Entrepreneurship psychology literature Review

Entrepreneurship psychology is a field that explores the psychological factors influencing

entrepreneurial behavior, decision-making, and performance. According to Mitchell (2004), both
the fields of cognitive psychology and entrepreneurial cognition have their distinct domains, but
they also intersect in some areas. Understanding the psychological aspects of entrepreneurship,
including personality traits, cognitive factors, emotions, attitude, self-motivational factors, and
passion, is crucial for identifying the key traits and characteristics that contribute to
entrepreneurial success and well-being. This literature review aims to examine the existing
research on entrepreneurship psychology and highlight the significant findings and theories in
this field.

The research on Personality focuses “on traits and characteristics such as internal locus of
control, self-reliance, competitive aggressiveness, autonomy, innovativeness, proactivity, and
risk taking, achievement orientation (Ardichvili et al. 2003; Begley and Boyd 1987; Brockhaus
1980; Stewart et al. 1999; Wincent and Örtqvist 2009 as cited in Omorede, Thorgren, &
Wincent, (2015)), and the Big Five personality attributes (neuroticism/emotional stability,
extroversion/extraversion, openness to experience, agreeableness, and conscientiousness)”.
(Omorede, Thorgren, & Wincent, 2015)

Saseendran H & Salman, S (2019) confirmed some of these traits, such as proactiveness,
autonomy, and self-reliance, after qualitative research with entrepreneurs and one of each their
staff. Defined under one major theme ‘Psychology of self’: the personality trait of being ‘self-
sufficiency’ exhibiting “independence in thought and action and having the ability to complete
tasks and decision-making without being overtly reliant on others.” another personal trait is
‘Enterprising dynamism’ they are proactive and that allows them to have “a higher success rate
in analysing market needs and resolving issues than those who are reactive to the industry”.
(Saseendran & Salman, 2019)

The Cognition factor "focuses on the knowledge structures that people use to make assessments,
judgments or decisions related to evaluating opportunities and creating and growing ventures
(Mitchell et al. 2002, p. 97 as cited in Omorede, Thorgren, S., & Wincent, J. (2015)). Some of
the research questions are: “why do some people and not others recognize or create new
opportunities?” What is being an entrepreneur: “who they are, why they are different from non-
entrepreneurs, and why do some convert ideas into realities;” and also the investigation goes to
the entrepreneurs’ success:” why are some entrepreneurs more successful than others (Omorede,
Thorgren, & Wincent, 2015)

