Description
During this file account comparative entrepreneurial cognitions and lagging russian new venture formation.
Comparative Entrepreneurial Cognitions and
Lagging Russian NewVenture Formation:
A Tale of Two Countries*
by Kristie W. Seawright, Ronald K. Mitchell, and J. Brock Smith
Changes in Russian government and economic systems over the last 15 years led to
expectations of increased entrepreneurial activity. Yet potential entrepreneurs are
deciding to venture at a much lower rate than anticipated. New venture creation in
Russia is occurring at a rate that is considerably lower than that of the United States
and Western Europe.
This research examines cognitive similarities and differences among Russian and
U.S. entrepreneurs and nonentrepreneurs to ?nd a possible explanation. Multivariate
analysis of variance and multiple discriminant analysis results found similarities
between U.S. and Russian experts and U.S. and Russian novices with respect to
arrangements, willingness, and ability scripts, but differences in these scripts were
found between experts and novices, particularly in Russia. Implications for entrepre-
neurship cognition research and public policy are discussed.
Introduction
Many experts expected Russia’s
movement from a planned to a market
economy to make a positive economic
difference. Instead, economic progress in
Russia has lagged, and people are won-
dering why Western-style entrepreneur-
ship is not helping more. Until recently,
per capita and real gross domestic
*The authors wish to thank the Center for Entrepreneurship at Brigham Young University, the
Jean Austin Bagley Endowment, and the Donald L. Staheli Fellowship for support for this project.
Kristie W. Seawright is an associate professor and Staheli Fellow of International Business
in the Marriott School at Brigham Young University.
Ronald K. Mitchell is a professor of entrepreneurship, and holds the Jean Austin Bagley
Regents Chair in Management in the Rawls College of Business at Texas Tech University.
J. Brock Smith is a professor of marketing and entrepreneurship and is Winspear Scholar in
the Faculty of Business at the University of Victoria.
Address correspondence to: Kristie W. Seawright, Department of Business Management, 766
TNRB, Brigham Young University, Provo, UT 84602. Tel: (801) 422-4563. Fax: (801) 422-0311.
E-mail: [email protected].
Journal of Small Business Management 2008 46(4), pp. 512–535
JOURNAL OF SMALL BUSINESS MANAGEMENT 512
product (GDP) (World Bank 2002, 1999),
along with manufacturing capacity
(Chazen 2005), has steadily declined
(McCarthy et al. 2005). Currently ob-
served economic growth is taking place
primarily in the natural resource sector,
contributing to skepticism concerning
Russia’s long-term development potential
(Ahrend and Tompson 2005). Aging pro-
duction technology and minimal capital
to invest in newtechnologies have limited
productivity improvements (Gurkov
2005; Mugler 2000). These factors com-
bine to slow Russia’s economic growth to
lower levels than were previously
expected, leaving Russians less able to
compete in the global marketplace. Poli-
cymakers ask, what happened?
During the early 1990s, hope was high
for Russian economic progress, built
upon the anticipated foundation of priva-
tization and new venture formation.
Development of a small to medium-size
enterprise (SME) sector was expected
to raise the Russian standard of living,
create wealth, and increase employment
(Dickinson 2004). Yet this sector, which
provides an average of 70 percent of GDP
in European economies, currently
accounts for only 12 percent of Russian
GDP (van Stel, Carree, and Thurik 2005;
Wennekers et al. 2005; Belton 2000).
New-venture creation was expected to
take the lead in developing the SME
sector, yet Russian entrepreneurial activ-
ity rates among the lowest in the world,
with 2.5 percent of the workforce estab-
lishing newventures, as compared to 10.5
percent in the United States and 12.0
percent globally (Reynolds et al. 2002).
The lag in Russian new venture devel-
opment, as compared to similar develop-
ment in the United States, highlights the
need to understand the factors underly-
ing entrepreneurial capability (Stewart
et al. 2003; Puffer, McCarthy, and Peter-
son 2001). Is it the market, the money, or
the mind?
Some think that Russian entrepre-
neurs do not understand the workings of
free markets and are less able to compete
than entrepreneurs having more exten-
sive experience in a market economy
(McCarthy et al. 2005; Snavely, Mias-
soedov, and McNeilly 1998; Gibb 1996;
Ponomarev and Gribankova 1996;
Brenner 1992). According to this point
of view, potential entrepreneurs are
perceived to be hampered by lack of
experience with market-based business,
resulting in insuf?cient maturity in risk-
taking and demand-identi?cation skills.
Others suggest that the decision to
venture is most negatively in?uenced by
the lack of capital and other needed
connections (Kuznetsov, McDonald, and
Kuznetsova 2000; Organization for Eco-
nomic Co-operation and Development
2000; Wallace 1996). In this article we
explore the third possibility: that of
“mind,” or entrepreneurial cognitions.
Cognition-based explanations of entre-
preneurial activity have recently gained
the interest of business and entrepreneur-
ship scholars (e.g., Mitchell et al. 2004;
Forbes 1999). Cognition-based constructs
have been found to be fruitful in better
understanding strategy and performance
(Johnson and Hoopes 2003), opportunity
recognition (Gaglio 2004), decision-
making processes and outcomes (Simon,
Houghton, and Aquino 1999; Baron 1998;
Busenitz and Barney 1997); and the
venture creation decision across cultures
and countries (Mitchell et al. 2002, 2000).
While there are noncognitive contextual,
emotional, or individual factors that affect
entrepreneurial behavior and outcomes,
the cognition-based perspective is com-
pelling in that it suggests that much of
what entrepreneurs do and how well they
do it depends on their active knowledge
structures: what they knowand what they
do with that information. We therefore
wonder if there are cognition-based
explanations for signi?cant variance in
observed differences between Russian
and U.S. entrepreneurship. If so, what are
the policy implications for encouraging
Russians to venture?
SEAWRIGHT, MITCHELL, AND SMITH 513
The purpose of this study is, there-
fore, to empirically examine the cogni-
tive capabilities of entrepreneurs and
nonentrepreneurs in Russia and to
compare them with their Western coun-
terparts, using an accepted cognition-
based analytical methodology (e.g.,
Mitchell et al. 2002, 2000; Morse et al.
1999; Mitchell and Seawright 1995), in
order to increase understanding of the
necessary factors underlying entrepre-
neurial expertise. In their 2002 article,
Mitchell et al. question the extent to
which development within a given
country is tied to the opportunity identi-
?cation process. Our analytical compari-
son of Russia to the United States is
suggested as an empirical case study that
attempts to address this question. Thus,
in this study, a comparison was made
among entrepreneurs and nonentrepre-
neurs from Russia and the United States.
Our argument proceeds according
to the following steps. We ?rst present
a synopsis of the situation in Russia.
Then, we summarize relevant literature
on information processing, entrepre-
neurial cognitions, and cognitive capa-
bilities. We next discuss our research
methodology and present the results of
the data analysis. Finally, in the conclud-
ing section we suggest implications for
public policy and entrepreneurial cogni-
tion research.
