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Contents lists available at ScienceDirect
The Journal of Socio-Economics
journal homepage: www.elsevier.com/locate/soceco
Motivation, self-efficacy, and risk attitudes among entrepreneurs during
transition to a market economy
Tadeusz Tyszka a,∗ , Jerzy Cieślik b , Artur Domurat c , Anna Macko a
a
b
c
Faculty of Economic Psychology, Kozminski University, ul. Jagiellonska 59, 03-301 Warsaw, Poland
Faculty of Management, Kozminski University, ul. Jagiellonska 59, 03-301 Warsaw, Poland
Faculty of Psychology, University of Warsaw, ul. Stawki 5/7, 00-183 Warsaw, Poland
a r t i c l e
i n f o
Article history:
Received 12 March 2010
Received in revised form 4 January 2011
Accepted 30 January 2011
JEL classification:
L26
Keywords:
Entrepreneurship
Entrepreneurial
Motivation
Self-efficacy
Risk attitudes
a b s t r a c t
In this research were investigated the three most frequently studied characteristics of entrepreneurs –
motivation, self-efficacy, and risk attitudes. We divided the sample of entrepreneurs into two subgroups:
opportunity-driven vs. necessity-driven. In agreement with findings of research performed in countries
with developed market economies, we found that the need for independence and the need for achievement were of higher importance to the entrepreneurs than to the non-entrepreneurs. However, this
was only true of the opportunity-driven subgroup of entrepreneurs, while not of those categorized as
necessity-driven. In contrast, the most important motive in the group of non-entrepreneurs and as well
as the necessity-driven subgroup of entrepreneurs was job security. In accordance with Knight’s claim,
we found that opportunity-driven (but not necessity-driven) entrepreneurs revealed higher levels of selfconfidence than the group of employees. We did not find support for the claim that entrepreneurs are
more risk-prone than wage earners. On the other hand, entrepreneurs (both opportunity- and necessitydriven) reported more everyday risky investment activities than wage earners did. We interpret this
observation in terms of the necessity of entrepreneurs for risk-taking, rather than personal preference
and liking.
© 2011 Elsevier Inc. All rights reserved.
1. Introduction
There is a long history of research on the personal characteristics
(traits and motivation) of entrepreneurs (see, e.g., Brandstaetter,
1997). The general finding is that although some traits and
motives are related to both an individual’s decision to become an
entrepreneur (e.g., Wärneryd, 1988), as well as to venture performance (Baum et al., 2001), these relationships are generally
weak. The most probable reason for this seems to be that the
entrepreneurs do not function in isolation from environmental factors.
The overall objective of the present study was to examine motivation, self-efficacy, and risk attitude – the three most frequently
studied characteristics of entrepreneurs – in a specific environment. That environment being Poland in transition. When studying
entrepreneurs and entrepreneurship in Poland and other CentralEast European countries, one cannot avoid placing the whole
analysis in the context of a systemic change – of a radical socioeconomic and political transition from a Communist to a market
∗ Corresponding author. Tel.: +48 22 519 21 89.
E-mail address: [email protected] (T. Tyszka).
economy. One reason for this is the relatively short time elapsed
since the dismantling of the Communist bloc in Central and Eastern
Europe. Such a period of approximately 20 years in most country
has been proven too brief to allow a full-degree of market maturity,
particularly in the shaping of the relevant environment of certain
institutions. As Osborn and Slomczynski (2005) state, the historical
developments that took place during the Communist era and during the transition (particularly in its initial years), have profoundly
affected attitudes and perceptions as well as the pool of available
entrepreneurial skills.
How did these historic roots affect the performance and operating patterns of Polish entrepreneurs once the systemic transition
got underway in 1989? Most striking was the obsolete character
of specific operating skills embedded in the context of a command economy. Even despite substantial experience in the field,
the apparent lack of a proactive, customer-focused attitude among
the “old entrepreneurs” made them unable to cope with the new
reality and, all the more so, to compete with new entrepreneurial
start-ups. According to estimates, less than 10% of the 1.7 million
businesses currently active in Poland can trace their roots to the
pre-1989 period. Those which were able to survive had to entirely
re-engineer their businesses, as illustrated by the following statement of an old-style entrepreneur:
1053-5357/$ – see front matter © 2011 Elsevier Inc. All rights reserved.
doi:10.1016/j.socec.2011.01.011
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In 1989 Poland changed to such an extent, that in order to continue my prosperous business I had to start de novo. The same
business, in a different environment, became a new kind of
activity (Osborn and Slomczynski, 2005, p. 88).
