Links To Competitiveness Of South African Ventures

Description
In such a brief outline around links to competitiveness of south african ventures.

352

SAJEMS NS 15 (2012) No 4

TRACKING THE VENTURE CREATION PHASES IN TERMS OF
ENTREPRENEURIAL SELF-EFFICACY: LINKS TO COMPETITIVENESS
OF SOUTH AFRICAN VENTURES
Boris Urban
Wits Business School
Accepted: May 2012
Abstract
Examining entrepreneurial self-efficacy across venture creation phases is important as research indicates
that behaviours to which self-efficacy corresponds are largely concerned with new-venture formation
processes and as such are required of entrepreneurs well beyond the point of founding. Hypotheses are
formulated, which take into account the sequential nature of entrepreneurial tasks in the venture process. A
multidimensional instrument is used to collect data from medium businesses (n = 199). Correlational and
regression analysis are performed where empirical evidence supports that entrepreneurial self-efficacy
during searching, planning, marshalling resources and implementing people phases of venturing are
significantly associated with the competitiveness of the venture. Implications of this study can be advanced
to the policy domain where it needs to be stressed that government initiatives will affect venture
sustainability only if these policies are conceived in a way that influences entrepreneurial self-efficacy.
Key words: venture creation phases, entrepreneurial self-efficacy, competitiveness, skills, entrepreneurial
tasks, South Africa

JEL: D8, J24, L26, M13

1
Introduction
Extant literature demonstrates that new firm
formation is a specific, identifiable organisational
process that has been subjected to previous
empirical research (De Clercq & Arenius,
2006; Kickul, Gundry, Barbosa & Whitcanack,
2009; Mueller & Goic, 2003; Newbert, 2005).
Of particular research interest has been
the identification of factors, characteristics,
and conditions which foster entrepreneurial
processes, new venture creation and contributing
successes factors (McGee, Peterson, Mueller &
Sequeira, 2009). By positioning the new firm
formation process as a dynamic capability
(Newbert, 2005), a common set of gestation
activities emerge for successful entrepreneurship,
where entrepreneurs typically emphasise
different venture creation steps to outperform
the competition (Goel, Gonzalez-Moreno &
Saez-Martines, 2003).
New venture creation is typically concepttualised in terms of broad stages or as

entrepreneurial tasks within a venture creation
phases model (Clouse, 1991; Farrington, Venter,
Eybers & Boshoff, 2011; McGee et al., 2009;
Stevenson & Jarillo, 1990; Timmons, 2002;
Vesper, 1996). The transition of individuals
from one stage of an entrepreneurial process to
another is often the result of a combination of
various motivational and cognition components
where environmental conditions and opportunities also play a role (Luiz & Mariotti,
2011; Shane, Locke & Collins, 2003).
However, environmental factors being held
constant, researchers argue (Shane et al., 2003;
Urban, 2010) that human motivation plays a
critical role in the entrepreneurial process.
Being motivated is not only considered an
integral aspect of the entrepreneurial process
but must be supplemented with the requisite
skills and competencies (Bandura, 1986; 1997;
2001). Unless individuals perceive themselves
as capable and willing to be entrepreneurial,
their venture will remain uncompetitive and
underperforming. Recent research finds that
although motivation is implied, or assumed, in