Entrepreneurship in
Russia
Krueger (1993) points out that the
current situation in Russia stems from
decentralization efforts that took place
during perestroika. Under perestroika,
managerial decisions were handed down
to lower levels without market mecha-
nisms in place to guide those decisions.
This procedure created a mismatch,
and with it, entrepreneurial opportunity.
Prices were ?xed by central administra-
tors, yet product mix decisions were del-
egated to lower management levels, with
the reward system stressing production
of higher-end products. This led to
decreased volumes or elimination of pro-
duction of lower-end goods. Shortages of
these products opened market niches
that were not ?lled by the public sector,
creating problems in the economy but
opportunities for entrepreneurs (Isakova
1997).
Gimpel’son (1993) suggested that
entrepreneurship in Russia is not as new
as one might expect, given recent
history. He traced three stages of Russian
entrepreneurial development through
the past three decades. During the ?rst
stage, starting in the 1960s and continu-
ing until 1987, an underground private
sector began developing to meet market
needs not supplied by centrally planned
production. From 1987 until 1991,
during the short second stage, per-
estroika allowed partial legalization
of private entrepreneurship in certain
markets. In the third stage, beginning in
1991 and continuing to today, progress
has been made toward full legalization of
private entrepreneurship.
Legalization, however, has not paved
an easy path for the nascent Russian
entrepreneur. Even though new start-up
ventures have been shown to be more
ef?cient contributors to economic devel-
opment in Russia than either state-
owned enterprises or privatized ?rms
(Johnson and Loveman 1995), entre-
preneurs have encountered economic,
political, and cultural dif?culties in their
efforts to strengthen a ?edgling SME
sector in the transition economy.
Several generations of the Soviet
system promoted the value of large
enterprises. Marxism-Leninism tended
to view the nation of the USSR as one
immense corporation (Aslund 2002).
This attitude of “bigger is better” has
decreased the perceived value of SMEs
as an important element of economic
growth. The lack of essential economic
infrastructures, such as legal and
banking systems, has also been credited
with contributing to the SME sector’s
JOURNAL OF SMALL BUSINESS MANAGEMENT 514
inability to play a major role in the
Russian economic transition (McFaul,
Petrov, and Ryabov 2004).
Political realities have also been
seen as nonsupportive of SME growth. A
considerable segment of President
Putin’s political capital stems from large
Russian conglomerates—known as the
Oligarchs—whose interests are best
served through curtailed SME-sector
expansion (Shevtsova 2003). Addition-
ally, unstable tax rates (Aslund 2002) and
large, unof?cial yet essential payments
to government and criminal gatekeepers
(Johnson, McMillan, and Woodruff 2000)
appear to discourage the emergence of
new business ventures.
Decades of established cultural norms
and values have created negative impres-
sions of entrepreneurs. The lack of legal
and market infrastructures encourages
self-serving business behaviors, support-
ing the image of entrepreneurs as unfair,
dishonest, and immoral (Kuznetsov and
Kuznetsova 2005). Modern entrepreneur-
ial culture and widespread acceptance of
entrepreneurship have been slow to
develop in Russia during the economic
and political transition. These perspec-
tives result from both a holdover attitude
from the communist days as well as the
current in?uence of organized crime.
Despite these limitations, reports
suggest that the SME sector, dominated
by entrepreneurial businesses, contrib-
utes from 10 percent (Shevtsova 2003,
p. 288, n2) to 20 percent (Aslund 2002,
p. 286) of the Russian GDP. Entrepre-
neurship has not supplied the economic
growth that was anticipated following
the dissolution of the Soviet Union; but
there is visible success among some
Russian entrepreneurs.
It is important, however, to note that
entrepreneurial development has not
consistently expanded across the vast
nation of Russia. During the past decade,
advances in business privatization and
international trade have centered in
Russia’s two largest cities: Moscow and
St. Petersburg (Zashev 2004; Russian
Ministry of Economic Development and
Trade 2003). Growth and maturation in
new venture enterprises are also more
prominent in these Russian commercial
centers (Kihlgren 2003). The disparity in
new venture creation and small-business
growth in different regions of this exten-
sive country highlights the need to
emphasize examination of entrepreneurs
in the major cities of European Russia,
where entrepreneurial progress has
occurred concurrently with efforts toward
privatization of state-owned enterprises.
When compared to other types of
privatization efforts, new venture forma-
tion appears to be key to productivity,
quality, and competitiveness improve-
ment in the Russian economy (World
Bank 1999; Ermakov 1996; Weisskopf
1994). For example, entrepreneurship
eliminates many problems found in the
privatization of state-owned enterprises
because the venturer is motivated to
operate ef?ciently and effectively in
order to competitively ?ll the identi?ed
market need (Aslund 2002). Unlike the
privatization of existing operations, new
venture formation does not threaten to
cause unemployment; in fact, it creates
meaningful employment with higher
income potential than can be available
in inef?cient operations struggling to
marketize. However, an open question
remains: do potential entrepreneurs from
Russia’s previously planned economy
have the cognitive foundation needed to
move forward and to choose to partici-
pate in free-enterprise venturing? This
question leads us to apply an expertise-
based approach to conducting this
research.
Social Cognition and
Expertise
Cognitions comprise all processes by
which sensory input is transformed,
reduced, elaborated, stored, recovered,
and used (e.g., Neisser 1967). They also
SEAWRIGHT, MITCHELL, AND SMITH 515
involve thoughts about “a comprehen-
sive reality that consists of knowledge
and its manner of use by a person in a
given situation” (Fiske and Taylor 1984).
Repeated cognitions are organized
within long-term memory as scripts, or
action-based knowledge structures (e.g.,
Lord and Maher 1990). Thus, scripts
possess the characteristics of being
highly developed, sequentially ordered
information in a speci?c ?eld that is
utilized according to discipline-speci?c
norms or processes (Read 1987; Glaser
1984). Scripts are more than simply
knowledge, because they invoke and
guide procedural and normative
processes. The discovery of knowledge
structures as a phenomenon in social/
cognitive psychology forms the founda-
tion of the expert information processing
branch of social cognition research (Lord
and Maher 1990) and explains why
experts and novices are expected to
differ on more than just knowledge, but
also in how to use it.
The study of expertise by information
processing theorists has been under-
taken mainly in the development of arti-
?cial intelligence, speci?cally in the
development of expert systems (Galam-
bos, Abelson, and Black 1986). Much has
been learned about the abilities of indi-
viduals who attain expertise in particular
domains that can now be used to assess
expertise within groups of experts, and
between groups of experts and groups of
novices. Speci?cally, experts have been
shown to have knowledge structures
about a particular domain, while novices
do not (Lord and Maher 1990; Read 1987;
Galambos 1986; Glaser 1984). These
knowledge structures explain the
remarkable performance of experts in a
?eld (Charness, Krampe, and Mayr 1996;
Ericsson and Charness 1994; Abelson
and Black 1986).