1.1. Entrepreneurial motivation and self-efficacy
It is commonly assumed – not without empirical support – that
individuals choose career roles matching their needs and values.
There is a long history of theoretical and empirical efforts to identify
the reasons driving individuals to become entrepreneurs. The main
results have been rather consistent. Scheinberg and MacMillan
(1988), who surveyed over 1400 business owners in 11 countries, identified 6 broad categories of reasons that entrepreneurs
offered for creating a business: the need for approval, the perceived instrumentality of wealth, degree of communitarianism,
the need for personal development, the need for independence,
and the need for escape. Continuing this exploration, Birley and
Westhead (1994), surveyed 405 British business owners. They
identified seven factors that drove individuals to start up a business: the need for approval, the need for independence, the need
for personal development, welfare considerations, the perceived
instrumentality of welfare, tax reduction, and the example of role
models. Interestingly enough, research by Smallbone and Welter
(2001) showed that in transition economies (e.g., Moldova, Belarus,
Ukraine) motives given for starting one’s own businesses were not
considerably different from those reported in market economies.
The need for independence, personal development (personal fulfillment) and personal wealth (to boost income) were also among
the most frequently declared motives in countries of transition
economy.
In summary, research into the motives directing individuals into
an entrepreneurial life path (Gatewood et al., 1995; Carter et al.,
2003) most frequently cites four motives: personal wealth (opportunities to earn more), the need for independence, the need for
personal development, and the need for approval. Additionally,
there are observations that entrepreneurs tend to put their families
in second place behind the interests of the enterprise (Wärneryd,
1988). Thus, compared to employees, entrepreneurs tend to accept
longer work hours (Eden, 1973; Hammermesh, 1990; Chay, 1993).
On the other hand, work security seems to be a factor of special
interest to wage earners (Kolvereid, 1996).
Motivation is a significant factor in directing an individual into
an entrepreneurial life path. Yet, in order to choose such a path,
one must believe that it will allow the attainment of one’s goals.
As van Praag (1999) points out, several economists (e.g., Schumpeter, Knight, etc.) dealing with entrepreneurship have recognized
the role of uncertainty and self-confidence in entrepreneurship. For
example, Knight (1921) emphasized that people differ with respect
to self-confidence. He asserted that entrepreneurs must bear uncertainty, which permits no objective calculation of the probability of
success. Thus he felt that self-confidence differentiates individuals,
and in particular it distinguishes entrepreneurs from others.
Knight’s concept of self-confidence is closely related to selfefficacy, defined by Bandura (1994) as task-specific self-confidence.
Self-efficacy, according to Bandura, is based on past experience and
attainment. Achieving success helps build a sense of self-efficacy,
whereas failure, especially if it occurs before a sense of self-efficacy
has been established, undermines it. Thus, according to Bandura,
self-efficacy depends on personal experience. Another significant
source of one’s self-efficacy is vicarious experience – seeing others
similar to oneself succeeding in something.
In the light of Knight’s thesis, Chen et al. (1998) asked
entrepreneurs and managers to rate their confidence in dealing
with various types of tasks involved in running a business. It turned
out, that for some of these tasks entrepreneurs indeed had a higher
sense of self-efficacy than did non-entrepreneurs. Similarly, Macko
and Tyszka (2009) found that entrepreneurs showed a higher level
of self-efficacy than non-entrepreneurs.
In summary, the following picture of an entrepreneur emerges.
The choice of an entrepreneurial career is based above all on
motives related to independence, self-realization/achievement,
financial success, and perhaps social approval. These motives
should differentiate entrepreneurs from wage earners, for whom
motives related to job security and working time should be more
important. Moreover, entrepreneurs should reveal a higher level of
self-efficacy than wage earners.
1.2. How can radical systemic change in the economy affect the
motivation and beliefs of people with regard to engaging in
entrepreneurial activities?
To answer this question we followed the theoretical framework
of Shapero and Sokol (1982), according to which the individual’s
behavioral intention to start a business depends on two main factors: perceived feasibility and perceived desirability of starting a
business. Shapero and Sokol (1982) defined “perceived desirability”
as the personal attractiveness of starting a business, and “perceived
feasibility” as the perceived capability to create a new venture. With
regard to “perceived desirability,” Shapero and Sokol (1982) recognize two main factors playing a role in prompting an individual
to consider entrepreneurship as a life-path option: “negative displacement” and a “between-things” factor. We believe that both of
these factors were present during the period of systemic transformation in Poland. Together they resulted in a large number of new
businesses being undertaken by individuals.
