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Management Decision

Challenges in measuring readiness for entrepreneurship

Jesus Ruiz Domingo Ribeiro Soriano Alicia Coduras
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Challenges in measuring readiness for entrepreneurship


Entrepreneurship continues to evolve as a key driver of innovation and job creation. Since the
late nineties, many elements have shaped this progress, exerting a major influence on the
academic entrepreneurship literature. Establishment of the Global Entrepreneurship Monitor
(GEM) and parallel initiatives has enabled measurement and characterization of
entrepreneurship on an international level.

The data collected in various studies (PSED, GEM and other particular investigations) carried
out by several authors and institutions cited in this research have allowed the study of many
facets of the entrepreneurial phenomenon. Scholars have made great progress defining
entrepreneurial activity and its variations (Harding, 2004; Davidsson, 2005; Koellinger, Minniti
and Schade 2007; Bager et al. 2010, Anokhin and Wincent, 2012). Researchers have studied the
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relationship between entrepreneurship and economic development (Acs and Szerb, 2007, Acs,
2007), and have investigated entrepreneurial values, attitudes and aspirations (Arenius and
Minniti, 2005; Hessels, Van Gelderen and Thurik, 2008; Bosma and Schutjens 2009; Evald et
al. 2011). Finally, a popular stream of literature addresses national entrepreneurial framework
conditions (Bowen and De Clercq 2008; Hechavarria and Reynolds, 2009; Estrin and
Mickiewicz, 2011; Estrin et al. 2012). Scholars have also addressed many other
entrepreneurship topics. One of the numerous challenges yet to receive significant attention in
the literature reflects the subject of this article; namely, measuring and quantify readiness for

Performing this type of measurement matters in contexts where fostering qualified

entrepreneurship is a priority. Practical applications of such measurements are numerous:
measuring students entrepreneurial orientation; investors (e.g., business angels or venture
capitalists) evaluation of entrepreneurial projects; granting bank credit or public funding;
offering unemployed people training in entrepreneurship; conducting research on the influence
of readiness for entrepreneurship on startup success or failure; and so forth.

Measuring readiness for entrepreneurship poses many challenges that should be addressed from
a multidisciplinary perspective. Thus, designers of a tool to perform this task must consider
numerous entrepreneurial profiles, as well as a wide range of psychological determinants. In
addition, designers of a tool of this type must resolve a lack of consensus on defining main
entrepreneurship concepts. Consequently, the approach must be grounded in a careful study in
several steps, the first of which must establish the meaning of readiness for entrepreneurship
and must identify the factors that determine this concept.

This paper establishes a theoretical framework to develop a tool for measuring readiness for
entrepreneurship. To do so, we addressed the research questions in Figure 1. The logic flow
described in Figure 1 indicates necessary steps to measure individuals entrepreneurial
readiness. We first defined the framework within which measurement should take place. Then,
we established the action for which individuals require this ability. Lastly, we defined this
ability, factors that determine this ability, and components required for its measurement.

In the following sections, we respond to all questions in Figure 1 by formulating proposals.
These proposals are based upon a comprehensive literature review.

1. What is entrepreneurship?


Originally, entrepreneurship was linked to new business creation. Nowadays, entrepreneurship

and entrepreneurial orientation represent broader concepts that embody different
conceptualizations depending on processes, practices, and decisions underlying entrepreneurial
actions. Thus, McDougall and Oviatt (2000:903) pointed out that Entrepreneurship is an
activity and the attributes that establish this type of activity.

Entrepreneurship and entrepreneurial activity have become essential for measuring progress,
quality, and future expectations of any sector, economy, or nation. They currently play a
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relevant role for economic development, which is why SME creation is crucial to establishing a
solid economic base (Goedhuys and Sleuwaegen, 2000). Entrepreneurships relevance,
however, is not restricted to SMEs and encompasses large companies and public administration
too. Furthermore, by helping to promote competitiveness and globalization, entrepreneurship
exerts an influence that extends beyond local markets to national and international markets.

Entrepreneurs act as catalysts for new economic activity. Business creation requires innovation,
which leads to job creation, wealth creation, and growth. Business creation contributes to
competition in developed economies and ensures social welfare in developing countries.
Imparting entrepreneurial knowledge is therefore vital to ensure progress in this scientific field
(Deakins et al., 2005).

Under Kuhns (1962) definition of a paradigm, the study of organizations is multiparadigmatic

(Fabian, 2000). Scholars have shown these paradigms to be incommensurable (Burrell, 1999;
Clarke and Clegg, 2000). We may therefore reasonably assume the existence of multiple
classifications for entrepreneurship.

Scientific field

The entrepreneurship research field has grown in recent decades (Cuervo, 2005). Research on
Entrepreneurship began after Professor Myles Mace used the term while teaching at Harvard
University in 1947 (Brush et al, 2003: 310). This event marked the beginning of the scientific
treatment of this discipline. Initial works were collated by Harvard Studies in Business History,
Journal of Business and Economics History, and Explorations in Entrepreneurial History. The
initial process culminated in 1958 with the creation of the Harvard Research Center in
Entrepreneurial History, managed by Arthur H. Cole.