New Venture Expertise
New venture formation expertise is
the extent to which an individual’s
expert script (or active knowledge struc-
ture) is suf?ciently developed to enable
him or her to successfully start-up and
sustain a new venture (Mitchell 1994;
Bull and Willard 1993). Recent research
has shown that individual entrepreneurs,
regardless of culture or geographical
location, share common experiences
during the conceptualization, start-up,
and growth of ventures, and therefore
share a similar script for new venture
formation (Mitchell et al. 2002, 2000).
Individuals who have started and con-
tinue to operate a business that is at least
two years old—or have started at least
three new ventures, at least one of which
was successful—are thought to possess
some meaningful level of new venture
formation expertise (Mitchell 1994).
Leddo and Abelson (1986) found evi-
dence in a series of experiments that
novices fail because they cannot deter-
mine which cues are important and
which are not important. Consequently,
they cannot enter and enact an appropri-
ate script. Experts, having deeper knowl-
edge, skills, experiences, and acumen
are able to access more highly developed
arrangements, willingness, and ability
scripts, which are necessary to achieve
high levels of performance. Drawing
on Leddo and Abelson’s (1986) work,
Mitchell (1994) proposed that entrepre-
neurial expertise requires suf?ciently
developed arrangements, willingness,
and ability scripts.
Arrangements Scripts
Venture arrangements scripts are the
active knowledge structures individuals
have about the use of contacts, relation-
ships, resources, assets, and other spe-
ci?c arrangements necessary to form a
new venture (Mitchell et al. 2000).
Having possession of or access to spe-
ci?c arrangements is thought to indi-
cate underlying expert arrangements
cognitions, but the possession or access
per se is not the script (Mitchell et al.
2000).
JOURNAL OF SMALL BUSINESS MANAGEMENT 516
At least four types of arrangements
are evident in the entrepreneurship
literature:
(1) Idea protection: accomplished when
patents, copyright, franchise agree-
ments, contracts, and other isolating
arrangements that serve to prevent
imitation are made (Rumelt 1987);
(2) Having resources: the extent to
which a prospective venturer con-
trols ?nancial and human capital
and other business assets and
resources necessary for new
venture formation (Vesper 1996);
(3) Access to resources: the extent to
which a prospective venturer has the
contacts and other access to needed
resources (Vesper 1996); and
(4) Venture speci?c skills: the extent to
which the prospective venturer has
capabilities that serve to provide
sustainable competitive advantage
for a new venture (Herron and
Robinson 1993; Cooper and
Dunkelberg 1987).
We thus de?ne arrangement scripts as
the active knowledge structures con-
cerned with the importance, acquisition,
and use of these arrangements.
Willingness Scripts
Venture willingness scripts are con-
cerned with commitment to venturing
and receptivity to the idea of starting a
venture. New venture formation requires
venture willingness, which includes at
least three dimensions:
(1) Seeking focus: an openness, orien-
tation, and drive to seek out new
situations and possibilities and to
try new things (Krueger and Brazeal
1994; Krueger and Dickson 1993);
(2) Commitment tolerance: a willing-
ness to “put your money where
your mouth is” and assume the risk
and responsibility of a new venture
(Ghemawat 1991); and
(3) Motivation: an attitude concerned
with “getting on with the task,” and
the belief that missing an op-
portunity is worse than trying and
failing (Sexton and Bowman 1985;
McClelland 1968).
We de?ne venture willingness scripts
as the active knowledge structures con-
cerned with seeking focus, commitment
tolerance, and motivation.
Ability Scripts
Venturing ability scripts are con-
cerned with the possession and masterful
deployment of the capabilities, skills,
knowledge, norms, and attitudes
required to be successful in new venture
development (Vesper 1996). At least
four cognitive dimensions of venturing
ability appear in the entrepreneurship
literature:
(1) Venture experience: the extent to
which an individual has been
directly involved in the start-up and
running of a new venture (Stuart
and Abetti 1990; Vesper 1996);
(2) Venturing diagnostic ability: the
ability to assess the condition and
potential of ventures and under-
stand the systematic elements
involved in new venture creation
(Boyd and Vozikis 1994; Krueger
and Carsrud 1993; Bird 1989);
(3) Venture situational knowledge: the
ability to draw on lessons learned in
a variety of ventures and apply
those lessons to a speci?c situation
(Vesper 1996); and
(4) Opportunity recognition capability:
the ability to see ways in which
both customer and venture value
can be created in new combinations
of people, materials, or products
(Kirzner 1982; Glade 1967).
We de?ne venture ability scripts as
the active knowledge structures con-
cerned with venture experience, ventur-
SEAWRIGHT, MITCHELL, AND SMITH 517
ing diagnostic ability, venture situational
knowledge, and opportunity recognition
capability.
Based upon the foregoing theory, the
empirical questions to be investigated in
this study are as follows:
(1) Are there differences in arrange-
ments, willingness, and ability cog-
nitions among Russian and U.S.
entrepreneurs and nonentrepre-
neurs?
(2) If differences are found, what are
those differences?
Methodology
This ex post facto study is based on
data collected using the survey methods
reported in this section. The methodol-
ogy we used to conduct this study is
reported in the following three sections:
(1) data collection; (2) measurement; and
(3) data analysis.
Data Collection
Data (n = 224) were gathered from
148 respondents in the western United
States and 76 respondents from the St.
Petersburg area in Russia. All survey
respondents had at least some business
experience or training. Given the dif?-
culty of accessing sampling frames for
probability samples in social science
research (Pedhazur and Schmelkin 1991)
and in international entrepreneurship
research (McDougall and Oviatt 1997,
p. 303), we used a purposeful sampling
approach. This approach relied upon the
combined judgment of the research team
and local assistants as survey respon-
dents of various industries, education
levels, ages, and backgrounds in busi-
ness experience were selected. Potential
respondents were identi?ed through
local chambers of commerce, small busi-
ness development centers, and local
business schools. The respondents in
this study were business owners, entre-
preneurs, midlevel employees from both
public and private sectors; in the United
States, some of the respondents were
business students (individuals age 22 or
older, with work experience).
Local assistants personally adminis-
tered a pretested, self-administered,
structured survey to participants.
Because only a small number of potential
respondents refused to participate, the
response rate was in excess of 95
percent.
Survey translation to Russian was
carefully managed. A native Russian
speaker that was ?uent in English trans-
lated the survey instrument into Russian.
One of the authors worked closely with
this native assistant, talking through the
meaning of each question to increase the
likelihood that appropriate meaning
would be communicated. The survey
was then back-translated by a native
English speaker who was ?uent in
Russian. Both translators met with one of
the researchers to reconcile discrepan-
cies. However, even with the care taken
in double-translation of the survey, it is
still limited, as it is founded upon theory
and methods derived from predomi-
nantly Western journals (Hofstede 1994).
The sample in this study is drawn
from two populations: practicing entre-
preneurs (new venture formation ex-
perts), and nonentrepreneurs (novices),
as shown in Table 1.
Measurement
Measurement of the variables used in
this study was accomplished as follows.
Expertise. Consistent with our concep-
tualization of entrepreneurial expertise,
respondents were asked to report their
level of entrepreneurial experience
in three categorically scaled choices
adopted from a study by Morse et al.