“Negative displacements” concern externally imposed circumstances, which deflect individuals from their previous paths, who
thus have little or no choice but to start new businesses. This may be
the case with refugees or with employees who have been fired, but
also with managers who are bored with climbing up the corporate
career ladder. Shapero and Sokol (1982) quote numerous instances
of such cases. The radical systemic changes in Poland from 1989
onward affected hundreds of thousands of people, who lost their
jobs in state-owned enterprises, farms and institutions – jobs that
had brought less-than-satisfactory income, but were considered
secure. Many such individuals had no other choice but to start a
new business. We labelled them necessity-driven entrepreneurs. For
this group, job security became a motive of prime importance. For
people who lost jobs, opening a business of one’s own was often the
only chance to earn a living. They had no alternative if they wished
to attain an acceptable standard of living. It was crucial for them to
satisfy the needs that lie at the base of Maslow’s hierarchy.
Empirical studies, particularly those concentrating on the initial period of 1989–1993, have emphasized the importance of the
transition context for the decision to start one’s own business.
Indeed, this was the typical view of Polish entrepreneurs interviewed by Osborn and Slomczynski (2005). They stressed the role
of “Wind of history”, meaning the magnitude and the irreversibility
of the social change taking place. Shapero and Sokol (1982) speak
also of a “between-things” factor, which manifests itself in a situation when a certain period of life comes to a natural end (e.g.,
end of school, end of military service), thus necessitating a decision as to the next phase. We think that in Poland, apart from
necessity-driven entrepreneurs, there were certainly others who
decided to start their own businesses based upon other motives,
such as the need for independence and/or self-reliance. In particular, middle-aged managers who had experienced working in
the highly bureaucratic state-owned firms, where they had been
unable to express their views nor put into action their initiatives,
were motivated to start their own businesses. Finding themselves
“between systems,” they could feel compelled to change their lives
Please cite this article in press as: Tyszka, T., et al., Motivation, self-efficacy, and risk attitudes among entrepreneurs during transition to a market
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by an overwhelming sense of very substantial and irreversible
change taking place around them. Thus, we decided to follow the
distinction introduced by Reynolds et al. (2002) between opportunity and necessity entrepreneurship. They classified opportunity
and necessity entrepreneurship according to the declared motivation to start and grow business. Entrepreneurs indicated whether
they did it to “take advantage of a unique market opportunity”
(opportunity-driven entrepreneurs) or because “it was the best
option available” (necessity-driven entrepreneurs) (Reynolds et al.,
2002). Other researchers differentiated between opportunity and
necessity using slightly different criteria. For example, Block and
Wagner (2010) classified opportunity and necessity entrepreneurs
examining the circumstances under which the entrepreneur had
left his/her previous job as a paid employee. A person was classified as an opportunity entrepreneur if she/he had voluntary left
her/his paid job to set up a business or became an entrepreneur
after deliberately moving through several jobs to acquire all the
competencies considered relevant to starting her/his own business.
A person was classified as a necessity entrepreneur if she/he had
left her/his previous job involuntarily.
Some researchers claim that treating entrepreneurs as driven
entirely either by opportunity or by necessity motives is too simplistic. They point to the coexistence of both types of motivation
in most entrepreneurs (Aidis et al., 2006; Smallbone and Welter,
2004). For example, Williams (2008) found that entrepreneurs in
three different countries, one well-developed economy – the UK
and two transition economies – Ukraine and Russia, the most
often observed pattern of motivation involved opportunity and
necessity factors (in different proportions). Yet, results of the
study by Block and Wagner (2010) showed that the opportunity
entrepreneurs pursue more profitable opportunities than necessity entrepreneurs. Thus, we decided to distinguish between these
two categories of entrepreneurship.
The above considerations led us to formulate the following
hypothesis:
H1. Opportunity-driven entrepreneurs will be motivated more
strongly than either employees or necessity-driven entrepreneurs by
the need for independence and the need for achievement. On the other
hand, employees and necessity-driven entrepreneurs will be motivated
more strongly than opportunity-driven entrepreneurs by job security
and having more time for themselves and their families.
Regarding the perceived feasibility of creating a new venture,
Shapero and Sokol (1982) consider “positive pull” from the milieu
(family, peers, etc.) as a factor prompting an individual to consider entrepreneurship as a life-path option. In the early period of
transformation in Poland, a potential entrepreneur might observe a
growing number of entrepreneurial initiatives being undertaken by
his relatives, friends and co-workers. This experience might allay
the individual’s fear of business failure, increase his self-efficacy,
and bolster his intent to start his own business. Indeed, Shapero’s
model considers self-efficacy as a proxy for feasibility.
