Competing Models of Entrepreneurial Intentions

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Transcript of Competing Models of Entrepreneurial Intentions


MICHAEL D. REILLYMontana State University, Bozeman, Montana

ALAN L. CARSRUDUniversity of California Los Angeles, Los Angeles, California

Why are intentions interesting to those who care about new venture formation? Entrepreneurship is a way of thinking, a way of thinking that emphasizes opportunities over threats. The opportunity identication process is clearly an intentional process, and, therefore, entrepreneurial intentions clearly merit our attention. Equally important, they offer a means to better explainand predictentrepreneurship. We dont start a business as a reex, do we? We may respond to the conditions around us, such as an intriguing market niche, by starting a new venture. Yet, we think about it rst; we process the cues from the environment around us and set about constructing the perceived opportunity into a viable business proposition. In the psychological literature, intentions have proven the best predictor of planned behavior, particularly when that behavior is rare, hard to observe, or involves unpredictable time lags. New businesses emerge over time and involve considerable planning. Thus, entrepreneurship is exactly the type of planned behavior (Bird 1988; Katz and Gartner 1988) for which intention models are ideally suited. If intention models prove useful in understanding business venture formation intentions, they offer a coherent, parsimonious, highly-generalizable, and robust theoretical framework for understanding and prediction. Empirically, we have learned that situational (for example, employment status or informational cues) or individual (for example, demographic characteristics or personality traits) variables are poor predictors. That is, predicting entrepreneurial activities by modeling only situational or personal factors usually resulted in disappointingly small explanatory power and even smaller predictive validity. Inten-


Address correspondence to Norris F. Krueger, Boise State University, Boise, ID 83725. E-mail: nf The authors wish to thank all those who helped us rene these ideas. We cannot name you all, but we are especially grateful to Jerry Katz, Gayle Baugh, and Kelly Shaver, also the editor and anonymous reviewers whose ideas proved invaluable. Remaining errors, of course, remain our responsiblity. We also wish to pay tribute to the late Michael Scott, a great loss to the eld and to us.Journal of Business Venturing 15, 411432 2000 Elsevier Science Inc. All rights reserved. 655 Avenue of the Americas, New York, NY 10010

0883-9026/00/$see front matter PII S0883-9026(98)00033-0



tions models offer us a signicant opportunity to increase our ability to understand and predict entrepreneurial activity. The current study compares two intention-based models in terms of their ability to predict entrepreneurial intentions: Ajzens theory of planned behavior (TPB) and Shaperos model of the entrepreneurial event (SEE). Ajzen argues that intentions in general depend on perceptions of personal attractiveness, social norms, and feasibility. Shapero argues that entrepreneurial intentions depend on perceptions of personal desirability, feasibility, and propensity to act. We employed a competing models approach, comparing regression analyses results for the two models. We tested for overall statistical t and how well the results supported each component of the models. The sample consisted of student subjects facing imminent career decisions. Results offered strong statistical support for both models. (1) Intentions are the single best predictor of any planned behavior, including entrepreneurship. Understanding the antecedents of intentions increases our understanding of the intended behavior. Attitudes inuence behavior by their impact on intentions. Intentions and attitudes depend on the situation and person. Accordingly, intentions models will predict behavior better than either individual (for example, personality) or situational (for example, employment status) variables. Predictive power is critical to better post hoc explanations of entrepreneurial behavior; intentions models provide superior predictive validity. (2) Personal and situational variables typically have an indirect inuence on entrepreneurship through inuencing key attitudes and general motivation to act. For instance, role models will affect entrepreneurial intentions only if they change attitudes and beliefs such as perceived self-efcacy. Intentionbased models describe how exogenous inuences (for eample, perceptions of resource availability) change intentions and, ultimately, venture creation. (3) The versatility and robustness of intention models support the broader use of comprehensive, theory-driven, testable process models in entrepreneurship research (MacMillan and Katz 1992). Intentional behavior helps explain and model why many entrepreneurs decide to start a business long before they scan for opportunities. Understanding intentions helps researchers and theoreticians to understand related phenomena. These include: what triggers opportunity scanning, the sources of ideas for a business venture, and how the venture ultimately becomes a reality. Intention models can describe how entrepreneurial training molds intentions in subsequent venture creation (for example, how does training in business plan writing change attitudes and intentions?). Past research has extensively explored aspects of new venture plans once written. Intentionality argues instead that we study the planning process itself for determinants of venturing behavior. We can apply intentions models to other strategic decisions such as the decision to grow or exit a business. Researchers can model the intentions of critical stakeholders in the venture, such as venture capitalists intentions toward investing in a given company. Finally, management researchers can explore the overlaps between venture formation intentions and venture opportunity identication. Entrepreneurs themselves (and those who teach and train them) should benet from a better understanding of their own motives. The lens provided by intentions affords them the opportunity to understand why they made certain choices in their vision of the new venture. Intentions-based models provide practical insight to any planned behavior. This allows us to better encourage the identication of personally-viable, personally-credible opportunities. Teachers, consultants, advisors, and entrepreneurs should benet from a better general understanding of how intentions are formed, as well as a specic understanding of how founders beliefs, perceptions, and motives coalesce into the intent to start a business. This understanding offers sizable diagnostic power, thus entrepreneurship educators can use this model to better understand the motivations and intentions of students and trainees and to help students and trainees understand their own motivations and intentions. Carefully targeted training becomes possible. For example, ethnic and gender differences in career choice are largely explained by self-efcacy differences. Applied work in psychology and sociology tells us that we already know how to remediate self-efcacy differences. Raising entrepreneurial efcacies will raise perceptions of venture feasibility, thus increasing the perception of opportunity. Economic and community development hinges not on chasing smokestacks, but on growing new businesses. To encourage economic development in the form of new enterprises we must rst increase perceptions of feasibility and desirability. Policy initiatives will increase business formations if those initiatives positively inuence attitudes and thus inuence intentions. The growing trends of downsizing and



outsourcing make this more than a sterile academic exercise. Even if we successfully increase the quantity and quality of potential entrepreneurs, we must also promote such perceptions among critical stakeholders including suppliers, nanciers, neighbors, government ofcials, and the larger community. The ndings of this study argue that promoting entrepreneurial intentions by promoting public perceptions of feasibility and desirability is not just desirable; promoting entrepreneurial intentions is also thoroughly feasible. 2000 Elsevier Science Inc.

INTRODUCTIONThe failure of situational and personality measures to signicantly predict entrepreneurial activity suggests another approach. In this study, we compare the predictive ability of two intentions models. One was developed and well validated in social psychology (Azjens 1991 Theory of Planned Behavior). The other was proposed, but not well tested from the domain of entrepreneurship research (Shaperos 1982 model of the Entrepreneurial Event). The comparison will examine the efcacy of these models as they try to predict the intentions that a sample of soon-to-graduate undergraduate business students hold towards starting a new business. Before we consider the past uses of intention models and describe their application in the current work, we begin with an examination of the issue of the degree to which entrepreneurship is planned, and therefore, intentional behavior.

Entrepreneurship as Intentional, Planned BehaviorAlthough it is possible that some will argue otherwise, it seems evident that much of what we consider entrepreneurial activity is intentionally planned behavior. Witness the tremendous emphasis on the business plan in virtually every academic and practical treatment on starting a new business. Even in cases where a unique catalyzing event like being downsized may spur the individual to the entrepreneurial act, there are often indications of a