SAJEMS NS 15 (2012) No 4

papers on intentions, scripts, and cognitive
maps to entrepreneurial behaviours, it remains
largely under researched despite its critical
importance to predicting and explaining entrepreneurial behaviours (Carsrud & Brannback,
2011). This paper responds to calls for
research (Poon, Ainuddin & Junit, 2006) in
this direction by investigating entrepreneurial
self-efficacy (ESE) across the venture creation
phases and attempts to establish links with the
competitiveness of medium-sized firms.
Research finds those with higher entrepreneurial self-efficacy as perceiving their
environment as more opportunistic rather than
fraught with risks, and they tend to believe in
their ability to influence the achievement of
goals (Chen, Greene & Crick, 1998; De Noble,
Jung & Ehrlich, 1999). Since ESE refers to
cognitive evaluations of personal capabilities
with reference to specific tasks of entrepreneurship, it achieves the entrepreneurial
distinctiveness that is well suited to tracking
the venture creation phases (Chen et al., 1998;
De Noble et al., 1999; McGee et al., 2009).
Many individuals in emerging economies
may have the desire to pursue entrepreneurial
ventures but are not engaging because they
are lacking in self-belief and requisite
entrepreneurial skills (Luthans, Stajkovic &
Ibrayeva, 2000). Research confirms this lack
of “can-do” attitude is prevalent in South
Africa, where not only is there a sense of
entitlement and an expectation that big
business, government and others should create
jobs, rather than one creating one’s own
employment, but aspiring entrepreneurs have
low levels of self-belief, experience, inadequate
education, and lack of access to finance and
business-orientated networks (Herrington, Kew
& Kew, 2010; Urban, 2006). While it is widely
recognised that new ventures are pivotal to the
growth and development of the South African
economy, and inextricably linked to economic
empowerment, job creation, and employment
within disadvantaged communities (Gauteng
Provincial Government, 2008), most entrepreneurs are restricted by their scarcity of skills,
business knowledge and resources in their
ability to grow and create competitive ventures
(Urban, Van Vuuren & Barreira, 2008).
Although substantial research exists interrogating links between start-up motivations

353

and entrepreneurial intentions (Edelman,
Brush, Manolova & Greene, 2010; Hmieleski
& Corbett, 2006) there is still limited
understanding of ESE’s role in the new venture’s
performance after start-up. Examining ESE
across venture creation phases is pertinent as
research indicates that once small businesses
begin to be sustainable their reported management challenges converge (Chan, Bhargava
& Street, 2006). ESE can influence how
well existing entrepreneurs discharge their
responsibilities during each of the venture
creation phases. The behaviours to which ESE
corresponds are largely concerned with newventure formation and as such are required of
entrepreneurs well beyond the point of
founding (Forbes, 2005).
Not only does the literature suggest that
higher levels of ESE influence the likelihood
of successfully launching a new business, but
there have been calls for future research to
apply ESE effectively so as to understand
casual directions and see how ESE can be
related to venture performance (McGee et al.,
2009). Equally important, it remains unclear if
certain underlying dimensions of ESE are
more important than others after a new
business is launched. For instance experienced
entrepreneurs might be more aware of the role
of luck and favourable timing in their
achievements, and therefore more humble
about their own ability to control the destinies
of their ventures. This effect might be more
marked for those entrepreneurs pursuing highgrowth ventures (McGee et al., 2009; Urban,
2009).
Given the recognised need for data-based
and integrative process studies of the venture
creation phases, this paper makes a contribution
to the field of entrepreneurship by empirically
investigating ESE across the different venture
creation phases and providing links to the
competitiveness of enterprises. The paper
proceeds by first accessing a relevant
theoretical base to support the hypotheses
which are formulated on existing findings from
a range of disciplines. Next the research
approach and measurement issues related to
the constructs are discussed. This is followed
by specific analytic methods best suited to test
the hypotheses. Results and implications
follow, and the study’s limitations are

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SAJEMS NS 15 (2012) No 4

addressed and future research directions are
suggested.

