between technology self-efficacy and business opportunity, and such ties would be expected to be strengthened in the coming decades because of the rapid technological advancement and innovation.

 

3.2    Importance of entrepreneurship in looking for future business opportunities

 

As mentioned above, we have described entrepreneurship in two dimensions: degree of risk taking and avoidance and level of innovation. In the current understanding, entrepreneurship represents behaviors and decisions making which are belonging to high degree of risk taking and also high level of innovation. Now the questions is that will the high degree of risk taking and also high level of innovation be maintain and even enhanced in the middle of this century? In my own understanding, the answer to this question is positive for the following reasons: Firstly, the diffusion of an innovation in the business sector and among the consumer groups is becoming more efficient and speedier. According to Rogers (1995), diffusion is a process where an innovation is communicated via certain channels, through time, between the individuals of a social system. As we can see from today’s situation, people are more than ever connected to the Internet and the various social groups in term of the increase popularity of the social online platforms such as the Facebook and Google Plus. With these immediate and effective social networks, any innovation that brings in great value to the customers will be diffused soon among these social network because people are more than ever would like to share their experiences online with their friends. And with an increasingly effective diffusion mechanism, we can predict that in the middle of this century, people will be more likely to accept and diffuse the new innovations in a shorter period of time. And this will actually help to speed up the innovation level and frequency; secondly, the innovation rate will increase because of more and more resources and labor invested on the research of new technologies. This more investment will be seen in two future trends. On one hand, with the maturity of the capital market, investments in the new technologies are no long the right of the rich people, ordinary people could also contribute to the new technology development by buying stocks. Also we can see this trend by the more provision of the complex financial products and many of them high risk products to focus on the development and research of the new technologies; on the other hand, with the wider application of the modern massive production mode in term of the use of machinery standard production processes, more and more people are enabled to work in research job. What is more as mentioned and analyzed in assignment one, in the middle of this century, there will be more and more labor force available especially in the developing countries, and some top talents among these labor forces could be absorbed in the research and development (R&D) activities in the future which will facilitate the innovation processes. Thirdly, though there are more and more financial tools to help control the investment risks including the investment activities in the new business, the popular perception of futures is still that there will be a form of very high risk in the future investments of the new business opportunities. For now, we can see that there is a trend of offering an efficient and effective investment mechanism for every investor, large or small, to engage in the investment projects. What many investors try to do is to invest in more projects with the hope that some of the projects will turn out to be working and marketable and crate value to the investors in return. But speaking from a single investment project, we can say that the risk in the future would not been well reduced because people’s focus is to do the investment more efficiently. Hence, in the future the high risk taking character of the entrepreneurs will still be expected and then we can conclude that there is strong link between the entrepreneurship and the business opportunities identifications.

 

4.        Conclusion

 

Based on the above discussion, we can see that the three concepts, self-efficacy, entrepreneurship and business opportunity are three interrelated concepts. Self-efficacy, are the personality traits of the entrepreneurs who with the entrepreneurship are able to identify the future business opportunities and turn them into profitable business through innovative thinking. And because the high risk taking and high innovation rate based on our analysis will hopefully be sustained and reinforced in the middle of this century, we anticipated that these three concepts will be more closely linked together.

 

 

 

 

 

 

Reference

 

About.com 2010. The History of Computers. Accessed on 20 Nov 2011 [online] available: http://inventors.about.com/library/blcoindex.htm

 

Africanir.com 2010. Africans do not wear shoes….. accessed on 20 Nov 2011 [online] available: http://www.africanir.com/2010/12/30/africans-do-not-wear-shoes/

 

Apple.com 2011. MacBook Air. Accessed on 20 Nov 2011 [online] available:  http://www.apple.com/asia/macbookair/

 

Bandura, A. 1982. Self-efficacy mechanism in human agency. American Psychologist, 37, 122 – 147

Bandura, A. 1977. Self-efficacy: toward a unifying theory of behavioral change. Psychological Review, 84, 191 – 214

 

Brockhaus, R.H. (1980). Risk-taking propensity of entrepreneurs. Academy of Management
Journal, 23, 509-520.

 

Burstein, F. & Holsapple, C. W. 2008, Handbook on decision support systems, Volume 1. Berlin Heidelberg: Springer – Verlag. p. 328

 

Cumming, J. & Hall, C. 2004. The relationship between goal orientation and self-efficacy for exercise. Journal of applied social psychology, 34, 737 – 763

 

English, J. & Moate, B. 2009, Discovering New Business Opportunities (Large Print 16pt). Crows Nest NSW: Griffin Press. p. 2

 

Kickul, J. & Krueger, N. 2004. A cognitive processing model of entrepreneurial self-efficacy and intentionality, Frontiers of entrepreneurship research, Wellesley, MA: Babson College.

 

Macmyth.com 2011. Latest slogan of Steve Jobs. accessed on 20 Nov 2011 [online] available: http://www.macmyth.com/2011/10/latest-slogan-of-steve-jobs.html

 

Maddux, J. E. 1995. Self-efficacy theory: an introduction. in J, E. Maddux (ED,), Self efficacy, adaptation and adjustment. Theory, research and application (pp. 3 – 33). New York, NY: Plenum.

 

McDougall, P. P. & Oviatt, B. M. 2000. International entrepreneurship: the intersection of two research paths. Academy of management journal, 43 (5), 902 – 6

 

Rogers, E. M. 1995. Diffusion of Innovations. The Free Press, New York

 

Sonfield, M. C. & Lussiee, R. N. 1997. The entrepreneurial strategic matrix: a model for new and ongoing ventures. Indiana University, Kelley School of Business

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