Entrepreneurial Mindset Study

 

PROJECT LEADS

Fredell Jacobs                             Immanuel Commarmond          Professor Kelly Shaver
Head of Impact Assurance         Expert Consultant                      Academic Lead
Allan Gray Orbis Foundation      Allan Gray Orbis Foundation    MindCette, LLC

 

GERN MEMBERS

Many GERN members have expressed interest in studying the topic.
 

PROJECT OVERVIEW

Introduction

What is it that leads people to become entrepreneurs, leaping into the unknown and creating the future?  What is the mindset that results in successful entrepreneurial action?  Is it innate to all people?  Do some cultures foster it, or is it culturally neutral?  We know who has it by what they do, but we don’t know what it is that they have.  If you can’t define and measure it, does it even exist?

These questions, among many others, were posed during parallel sessions at the March 2016 Global Entrepreneurship Congress (GEC) in Medellin, Colombia.  The discussions led the Global Entrepreneurship Research Network (GERN) and the Allan Gray Orbis Foundation (AGOF) to join forces in seeking answers.  During the August 2016 GEC+ in Daegu, Korea they heard from leading international experts on entrepreneurial mindset, helping to crystallize a scientific approach for collecting data on the hallmarks of an entrepreneurial mindset.

The result is the Global Entrepreneurial Mindset Project, an international collaboration under the leadership of AGOF formed with GERN and with the support of MindCette, LLC.  The project is intended to serve the entrepreneurship community by achieving the following outcomes:

  • Building a shared understanding of entrepreneurial mindset
  • Introducing a data-based system for assessing entrepreneurial mindset development
  • Revealing new insight about entrepreneurial mindset
  • Creating an objective, quantifiable methodology for measuring progress over time
  • Providing an evidence-based framework for developing recommendations for developing new policies and programs
  • Increasing entrepreneurial action around the world.

 

Review of the Academic Literature

To achieve these results, the research team, made up of Professor Kelly Shaver, president of MindCette, and Immanuel Commarmond, special advisor to the Allan Gray Orbis Foundation, set to work reviewing the academic literature in a variety of fields – cognition, psychology, behavioral economics, entrepreneurship, to name a few – in order to catalogue existing measurable entrepreneurial characteristics.

“Reading the literature presents a chronological story line of the emergence of mindset as a discipline,” says Commarmond, “from the days of psychological behavior in the 1950s before it was called entrepreneurial mindset.”

 

Foundations of Entrepreneurial Mindset

In a report published by the World Bank, Valerio, Parton, and Robb (2012) argue that assessing entrepreneurial training programs needs to involve both an individual’s competencies (entrepreneurial capabilities such as management skills and technical knowledge) and an individual’s personal characteristics (an entrepreneurial mindset that includes traits such as resilience and creativity and social-emotional skills such as self-confidence and leadership).  Although they are important, Commarmond and Shaver have adopted the Valerio, Parton and Robb view that an entrepreneurial mindset is more than a collection of psychological characteristics.  Rather, mindset also includes beliefs about what can be accomplished, perceptions of opportunities, and expectations about the consequences of entrepreneurial actions.  Fundamentally, entrepreneurs believe that change is possible, a view that is similar to Dweck’s (2012) “incremental mindset,” the idea that core qualities can be developed.

“Although a key focus of mindset is cognition,” Shaver says, “we need to capture the behaviors that people actually perform, because we are ultimately interested in a better way to predict entrepreneurial success.”  By identifying and collating the specific characteristics, each connected to an accepted scientific theory and adding nuance to the essential components, the project will contribute to the development of a shared, if not universal, definition of the meaning of entrepreneurial mindset.

 

Established Scales

But, to create a comprehensive and rigorous means for measuring what we understand mindset to be, Prof. Shaver added that “we need to identify the behavioral dimensions that are important to entrepreneurial action.”  To this end, they set about identifying and obtaining existing questions that measure known characteristics.  Some examples of existing, public measures of entrepreneurial mindset characteristics include achievement motivation, self-efficacy, and locus of control.  Questions from these established and publically available scales will be included in the Pilot Entrepreneurial Mindset Study survey.

 

How a New Scale Comes into Being

Next, they will need to create new questions for characteristics that may be important to entrepreneurial action, but for which appropriate questions do not exist.  “Equanimity,” said Prof. Shaver, “is a good example of a characteristic for which there is not yet an existing scale applicable in an entrepreneurial context.”  Everyone believes that failure is an integral part of entrepreneurial activity, but an ability to learn from one’s failures requires the equanimity to step back and consider the lessons that failure provides.  Where there is no existing scale to measure an important facet of the entrepreneurial mindset, the team will create new items using either a Likert format or a Semantic Differential format.

 

Entrepreneurial vs. Generic Characteristics

In designing the survey, Shaver and Commarmond are breaking down characteristics so that the instrument will test for and measure those things that are expected to change as a result of an intervention against those things that are not.  Risk tolerance/avoidance presents a useful example of the survey’s power for evaluating entrepreneurial programs across geographies, cultures, and social/economic contexts.  If a given entrepreneur support intervention is demonstrated to increase participants’ appetite for entrepreneurial risk while not affecting aspects of risk avoidance (walking near cliffs, driving without a seatbelt, playing with fire, etc.), clear and convincing evidence of the program’s success is provided.

 

Prototype Survey: Pilot Entrepreneurial Mindset Study in South Africa

Following the March 2017 GEC, during the initial, pilot phase of the project, the three partners will test the survey instrument in Johannesburg (population 4.4 million) and Cape Town (population 3.6 million).  “The focus,” says Fredell Jacobs, AGO’s Head of Impact Assurance, “is geared toward understanding entrepreneurial mindset in a broad sense and gaining contextual insights for when the survey is implemented in other regions.” At the same time, he added, “we also want to establish the parameters for a national sample and hence the focus on the two most active entrepreneurial ecosystems in South Africa.”

The prototype survey, Commarmond and Shaver anticipate, will include 110+ items of entrepreneurial characteristics and use both Likert Scale and Semantic Differential questions.  It will also capture relevant demographic information – age, employment/vocational status and level of education – to be able to differentiate core characteristics of the respondents.

The pilot phase will involve two rounds of surveys.  Shaver explained that “it’s a two-step process – initially of a broad sample of people to identify structural patterns within the questions – so that we may refine and distill the scale, which goes from entrepreneurial on one side to non-entrepreneurial on the other, and then test entrepreneurs.”  After the first round, Shaver will conduct a factor analysis – a statistical process in which the values of observed data are expressed as functions of a number of possible causes in order to find which are the most important.  This will boil down the number of items to those that are essential and result in an iterated version of the survey.

A second round of surveying will validate its efficacy in capturing and measuring entrepreneurial mindset.  “In order for the survey to scale,” added Fredell Jacobs, “the survey design should allow for some degree of accommodating contextual differences while allowing for the outcomes to remain largely comparable.”

 

Conclusion

The beneficial impact on societies of increased high-growth entrepreneurship is well documented.  When conducted over time and across geographies, the new survey will generate information that contributes to evaluating the effect of policies and programs that seek to increase such entrepreneurial behavior.

This pioneering research, with its comprehensive, state-of-the-art approach to identifying and distilling all the essential characteristics, components, elements, and aspects, of the mindset that leads to successful entrepreneurial activity, holds the promise of providing the entrepreneurial community with the information it needs to make informed decisions, improve outcomes, and achieve enduring impact.

 

For more information about the theoretical underpinnings of this project, please see the attached Research Note.