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nAch, risk-taking propensity, locus of control and entrepreneurship
Person. inrlii,ic1.Difl. Vol. 6, No. 6. pp. 781. -782, 1985 tn Great Britam All rights reserved
Printed
nAch, Risk-taking
Copyright
Propensity,
ic
0191-8869185 S3.00+0 00 1985 Pergamon Press Ltd
LOCUSof Control and entrepreneurship S. I-J. AHMED
Universi!y of Dacca, Ramna, Dacca, Bangladesh (Received 26 Ocfober 1984) Summary-Seventy-one entrepreneurs and 62 non-entrepreneurs Risk-taking Propensity, as well as nAch. Significant differences the concept of entrepreneurship.
were given tests of Locus of Control and were found and led to a clarification of
INTRODUCTION During recent years several attempts have been made in different parts of the world to identify factors that make a man an entrepreneur. This effort for identification of factors has been approached from different angles and theoretical foundations such as economics, social-psychological and anthropological etc. One of the major contributors to these entrepreneurial studies is McClelland (1961) who emphasized specifically one attitudinal factor, i.e. Achievement Motivation or need for achievement which is symbolically known as nAch. McClelland defined the term as a desire to do well to attain an inner feeling of personal accomplishment. McClelland (1961) and others (Schrage, 1965; Lynn, 1969; Singh, 1969; Dart, 1971; Nandy, 1973; Durand, 1975; Roberts, 1972; Kock. 1965; Wainer and Rubin, 1969) found a positive relationship of nAch to entrepreneurial success. But conversely Gilmore (1971) and Magdalena (1977) have reported an insignificant or lack of a relationship of nAch to entrepreneurship. A review of past literature also disclosed some other psychological factors important in determining entrepreneurial success. Among those Risk-taking Propensity and Internal-External (IE) Locus of Control seems to have received much attention in entrepreneurial studies. Generally Risk-taking Propensity in psychological terms can be defined as dealing with uncertainties and the degree of readiness to bear it. Studies by Mengel (1972). Dart (1971). Meyer, Walker and Litwin (1961), Liles (1974) and Broehl (1978) reported that entrepreneurs take moderate or higher risks as compared to non-entrepreneurs. Internal Locus of Control can be defined, according to Rotter (1966). as one’s perception of events being contingent upon one’s own characteristics or actions while External Locus of Control is defined as one’s feeling of outcome being fully independent of his own actions, i.e. outcome being the result of luck, chance, fate or powerful others. Studies by Stokes (1971). Shapero, Ferrari and Garcia-Bouza (1973), Liles (1974), Magdalena (1977). Borland (1974). Brochaus (1975, 1976) and Pandey and Tewary (1979) have reported a positive relationship of Internal Locus of Control to entrepreneurial entry. This paper reports the findings of a study on the relationship of nAch, Risk-taking Propensity and Internal Locus of Control to entrepreneurship conducted on a group of immigrants from Bangladesh in the U.K. Entrepreneurship is defined for the purpose of this study as a person who starts a business of his own. It was hypothesized that persons starting their own business would tend to have: higher nAch; higher Risk-taking Propensity; and higher Internal Locus of Control than those who have not started a business of their own.
METHOD Subjects Seventy-one
entrepreneurs
and 62 non-entrepreneurs
of the Bangladeshi
immigrant
community
Design The sample was selected on a random basis from Bangladeshi immigrants living in the greater view the type of business they do. Non-entrepreneurs were also matched with the entrepreneurs period of their arriving into the U.K.
were the Ss of this study.
London area keeping in on the basis of age and
In order to measure nAch Lynn’s (1969) Achievement Motivation Questionnaire was used. Internal-External Control was measured by a short version of Rotter’s (1966) IE scale devised by Magdalena (1977) and Propensity was measured by a Risk-taking Propensity Scale developed by Magdalena (1977).
Locus of Risk-taking
RESULTS A pilot study was conducted in order to pretest the questionnaire. Interviews were conducted through personal and face-to-face meetings and the responses of the completed questionnaire were obtained. Two-tailed tests of significance under the central limit theorem were applied to see the significance of difference between entrepreneurs and non-entrepreneurs on psychological tests designed to measure the variables. The results are given in Table I.
DISCUSSION The significant differences between entrepreneurs and non-entrepreneurs on nAch, Internal Locus of Control and Risk-taking Propensity suggest that these variables are positively related to entrepreneurship and confirm the earlier findings of McClelland (1961). Lynn (1969) and others. The positive correlations between nAch and Risk-taking Propensity and Internal Locus of Control may indicate a broader factor underlying motivation for entrepreneurship. 781
782
NOTES AND
Table
I.