Table 1 provides a timeline showing key developments in this scientific field. The United States
has played, and continues to play, a key role in entrepreneurship research. The USA was the
birthplace of entrepreneurship research, and later built a framework for its dissemination. Since
the mid-eighties, international business journals have incorporated entrepreneurship research
into their publications to a remarkable degree. Specific works and monographs have appeared in
major management journals such as Strategic Management Journal and Journal of Management
(Audretsch et al., 2005), Academy of Management Journal, Journal of International Marketing
(Coviello and Jones, 2004, p. 489) and Management Decision (Audretsch, 2012).

Recent years have seen the launch of new international journals whose main theme is
entrepreneurship, with the most notable journals listed in Table 1. Finally, conferences and
congresses have contributed heavily to the progress of this scientific field by creating discussion
forums, meeting places, and platforms for dissemination of results.

International publications containing the word entrepreneurship in their titles are numerous, and
demonstrate the breadth and multidisciplinary nature of this scientific field. Scholars have
studied entrepreneurship from various perspectives including business, management,
entrepreneurial orientation and processes, entrepreneurial leadership, and corporate
entrepreneurship. All approaches contribute to determining what constitutes entrepreneurship
and hence entrepreneurial behavior. Consequently, defining the field of entrepreneurship is
complex because of its close relation to other fields. Differentiating entrepreneurship from other
fields depends on the topic, project, and research questions (Bruyat and Julien, 2000, p. 172).

Busenitz et al. (2003, p. 286) described entrepreneurship as a field of study within the
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management area. Conversely, Hitt et al. (2001, p. 480) reported that the fields of
entrepreneurship and strategic management have been developed independently of each other.
Bruyat and Julien (2000, p. 172), in contrast, claimed that the field of small business and
innovation in strategic direction is closely related to entrepreneurship. Regardless of these
differing views, our aim is not to determine whether entrepreneurship began as a discipline in
management or business strategy, nor whether it is a field created by authors and researchers
unable to frame their works elsewhere (Shane and Venkataraman, 2000; Shane and
Venkataraman, 2001). Instead, we wish to delimit the scope of entrepreneurship to establish a
framework for measuring readiness for entrepreneurship. Of the numerous theories that define
entrepreneurship as a scientific field, we have selected those attributed to Busenitz et al. (2003,
p. 296-297), Brush et al. (2003, p. 312), and Veciana (2007), who scientifically analyzed
entrepreneurship and the concept of the entrepreneur. Tables 2 and 3 summarize these authors

Entrepreneurship and businesses

What makes an entrepreneur and what is entrepreneurship? These questions remain the subject
of continuous debate (Casson, 2005). For Cuervo et al. (2007) entrepreneurs main activity is
business creation, which can be studied on two levels: individual (including psychological
characteristics and non-psychological social characteristics) and environmental (specific and
general contexts). The individual level captures personal psychological characteristics to explain
entrepreneurial individuals nature. Characteristics of these individuals are a need for
achievement, controllability, power, tolerance for ambiguity, independence, and propensity for
risk taking. This level also considers non-psychological social variables such as education and
training, experience, professional network, and family background. The environmental
perspective encompasses variables that describe the general context. Such variables include
economic climate, market dimensions, availability of financing resources, taxes and
bureaucracy, regulatory framework, R&D transfer system, and sociocultural and institutional
background. The specific context view places emphasis on analyzing variables to do with
sector: productive processes configuration, technological changes, and the spatial dimension
(clusters and agglomeration economies). These two perspectives can be considered the pillars to

explaining entrepreneurial activity. According to Eckhardt and Shane (2003), they are not
mutually exclusive.

Lee and Peterson (2000:402) explained that entrepreneurship is generally defined as the process
of new firm creation. Previous definitions nevertheless highlight other defining characteristics.
Thus, Stevenson and Jarillo (1990:23) defined entrepreneurship as the process by which
individualsboth on their own and within an organizationpursue opportunities. This vision
facilitated the introduction of corporate entrepreneurship as a scientific research field. Timmons
(1994:7) described entrepreneurship as the process of creating or seeking an opportunity and
pursuing it regardless of available resources. McDougall and Oviatt (1997:293) defined
entrepreneurship as new innovative activities whose main objective is to create value and grow
business opportunities. Ultimately, following Schumpeters economic view, entrepreneurial
behavior is the search for growth through innovation, technology, or management, finding
opportunities through specific business structures or otherwise. These ideas are the essence of
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both individual and corporate entrepreneurship.

More research is needed at all levels on how the entrepreneurship process unfolds and brings
about successful exploitation of opportunities. Certainly, however, the three aspects mentioned
aboveopportunity identification, desire to search, and confidence in chances of successare
key components in the process. Research in many fields sheds light on the entrepreneurship
process, but many questions remain unanswered.

So many definitions of entrepreneurship exist because the entrepreneurial process involves

several concepts: identification and evaluation of opportunities (Amit and Muller, 1995),
decision on how to exploit or sell these opportunities, attracting and securing resources,
designing strategies, and organizing new business projects (Eckhardt and Shane, 2003). Hence,
entrepreneurship often appears under the guises of entrepreneurial factor, entrepreneurial
function, entrepreneurial behavior, entrepreneurial initiative, and even entrepreneurial spirit.
First, the entrepreneurial factor embodies new production factors that differ from classical
production factors of land, labor, and capital. which forces to explain its remuneration through
the entrepreneurs income linked to the shortage of people with readiness for entrepreneurship.
Second, entrepreneurship is the discovery and exploitation of opportunities, and business
creation. Third, entrepreneurial behavior refers to the skills needed to combine innovation, risk
taking, and proactivity (Miller, 1983). Fourth, entrepreneurial initiative covers creation, risk
taking, renewal, and innovation. Entrepreneurial initiative may arise within or outside an
existing organization because entrepreneurial initiative involves the ability to anticipate market
imperfections correctly and the capacity to utilize innovation to create a new combination of
products and approach to markets. Finally, what most characterizes the entrepreneurial spirit is
opportunities exploitation (more prevalent among managers) fostering exploration, search for
new opportunities, and innovation (more prevalent among potential entrepreneurs).