(1999). Respondents were classi?ed as
new venture formation experts if they
had either (1) started a business that has
been in existence for more than two
years; (2) started three or more busi-
nesses, at least one of which is currently
JOURNAL OF SMALL BUSINESS MANAGEMENT 518
successful; or (3) had substantial experi-
ence in funding or investing in new
ventures.
Cognitions. Arrangements, willingness,
and ability cognitions were measured
using the script-cue recognition
approach and items adopted from Mitch-
ell et al. (2000). These items are docu-
mented in the Appendix. The script-cue
recognition measurement method pre-
sents the respondent with a set of
dichotomous statements: one is a state-
ment that an expert would recognize as
being true and the other is a distracter
statement that is commonly thought to
be true (by nonexperts) but is not (Read
1987). The statements themselves are
not the scripts (cognitions), but they are
thought to indicate the existence of the
underlying scripts (Mitchell et al. 2000).
That is, what someone “knows” or “has”
at a point in time is evidence of “what”
and “how” they have been thinking. The
script-cues are, therefore, formative
indicators of the underlying cognitive
constructs: each item helps to de?ne the
meaning of the construct, but they are
independent components of the con-
structs and are, therefore, not expected
to be highly correlated. As argued by
Mitchell et al. (2000), based on a study
by Howell (1987, p. 121), it is conse-
quently inappropriate to expect unidi-
mensionality at the construct level, and it
is inappropriate to assess reliability at the
item level with Cronbach’s alpha, which
is based on interitem correlation. Follow-
ing Mitchell et al. (2000), we used con-
?rmatory principal components factor
analysis to con?rm the conceptualized
dimensions of the cognitive script con-
structs and found item loadings similar
to those found by Mitchell et al. (2000).
These ?ndings suggest that the measures
were suf?ciently valid to be useful in
examining the research questions. The
items were summed to create subcon-
structs and then summed again to create
measures of arrangements, willingness,
and ability scripts.
Data Analysis
The research questions call for an
examination of differences among U.S.
and Russian entrepreneurs and nonen-
trepreneurs. Differences among these
four groups were examined two ways:
(1) multivariate analysis of variance
(MANOVA); and (2) multiple discrimi-
nant analysis (MDA). The MANOVA
examined differences among the higher
order constructs of arrangements, will-
ingness, and ability cognitions. The dis-
criminant analysis examined which of
the subconstructs best differentiated the
four groups.
Table 1
Description of Sample
Groups U.S.
Experts
U.S.
Novices
Russian
Experts
Russian
Novices
Group totals 54 94 55 21
Percent of sample 24.1 42.0 24.6 9.4
Male 45 61 38 10
Female 9 33 17 11
Mean age 44 29 37 35
Years education 15.3 14.9 15.7 14.9
SEAWRIGHT, MITCHELL, AND SMITH 519
Results
In response to research question 1, as
evidenced by a signi?cant multivariate F
statistic (Table 2), signi?cant differences
were found in the cognitions of Russian
and U.S. entrepreneurs and nonentrepre-
neurs. Signi?cant differences were found
for all three cognition constructs
(univariate F, Table 2, p = .0000), indicat-
ing differences among at least two of the
groups, for all three types of scripts. And
in answer to research question 2, post
hoc tests found that (1) U.S. experts have
higher arrangements, willingness, and
ability scripts than either U.S. or Russian
novices; (2) Russian experts have higher
arrangements scripts than Russian
novices, but not signi?cantly higher will-
ingness or ability scripts. Russian experts
may also have higher arrangements
scripts than U.S. novices (p = .051), but
this result requires further investigation
because our ?nding approached signi?-
cance only at the .05 level; (3) U.S.
experts do not have signi?cantly higher
arrangements, willingness, or ability
scripts than Russian experts (although
the mean scores are higher, this result
may be a statistical power issue); and (4)
U.S. novices have signi?cantly lower
ability scripts than Russian novices but
not signi?cantly different willingness or
arrangements scripts.
To begin to understand which arrange-
ments, willingness, and ability scripts
were driving these observed differences,
we used multiple discriminant analysis,
with the four expertise groups as the
dependent variable and the eleven script
subconstructs as the independent vari-
ables. The discriminant analysis, pre-
sented in Table 3, found three signi?cant
discriminant functions, the ?rst two of
which accounted for 90 percent of the
discriminating power. When we inter-
preted the signi?cant function loadings,
we found that the ?rst function (which
had 53 percent of the discriminating
power) is highly aligned with the ability
script of venture situational knowledge.
The second function is highly aligned
with the arrangements script of resource
access and the willingness script of
seeking focus. The third function is highly
aligned with the arrangements script of
resource possession and the willingness
script of opportunity motivation. The
group centroids (Table 3) indicate that
(lower) venture situational knowledge
script differentiates U.S. novices from the
other groups; that (higher) resource
access scripts and seeking focus scripts
differentiate U.S. experts from the other
groups, and from Russian novices in par-
ticular; and (higher) resource possession
scripts and opportunity motivation scripts
differentiate Russian experts from the
other groups.
Discussion
In this study we use an information-
processing theory-based approach to
represent and analyze entrepreneurial
cognitions operating in two distinct
socioeconomic settings, Russia and the
United States. Our ?ndings of similarities
and differences among Russian and U.S.
experts and novices with respect to
Arrangements, Willingness, and Oppor-
tunity scripts informs our guiding
research question: What explains unex-
pectedly low levels of entrepreneurship
in the emerging market economy of
Russia? Our results suggest that in addi-
tion to markets and money, “mind,” or
cognitions, need to be considered as a
plausible explanation—both in itself
and in relation to markets and money.
This is re?ected in the suggestion of
the internationally renowned economist,
Hernando De Soto (2000):
One of the greatest challenges
to the human mind is to compre-
hend and to gain access to those
things we know exist but cannot
see. Not everything that is real
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SEAWRIGHT, MITCHELL, AND SMITH 521
beings have invented represen-
tational systems—writing, musical
notation, double-entry book-
keeping—to grasp with the mind
what human hands could never
touch. (p. 7)
With that in mind we discuss the
entrepreneurial cognition research and
public policy implications of our results
and conclude with directions for future
research.
Implications for Entrepreneurial
Cognition Research
The entrepreneurial cognition re-
search stream has developed to assist
scholars in effectively conceptualizing
relationships concerning the thinking
and individual decision-making involved
in entrepreneurship. We have utilized
concepts from this research stream to
compare and contrast entrepreneurial
cognitions in both the United States and
Russia. Over the past decade, the entre-
preneurial cognition literature has seen
substantial development, especially in
the focal area of this article: the exami-
nation of cognitions relating to differ-
ences between entrepreneurs and
nonentrepreneurs in entrepreneurial
decision-making. Within the larger ?eld
of entrepreneurial cognitions, explana-
tions for such differences include both
Table 3
Discriminant Analysis
Discriminant Discriminant Discriminant
Function 1 Function 2 Function 3
Eigen Value 0.290 0.205 0.053
Signi?cance level (p
During this file account comparative entrepreneurial cognitions and lagging russian new venture formation.