If Knight (1921) was correct in stating that self-confidence (selfefficacy) is the feature distinguishing entrepreneurs from others,
then we may formulate a hypothesis that:
H2a. Opportunity-driven entrepreneurs, but not necessity-driven
entrepreneurs, should show higher self-efficacy than employees.
Moreover, assuming that Bandura (1994) was right in that an
experience of success helps build a sense of self-efficacy, we may
surmise that in regions with higher numbers of enterprises, a higher
level of self-efficacy should be observed. Therefore, we formulate a
hypothesis that:
H2b. The higher the number of enterprises in a region, the higher the
level of self-efficacy among its inhabitants.
3
1.3. Entrepreneurial risk-taking
Both economic theory and every-day observation suggest that
risk-taking or risk-propensity is important aspects of running a
business. Mill (1848/1984) described the entrepreneur as a risktaker and captain of enterprise, and he emphasized risk-taking as a
feature differentiating an entrepreneur from a manager. Similarly,
risk is a business factor that is widely assumed in economic theory
to be a source of entrepreneurial profit. As Wärneryd (1988, p. 407)
put it, “. . . there seems to be general agreement that risk bearing is
a necessary . . . prerequisite for being called an entrepreneur.”
However, psychological studies are not yet conclusive on the
matter of entrepreneurs being more risk-prone than other people. Results are mixed. The two most frequently used measures of
risk-taking are the Kogan–Wallach Choice-Dilemma Questionnaire
(CDQ, Kogan and Wallach, 1964) and the risk-taking scale that is
included in the Jackson Personality Inventory (JPI, Jackson, 1976).
Using the CDQ, Brockhaus (1980) obtained no significant difference
between entrepreneurs and managers in risk-taking propensity. In
similar studies, no difference between start-up entrepreneurs and
managers was found by Brockhaus and Nord (1979), nor by Masters
and Meier (1988). On the other hand, in studies in which the JPI was
used, entrepreneurs generally turned out to be greater risk-takers,
as compared to non-entrepreneurs (Begley, 1995; Carland et al.,
1995; Stewart et al., 1999; see also the meta-analytic review in
Stewart and Roth, 2001).
Thus the question of whether entrepreneurs are more riskprone than other people still lacks a definitive answer. Moreover,
there is evidence that risk-taking is not a well-defined concept.
Firstly, an individual need not show the same risk-propensity
across various domains, such as finance and health. Keyes
(1985), who analyzed cases of individuals whose occupations are
commonly regarded as requiring risk-taking (e.g., gamblers, wirewalkers, entrepreneurs), concluded that they did not manifest a
generalized cross-situational propensity for risk-taking. In line with
this, Jackson et al. (1972) studied risk attitudes and posited a priori
that the concept of risk-taking comprises at least four dimensions:
(i) monetary, (ii) physical, (iii) social and (iv) ethical. Using selfreported attitudes toward risk-taking and measures of hypothetical
behavior in risky situations, the authors confirmed their proposed
four-dimensional model of risk propensity. Factor analysis revealed
a four-factor structure that corresponded to the four domains specified. Similar results were obtained by XXXX and XXXX (2004).
Secondly, various measures of risk attitude can be used. Perhaps the most straightforward is risk-taking behavior, i.e. observed
behavior in naturally occurring risky situations. Another measure
of risk preference is respondents’ declared behavior in hypothetical risky situations. Here a person declares what he or she would
do in a given situation. This type of measure is referred to as attitude toward risk. Other kinds of measures are also possible; for
example, Kogan and Wallach (1964) constructed a Choice-Dilemma
Questionnaire which asked individuals to indicate acceptable probabilities for choosing a risky option instead of a safe one. Overall,
research using various measures of risk preference (actual risk
behavior, declared behavior in hypothetical risky situations, etc.)
is inconclusive.
Macko and Tyszka (2009), in their research on entrepreneurial
risk-taking, found that in well-defined (laboratory) risky situations
entrepreneurs were not more risk-prone than non-entrepreneurs.
However, in naturalistic-business risky situations they found
more risky choices among entrepreneurs than among nonentrepreneurs. They concluded this study with the assertion:
Perhaps, like most humans, entrepreneurs try to avoid risks.
Risky ventures which they undertake outside the laboratory are
perhaps the result of a special motivation and/or a special perception of the risk involved in those ventures.