Conceptual delimitation

Language poses major problems for entrepreneurship scholars. Thus, whereas the terms
entrepreneurship and independent entrepreneurship describe efforts of individuals who operate
outside an existing organization, several terms are employed to describe efforts of individuals
who operate within an existing organization. Such terms include corporate entrepreneurship,
new corporate venturing, intrapreneurship, internal entrepreneurship, strategic renewal, and
new corporate activities. In the seventies, the concept of entrepreneurship meant the creation of

new business lines to commercialize innovative products or services whose production or
realization required new equipment, teams, or knowledge (Von Hippel, 1977:163; Biggadike,
1979:104). This definition, however, has evolved towards a broader concept that includes the
startup and consolidation phases (three and a half years) of any type of business, with or without
an innovative component, run either independently or within an existing firm (Reynolds, Hay,
Camp, 1999). The current definition of entrepreneurshipthe broadest and most complete to
dateis that which appeared in the first GEM Global Report in 1999 by Reynolds et al. (1999):

Any attempt at new business or new venture creation, such as self-employment,

a new business organization, or the expansion of an existing business, by an
individual, a team of individuals, or an established business.

From 1999 onwards, new considerations deriving from modern entrepreneurship have
demonstrated that there is still room for this definition to grow. Thus, although entrepreneurship
seems to represent a single concept, societies are evolving towards developing an
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entrepreneurial spirit. The concept hence extends beyond the frontier of business creation,
embracing areas such as work organization, strategic design, management, human resources
practice, and, ultimately, implementation of entrepreneurial spirit in any type of activity.

This paper develops a framework to measure readiness for entrepreneurship, and so it is

necessary to consider a wider definition of entrepreneurship that incorporates this recent
perspective. We thus formulate our first research proposition as follows:

Proposition 1:

Q1. What is entrepreneurship?

With the aim of creating a theoretical framework to measure readiness for entrepreneurship, we
define entrepreneurship as follows:

Entrepreneurship means an undertaking by an individual, a team of individuals, or an

established private or public entity in any of the following activities or areas. Any attempt at
new business or new venture creation such as self-employment, founding a new business
organization, or expanding an existing business. Any attempt at creating a new public initiative
such as a new public organism, or expanding an existing organism. Any attempt at innovation,
such as launching new products or services, new strategic development, new organization of
resources (including human), entering new markets (including internationalization), creating
new sectors, social development, or any other action that adds economic or social value.

The scope of this definition allows us to measure readiness for entrepreneurship in areas besides
capacities, knowledge, and skills needed to create new firms. The definitions scope is relevant.
It permits the inclusion of new facets never considered in entrepreneurship research. This allows
us to build a measurement tool able to establish individuals profiles. We can then use this data
to calculate these individuals readiness for entrepreneurship, and locate where these aspects of
their personalities reside.

Two further questions arise:

Q1.1. Is entrepreneurship a single concept or are there different types or categories?

Q1.2. If there are different types, what are these types and how can they be classified?

We therefore conclude that entrepreneurship is a single concept, albeit complex and dynamic.
Entrepreneurship comprises aspects that enable discussion about specific branches of
entrepreneurial activity such as independent or internal entrepreneurial activity, opportunity or
necessity entrepreneurial activity, entrepreneurial activity with or without innovative
components, and many more. Thus, one view is to consider the concept as a whole; another
view is to consider only its output or entrepreneurial activity, which can be categorized into
several types. These types are based on concepts like context, motivation, innovation, job
generation, and competition.

2. What do academics understand by entrepreneurial action?

Following the discussion in the previous section, three fundamental reasons explain the
emergence of entrepreneurial activity. First, entrepreneurial action is triggered by attributes
inherent to humans such as achievement needs (McClelland, 1961), aim to confront uncertainty
(Kihlstrom and Laffont, 1979), risk acceptance, and others. These attributes differentiate
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entrepreneurs from other individuals in society. The second reason relates to economic
environment factors such as market dimension, technological change dynamics (Tushman and
Anderson, 1986), regulatory and demographic market structure (Acs and Audretsch, 1990) or
simple industrial dynamics. The third reason is linked to institutions, and cultural and social
norms (North, 1990, 2005).

Thus, entrepreneurship is not only linked to birth of organizations (Gartner et al., 1988) or self-
employment (Reynolds, 1991). According to research conducted by McClelland (1961) and
later by Stevenson (1990) entrepreneurship also embraces everything that allows proper
operation and development to add value to society. Stevenson and Jarillo (1990) reported that
entrepreneurship is not only a way to start new businesses, but that entrepreneurial management
is a way of managing different from the traditional direction. Entrepreneurial managers seek
ways of making their organizations entrepreneurial in several ways, although they are limited-
for strategic guidance for remuneration or incentive systems (Brown et al., 2001).