Comparative Entrepreneurial Cognitions and
Lagging Russian NewVenture Formation:
A Tale of Two Countries*
by Kristie W. Seawright, Ronald K. Mitchell, and J. Brock Smith
Changes in Russian government and economic systems over the last 15 years led to
expectations of increased entrepreneurial activity. Yet potential entrepreneurs are
deciding to venture at a much lower rate than anticipated. New venture creation in
Russia is occurring at a rate that is considerably lower than that of the United States
and Western Europe.
This research examines cognitive similarities and differences among Russian and
U.S. entrepreneurs and nonentrepreneurs to ?nd a possible explanation. Multivariate
analysis of variance and multiple discriminant analysis results found similarities
between U.S. and Russian experts and U.S. and Russian novices with respect to
arrangements, willingness, and ability scripts, but differences in these scripts were
found between experts and novices, particularly in Russia. Implications for entrepre-
neurship cognition research and public policy are discussed.
Introduction
Many experts expected Russia’s
movement from a planned to a market
economy to make a positive economic
difference. Instead, economic progress in
Russia has lagged, and people are won-
dering why Western-style entrepreneur-
ship is not helping more. Until recently,
per capita and real gross domestic
*The authors wish to thank the Center for Entrepreneurship at Brigham Young University, the
Jean Austin Bagley Endowment, and the Donald L. Staheli Fellowship for support for this project.
Kristie W. Seawright is an associate professor and Staheli Fellow of International Business
in the Marriott School at Brigham Young University.
Ronald K. Mitchell is a professor of entrepreneurship, and holds the Jean Austin Bagley
Regents Chair in Management in the Rawls College of Business at Texas Tech University.
J. Brock Smith is a professor of marketing and entrepreneurship and is Winspear Scholar in
the Faculty of Business at the University of Victoria.
Address correspondence to: Kristie W. Seawright, Department of Business Management, 766
TNRB, Brigham Young University, Provo, UT 84602. Tel: (801) 422-4563. Fax: (801) 422-0311.
E-mail: [email protected].
Journal of Small Business Management 2008 46(4), pp. 512–535
JOURNAL OF SMALL BUSINESS MANAGEMENT 512
product (GDP) (World Bank 2002, 1999),
along with manufacturing capacity
(Chazen 2005), has steadily declined
(McCarthy et al. 2005). Currently ob-
served economic growth is taking place
primarily in the natural resource sector,
contributing to skepticism concerning
Russia’s long-term development potential
(Ahrend and Tompson 2005). Aging pro-
duction technology and minimal capital
to invest in newtechnologies have limited
productivity improvements (Gurkov
2005; Mugler 2000). These factors com-
bine to slow Russia’s economic growth to
lower levels than were previously
expected, leaving Russians less able to
compete in the global marketplace. Poli-
cymakers ask, what happened?
During the early 1990s, hope was high
for Russian economic progress, built
upon the anticipated foundation of priva-
tization and new venture formation.
Development of a small to medium-size
enterprise (SME) sector was expected
to raise the Russian standard of living,
create wealth, and increase employment
(Dickinson 2004). Yet this sector, which
provides an average of 70 percent of GDP
in European economies, currently
accounts for only 12 percent of Russian
GDP (van Stel, Carree, and Thurik 2005;
Wennekers et al. 2005; Belton 2000).
New-venture creation was expected to
take the lead in developing the SME
sector, yet Russian entrepreneurial activ-
ity rates among the lowest in the world,
with 2.5 percent of the workforce estab-
lishing newventures, as compared to 10.5
percent in the United States and 12.0
percent globally (Reynolds et al. 2002).
The lag in Russian new venture devel-
opment, as compared to similar develop-
ment in the United States, highlights the
need to understand the factors underly-
ing entrepreneurial capability (Stewart
et al. 2003; Puffer, McCarthy, and Peter-
son 2001). Is it the market, the money, or
the mind?
Some think that Russian entrepre-
neurs do not understand the workings of
free markets and are less able to compete
than entrepreneurs having more exten-
sive experience in a market economy
(McCarthy et al. 2005; Snavely, Mias-
soedov, and McNeilly 1998; Gibb 1996;
Ponomarev and Gribankova 1996;
Brenner 1992). According to this point
of view, potential entrepreneurs are
perceived to be hampered by lack of
experience with market-based business,
resulting in insuf?cient maturity in risk-
taking and demand-identi?cation skills.
Others suggest that the decision to
venture is most negatively in?uenced by
the lack of capital and other needed
connections (Kuznetsov, McDonald, and
Kuznetsova 2000; Organization for Eco-
nomic Co-operation and Development
2000; Wallace 1996). In this article we
explore the third possibility: that of
“mind,” or entrepreneurial cognitions.
Cognition-based explanations of entre-
preneurial activity have recently gained
the interest of business and entrepreneur-
ship scholars (e.g., Mitchell et al. 2004;
Forbes 1999). Cognition-based constructs
have been found to be fruitful in better
understanding strategy and performance
(Johnson and Hoopes 2003), opportunity
recognition (Gaglio 2004), decision-
making processes and outcomes (Simon,
Houghton, and Aquino 1999; Baron 1998;
Busenitz and Barney 1997); and the
venture creation decision across cultures
and countries (Mitchell et al. 2002, 2000).
While there are noncognitive contextual,
emotional, or individual factors that affect
entrepreneurial behavior and outcomes,
the cognition-based perspective is com-
pelling in that it suggests that much of
what entrepreneurs do and how well they
do it depends on their active knowledge
structures: what they knowand what they
do with that information. We therefore
wonder if there are cognition-based
explanations for signi?cant variance in
observed differences between Russian
and U.S. entrepreneurship. If so, what are
the policy implications for encouraging
Russians to venture?
SEAWRIGHT, MITCHELL, AND SMITH 513
The purpose of this study is, there-
fore, to empirically examine the cogni-
tive capabilities of entrepreneurs and
nonentrepreneurs in Russia and to
compare them with their Western coun-
terparts, using an accepted cognition-
based analytical methodology (e.g.,
Mitchell et al. 2002, 2000; Morse et al.
1999; Mitchell and Seawright 1995), in
order to increase understanding of the
necessary factors underlying entrepre-
neurial expertise. In their 2002 article,
Mitchell et al. question the extent to
which development within a given
country is tied to the opportunity identi-
?cation process. Our analytical compari-
son of Russia to the United States is
suggested as an empirical case study that
attempts to address this question. Thus,
in this study, a comparison was made
among entrepreneurs and nonentrepre-
neurs from Russia and the United States.
Our argument proceeds according
to the following steps. We ?rst present
a synopsis of the situation in Russia.
Then, we summarize relevant literature
on information processing, entrepre-
neurial cognitions, and cognitive capa-
bilities. We next discuss our research
methodology and present the results of
the data analysis. Finally, in the conclud-
ing section we suggest implications for
public policy and entrepreneurial cogni-
tion research.