Please cite this article in press as: Tyszka, T., et al., Motivation, self-efficacy, and risk attitudes among entrepreneurs during transition to a market
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In line with this idea, we speculate that risk-proneness is not a
specific characteristic of entrepreneurs. On the contrary, willy-nilly,
entrepreneurs have to deal with risky situations (they simply face
them), so they cannot avoid undertaking risky activities in business (e.g., investing, taking out credit, etc.). As a result, even if they
prefer avoiding risky situations, they show more risky businessrelated activities than those who have decided to remain plain wage
earners. Thus, we formulate the hypothesis:
H3. Independent of the motivation for creating one’s own new business, those who have chosen an entrepreneurial career should show
more risky business-related activities than those who have decided to
remain wage earners.
2. Method
2.1. Sample
A sample of 117 entrepreneurs and 120 non-entrepreneurs, all
from eastern Poland’s Podlasie region, was used. All participants
were male in the age 30–60, almost equally distributed among the
three levels of education: below secondary, secondary education
and above secondary education, with a slight preponderance of
below secondary in the employee group. As to their income, all
participants were asked to indicate their income on a scale with
verbal instead of numerical labels, as respondents in Poland are
very unwilling to answer questions concerning their income. Half
of them declared average income, ca. 1/4 below the average, and
a 1/4 above the average; again with a slight preponderance of
“below average” in the employee group and “above average” in
entrepreneurial groups. The interpretation of “the average income”
was left up to the respondent.
The entrepreneurial groups were composed of the representatives of different kind of small businesses, with a preponderance of
the service sector (construction, hoteliers, craftsmen, shop-owners,
etc.). The non-entrepreneurial group was similar with respect to the
demographic characteristics of the entrepreneurial group, with the
sole difference being the type of employment. All came from three
communities differing in level of entrepreneurship (measured as
the number of registered firms per capita in the community). The
participants were a convenience sample.
2.2. Materials
2.2.1. Classification into 2 groups of entrepreneurs
In order to identify opportunity-driven vs. necessity-driven
entrepreneurs, the sample of entrepreneurs was asked two questions concerning their attachment to self-employment:
• How willing would you be to give up your business and start
working for somebody else if the income in the two places was
comparable?
• How willing would you be to close down your business if you
were guaranteed another source of income?
Subjects answered the above questions using a five-point scale
with “decisively no” corresponding to 1 and “decisively yes” corresponding to 5.
2.2.2. Motivation at work
The study considered several questions related to entrepreneurship. One of these was motivation at work. Six motives were chosen
for comparison: the need for independence, financial betterment,
achievement, job security, social recognition, and more time for
oneself and one’s family (a preference for shorter work hours).
These motives were chosen on the basis of their frequent occur-
rence in entrepreneurship-related literature. The motives were
organized as pairs, each motive being paired with all others, yielding a total of 15 pairs. The subject was asked to indicate which
motive in a given pair was more important to them at work.
2.2.3. Self-efficacy
Schwarzer’s and Jerusalem’s 10-item Generalized Self-Efficacy
Scale (Schwarzer and Jerusalem, 1995) was used as a measure of
self-efficacy. Some typical items are: Thanks to my resourcefulness, I
know how to handle unforeseen situations, and When I am confronted
with a problem, I can usually find several solutions. Using a four-point
scale, the subject indicates how true these statements are of him.
2.2.4. Risk attitudes
2.2.4.1. Self-reported risky financial behaviors. The questionnaire
was composed of 20 items representing risky economic behaviors with financial consequences: investments (e.g., buying shares
on the stock market), consumer behaviors (e.g., shopping on the
internet), gambling (e.g., gambling in a casino or in lotteries for
small stakes) and illegal activities (e.g., unjustified use of tax deductions, the offering of bribes). Participants estimated their behavior
frequencies on a five-point scale (1: never; 2: very seldom; 3: occasionally; 4: often; 5: always).
2.2.4.2. Quiz vs. sure payment. In order to have at least one direct
observation of actual risky behavior, the last question in the questionnaire involved the respondent choosing the preferred form of
payment. Participants could choose a payment of 20 PLN (zloty;
about $6 at the time of the study) or participation in a quiz with
5 questions on popular social and economic matters. Respondents
were informed that these questions were on average answered correctly by half of the subjects. Respondents would be paid 10 PLN
for each correct answer and could thus win between 0 and 50 PLN
for participating in the quiz
3. Results
First, we divided the sample of entrepreneurs into two subgroups based upon their answers to two questions concerning
the attachment to self-employment. The internal consistency
in answering these two questions was moderate (Cronbach’s
alpha = 0.626). We dichotomized the sample into two groups
according to the average score from the answers to the two questions. Those who scored up to the median (Me = 3.5) were classified
as opportunity-driven entrepreneurs (N = 64), the rest (N = 53) were
classified as necessity-driven entrepreneurs.