Furthermore, Barringer and Bluedorn (1999) highlighted a positive relationship between a

companys corporate entrepreneurship intensity and proper strategic analysis. In short,
entrepreneurs perform three basic functions essential to any enterprise: capitalist or financial
functions, policy functions, and stimulus functions fostering the implication of different types of
stakeholders and employees if they are (Guzmn and Santos, 2001).

From the perspective of readiness for entrepreneurship measurement, therefore, it is essential to

consider the existence of self-employees, owners of large and small businesses, and
entrepreneurial employees within organizations. For companies of all sizes to thrive in
competitive environments, entrepreneurial attitudes and behaviors are needed for several
reasons. Entrepreneurial attitudes and behaviors contribute to company survival and
performance (Covin and Slevin, 1989; Lyon et al, 2000), enable understanding and adequate
management of companies; yield economic development, create wealth (Lounsbury and Glynn,
2001), and stimulate economic growth (Begley and Tan, 2001, Thomas and Mueller, 2000;
Zahra, 1991, 1993). Thus, Hitt et al. (2001:488) found that companies need to be both strategic
and entrepreneurial. Entrepreneurship is not linked to an organizations size or age.
Generalizations about these issues are impossible because differences in background, culture,
and political or economic systems prevent conventional theories from explaining effects and
observed behaviors (Herron and Sapienza, 1992; Lee and Tsang, 2001; Zafirovski, 1999). That

is, entrepreneurs and the processes they engage in to start new ventures vary depending on
business line, region, and entrepreneurs origin (Littunen, 2000).

The above discussion leads to the second proposition, which defines entrepreneurial action so
that we may measure readiness for entrepreneurship.

Proposition 2:

Q2. What do academics understand by entrepreneurial action?

An entrepreneurial action is any initiative by an individual or team of individuals who pursue

the creation or development of a new business, enterprise, self-employment, or project in any
private or public sector, or the improvement or progress of strategy, organization, financing,
motivation, diversification, or any other aspect of development and management of a firm,
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organization or existing entity.

Two further questions arise:

Q2.1. Are there different types of entrepreneurial actions?

Regard this one, the answer is yes, evidence suggests that there are different types of
entrepreneurial actions.

Q2.2. If there are different types, what are these types and how can they be classified?

The proposed definition of entrepreneurial action is so broad that it suggests the existence of
numerous types of actions. Their identification and classification is outside the scope of this
research. The literature nevertheless indicates at least three groups of factors that determine
these actions, so we can cite some examples. Examples of entrepreneurial actions derived from
human attributes are perceiving an opportunity, producing an idea, seeking information, taking
on risk to start a business or project, persuading others to participate or adopt an idea, pursuing
financing, and searching for a location. Examples of entrepreneurial actions derived from
context are innovating to compete, looking for new markets or niches, internationalization,
developing new strategies, implementing human resources practices, adopting technological
changes, and developing new technologies. Finally, from an institutional perspective,
entrepreneurial actions include changing the regulatory framework to foster entrepreneurship,
developing programs to facilitate women or youth integration into entrepreneurial processes,
introducing entrepreneurial education and training into the educational system, and promoting
tax benefits for informal investors. Ultimately, entrepreneurial actions can be classified
depending on scope, team, motivation, subject, and other criteria.

3. How can we define readiness for entrepreneurship?

In light of the literature review and our research aims, the following proposition defines
readiness for entrepreneurship of a person:

Proposition 3:

The readiness for entrepreneurship of individuals is defined as the confluence of a set of

personal traits (or features) that distinguish individuals with readiness for entrepreneurship as

especially competent to observe and analyze their environment in such a way that they channel
their high creative and productive potential so they may deploy their capability to dare and
need for self-achievement.

Further questions arise:

Q3.1. Can we build a single definition?

Q3.2. If so, what elements must the method capture to measure this concept?

We conclude that building a single definition is possible despite the complexity of the concept
of readiness for entrepreneurship. This single definition is essential for measuring readiness for
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entrepreneurship. Measuring a poorly defined concept would be impossible. Another issue is

deciding which elements should appear simultaneously in the scale to capture a persons
readiness for entrepreneurship. We discuss this challenge in the next section to complete the
theoretical framework, showing that different groups of elements configure individuals
readiness for entrepreneurship: personal characteristics, economic conditions, and a large set of
psychological traits.

4. What factors determine the readiness of a person for entrepreneurship?

As a complex concept, entrepreneurship has an equally complex definition. Features that

determine peoples readiness for entrepreneurship are therefore numerous and diverse. Main
factors can nevertheless be identified from three areas of knowledge:

1. Sociology
2. Psychology
3. Business management

In the following subsections, we explain each areas contribution.

Sociologys contribution

Several studies have demonstrated that sociological variables have some influence on
entrepreneurial actions. These variables are therefore relevant when measuring peoples
readiness for entrepreneurship. Key sociological variables are gender (e.g., Sexton and
Bowman, 1990; Bruni et al., 2004; Minniti and Nardone, 2007), age (Davidsson and Honig,
2003; Arenius and Minniti, 2005), origin (Portes et al., 2002), habitat (Lafuente et al., 2007),
educational level (Pittaway and Cope, 2007), income level (Acs, 2007; Van Stel et al., 2007),
entrepreneurial antecedents (Krueger and Brazeal, 1994), and work-status (Arenius and Minniti,