Entrepreneurship in
Russia
Krueger (1993) points out that the
current situation in Russia stems from
decentralization efforts that took place
during perestroika. Under perestroika,
managerial decisions were handed down
to lower levels without market mecha-
nisms in place to guide those decisions.
This procedure created a mismatch,
and with it, entrepreneurial opportunity.
Prices were ?xed by central administra-
tors, yet product mix decisions were del-
egated to lower management levels, with
the reward system stressing production
of higher-end products. This led to
decreased volumes or elimination of pro-
duction of lower-end goods. Shortages of
these products opened market niches
that were not ?lled by the public sector,
creating problems in the economy but
opportunities for entrepreneurs (Isakova
1997).
Gimpel’son (1993) suggested that
entrepreneurship in Russia is not as new
as one might expect, given recent
history. He traced three stages of Russian
entrepreneurial development through
the past three decades. During the ?rst
stage, starting in the 1960s and continu-
ing until 1987, an underground private
sector began developing to meet market
needs not supplied by centrally planned
production. From 1987 until 1991,
during the short second stage, per-
estroika allowed partial legalization
of private entrepreneurship in certain
markets. In the third stage, beginning in
1991 and continuing to today, progress
has been made toward full legalization of
private entrepreneurship.
Legalization, however, has not paved
an easy path for the nascent Russian
entrepreneur. Even though new start-up
ventures have been shown to be more
ef?cient contributors to economic devel-
opment in Russia than either state-
owned enterprises or privatized ?rms
(Johnson and Loveman 1995), entre-
preneurs have encountered economic,
political, and cultural dif?culties in their
efforts to strengthen a ?edgling SME
sector in the transition economy.
Several generations of the Soviet
system promoted the value of large
enterprises. Marxism-Leninism tended
to view the nation of the USSR as one
immense corporation (Aslund 2002).
This attitude of “bigger is better” has
decreased the perceived value of SMEs
as an important element of economic
growth. The lack of essential economic
infrastructures, such as legal and
banking systems, has also been credited
with contributing to the SME sector’s
JOURNAL OF SMALL BUSINESS MANAGEMENT 514
inability to play a major role in the
Russian economic transition (McFaul,
Petrov, and Ryabov 2004).
Political realities have also been
seen as nonsupportive of SME growth. A
considerable segment of President
Putin’s political capital stems from large
Russian conglomerates—known as the
Oligarchs—whose interests are best
served through curtailed SME-sector
expansion (Shevtsova 2003). Addition-
ally, unstable tax rates (Aslund 2002) and
large, unof?cial yet essential payments
to government and criminal gatekeepers
(Johnson, McMillan, and Woodruff 2000)
appear to discourage the emergence of
new business ventures.
Decades of established cultural norms
and values have created negative impres-
sions of entrepreneurs. The lack of legal
and market infrastructures encourages
self-serving business behaviors, support-
ing the image of entrepreneurs as unfair,
dishonest, and immoral (Kuznetsov and
Kuznetsova 2005). Modern entrepreneur-
ial culture and widespread acceptance of
entrepreneurship have been slow to
develop in Russia during the economic
and political transition. These perspec-
tives result from both a holdover attitude
from the communist days as well as the
current in?uence of organized crime.
Despite these limitations, reports
suggest that the SME sector, dominated
by entrepreneurial businesses, contrib-
utes from 10 percent (Shevtsova 2003,
p. 288, n2) to 20 percent (Aslund 2002,
p. 286) of the Russian GDP. Entrepre-
neurship has not supplied the economic
growth that was anticipated following
the dissolution of the Soviet Union; but
there is visible success among some
Russian entrepreneurs.
It is important, however, to note that
entrepreneurial development has not
consistently expanded across the vast
nation of Russia. During the past decade,
advances in business privatization and
international trade have centered in
Russia’s two largest cities: Moscow and
St. Petersburg (Zashev 2004; Russian
Ministry of Economic Development and
Trade 2003). Growth and maturation in
new venture enterprises are also more
prominent in these Russian commercial
centers (Kihlgren 2003). The disparity in
new venture creation and small-business
growth in different regions of this exten-
sive country highlights the need to
emphasize examination of entrepreneurs
in the major cities of European Russia,
where entrepreneurial progress has
occurred concurrently with efforts toward
privatization of state-owned enterprises.
When compared to other types of
privatization efforts, new venture forma-
tion appears to be key to productivity,
quality, and competitiveness improve-
ment in the Russian economy (World
Bank 1999; Ermakov 1996; Weisskopf
1994). For example, entrepreneurship
eliminates many problems found in the
privatization of state-owned enterprises
because the venturer is motivated to
operate ef?ciently and effectively in
order to competitively ?ll the identi?ed
market need (Aslund 2002). Unlike the
privatization of existing operations, new
venture formation does not threaten to
cause unemployment; in fact, it creates
meaningful employment with higher
income potential than can be available
in inef?cient operations struggling to
marketize. However, an open question
remains: do potential entrepreneurs from
Russia’s previously planned economy
have the cognitive foundation needed to
move forward and to choose to partici-
pate in free-enterprise venturing? This
question leads us to apply an expertise-
based approach to conducting this
research.
Social Cognition and
Expertise
Cognitions comprise all processes by
which sensory input is transformed,
reduced, elaborated, stored, recovered,
and used (e.g., Neisser 1967). They also
SEAWRIGHT, MITCHELL, AND SMITH 515
involve thoughts about “a comprehen-
sive reality that consists of knowledge
and its manner of use by a person in a
given situation” (Fiske and Taylor 1984).
Repeated cognitions are organized
within long-term memory as scripts, or
action-based knowledge structures (e.g.,
Lord and Maher 1990). Thus, scripts
possess the characteristics of being
highly developed, sequentially ordered
information in a speci?c ?eld that is
utilized according to discipline-speci?c
norms or processes (Read 1987; Glaser
1984). Scripts are more than simply
knowledge, because they invoke and
guide procedural and normative
processes. The discovery of knowledge
structures as a phenomenon in social/
cognitive psychology forms the founda-
tion of the expert information processing
branch of social cognition research (Lord
and Maher 1990) and explains why
experts and novices are expected to
differ on more than just knowledge, but
also in how to use it.
The study of expertise by information
processing theorists has been under-
taken mainly in the development of arti-
?cial intelligence, speci?cally in the
development of expert systems (Galam-
bos, Abelson, and Black 1986). Much has
been learned about the abilities of indi-
viduals who attain expertise in particular
domains that can now be used to assess
expertise within groups of experts, and
between groups of experts and groups of
novices. Speci?cally, experts have been
shown to have knowledge structures
about a particular domain, while novices
do not (Lord and Maher 1990; Read 1987;
Galambos 1986; Glaser 1984). These
knowledge structures explain the
remarkable performance of experts in a
?eld (Charness, Krampe, and Mayr 1996;
Ericsson and Charness 1994; Abelson
and Black 1986).
