Essay

Subject :	Entrepreneurship
Topic :	Importance of Cognitive and Behavioural Research Findings compared with Traditional Trait Theory

Introduction

This essay sheds light on the importance of behavioural and cognitive research towards encouragement, improvement and support for individuals aspiring to start off their new business ventures. It reflects on the point of difference between trait theory and cognitive and behavioural research. It presents recommendations on the findings of this report. In order to assess the growing importance of behavioural and cognitive research as compared to the trait theory, this report utilises the existing research literature available on the subject. Existing research literature was evaluated for findings with respect to the research on behavioural, cognitive and trait theory of entrepreneurship.

Entrepreneurship: Importance of Cognitive and Behavioural Research Findings compared with Traditional Trait Theory

Research on existing literature reveals that behavioural and cognitive theories of entrepreneurship are gaining immense importance. Behavioural research on entrepreneurship emphasises the roles and actions performed by entrepreneurs that lead to creation and organisation of new ventures (Gartner and Carter, 2003). Behavioural research on entrepreneurship plays a great role in the process of directing, encouragement and support for individuals aspiring to establish new business ventures because of its focus on performance rather than personality attributes of entrepreneurs as in trait theory. Early research in behavioural aspect of entrepreneurship found that entrepreneurship is about performing sequenced tasks which start from finding solutions to problem and then organising resources to produce and sell products and services (Block and MacMillan, 1985). However, behavioural research (Gartner and Carter, 2003) also found that entrepreneurship success is not associated with any sequential performance of tasks. Research conducted by Newbert (2005) suggests that there are possibilities that the sequence of tasks performed by entrepreneurs differ case by case, but it plays a great role in the success of entrepreneurs. Carter et al. (1996) studied entrepreneurial activities and found that successful entrepreneurs display similar activities. Entrepreneurs who demonstrated great energy and efforts at the start up of their business venture were mostly successful in their business. Same were the findings for failed new business ventures. The authors found that the entrepreneurs that neither succeeded nor failed were slow in exerting efforts and energy at the start up of a new business venture.

Cognitive research on entrepreneurship focuses on the knowledge and skills possessed by entrepreneurs for the success of new business ventures (Mitchell et al., 2002). Simon et al. (2000) find that because entrepreneurs are mostly skilful individuals they mostly remain under the impression that their knowledge and skill can add to the success of their business venture’s performance, which in certain situations, can turn out into overconfidence. Busenitz and Barney (1997) also put forward the similar results regarding entrepreneurial overconfidence. Krueger (2000) finds that individuals can be encouraged and motivated to become entrepreneurs by providing them feasible environment to become entrepreneurs. This can be done by encouraging people to take up new business ventures and eliminating the impeding beliefs encompassing entrepreneurship as a very difficult career. Cognitive research has also shed light on the cognitive errors made by entrepreneurs due to generally stressful situations they face. Baron (1998) suggests that entrepreneurs mostly fall prey to several biases which lead them to failure. Entrepreneurs are mostly confident of their personal knowledge and skills, hence are psychologically motivated to mark business successes to their credit and attribute failures to others. This hampers their way to self-improvement and success. The author also finds that most entrepreneurs fail due to lack of planning and their biased attitude. Kickul and Krueger (2004) find that entrepreneurs with knowledge and cognitive approach play a great role in entrepreneurial thinking in new business ventures. The cognitive research on entrepreneurship allows individuals setting up their new businesses to learn the knowledge and cognitive styles demonstrated by successful entrepreneurs and avoid cognitive errors.

Cognitive and behavioural research on entrepreneurship differs significantly from the traditional trait theory characteristics. Trait theory of entrepreneurship places its emphasis on the specific personality traits and characteristics of successful entrepreneurs. Research on trait theory of entrepreneurship such as Begley & Boyd (1987) discovered the specific characteristics of entrepreneurs successful in their business ventures including desire for achievement, risk taking approach and innovativeness etc. The research however failed to demonstrate any strong ties of these personality characteristics of entrepreneurs with success of business ventures. There are certain characteristics and traits that were found to be closely associated with entrepreneurial qualities. For instance, Koh (1996) identified that entrepreneurs are always willing to carry out risky tasks and are prepared to work in uncertain situations. Whetten et al. (2000) suggested that entrepreneurs could be identified by their ability to tolerate and manage ambiguous situations. Trait based research on entrepreneurship also associates the importance of a person’s realisation of his or her ability to start up a business venture and make it successful which is known as self-efficacy (Neck et al., 1999). Some researchers also related a person’s willingness to change and ability to respond to changing environment as one of the most important entrepreneurial qualities (Drucker, 1985). Internal locus of control has also been considered to be an essential characteristic of entrepreneurs leading to success of newly established business ventures (Boone et al., 1996).