Psychologys contribution

According to Rauch and Frese (2000), all aspects of psychology are essentially involved in
determining an entrepreneurs profile. Psychological approaches to entrepreneurship have
recently experienced a revival because they straddle the border between work, organizational,
and market psychology. Nevertheless, although psychologists accept that entrepreneurial

behavior is a product of several influences, in psychological terms key determinants are
personality traits. In other words, exponents of psychological approaches deem that
entrepreneurs possess traits that predispose them to act entrepreneurially. Hence, the
relationship between personality traits and entrepreneurial behavior has often been analyzed
thus in research on entrepreneurship. Undoubtedly, however, the literature reveals some
skepticism from scholars about the strength of this relationship. Although some authors have
reported a positive relationship between personality traits and entrepreneurship (Chell, Haworth,
& Brearley, 1991; Rauch & Frese, 2000), other studies have failed to show the existence of such
a relationship (Brockhaus & Horwitz, 1986; Gartner, 1988; Low & MacMillan, 1988). Recent
meta-analysis has provided evidence for the predictive validity of personality traits (Collins,
Hanges, & Locke, 2004; Rauch & Frese, 2007, Stewart & Roth, 2001, 2004, Zhao & Seibert,
2006), suggesting the identification of contingencies that may affect the magnitude of this
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Assuming the existence of a relationship between personality traits and entrepreneurial

behavior, the next step is to identify those personality traits. A review of the literature yields a
large number of personality traits related to entrepreneurship. Hornaday (1982), for example,
listed 42 traits associated with entrepreneurial personality, bringing into question whether any
individual really possesses all the traits associated with entrepreneurship. Therefore, for
practical reasons, we admitted only traits supported by strong scientific arguments.

Fortunately, literature is converging towards a specific group of traits upon which almost all
researchers agree to some degree. Thus, considering the works of representative authors (Covin
& Slevin, 1989; Cromie, 2000; Filion, 2003; Vecchio, 2003) and the common traits they
identify, we composed the following list of main features of entrepreneurial personality: locus
of control, self-efficacy, risk tolerance, and proactivity.

Locus of control relates to the belief that actions determine outcomes (Rotter, 1966). Locus of
control comprises two parts: internal and external. Individuals with a high internal locus of
control believe they are able to control outcomes so they devote more effort towards desired
outcomes, which helps business ventures succeed. In contrast, individuals with a high external
locus of control may be more passive. These individuals believe that if they are unable to
control outcomes, there is no reason to actively change their environment by starting a business.
Through a sample of nascent entrepreneurs, Korunka, Frank, Lueger, and Mugler (2003) found
that locus of control relates to other aspects of personality such as need for achievement and
personal initiative. Filion (2003) reported that internal locus of control is a trait often but not
always attributed to entrepreneurs because it is also found in successful people who are not
necessarily entrepreneurs. Finally, some authors (Hansermark, 2003; Peacock and Wong, 1996)
have pointed out that this trait can be learned.

Self-efficacy refers to an individuals belief that he or she can effectively organize and execute
actions required to produce an outcome (Bandura, 1997; Chen, Greene, & Crick, 1998). That is,
self-efficacy is a persons self-evaluation of personal competence and control in a given
situation. Self-efficacy reflects perceptions of personal ability to perform a specific job or task.
Self-efficacy affects choice of action and effort expended, and it is the single biggest predictor
of career choice (Bandura, 1986). The relationship between self-efficacy and entrepreneurship is
justified for several reasons. First, because people avoid careers and environments they believe
exceed their capabilities and instead choose vocations they feel they are capable of doing
(Krueger & Dickson, 1994). Second, because entrepreneurship involves significant risks and

difficulties, entrepreneurs need high levels of self-efficacy. Third, because self-efficacy predicts
career choice, occupational interests, perseverance to cope with difficulties, and personal
effectiveness (Bandura, 1986; Krueger & Dickson, 1994), self-efficacy must also be related to
entrepreneurial activity. Finally, because incentive to act is greater when entrepreneurs believe
their actions have achievable outcomes, self-efficacy is an important determinant of successful
entrepreneurial behaviors (Sanchez Lanero, & Yurrebaso, 2005). From this line of reasoning,
several authors have shown that self-efficacy is more distinctive to entrepreneurs than to other
workers or to the general population (Markman, Balkin, & Baron, 2002; 2003). Similarly, other
empirical studies have linked entrepreneurial self-efficacy to personal and financial success,
usually measured in annual earnings (Markman et al., 2002).

Propensity to take risks is the trait that determines the tendency and willingness of individuals to
assume risks. In a risk tolerance test, individuals with high scores had an inclination towards
high-risk behaviors; that is, they considered the alternatives whose ultimate consequences could
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get away from their frame of outcome expectations. Conversely, subjects with low risk
propensity, tend towards low-risk behaviors, and tend to avoid alternatives that may cause
outcomes to vary greatly from their expectations (Das & Teng, 2001). Risk propensity has been
associated with entrepreneurship. By definition, entrepreneurship involves taking risks. Indeed,
according to Covin and Slevin (1989), risk propensity is one of the three dimensionstogether
with proactivity and innovationthat make up entrepreneurial orientation. In this framework,
risk propensity refers to subjects willingness to make commitments despite chances of failure.
Surprisingly, however, entrepreneurial behaviors have been linked to both moderate levels of
risk taking (McCelland, 1961; Sexton & Bowman, 1985) and high levels of risk taking (Begley
& Boyd, 1987). Moderate risk taking is more common among owners and managers of existing
firms, whereas high levels of risk taking are more prevalent among independent entrepreneurs
starting new businesses. Some recent studies have found that tolerance and positive attitudes
towards risk are predictors of entrepreneurial intention (Segal, Borgia, & Schoenfeld, 2005).
Similarly, scholars have reported that risk propensity is positively associated with intentions of
self-employment. In this case, risk propensity acts through its influence on certain predictors of
intentions of self-employment such as self-efficacy (Zhao, Seibert, & Hills, 2005), and a
positive attitude towards entrepreneurial behavior (Lthje & Franke, 2003).