New Venture Expertise
New venture formation expertise is
the extent to which an individual’s
expert script (or active knowledge struc-
ture) is suf?ciently developed to enable
him or her to successfully start-up and
sustain a new venture (Mitchell 1994;
Bull and Willard 1993). Recent research
has shown that individual entrepreneurs,
regardless of culture or geographical
location, share common experiences
during the conceptualization, start-up,
and growth of ventures, and therefore
share a similar script for new venture
formation (Mitchell et al. 2002, 2000).
Individuals who have started and con-
tinue to operate a business that is at least
two years old—or have started at least
three new ventures, at least one of which
was successful—are thought to possess
some meaningful level of new venture
formation expertise (Mitchell 1994).
Leddo and Abelson (1986) found evi-
dence in a series of experiments that
novices fail because they cannot deter-
mine which cues are important and
which are not important. Consequently,
they cannot enter and enact an appropri-
ate script. Experts, having deeper knowl-
edge, skills, experiences, and acumen
are able to access more highly developed
arrangements, willingness, and ability
scripts, which are necessary to achieve
high levels of performance. Drawing
on Leddo and Abelson’s (1986) work,
Mitchell (1994) proposed that entrepre-
neurial expertise requires suf?ciently
developed arrangements, willingness,
and ability scripts.
Arrangements Scripts
Venture arrangements scripts are the
active knowledge structures individuals
have about the use of contacts, relation-
ships, resources, assets, and other spe-
ci?c arrangements necessary to form a
new venture (Mitchell et al. 2000).
Having possession of or access to spe-
ci?c arrangements is thought to indi-
cate underlying expert arrangements
cognitions, but the possession or access
per se is not the script (Mitchell et al.
2000).
JOURNAL OF SMALL BUSINESS MANAGEMENT 516
At least four types of arrangements
are evident in the entrepreneurship
literature:
(1) Idea protection: accomplished when
patents, copyright, franchise agree-
ments, contracts, and other isolating
arrangements that serve to prevent
imitation are made (Rumelt 1987);
(2) Having resources: the extent to
which a prospective venturer con-
trols ?nancial and human capital
and other business assets and
resources necessary for new
venture formation (Vesper 1996);
(3) Access to resources: the extent to
which a prospective venturer has the
contacts and other access to needed
resources (Vesper 1996); and
(4) Venture speci?c skills: the extent to
which the prospective venturer has
capabilities that serve to provide
sustainable competitive advantage
for a new venture (Herron and
Robinson 1993; Cooper and
Dunkelberg 1987).
We thus de?ne arrangement scripts as
the active knowledge structures con-
cerned with the importance, acquisition,
and use of these arrangements.
Willingness Scripts
Venture willingness scripts are con-
cerned with commitment to venturing
and receptivity to the idea of starting a
venture. New venture formation requires
venture willingness, which includes at
least three dimensions:
(1) Seeking focus: an openness, orien-
tation, and drive to seek out new
situations and possibilities and to
try new things (Krueger and Brazeal
1994; Krueger and Dickson 1993);
(2) Commitment tolerance: a willing-
ness to “put your money where
your mouth is” and assume the risk
and responsibility of a new venture
(Ghemawat 1991); and
(3) Motivation: an attitude concerned
with “getting on with the task,” and
the belief that missing an op-
portunity is worse than trying and
failing (Sexton and Bowman 1985;
McClelland 1968).
We de?ne venture willingness scripts
as the active knowledge structures con-
cerned with seeking focus, commitment
tolerance, and motivation.
Ability Scripts
Venturing ability scripts are con-
cerned with the possession and masterful
deployment of the capabilities, skills,
knowledge, norms, and attitudes
required to be successful in new venture
development (Vesper 1996). At least
four cognitive dimensions of venturing
ability appear in the entrepreneurship
literature:
(1) Venture experience: the extent to
which an individual has been
directly involved in the start-up and
running of a new venture (Stuart
and Abetti 1990; Vesper 1996);
(2) Venturing diagnostic ability: the
ability to assess the condition and
potential of ventures and under-
stand the systematic elements
involved in new venture creation
(Boyd and Vozikis 1994; Krueger
and Carsrud 1993; Bird 1989);
(3) Venture situational knowledge: the
ability to draw on lessons learned in
a variety of ventures and apply
those lessons to a speci?c situation
(Vesper 1996); and
(4) Opportunity recognition capability:
the ability to see ways in which
both customer and venture value
can be created in new combinations
of people, materials, or products
(Kirzner 1982; Glade 1967).
We de?ne venture ability scripts as
the active knowledge structures con-
cerned with venture experience, ventur-
SEAWRIGHT, MITCHELL, AND SMITH 517
ing diagnostic ability, venture situational
knowledge, and opportunity recognition
capability.
Based upon the foregoing theory, the
empirical questions to be investigated in
this study are as follows:
(1) Are there differences in arrange-
ments, willingness, and ability cog-
nitions among Russian and U.S.
entrepreneurs and nonentrepre-
neurs?
(2) If differences are found, what are
those differences?
Methodology
This ex post facto study is based on
data collected using the survey methods
reported in this section. The methodol-
ogy we used to conduct this study is
reported in the following three sections:
(1) data collection; (2) measurement; and
(3) data analysis.
Data Collection
Data (n = 224) were gathered from
148 respondents in the western United
States and 76 respondents from the St.
Petersburg area in Russia. All survey
respondents had at least some business
experience or training. Given the dif?-
culty of accessing sampling frames for
probability samples in social science
research (Pedhazur and Schmelkin 1991)
and in international entrepreneurship
research (McDougall and Oviatt 1997,
p. 303), we used a purposeful sampling
approach. This approach relied upon the
combined judgment of the research team
and local assistants as survey respon-
dents of various industries, education
levels, ages, and backgrounds in busi-
ness experience were selected. Potential
respondents were identi?ed through
local chambers of commerce, small busi-
ness development centers, and local
business schools. The respondents in
this study were business owners, entre-
preneurs, midlevel employees from both
public and private sectors; in the United
States, some of the respondents were
business students (individuals age 22 or
older, with work experience).
Local assistants personally adminis-
tered a pretested, self-administered,
structured survey to participants.
Because only a small number of potential
respondents refused to participate, the
response rate was in excess of 95
percent.
Survey translation to Russian was
carefully managed. A native Russian
speaker that was ?uent in English trans-
lated the survey instrument into Russian.
One of the authors worked closely with
this native assistant, talking through the
meaning of each question to increase the
likelihood that appropriate meaning
would be communicated. The survey
was then back-translated by a native
English speaker who was ?uent in
Russian. Both translators met with one of
the researchers to reconcile discrepan-
cies. However, even with the care taken
in double-translation of the survey, it is
still limited, as it is founded upon theory
and methods derived from predomi-
nantly Western journals (Hofstede 1994).
The sample in this study is drawn
from two populations: practicing entre-
preneurs (new venture formation ex-
perts), and nonentrepreneurs (novices),
as shown in Table 1.
Measurement
Measurement of the variables used in
this study was accomplished as follows.
Expertise. Consistent with our concep-
tualization of entrepreneurial expertise,
respondents were asked to report their
level of entrepreneurial experience
in three categorically scaled choices
adopted from a study by Morse et al.