On this topic, we found the concept of “ESE (entrepreneurial self-efficacy)", a belief that an
entrepreneur possesses knowledge about marketing, innovation, management, risk taking, and
financial control. On the other hand, Simon et al. (2000) identified cognitive errors and biases
such as illusion of control, overconfidence, and believing in the law of small numbers.” as cited
in Omorede, Thorgren, & Wincent, (2015).
According to Kaffka (2021), in his article answering the question, How Does an Entrepreneur's
Educational Background Affect Their Cognitive Processing of Business Models?" an
entrepreneur's professional background and education can influence their decisions regarding
business models (BM) design. Specifically, entrepreneurs with academic backgrounds in STEM
disciplines (Science, Technology, Engineering, and Mathematics) often prioritize the technical
facets of their business ideas over market-driven considerations. This inclination can introduce
management challenges and, at times, threaten the survival of the new business venture. The
reason is that these entrepreneurs may divert their attention from the needs of the customers,
concentrating instead on technical innovation and creativity. The article further highlights that a
shared understanding between entrepreneurs and their stakeholders assists in designing the initial
BM for a new enterprise. Scholars who have adopted the perspective of the BM as a cognitive
schema contend that an "owner-manager cognition and sensemaking offer the most crucial
insights into the initial design of a business model."
Related to the cognition aspect, studies by Gunia et al. (2020), who delve into the
biopsychological aspects of ADHD-like tendencies where impermanent sleep problems nudge
individuals to venture into the entrepreneurial journey, support the cognitive influence of
entrepreneurial psychology. The term ‘impermanent’ in their research is used because it is not
perse a clinical disorder like insomnia, and not temporary either like hunger or thirst, but comes
and goes in periods lasting weeks or months for whatever reason. Previous studies in
entrepreneurship mentioned in this article by Gunia et.al investigated the implications sleep
problems may have which suggested reduced creativity (Weinberger et.al., 2018), reduced
behaviour towards innovation (Williamson et.al., 2019) (Williamson, Battisti, Gish, &
Leatherbee, 2018), or increased exhaustion (Murnieks et.al., 2020). The study by Gunia et.al
(2020), however, investigated the possibility of where sleep problems, an ADHD-like
tendency/symptom, could heighten the entrepreneurial intentions and encourage individuals to
venture into businesses. Looking at the clinical ADHD symptoms, which include hyperactivity,
impulsivity, and a varied span of attention, these combined could restrict success in certain
workplaces on the typical labour market. Entrepreneurship research, however, suggests that these
could stimulate entrepreneurial inclinations due to specifically, clinical ADHD individuals being
“pushed” away from standard jobs, and “pulled” towards venturing into more flexible
entrepreneurial lifestyles. Seen as clinical ADHD is something some individuals have, and others
do not, research conducted by Gunia et.al focus on the impermanent ADHD-like tendencies such
as: lack of restraint, impulsivity, and sleep problems, that could motivate one to clear away from
stand jobs fitted with rules and constraints. This therefore supports the correlation certain
aforementioned tendencies have with venturing to start a flexible, self-governed entrepreneurial
lifestyle.
The role emotions play has been highlighted in recognizing and exploiting opportunities, venture
start-up, and venture success (Cardon et al. 2005; Foo 2011; Foo et al. 2009; Goss 2005;
Grichnik et al. 2010; Wincent and Örtqvist 2011 as cited in Omorede, Thorgren, & Wincent,
(2015)).
“Some authors noted that entrepreneurial processes and actions … can be initiated when
emotions are produced in an uncertain and unpredictable environment” which have an impact on
‘individuals’ cognitive behaviors when they make decisions and judgments” (e.g. Baron 2008;
Foo 2011 as cited in Omorede, Thorgren, & Wincent, (2015)). For example, Hayward et al.
(2010) argued that “highly confident entrepreneurs are more likely to experience positive
emotions during the startup process and greater emotional resilience if the venture fails.” as cited
in Omorede, Thorgren, & Wincent, (2015). However, this direct relation between positive
emotions and positive outcomes has a limit, Baron et al. (2012) proposed that is a more
curvilinear in relation, as cited in Omorede, Thorgren, & Wincent (2015)
Motivational/affectional factors have also been a research topic in entrepreneurship literature;
they have been linked to important antecedents of entrepreneurial action (Baron 2008, Frese
2009 as cited in (Frese & Gielnik, The Psychology of Entrepreneurship, 2014)).
Saseendran H & Salman, S (2019) also found under the major topic ‘energiser ego’ that
entrepreneurs are highly motivated archives, heir self-confidence and motivation to achieve goals
they have set for themselves irrespective of other people’s opinions.