Proactivity is the third dimension in Covin and Slevins (1989) definition of entrepreneurial
orientation. Proactivity refers to implementing the tools necessary to engage in entrepreneurial
behavior. It embodies features like perseverance, adaptability, and willingness to assume
responsibility for failure. Bateman and Crant (1993) defined the proactive personality as
individuals tendency to initiate and maintain actions that directly alter their environment.
Proactive individuals identify opportunities, act on these opportunities, show initiative, take
direct action, and persevere until they achieve significant change. Proactivity implies an
emphasis on anticipating and preventing problems before they occur. Proactivity also implies an
orientation towards action, including a creative interpretation of rules, and a high level of
persistence and patience to make changes. Studies linking entrepreneurship and proactivity have
confirmed relationships between proactive personality and entrepreneurial behaviorin both
existing firms and in the general population(Becherer & Mauer, 1999, Cox, & Jennings,
1995), and between business development and career success (Brown, 1996; Junehed &
Davidsson, 1998, Seibert, Crant, & Kraimer 1999; Seibert, Kraimer, & Crant, 2001). Shapero
(1982) suggested that this personal propensity to act on opportunities is one factor that may
influence the intentionbehavior relationship by precipitating or facilitating the realization of

intentions. In entrepreneurship, Crant (1996) found that entrepreneurial intentions were
positively associated with having a proactive personality. Similarly, this guidance personality
type has been reported in the literature (Krueger & Brazeal, 1994; Shapero, 1982) as a precursor
of intentions and entrepreneurial potential.

Based on the literature review, we conclude that sociological variables to include in the
framework to measure readiness for entrepreneurship are locus of control, self-efficacy, risk
tolerance, and proactivity.

Business managements contribution

As mentioned earlier, research on entrepreneurship has progressed tremendously in the last two
decades. A major contribution of this research is the study of characteristics that form
entrepreneurial personality. Care must be taken, however, when drawing variables from the
business management field. Business management research on entrepreneurship is sometimes
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difficult to distinguish from research employing approaches from psychology: the two fields
interact, blurring the boundary between them.

Ajzens (1991) studies are among the most cited works on entrepreneurial attitude, and these
studies constitute the basis for the theory of planned behavior. The theory of planned behavior
addresses the link between beliefs and behavior. It is one of the most predictive persuasion
theories, and it has been applied to studies of relations among attitudes, beliefs, intentions, and
behaviors in several fields including entrepreneurship. Ajzen improved the predictive power of
the theory of reasoned action (Fishbein and Ajzen, 1975) by including perceived behavioral
control. The theory of planned behavior can cover peoples non-volitional behavior, a variable
that the theory of reasoned action fails to explain. The theory of planned behavior states that
attitude towards behavior, subjective norms, and perceived behavioral control together shape an
individuals behavioral intentions and behaviors.

According to Ajzens (1991) theory of planned behavior, entrepreneurs evaluations of firm

creation may be positive or negative. If positive, then an individual will have fulfilled one of
three determinants of intended action to become an entrepreneur. The second determinant for
business creation behavior is subjective norms that condition entrepreneurs perceptions of
social pressure to create a business. The third prediction of intention is perception of behavioral
control; that is, potential entrepreneurs perceptions about their entrepreneurial skills to create a
business. A self-evaluation by potential entrepreneurs can provide evidence of previous
experiences, prevent difficulties, and highlight issues to consider before undertaking
entrepreneurial actions (Shane et al., 2003). Entrepreneurial attitude is characterized by a
constant willingness to initiate and organize, taking into consideration available resources, to
achieve specific outcomes regardless of activity (Quintero, 2007).

Attitudes are evaluative judgments or statements of persons, objects, or events. Attitudes have
three components: cognitive, affective-emotional, and behavioral (Robbins & Judge, 2011). The
theory of planned behavior (Ajzen, 1991) described above relies more on the cognitive
component of attitudes than on personality traits (Epstein et al., 1984). For an overall
understanding of entrepreneurial behavior, however, studying personality traits, cognitive and
emotional factors, and social and environmental variables is necessary.

De la Vega suggested that business success depends on entrepreneurial teams possessing

entrepreneurial skills. Thus, according to De la Vega (2004), many cases have been reported of

the same business idea succeeding or failing depending on the founders. For some authors,
entrepreneurs are born, not made, so anyone with appropriate characteristics is practically
predestined to become an entrepreneur and eventually a businessperson (Bull and Winter,
1991). Furthermore, the context in which entrepreneurial initiatives take place, and the influence
of cultural, economic, sociological, and psychological factors play a part.

Building on the theory of planned behavior and analysis of hundreds of studies, Filion
performed a synthesis of entrepreneurs main characteristics. This research yielded 22 essential
features shown in Table 4. Recently, Koellinger et al. showed the importance of the perception
as a highly determinant factor in the decision to create a start-up. Their findings are consistent
with those of other authors (Cooper et al, 1988; Busenitz and Barney, 1997; Camerer and
Lovallo, 1999) regarding the role of self-confidence in decisions of this type. This research
approach is an alternative to conducting an objective baseline contrast between business
efficiency and real chance of success. Filions (1996) findings are complemented in Table 4 by
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perceptual elements and other features cited by Koellinger et al. (2007) as relevant when
studying entrepreneurial personality.