(1999). Respondents were classi?ed as
new venture formation experts if they
had either (1) started a business that has
been in existence for more than two
years; (2) started three or more busi-
nesses, at least one of which is currently
JOURNAL OF SMALL BUSINESS MANAGEMENT 518
successful; or (3) had substantial experi-
ence in funding or investing in new
ventures.
Cognitions. Arrangements, willingness,
and ability cognitions were measured
using the script-cue recognition
approach and items adopted from Mitch-
ell et al. (2000). These items are docu-
mented in the Appendix. The script-cue
recognition measurement method pre-
sents the respondent with a set of
dichotomous statements: one is a state-
ment that an expert would recognize as
being true and the other is a distracter
statement that is commonly thought to
be true (by nonexperts) but is not (Read
1987). The statements themselves are
not the scripts (cognitions), but they are
thought to indicate the existence of the
underlying scripts (Mitchell et al. 2000).
That is, what someone “knows” or “has”
at a point in time is evidence of “what”
and “how” they have been thinking. The
script-cues are, therefore, formative
indicators of the underlying cognitive
constructs: each item helps to de?ne the
meaning of the construct, but they are
independent components of the con-
structs and are, therefore, not expected
to be highly correlated. As argued by
Mitchell et al. (2000), based on a study
by Howell (1987, p. 121), it is conse-
quently inappropriate to expect unidi-
mensionality at the construct level, and it
is inappropriate to assess reliability at the
item level with Cronbach’s alpha, which
is based on interitem correlation. Follow-
ing Mitchell et al. (2000), we used con-
?rmatory principal components factor
analysis to con?rm the conceptualized
dimensions of the cognitive script con-
structs and found item loadings similar
to those found by Mitchell et al. (2000).
These ?ndings suggest that the measures
were suf?ciently valid to be useful in
examining the research questions. The
items were summed to create subcon-
structs and then summed again to create
measures of arrangements, willingness,
and ability scripts.
Data Analysis
The research questions call for an
examination of differences among U.S.
and Russian entrepreneurs and nonen-
trepreneurs. Differences among these
four groups were examined two ways:
(1) multivariate analysis of variance
(MANOVA); and (2) multiple discrimi-
nant analysis (MDA). The MANOVA
examined differences among the higher
order constructs of arrangements, will-
ingness, and ability cognitions. The dis-
criminant analysis examined which of
the subconstructs best differentiated the
four groups.
Table 1
Description of Sample
Groups U.S.
Experts
U.S.
Novices
Russian
Experts
Russian
Novices
Group totals 54 94 55 21
Percent of sample 24.1 42.0 24.6 9.4
Male 45 61 38 10
Female 9 33 17 11
Mean age 44 29 37 35
Years education 15.3 14.9 15.7 14.9
SEAWRIGHT, MITCHELL, AND SMITH 519
Results
In response to research question 1, as
evidenced by a signi?cant multivariate F
statistic (Table 2), signi?cant differences
were found in the cognitions of Russian
and U.S. entrepreneurs and nonentrepre-
neurs. Signi?cant differences were found
for all three cognition constructs
(univariate F, Table 2, p = .0000), indicat-
ing differences among at least two of the
groups, for all three types of scripts. And
in answer to research question 2, post
hoc tests found that (1) U.S. experts have
higher arrangements, willingness, and
ability scripts than either U.S. or Russian
novices; (2) Russian experts have higher
arrangements scripts than Russian
novices, but not signi?cantly higher will-
ingness or ability scripts. Russian experts
may also have higher arrangements
scripts than U.S. novices (p = .051), but
this result requires further investigation
because our ?nding approached signi?-
cance only at the .05 level; (3) U.S.
experts do not have signi?cantly higher
arrangements, willingness, or ability
scripts than Russian experts (although
the mean scores are higher, this result
may be a statistical power issue); and (4)
U.S. novices have signi?cantly lower
ability scripts than Russian novices but
not signi?cantly different willingness or
arrangements scripts.
To begin to understand which arrange-
ments, willingness, and ability scripts
were driving these observed differences,
we used multiple discriminant analysis,
with the four expertise groups as the
dependent variable and the eleven script
subconstructs as the independent vari-
ables. The discriminant analysis, pre-
sented in Table 3, found three signi?cant
discriminant functions, the ?rst two of
which accounted for 90 percent of the
discriminating power. When we inter-
preted the signi?cant function loadings,
we found that the ?rst function (which
had 53 percent of the discriminating
power) is highly aligned with the ability
script of venture situational knowledge.
The second function is highly aligned
with the arrangements script of resource
access and the willingness script of
seeking focus. The third function is highly
aligned with the arrangements script of
resource possession and the willingness
script of opportunity motivation. The
group centroids (Table 3) indicate that
(lower) venture situational knowledge
script differentiates U.S. novices from the
other groups; that (higher) resource
access scripts and seeking focus scripts
differentiate U.S. experts from the other
groups, and from Russian novices in par-
ticular; and (higher) resource possession
scripts and opportunity motivation scripts
differentiate Russian experts from the
other groups.
Discussion
In this study we use an information-
processing theory-based approach to
represent and analyze entrepreneurial
cognitions operating in two distinct
socioeconomic settings, Russia and the
United States. Our ?ndings of similarities
and differences among Russian and U.S.
experts and novices with respect to
Arrangements, Willingness, and Oppor-
tunity scripts informs our guiding
research question: What explains unex-
pectedly low levels of entrepreneurship
in the emerging market economy of
Russia? Our results suggest that in addi-
tion to markets and money, “mind,” or
cognitions, need to be considered as a
plausible explanation—both in itself
and in relation to markets and money.
This is re?ected in the suggestion of
the internationally renowned economist,
Hernando De Soto (2000):
One of the greatest challenges
to the human mind is to compre-
hend and to gain access to those
things we know exist but cannot
see. Not everything that is real
and useful is tangible and visible.
. . . Throughout history, human
JOURNAL OF SMALL BUSINESS MANAGEMENT 520
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beings have invented represen-
tational systems—writing, musical
notation, double-entry book-
keeping—to grasp with the mind
what human hands could never
touch. (p. 7)
With that in mind we discuss the
entrepreneurial cognition research and
public policy implications of our results
and conclude with directions for future
research.
Implications for Entrepreneurial
Cognition Research
The entrepreneurial cognition re-
search stream has developed to assist
scholars in effectively conceptualizing
relationships concerning the thinking
and individual decision-making involved
in entrepreneurship. We have utilized
concepts from this research stream to
compare and contrast entrepreneurial
cognitions in both the United States and
Russia. Over the past decade, the entre-
preneurial cognition literature has seen
substantial development, especially in
the focal area of this article: the exami-
nation of cognitions relating to differ-
ences between entrepreneurs and
nonentrepreneurs in entrepreneurial
decision-making. Within the larger ?eld
of entrepreneurial cognitions, explana-
tions for such differences include both
Table 3
Discriminant Analysis
Discriminant Discriminant Discriminant
Function 1 Function 2 Function 3
Eigen Value 0.290 0.205 0.053
Signi?cance level (p