Showing
SHORTER
the significance of entrepreneurs
COMMUNICATIONS
difference between on mean scores
Entrepreneurs (N
_
entrepreneurs
Non-entrepreneurs
= 70)
(N
and
Levels
= 61)
non-
of
significance 0A Level
Variable “Ach Risk-taking Propensity
Mea”
SD
Mea”
SD
Probabilitv
5.6619
0.9706
4.4354
I.5216
P
I .0249
0.2719
0.8566
0.2821
P
1.7842
0.2962
I .4324
0.3498
P
of
Internal Locus
of
Control The
product-moment shown
in Table
correlations
between
the variables
for the entrepreneurs
are
2.
Table
2 Internal
nAch
Variables nAch
Locus
ProDensitv
Control
of
I .oo
Risk-takine Internal
Risk-taking
ProDensitv
LOCUS of
Control
0.23’
1.00
0.23*
0.05
1.00
lP < 0.05.
REFERENCES
Borland C. M. (1974) Locus of Control, Need for Achievement and entrepreneurship. Doctoral Dissertation, Univ. of Texas, Austin, Tex. Brochaus R. H. (1975) I-E Locus of Control scores as predictors of entrepreneurial intentions. Paper presented at the I975 Nalional Meeting of the Academy of Management, New Orleans, La. Brochaus R. H. (1976) Locus of Control and Risk-taking Propensity as entrepreneurial characteristics-a comparative study. Doctoral Dissertation, Washington Univ., St. Louis, MO. Broehl W. G. (1978) The Village Entrepreneurs. Harvard Univ. Press, Cambridge, Mass. Dart .I. (1971) The development of a classification system for entrepreneurial types with a special investigation of the potential of Achievement Motivation and its correlates to discriminate between these types. DBA Dissertation, Univ. of Colorado, Boulder, Colo. Durand D. E. (1975) Relation of achievement and power motives to performance among black businessmen. Psychol. Rep. 37, 11-14.
Gilmore J. B. (1971) An investigation of the selected entrepreneurial models’ ability to predict successful entrepreneurial activity. Doctoral Dissertation, Univ. of Oklahoma, Norman, Okla. Kock S. W. (1965) Management and motivation. Summary of a Doctoral Thesis presented at the Swedish School of Economics, Finland. Liles P. R. (1974) New Business Ventures and rhe Enrrepreneur. Irwin, Homewood, III. Lynn R. (1969) An Achievement Motivation Questionnaire. Br. J. Psychol. 60, 529-534. Magdalena F. V. (1977) Filipino entrepreneurs of Hawaii. Doctoral Dissertation, Univ. of Hawaii, Honolulu, HI. McClelland D. C. (1961) The Achieving Sociefy. Free Press, New York. Mengel R. H. (1972) Entrepreneurship in micro-electronic industry. Doctoral Dissertation, Univ. of Texas, Austin, Tex. Meyer H. H., Walker W. B. and Litwin G. H. (1961) Motive patterns and risk preferences associated with entrepreneurship. J. abnorm. sot. Psychol. 63, 570-574.
Nandy A. (1973) Motives, modernity, and entrepreneurial competence. J. sot. Psychol. 91, 127-136. Pandey J. and Tewary N. B. (1979) Locus of control and achievement values of entrepreneurs. J. occup. Psychol. 52, 107-111.
Roberts E. B. (1972) Influences upon performance of new technical enterprises. In Technical Entrepreneurship: a Symposium (Edited by Cooper A. C. and Komives J. L.). Center for Venture Management, Milwaukee, Wise. Rotter J. B. (1966) General&d expectancies for Internal versus External Control of Reinforcement. Psycho/. Monogr.: Gen. Appl. 80, l-28.
Schrage H. (1965) The R & D entrepreneurs profile of Success. Haru. Bus. Rev. 43, 56-69. Shaper0 A., Ferrari A. and Garcia-Bouza J. (1973) Technical Entrepreneurship in Northern Imly. IIMT. Cited in Borland ( 1974). Singh N. P. (1969) n/Ach among successful non-successful and traditional-progressive agricultural entrepreneurs of Delhi. J. sot. Psycho!. 19, 271-272.
Stokes R. G. (1971) Afrikaner entrepreneur: social origins, psychological dispositions and values. Doctoral Dissertation, Duke Univ., Durham, N.C. Wainer H. A. and Rubin I. M. (1969) Motivation of research and development entrepreneurs: determinants of company success. J. appl. Psycho!. 53, 178-184.