3.1. Motivation at work
Fig. 1 shows the relative importance of the six motives in the
two entrepreneur subgroups and in the group of employees. It
clearly shows that for the employee group two motives top the
hierarchy: job security and more time for self and family. The
same two motives dominate in the subgroup of necessity-driven
entrepreneurs. By contrast, in the subgroup of opportunity-driven
entrepreneurs most prominent is the need for independence.
To test Hypothesis 1, one-way ANOVAs for importance of the
four motives in the three employment groups were conducted. The
test revealed significant differences between the three groups with
regard to the need for independence (F(2,234) = 12.874, p < 0.001),
the need for achievement (F(2,234) = 3.398, p < 0.05), and job security (F(2,234) = 13.635, p < 0.001). As predicted by our Hypothesis
1, opportunity-driven entrepreneurs attributed higher importance either employees or necessity-driven entrepreneurs to the
need for independence (t(182) = 4.966, p < 0.001 and t(115) = 1.643,
p = 0.10, respectively) and for achievement (t(182) = 2.348, p < 0.05
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Motivation, self-efficacy, and risk attitudes among entrepreneurs during transition to a market economy
5
entrepreneurs opportunity driven
entrepreneurs necessity driven
employees
4
3,59
3,49
3,20
3
3,13
3,09
2,83
2,01
2
2,24
2,89
2,34
2,24
2,23
2,37
2,27
2,26
1,52
1,80
1,47
1
0
need for
independence
personal wealth
(earning more
money)
need for
achievement
need for social
approval
more time for
self and family
job security
Fig. 1. The relative importance of the six motives at work in two entrepreneur subgroups and in the group of employees.
and t(115) = 2.157, p < 0.05, respectively). On the other hand,
opportunity-driven entrepreneurs attributed lower importance
than either employees or necessity-driven entrepreneurs to job
security (t(102.8) = 4.866, p < 0.001 and t(115) = 2.448, p < 0.05,
respectively). The three groups did not differ in rating the importance of earning more money, the need for social approval, nor in
having more time for self and family.
3.2. Self-efficacy
Fig. 2 shows the average self-efficacy scores for the three
groups of subjects tested: opportunity-driven entrepreneurs,
necessity-driven entrepreneurs, and employees. Opportunitydriven entrepreneurs showed higher self-efficacy levels than both
3,5
3,23
3,10
3,21
opportunity-driven
entrepreneurs
necessity-driven
entrepreneurs
employees
necessity-driven entrepreneurs and employees. A 3 (groups) × 3
(regions) ANOVA test on self-efficacy scores yielded, in agreement with Hypothesis 2a, a group effect (F(2,228) = 4.753, p < 0.01).
Moreover, a t-test revealed significant differences between
opportunity-driven entrepreneurs and employees (t(182) = 2.898,
p < 0.01), as well as between opportunity-driven and necessitydriven entrepreneurs (t(115) = 2.816, p < 0.01), while none between
necessity-driven entrepreneurs and employees.
Our two-way ANOVA also yielded a statistical trend on regional
effect (F(2,228) = 2.951, p = 0.054). As shown in Fig. 3, not only did
entrepreneurs as a group show a higher self-efficacy level than
employees, but also self-efficacy level differed by region. Higher
self-efficacy levels were observed among inhabitants of regions
with more numerous enterprises (Augustów being the region with
the highest number of enterprises, and Tykocin that with the
lowest). This supports our Hypothesis 2b, that a higher level of
entrepreneurship in a region leads to increased self-efficacy.
2,0
3,12
3,07
3,05
3
1,57
2,90
2,95
2,81
1,48
1,5
1,21
1,0
2,5
Augustów
Nowogród
Tykocin
Fig. 2. The average self-efficacy scores, in three Polish geographical municipalities, for the three groups of subjects tested: opportunity-driven entrepreneurs,
necessity-driven entrepreneurs, and employees.
opportunity-driven
entrepreneurs
necessity-driven
entrepreneurs
employees
Fig. 3. The average of scores of risky investment activities (based upon a 5-item
scale) among the three groups of subjects tested.
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Fig. 4. The percentage of subjects who chose the quiz option over sure payment.
3.3. Risk attitudes
The 20-item scale of self-reported risky financial behaviors
showed moderate internal consistency (Cronbach’s alpha = 0.725).
Additionally, we divided the scale into two sub-scales: a 5-item
scale of investment activities (e.g., Do you often purchase shares on
the stock market? Cronbach’s alpha = 0.718), and a 14-item scale of
other risky financial behaviors in non-investment activities (e.g.,
Do you purchase goods via the internet? Cronbach’s alpha = 0.702).
