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Starting Your Own Business: It’s All About Confidence

What makes certain people become entrepreneurs despite the risk and immense responsibility it entails? Some say it’s genetics; others suggest it’s related to education, personal characteristics, or past work experience. Whichever way, this question is a hard one to answer, and that is probably the reason that it interests so many, including me. This question will also be the focus of this post as I dive into current academic knowledge regarding the relationship between entrepreneurship and self-confidence.

In a study published in the Journal of Business Venturing, three researchers from the University of Oklahoma and Washington State University attempt to shed light on the reasons that lead a person to engage in business venturing despite the high base failure rates. The researchers review entrepreneurs’ outcome and ability expectancies to see whether increased expectation of success or high assessment of capabilities has anything to do with the decision to start your own business. Unlike previous findings, they suggest that elevated outcome expectancies do not play a significant role in the decision to become an entrepreneur. Rather, they find that high valuation of skills and capabilities is a much more critical factor to the startup decision.

The researchers also examined the influence of time lags on the decision to start a new business venture. They found that for people with high outcome expectancies, “the longer it takes for individuals to act on the intention to become an entrepreneur, the less likely they are to decide to create a new venture.” For highly confident entrepreneurs, that wasn’t the case. Even a long delay did not deter them from their initial decision to start a new venture.

These research findings raise two interesting points regarding the entrepreneurial process. The first is that dedicating time to think the business plan over and waiting before making the entrepreneurial plunge is a very good thing. It seems that the longer you wait, the more time you have to form a realistic picture of your future business and its potential success.

The second refers to the researchers’ finding regarding entrepreneurship and confidence. While they suggest that self-confidence is critical to entrepreneurship, they don’t specify which capabilities a nascent entrepreneur should be confidently possess in order to decide and actually follow through with his or her new venture.

What do you think? Which skills are the most important?

Based on:
D. Arthurs. “To start or not to start: Outcome and ability expectations in the decision to start a new venture.” Journal of Business Venturing. 25. (2010): 192-202. Web. 24 Mar. 2013.

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