Perceptions of Efficacy, Control, and Risk: A Theory of Mixed Control

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Erik Monsen Max Planck Institute of Economics Diemo Urbig Max Planck Institute of Economics AbstractBased on the aggregated insights of the existing theories related to multiple sources of efficacy and locus of control, we introduce the theory of mixed control, a model of compound-risk perception. This theory considers outcome expectancies as being composed of expectancies regarding three distinct sources of risk (self, others, and chance). This reflects that entrepreneurship is a complex and dynamic activity, involving multiple sources of risk. Beliefs about the efficacy of these elements are weighted by the degree to which these elements are perceived to control the outcome. The interaction of efficacy and control beliefs is therefore at the core of our theory. Further, we discuss that risks are not only subjectively perceived but can be endogenous and depend on future decisions and actions of the entrepreneur. JEL-classification: D8, D83, D84

The Impact of Cognition on New Value Creation within the Institutional Theory Perspective

“…Moreover, Monsen and Urbig [27] state that the evaluation of entrepreneurial opportunity depends on the perception of self-eicacy perception, corroborating our indings. Apart from cognition, it is evident that new value creation activities are related to radical innovation in a way that creates new legitimacy.…”

“…Optimism in relation to value creation is complicated by the fact that those with high levels of optimism may perceive less risk in potential opportunities, thereby leading to possible failure [27]. However, in our research sample, all entrepreneurs demonstrated success in changing value proposition in the market.…”

“…For instance, entrepreneurs with high self-eicacy tend to reduce risk and uncertainty, resulting in an improved opportunity to identify and create new value [26]. This is also true for optimism [27]. As a result, in dynamic, risky and changing environments, high levels of optimism and self-eicacy correspond to high levels of new value creation.…”

“…Conversely, if entrepreneurs can view themselves and the market situation from a more objective perspective, they may be more apt to judge outcomes more realistically [35]. As argued by Monsen and Urbig [27], it is because of optimism that entrepreneurs may overestimate the possibility of success and, as a result, overlook the real risks associated with a speciic opportunity. This tends to suggest that entrepreneurs with high levels of optimism may perceive any opportunity as less risky [35].…”

Should I stay or should I go? Career choice intentions of students with family business background

“…Accordingly, the family business context and hence the external source of entrepreneurial efficacy adds to the perceived self-efficacy to take risks and pursue an entrepreneurial career. Building on Monsen and Urbig (2009) we thus propose that the inclination to start an own firm for students with family business background is π = (e s + e f ), with e s and e f representing self-and family-induced efficacy beliefs. In stark contrast to above motivation, the same external context may reduce the inclination to start an own firm through lessening perceptions of internal locus of control when pursuing such a career (π = (c s − c f ), with c s and c f representing self-and family-induced control beliefs).…”