Applying a simple ANOVA test to the scores of self-reported
risky financial behaviors among the three groups of subjects tested – opportunity-driven entrepreneurs, necessity-driven
entrepreneurs, and employees – we found a statistical trend
(F(2,234) = 2.704, p < 0.07). However, a simple ANOVA test of
the scores in the two sub-scales of self-reported risky financial behaviors showed that a significant effect only pertains
to investment activities (F(2,234) = 11.130, p < 0.001) while not
to other risky financial activities (F(2,234) = 0.465, p = 0.629).
As shown in Fig. 3, both opportunity-driven and necessitydriven entrepreneurs reported more risky investment activities
than employees (t(91.36) = 3.845, p < 0.001 and t(84.36) = 3.275,
p < 0.01, respectively). No significant effect has been found
between opportunity-driven entrepreneurs vs. necessity-driven
entrepreneurs.
Fig. 4 shows the percentage of subjects who chose the quiz
over sure payment, among the three groups of subjects tested.
The differences presented in Fig. 4 proved not to be significant, by
chi-square test, neither for the pair employees vs. necessity-driven
entrepreneurs nor for the pair employees vs. opportunity-driven
entrepreneurs. Thus the hypothesis that those subjects who had
chosen an entrepreneurial career were more risk-prone than those
who had remained wage earners was not borne out.
4. Discussion
4.1. Motives
Three motives are most frequently mentioned as factors that
direct individuals onto an entrepreneurial life path: the desire
for personal wealth, the need for independence, and the need
for achievement. This seems to be a feature of entrepreneurship
in highly developed countries. Our study was set in a country with an economy in transition and a relatively low GDP per
capita. According to the Global Entrepreneurship Project (Acs et al.,
2005), there is a U-shaped relation between the level of early
stage entrepreneurial-activity rates and the level of economic
development. High rates of early stage entrepreneurial activity in
low-income countries reflect the prevalence of necessity-driven
entrepreneurship due to a dearth of employment opportunities. With the establishment of an industrial base, the level of
entrepreneurial activity declines as more people are able to find
employment. It begins to grow again in highly developed countries,
reflecting increased interest in opportunity-driven entrepreneurship. What is the impact of this process on entrepreneurial
motivation?
Our results show that motivational profiles of necessity-driven
and opportunity-driven entrepreneurs differ substantially. The
motivational profile of the necessity-driven entrepreneurs is rather
close to that of wage earners. In both these groups, the motives of
job security and of having more time for oneself and for family
were shown to be of highest importance. On the other hand, in the
group of opportunity-driven entrepreneurs the needs for independence and for achievement proved to be more important motives
while job security less important than in the other two groups. This
profile is in accordance with findings from countries with developed market economies (Scheinberg and MacMillan, 1988; Birley
and Westhead, 1994). Thus, we may conclude that even in such a
specific environment as a society adapting to a market economy,
there exist individuals who begin their entrepreneurial activity,
motivated by the needs for independence and for achievement.
Regardless of the environment, these two motives seem to play a
decisive role in some individuals becoming entrepreneurs. Indeed,
as portrayed by Osborn and Slomczynski (2005), such a group has
survived in Poland, in spite of the Soviet-style economy with its
harsh constraints on the availability of industrial supplies, with its
fiscal legislation unfavorable to private businesses, etc.
4.2. Self-efficacy
In accordance with expectations, entrepreneurs as a group
showed a higher level of self-efficacy than non-entrepreneurs. It
is even more notable that compared to employees, the level of
self-efficacy is higher only in the subgroup of opportunity-driven
entrepreneurs, but not the necessity-driven ones, whose choice of
an entrepreneurial career was presumably caused by externally
imposed circumstances. This is in line with Knight’s assertion that
self-confidence is a trait that distinguishes entrepreneurs from
other people. Our results are also in agreement with several other
research studies. Some show that self-efficacy differentiates business founders from non-founders (e.g., Chen et al., 1998). Others
show that more self-confident founders achieved greater growth
of new ventures (Baum and Locke, 2004).