Table 4 marks the end of the exhaustive literature review to determine the theoretical framework
for measuring peoples readiness for entrepreneurship.

We now address the final research question through the following proposition:

Proposition 4:

Q4. What factors determine a persons readiness for entrepreneurship?

Readiness for entrepreneurship is determined by a wide set of sociological, psychological, and

business management factors. Each of these disciplines provides measurable qualitative and
quantitative variables that have been linked in scientific research to entrepreneurship and
entrepreneurial personality and behavior, and that must be considered in the theoretical
framework to develop a tool to measure readiness for entrepreneurship.

Two further questions arise:

Q4.1. Can we classify these factors into different groups?

Q4.2. If so, what are these groups?

The answer to question 4.1 is yes; factors can be grouped into personal, emotional, perceptual,
cognitive, behavioral, and other groups identified during the literature review. Organizing these
factors into a framework to build a tool to measure the readiness for entrepreneurship, however,
falls outside this studys scope. Development of the framework will take place in the step of this
research: formalizing a proposal for the target tool.

Discussion, limitations, and future research

Building a tool to measure readiness for entrepreneurship should include items from three areas:
sociology, psychology, and business management. Research since the eighties has demonstrated
the relevance of all items included in the literature review in this work. Projects like PSED,
GEM, and other smaller endeavors have provided sufficient data to test the main hypotheses on
the relationship between these items and entrepreneurial personality. Nevertheless, scholars

have never designed a scientific tool that combines all perspectives discussed herein to yield
individual measures of readiness for entrepreneurship.

The greatest difficulty in meeting this challenge is the sheer number of variables from tools that
measure parts of the full concept. Single validated tests exist to measure: locus of control, self-
efficacy, risk propensity, creativity, self-confidence, capacity to perceive opportunities,
leadership, responsibility, and all other personal, cognitive, and perceptual entrepreneurial traits.
During entrepreneurships current resurgence, numerous tools that aim at measuring the
entrepreneurial capacity of persons continue to appear as online tests embedded in
entrepreneurship web pages. These tools are deficient, however, and lack scientific grounding
and rigorous validation.

This article demonstrates that to build a tool that effectively measures peoples readiness for
entrepreneurship, implementing and following a scientific process is paramount. This process
constitutes the next step of the current research. In the next step, we aim at continuing our
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research to identify the most relevant tools to perform scientific measurements of essential
concepts composing peoples readiness for entrepreneurship. We then intend to summarize
these tools scientifically to build a unique test.

The process is long and complex because documentation on the subject is so extensive. Indeed,
analyzing all tools is impossible, and we have adhered to only the most relevant in each field.
Completing this process is undoubtedly necessary because society and entrepreneurship
stakeholders need scientific tools to give adequate guidance to potential entrepreneurs, to
channel students efforts towards entrepreneurship, and to foster entrepreneurial initiatives
based on sound decisions.

The excessive number of tests and tools for measuring entrepreneurial personality and capacity
poses a key limitation to this research. Additional limitations come from the complexity and
evolution of the concept of entrepreneurship. As the literature shows, entrepreneurship is a
dynamic concept that evolves with sociology, psychology, and business management. The
evolution of these scientific disciplines will mark changes in entrepreneurial personality. Any
entrepreneurship tool should therefore be subjected to periodic review based on the changing
importance of the phenomena it seeks to measure.

The business world, too, is rapidly changing because of new technological progress. Such
change will affect entrepreneurial personality. For example, no basic variable chosen in the
literature review measures peoples ability to operate in e-commerce and similar fields. This
could change drastically in a short time.

To conclude, we highlight the importance of contributions from disciplines that may initially
seem far removed from business management, but that are in fact highly related. This subject is
a multidisciplinary field, and specialists from different fields should collaborate to study
readiness for entrepreneurship.


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About the authors

Jess Ruiz is a lecturer of Incorporation Studies in ADE and Human Resources at EDEM, a
university center affiliated with the University of Valencia. He is an associate professor of the
social psychology department at the University of Valencia, and has been a member of
IDOCAL (Institute for Research in Psychology of Human Resources, Organizational
Development, and Quality of Working Life) since 2011.

Domingo Ribeiro. Domingo Enrique Ribeiro-Soriano. IUDESCOOP and Management

Department of the Universitat de Valncia. Email: Numerous papers presented
at International congresses. Publications (and books) in international reviews including: Annals
of Public and Cooperative Economics, Cornell Hotel and Restaurant Administration Quarterly,
Managing Service Quality, International Small Business Journal, International Journal of
Quality & Reliability Management, European Business Review, Service Industries Journal,
Journal of Small Business Management, Management Decision, Small Business Economics,
Group Decision and Negotiation, Journal of Business Research, International Journal of
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Technology Management etc. Reviewer, guest editor and editor of international journals.

Alicia Coduras is a lecturer of Statistics, Inference, and Econometrics at EDEM, a university

center affiliated with the University of Valencia. She manages the Entrepreneurship Chair at
Nebrija University. She has also been a member of the technical staff of the Global
Entrepreneurship Monitor since 2007.