Cardon et al. (2009) defined entrepreneurial passion as an “intense positive feeling toward
entrepreneurial tasks and activities that are relevant to the entrepreneur’s self-identity.” as cited
in (Frese & Gielnik, The Psychology of Entrepreneurship, 2014) so passion implies strong
feelings and high motivation. Frese & Gielnik found that most entrepreneurs persisted, especially
in the beginning phase of starting a business, due to their great passion.
Attitudes: Kolvereid and Isaksen (2006) applied both the TRA (theory of reasoned action) and
TPB (theory of planned behavior) to determine the attitudinal antecedents of self-employment,
intentions to become self-employed, as well as the actual entry into self-employment. They
found that salient beliefs, attitudes, and subjective norms determined why individuals develop
intentions to be self-employed. The main predictors of becoming an entrepreneur are personal
and situational variables that influence key attitudes.
Lüthje and Franke (2003) went further by testing entrepreneurial intent using personality and
contextual factors on students. They found that personality traits such as risk-taking and locus of
control impacted attitudes toward the intent to start a new venture. This led the authors to
conclude that the intent to become an entrepreneur is not just influenced indirectly by personality
traits but also directly by contextual factors. On a similar note, de la Sánchez-Escobedo et al.
(2011) and Díaz-García and Jiménez-Moreno (2010) concluded that apart from attitude toward
self-employment, gender plays an important role towards individual intentions for starting a
venture.
Billingsley et al. (2023 support Lüthje and Franke’s findings by conducting taxometric analyses,
which provide statistical evidence that mindset constructs to entrepreneurship is a continuous
latent construct that can be (minorly) influenced. Their insights show that somebody who has a
greater growth mindset of entrepreneurship (GME) is likelier to venture into entrepreneurship
than somebody who has a lower GME. This GME is something that can be trained, accelerated,
or taught. Billingsley et al. continue in their article by suggesting that “interventions, trainings, or
curricula aimed at fostering stronger growth mindsets of entrepreneurship might consider
simultaneously including multiple messages of change: information about the potential for the
brain to make new connections; content concerning the potential to develop creativity and
leadership skills; the idea that generally people can and do change with new experiences; and
information about the potential to improve entrepreneurial abilities.” Therefore, the psychology
of entrepreneurship is something that can be developed or triggered by external factors such as
from exposure to an entrepreneurial environment, trainings, and schooling; thus inspiring
creativity and eagerness to continuously develop oneself. (Billingsley, Lipsey, Burnette, &
Pollack, 2023)
The Self factor tries to answer the questions: “Who am I (now)? Where do I come from? What
can I become? and Whom do I know?” under different research question such us “how
entrepreneurs orient themselves, how they give meaning to their experiences, provide guidelines
for their actions, and how they distinguish themselves from others.?” (Omorede, Thorgren, &
Wincent, 2015)
Some of the paper listed on the literature review from Omorede, Thorgren, & Wincent (2015) is
from Shepherd and Haynie (2009a) who “noted that although entrepreneurs want to convey that
they are somehow different and unique—which fulfills their need for distinctiveness—they may
also want to satisfy their need for belongingness.”
About the self, there is also research concerning female entrepreneurs and the contradiction the
face when constructing their identity, between being entrepreneurial and caring (Nadin, 2007 as
cited in Omorede, Thorgren, & Wincent, (2015))
On other subtopics, there has been research about the family-business (meta) identity (e.g.
Shepherd and Haynie 2009b); place identity, that is, how individuals identify themselves with
their environments (e.g. Hallak et al. 2012 as cited in Omorede, Thorgren, & Wincent, (2015)).

The final psychological characteristic found was ‘risk-taking daredevilry’, which allowed
entrepreneurs to take risks and do things that the average person avoids. With higher risks, there
is the chance of increased success and profitability, which makes them attain their goals in
comparison to the average person.
References

Billingsley, J., Lipsey, N. P., Burnette, J. L. i Pollack, J. M. (2023). Growth mindsets: defining, assessing,
and exploring effects on motivation for entrepreneurs and non-entrepreneurs. Current
Psychology, 8855-8873. doi:https://doi.org/10.1007/s12144-021-02149-w
Frese, M. i Gielnik, M. M. (2014, Mars). The Psychology of Entrepreneurship. 28. doi:10.1146/annurev-
orgpsych-031413-091326
Frese, M. i Gielnik, M. M. (2023). The psychology of entrepreneurship: action and process. Annual
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Kaffka, G. A., Singaram, R., Groen, A. J. i Kraaijenbrink, J. (2021, 08 11). Entrepreneurial cognition of
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