Our results support the hypothesis that a higher level of
entrepreneurship in a geographical region leads to increased selfefficacy. Such results seem to be in accord with Bandura’s (1994)
assertions concerning how the belief in one’s efficacy could be
developed. The most effective way is through an experience of
mastery. Experiencing successes raises one’s sense of self-efficacy,
while experiencing failures lowers it. However, a sense of selfefficacy may also be experienced vicariously. Seeing someone
succeed at something increases one’s belief in efficacy, and the
opposite happens upon seeing someone fail. The effectiveness of
this process depends on the degree of similarity between the
observer and the observed model. The observer’s self-efficacy will
very likely increase if he observes the success of a peer who is
perceived as having similar ability. Such a source of increased selfefficacy offers a very plausible explanation of our result. In regions
with higher levels of entrepreneurship, belief in self-efficacy most
likely increases through the observation of many persons with generated in this manner is likely to be strengthened later by successes
experienced in running one’s own business. It could be further
Please cite this article in press as: Tyszka, T., et al., Motivation, self-efficacy, and risk attitudes among entrepreneurs during transition to a market
economy. J. Socio-Econ. (2011), doi:10.1016/j.socec.2011.01.011
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strengthened by seeing fatigue and other stress reactions as a normal part of the professional routine, rather than treating them
as an indication of entrepreneurial inability. Finally, self-efficacy
can be additionally strengthened through social encouragement
and persuasion. (This is, according to Bandura, yet another factor
affecting a person’s beliefs about self-efficacy.) Our result suggests
that programs aimed at stimulating entrepreneurship should not
only provide training in the necessary technical skills for running a
business, but also provide examples of successful entrepreneurial
activity in one’s social environment.
4.3. Risk-taking
As was the case in many earlier studies, we found no support for
the claim that entrepreneurs are generally more risk-prone than
wage earners. In particular, entrepreneurs did not choose the quiz
option over a smaller yet sure payoff more often than employees.
On the other hand, we did find that entrepreneurs reported more
everyday risky investment activities than wage earners. How to
interpret this finding?
We tend to conclude that, in terms of risk attitudes,
entrepreneurs are no different than other people. Perhaps, like
the majority of humans, and in line with the prospect theory of
Kahneman and Tversky (1979), entrepreneurs prefer to avoid risks.
The commonplace assumption that entrepreneurs are risk-takers
may stem from the fact that for an external observer, unfamiliar
with the field of business, the entrepreneur’s actions – e.g., putting
money into a business that could fail – might appear extremely
risky. Such an impression could simply result from a lack of knowledge and competence in the business field. Likewise, an external
observer commonly perceives the job of a wirewalker as extremely
risky, though wirewalkers may not consider it so, as shown in a
statement of a wirewalker quoted by Keyes (1985, p. 10):
“You can’t be both a risk taker and a wire walker. I take absolutely no risks?”.
However, there are situations when entrepreneurs do have
to take risks. These are business-specific risky situations such
as investing and taking out credit. As asserted by Macko and
Tyszka (2009), in such situations entrepreneurs may use simple rules of thumb, accepted in their milieu. These rules have to
permit risk-taking in certain specified circumstances, as otherwise no business could be run. For example, one cannot run a
business if he avoids investing money into a business that may
fail. Thus, in risky business situations, entrepreneurs would more
frequently, as compared to employees, choose risky options. However, it should not be attributed to high risk-proneness among
entrepreneurs. We rather think that risky ventures undertaken by
entrepreneurs are unavoidable (though undesirable) consequences
of the entrepreneurial life path, regardless of the motivation behind
choosing such a way: a life necessity or the need for independence,
etc. This explanation is in line with two of our findings. First, we
found no difference between entrepreneurs and wage earners in
everyday risky activities, but did find one in the reported frequency
of risky investment activities. Second, we found a significant difference in the reported frequency of risky investment activities
not only between the opportunity-driven entrepreneurs and wage
earners, but also between the necessity-driven entrepreneurs and
wage earners.
In summary, we believe that our understanding of riskproneness as not being a characteristic specific to entrepreneurs,
but that the fact of being an entrepreneur brings along with it
increased risky activities in business, could explain the differing
results obtained in various studies concerning entrepreneurs’ risk
attitudes. Generally, when the Kogan–Wallach Choice-Dilemma
Questionnaire has been used in research, no difference was
7
found between entrepreneurs and non-entrepreneurs. The probable reason for this is that in Kogan and Wallach’s questionnaire,
individuals are asked to indicate acceptable probabilities for taking
part in abstract lotteries. Thus this task is unrelated to a business
environment. On the other hand, in research where the Jackson
Personality Inventory has been used, entrepreneurs have shown a
higher level of risk-taking than non-entrepreneurs. This inventory,
in contrast to the Choice-Dilemma Questionnaire, is composed of
items that directly pertain to business decision-making (e.g., If the
possible reward was very high, I would not hesitate putting my money
into a new business that could fail; or, I probably would not take a
chance of borrowing money in a new business deal even if it might
be profitable). In tasks like these, entrepreneurs can show a higher
level of risk-taking simply by following rules of thumb accepted in
their milieu.
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