Figure 1. Logic flow to build a theoretical framework for measuring readiness for

Q1. What is entrepreneurship?

Q1.1. Is entrepreneurship a single concept or are there different types or categories?

Q1.2. If there are different types, what are these types and how can they be classified?

Q2. What do academics understand by entrepreneurial action?

Q2.1. Are there different types of entrepreneurial actions?

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Q2.2. If there are different types, what are these types and how can they be classified?

Q3. How can we define readiness for entrepreneurship?

Q3.1. Can we build a single definition?

Q3.2. If so, what should this definition be?

Q4. What factors determine a persons readiness for entrepreneurship?

Q4.1. Can we classify these factors into different groups?

Q4.2. If so, what are these groups?

Four tables:

Table 1. Milestones in the historical development of entrepreneurship as a scientific field

Year Event
1947 Professor Myles Mace: imparts first course on entrepreneurship
1958 Creation of the Harvard Research Center in Entrepreneurial History
1963 Research on the role of entrepreneurs: Journal of Small Business Management
1974 Academy of Management: creation of the Entrepreneurship Division
1977 First Congress on Entrepreneurship at Colorado University, organized by the National Council for
Small Business
1977 Creation of the International Council for Small Business
1981 First Congress in Babson College and publication of its minutes under the title Frontiers of
Entrepreneurship Research
1985 Research on the role of entrepreneurs: Journal of Business Venturing
1988 Research on the role of entrepreneurs: Entrepreneurship Theory & Practice
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1989 Research on the role of entrepreneurs: Entrepreneurship Theory & Practice; Small Business
1995 Panel Study of Entrepreneurial Dynamics (PSED) design and implementation
1997 Global Entrepreneurship Monitor (GEM) design and implementation

Table 2. Outstanding contributions to the scientific field of entrepreneurship

Research lines identified by Busenitz et al. (2003)

1) Opportunities often evolve from interactions between markets and environments that involve the creation of new
means-ends relationships.
2) The individuals and teams category focuses on the characteristics of individuals and teams, the dynamic
processes associated with the development of intellectual or human capital by individuals and/or teams, and the
comparison of different types of entrepreneurs or of entrepreneurs to non-entrepreneurs.
3) The mode of organizing category includes management practices, the acquisition and deployment of resources,
and the development of systems, strategies, and structures that allow a discovered opportunity to be transformed into
a viable product or service.
4) The environments category is concerned with rates of startup at a population level and the cultural, economic or
market factors converging to create an environment that enhances or inhibits entrepreneurship.
Research lines identified by Brush et al. (2003)
1) Opportunity exploration processes, containing learning strategies.
2) Opportunity exploitation processes, containing resource acquisition and development, and growth intentions of
3) Opportunity recognition, containing entrepreneurial orientation and opportunity recognition.
4) Venture creation, containing conditions and emergence, international entrepreneurship, venture creation process,
startup sequences, and organizational founding.
5) Component/Product creation, containing effect of strategy on technology, dominant design development, and
innovations and technology discontinuities.
6) Industry/Market creation, containing franchisor development, informal venture capital market, and new industry
7) Wealth creation, containing venture capital investment and returns, resources and firm performance, strategies
and firm performance, and founding team strategy and growth.
Sources: Busenitz et al. (2003) and Brush et al. (2003)
Table 3. Theoretical approaches to the study of entrepreneurship

Approaches/Level Economic Psychological Sociocultural Managerial

of analysis Approach Approach Approach Approach
MICRO: individual -Entrepreneurial -Traits theory -Margination theory -Leibensteins x-
level functions as fourth -Psychodynamic -Role Theory efficiency theory
factor of production theory -Network Theory -Behavioral theory
-Theory of the of the entrepreneur
entrepreneurial -Modes of new
profit enterprise creation
-Modes to become
an entrepreneur
MESO: corporate Transaction cost -Network Theory -Modes of new
level theory -Incubator Theory enterprise success
-Evolutionary and failure
Theory -Corporate
MACRO: global- -Schumpeters Kirzners -Webers theory of
country level theory of economic entrepreneur theory economic
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development development
-Theory of the -Theory of social
endogenous regional change
development -Population ecology
-Institutional theory
Source: Veciana (2007, p. 35)

Table 4. Main characteristics associated with entrepreneurial personality from the business
management perspective

Filion et al. (1996) Other authors cited by Koellinger et al. (2007)

Self-confidence Creativity Alertness as the ability to perceive unexploited
opportunities (Kirzner, 1973, 1979; Shane and
Venkataraman, 2000)
Perseverance, Initiative Overconfidence (Kahneman and Lovallo, 1993)
determination, long-
term commitment
Energy Flexibility Idea generation (Vesper, 1990)
Talent Responsibility Organizational creation (Gartner, 2001),
Ability to take Independence Autonomy (Gebert, Boerner, and Lanwehr, 2003)
calculated risks
Need for achievement Prevision, Esteem (Robbins and Judge 2009)
Tolerance to address Internalization Research and planning (Bhide, 2000)
ambiguity and
Leadership Dynamism Competitive aggressiveness (Miller and Camp 1985;
DAveni 1994)
Versatility, product Ability to treat Networks and alliances (Cooper, 2002)
knowledge, market, people
equipment, technology
Adaptation to critical Orientation towards
moments profit or gain
Optimism Non-conformity
Source: Filion, 1996; Koellinger et al., 2007.
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