Mitchell et al. (2002) propound that cognitive approach of entrepreneurship provides a strikingly opposite view to understanding entrepreneurial success as compared to trait theory. This approach focuses on entrepreneurial knowledge and cognitive styles that enable entrepreneurs to make certain decisions concerning opportunity identification, business establishment and organisation of resources. It allows one to explore the cognitive qualities an entrepreneur should have for the success of his or her new business venture. Cognitive research focuses on the importance of cognitive styles, knowledge and skills possessed by successful entrepreneurs. On the other hand, behavioural research allows individuals to shape their behaviours and actions according to the performance of successful entrepreneurs. Behavioural and cognitive research encourages new entrepreneurs to establish their business ventures and constantly promotes improvement in entrepreneurial performance. On the contrary, trait theory hinders the new entrepreneurs’ way to improvement and discourages entrepreneurship by suggesting as if individuals not possessing certain ‘personality traits’ would not be successful in their new business ventures. This has several implications for entrepreneurial growth and support for individuals willing to start up new business ventures. Cognitive and behavioural research has great potential to support and encourage individuals to open new businesses. On the other hand, trait theory has more potential to curtail the growth of entrepreneurship.

Conclusion

This report reflects on the growing importance of cognitive and behavioural research on entrepreneurship and also compares them to traditionally established trait theory. The above findings suggest that cognitive research on entrepreneurship leads to improvement and encouragement of new entrepreneurs by guiding them on the cognitive styles adopted by successful entrepreneurs and identifying the cognitive errors made by failed entrepreneurs. The behavioural research is focused on the importance of activities performed by entrepreneurs, thus leading to action oriented entrepreneurship on the part of individuals willing to start up new business ventures. These are highly different from that of the trait theory of entrepreneurship which by emphasising on certain traits and personality qualities of entrepreneurs suggests that only people possessing these qualities can become successful entrepreneurs. It, therefore, leads to discouragement of entrepreneurship.

Currently, there is insignificant literature available on cognitive and behavioural entrepreneurship as compared to the traditional trait theory. The research on cognitive and behavioural entrepreneurship needs to be extended so as to evaluate its practical importance, as these theories possess great significance to the growth of entrepreneurship.

References

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• Begley, T.M. & Boyd, D.P. (1987), Psychological Characteristics Associated with Performance, In Entrepreneurial Firms and Smaller Businesses, Journal of Business Venturing, 2, pp. 79-93
• Block, Z. and MacMillan, I. (1985). Milestones for successful venture planning. Harvard Business Review, 85(5), pp. 184-188
• Boone, C., De Brabander, B. and Van Witteloostuijn, A. (1996), CEO Locus of Control and Small Firm Performance: An Integrative Framework and Empirical Test, Journal of Management Studies, 33(5), pp. 667-99
• Busenitz, L. and Barney, J. (1997). Differences between entrepreneurs and managers in large organizations: Biases and heuristics in strategic decision-making. Journal of Business Venturing, 12, pp. 9-30
• Carter, N., Gartner, W. and Reynolds, P. (1996). Exploring start-up event sequences. Journal of Business Venturing, 11(3), pp. 151–166
• Drucker, P. F. (1985), Innovation and Entrepreneurship: Practice and Principles, New York: Harper & Row
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• Kickul, J. and Krueger, N. (2004) ‘A Cognitive Processing Model of Entrepreneurial Self-Efficacy and Intentionality’, in S. A. Zahra et al. (Eds) Frontiers of Entrepreneurship Research, pp. 607–19. Wellesley, MA: Babson College, Center for Entrepreneurial Studies.
• Koh, H. C. (1996), Testing Hypotheses of Entrepreneurial Characteristics: A Study of Hong Kong MBA Students, Journal of Managerial Psychology, 11(3), pp. 12–25
• Krueger, N. (2000). The cognitive infrastructure of opportunity emergence. Entrepreneurship: Theory & Practice, 24(3), pp. 5-23
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