Printed
nAch, Risk-taking
Copyright
Propensity,
ic
0191-8869185 S3.00+0 00 1985 Pergamon Press Ltd
LOCUSof Control and entrepreneurship S. I-J. AHMED
Universi!y of Dacca, Ramna, Dacca, Bangladesh (Received 26 Ocfober 1984) Summary-Seventy-one entrepreneurs and 62 non-entrepreneurs Risk-taking Propensity, as well as nAch. Significant differences the concept of entrepreneurship.
were given tests of Locus of Control and were found and led to a clarification of
INTRODUCTION During recent years several attempts have been made in different parts of the world to identify factors that make a man an entrepreneur. This effort for identification of factors has been approached from different angles and theoretical foundations such as economics, social-psychological and anthropological etc. One of the major contributors to these entrepreneurial studies is McClelland (1961) who emphasized specifically one attitudinal factor, i.e. Achievement Motivation or need for achievement which is symbolically known as nAch. McClelland defined the term as a desire to do well to attain an inner feeling of personal accomplishment. McClelland (1961) and others (Schrage, 1965; Lynn, 1969; Singh, 1969; Dart, 1971; Nandy, 1973; Durand, 1975; Roberts, 1972; Kock. 1965; Wainer and Rubin, 1969) found a positive relationship of nAch to entrepreneurial success. But conversely Gilmore (1971) and Magdalena (1977) have reported an insignificant or lack of a relationship of nAch to entrepreneurship. A review of past literature also disclosed some other psychological factors important in determining entrepreneurial success. Among those Risk-taking Propensity and Internal-External (IE) Locus of Control seems to have received much attention in entrepreneurial studies. Generally Risk-taking Propensity in psychological terms can be defined as dealing with uncertainties and the degree of readiness to bear it. Studies by Mengel (1972). Dart (1971). Meyer, Walker and Litwin (1961), Liles (1974) and Broehl (1978) reported that entrepreneurs take moderate or higher risks as compared to non-entrepreneurs. Internal Locus of Control can be defined, according to Rotter (1966). as one’s perception of events being contingent upon one’s own characteristics or actions while External Locus of Control is defined as one’s feeling of outcome being fully independent of his own actions, i.e. outcome being the result of luck, chance, fate or powerful others. Studies by Stokes (1971). Shapero, Ferrari and Garcia-Bouza (1973), Liles (1974), Magdalena (1977). Borland (1974). Brochaus (1975, 1976) and Pandey and Tewary (1979) have reported a positive relationship of Internal Locus of Control to entrepreneurial entry. This paper reports the findings of a study on the relationship of nAch, Risk-taking Propensity and Internal Locus of Control to entrepreneurship conducted on a group of immigrants from Bangladesh in the U.K. Entrepreneurship is defined for the purpose of this study as a person who starts a business of his own. It was hypothesized that persons starting their own business would tend to have: higher nAch; higher Risk-taking Propensity; and higher Internal Locus of Control than those who have not started a business of their own.
METHOD Subjects Seventy-one
entrepreneurs
and 62 non-entrepreneurs
of the Bangladeshi
immigrant
community
Design The sample was selected on a random basis from Bangladeshi immigrants living in the greater view the type of business they do. Non-entrepreneurs were also matched with the entrepreneurs period of their arriving into the U.K.
were the Ss of this study.
London area keeping in on the basis of age and
In order to measure nAch Lynn’s (1969) Achievement Motivation Questionnaire was used. Internal-External Control was measured by a short version of Rotter’s (1966) IE scale devised by Magdalena (1977) and Propensity was measured by a Risk-taking Propensity Scale developed by Magdalena (1977).
Locus of Risk-taking
RESULTS A pilot study was conducted in order to pretest the questionnaire. Interviews were conducted through personal and face-to-face meetings and the responses of the completed questionnaire were obtained. Two-tailed tests of significance under the central limit theorem were applied to see the significance of difference between entrepreneurs and non-entrepreneurs on psychological tests designed to measure the variables. The results are given in Table I.
DISCUSSION The significant differences between entrepreneurs and non-entrepreneurs on nAch, Internal Locus of Control and Risk-taking Propensity suggest that these variables are positively related to entrepreneurship and confirm the earlier findings of McClelland (1961). Lynn (1969) and others. The positive correlations between nAch and Risk-taking Propensity and Internal Locus of Control may indicate a broader factor underlying motivation for entrepreneurship. 781
782
NOTES AND
Table
I.
Showing
SHORTER
the significance of entrepreneurs
COMMUNICATIONS
difference between on mean scores
Entrepreneurs (N
_
entrepreneurs
Non-entrepreneurs
= 70)
(N
and
Levels
= 61)
non-
of
significance 0A Level
Variable “Ach Risk-taking Propensity
Mea”
SD
Mea”
SD
Probabilitv
5.6619
0.9706
4.4354
I.5216
P
I .0249
0.2719
0.8566
0.2821
P
1.7842
0.2962
I .4324
0.3498
P
of
Internal Locus
of
Control The
product-moment shown
in Table
correlations
between
the variables
for the entrepreneurs
are
2.
Table
2 Internal
nAch
Variables nAch
Locus
ProDensitv
Control
of
I .oo
Risk-takine Internal
Risk-taking
ProDensitv
LOCUS of
Control
0.23’
1.00
0.23*
0.05
1.00
lP < 0.05.
REFERENCES
Borland C. M. (1974) Locus of Control, Need for Achievement and entrepreneurship. Doctoral Dissertation, Univ. of Texas, Austin, Tex. Brochaus R. H. (1975) I-E Locus of Control scores as predictors of entrepreneurial intentions. Paper presented at the I975 Nalional Meeting of the Academy of Management, New Orleans, La. Brochaus R. H. (1976) Locus of Control and Risk-taking Propensity as entrepreneurial characteristics-a comparative study. Doctoral Dissertation, Washington Univ., St. Louis, MO. Broehl W. G. (1978) The Village Entrepreneurs. Harvard Univ. Press, Cambridge, Mass. Dart .I. (1971) The development of a classification system for entrepreneurial types with a special investigation of the potential of Achievement Motivation and its correlates to discriminate between these types. DBA Dissertation, Univ. of Colorado, Boulder, Colo. Durand D. E. (1975) Relation of achievement and power motives to performance among black businessmen. Psychol. Rep. 37, 11-14.
Gilmore J. B. (1971) An investigation of the selected entrepreneurial models’ ability to predict successful entrepreneurial activity. Doctoral Dissertation, Univ. of Oklahoma, Norman, Okla. Kock S. W. (1965) Management and motivation. Summary of a Doctoral Thesis presented at the Swedish School of Economics, Finland. Liles P. R. (1974) New Business Ventures and rhe Enrrepreneur. Irwin, Homewood, III. Lynn R. (1969) An Achievement Motivation Questionnaire. Br. J. Psychol. 60, 529-534. Magdalena F. V. (1977) Filipino entrepreneurs of Hawaii. Doctoral Dissertation, Univ. of Hawaii, Honolulu, HI. McClelland D. C. (1961) The Achieving Sociefy. Free Press, New York. Mengel R. H. (1972) Entrepreneurship in micro-electronic industry. Doctoral Dissertation, Univ. of Texas, Austin, Tex. Meyer H. H., Walker W. B. and Litwin G. H. (1961) Motive patterns and risk preferences associated with entrepreneurship. J. abnorm. sot. Psychol. 63, 570-574.
Nandy A. (1973) Motives, modernity, and entrepreneurial competence. J. sot. Psychol. 91, 127-136. Pandey J. and Tewary N. B. (1979) Locus of control and achievement values of entrepreneurs. J. occup. Psychol. 52, 107-111.
Roberts E. B. (1972) Influences upon performance of new technical enterprises. In Technical Entrepreneurship: a Symposium (Edited by Cooper A. C. and Komives J. L.). Center for Venture Management, Milwaukee, Wise. Rotter J. B. (1966) General&d expectancies for Internal versus External Control of Reinforcement. Psycho/. Monogr.: Gen. Appl. 80, l-28.
Schrage H. (1965) The R & D entrepreneurs profile of Success. Haru. Bus. Rev. 43, 56-69. Shaper0 A., Ferrari A. and Garcia-Bouza J. (1973) Technical Entrepreneurship in Northern Imly. IIMT. Cited in Borland ( 1974). Singh N. P. (1969) n/Ach among successful non-successful and traditional-progressive agricultural entrepreneurs of Delhi. J. sot. Psycho!. 19, 271-272.
Stokes R. G. (1971) Afrikaner entrepreneur: social origins, psychological dispositions and values. Doctoral Dissertation, Duke Univ., Durham, N.C. Wainer H. A. and Rubin I. M. (1969) Motivation of research and development entrepreneurs: determinants of company success. J. appl. Psycho!. 53, 178-184.