2
Theoretical overview
2.1 Competitiveness of ventures
Competitiveness is a concept often related to
long-term performance of firms and economies.
Many governments believe that new ventures
can contribute towards the promotion of more
equitable development, as well as the
enhancement of the competitiveness of local
industries within a global economy (Bygrave
& Minniti, 2000; Preece, Miles & Baetz, 1998;
Wright, Hmieleski, Siegel & Ensley, 2007).
At the firm level, existing studies suggest
that a sustainable competitive advantage is
derived from how a firm approaches strategy
formulation (Dess, Lumpkin & McGee, 1999).
Strategic management in entrepreneurial firms
has gained prominence in recent years as
organisations compete in volatile environments.
The venture creation environment is characterised by complexity and dynamism, with
ventures having to anticipate future scenarios
and develop proactive strategies in an
ambiguous and unstructured surrounding (Allen
& Stearns, 2004).
Competitiveness, with a focus on small and
medium enterprises (SMEs) (ventures and
SMEs are used interchangeably in this paper),
has shown how the interaction of the scope for
action or growth in the business environment,
together with the degree of access to capital
resources and the intrinsic ability of the firm,
are all necessary factors required to improve
the performance of the firm (Chan, Bhargava
& Street, 2006; Ireland, Covin & Kuratko,
2009). For any venture, consequences primarily
concern the degree to which results lead to
acceptable (or better) current performance and
to the possibility of acceptable (or better)
future performance. Literature has emphasised
several organisational-level outcomes of
entrepreneurship, where two principal types of
such outcomes are: (1) capability development,
and (2) strategic repositioning (Ireland, Covin
& Kuratko, 2009).
Competitiveness is the capacity of ventures
to create and sustain economically viable

industry positions (Nelson, 1991; Teece, Pisano
& Shuen, 1997). Competitive development is
created as ventures use entrepreneurial
initiatives to explore new technologies or
product-market domains or exploit existing
ones. Enhanced competitiveness, in particular,
is often the result of exploitation of entrepreneurial opportunities. In terms of strategic
repositioning, entrepreneurial behaviours can
(1) place the venture, or portions thereof, in a
new position within its pre-existing productmarket domain(s), (2) alter the attributes of
that domain(s), and/or (3) position the venture
within a new product-market domain(s)
(Ireland, Covin & Kuratko, 2009).
Rather than rely on typical performance
measures such as sales and profit growth,
assessing the competitiveness of SMEs is
important, particularly as differences in growth
measures have led to different relationships
among constructs, with a reduction in the
appropriateness of accumulating knowledge
across studies (Shepherd & Wiklund, 2009).
Building in this direction of competitiveness
the focus of this study is on the organisational
outcomes resulting from entrepreneurial action
during the venture creation phases.

2.2 Entrepreneurial self-efficacy in the
venture creation phases
Self-efficacy is an important motivational
construct that influences individual choices,
goals, emotional reactions, effort, coping and
persistence. It refers to individuals’ convictions
about their abilities, and consequently an
important set of cognitions is self-efficacy or
beliefs about one's capacity to perform at
designated levels (Bandura, 1986; 1997; 2001;
Bird, 1989; Boyd & Vozikis, 1994; Stajkovic
& Luthans, 1998). Self-efficacy is based on
tenants of social cognitive theory (SCT) which
favours the concept of interaction where
behaviour, personal factors, and environmental
influences all operate interactively as determinants of each other. Previous studies on
entrepreneurial motivation have focused on
basic concepts such as achievement need, risk
taking, tolerance of ambiguity, and locus of
control, all of which have yielded mixed
results. However, findings have been more
consistent for the self-efficacy construct when
applied to entrepreneurial behaviour (Bradley

SAJEMS NS 15 (2012) No 4

& Roberts, 2004; Forbes, 2005), and through
its effect on entrepreneurial orientation (Poon
et al., 2006). Unlike personality traits selfefficacy can be developed through training and
modelling. Efficacy judgments are task
specific and regulate behaviour by determining
task choices, effort and persistence (Earley,
1994; Gist & Mitchell, 1992; Stevens & Gist,
1997; Vesper & McMullan, 1997).
The self-efficacy construct has application
to entrepreneurship and the entrepreneurial
self-efficacy (ESE) construct has been proposed
to predict the likelihood of the individual being
an entrepreneur, that is entrepreneurial selfefficacy refers to the strengths of a person’s
belief that he/she is capable of successfully
performing the various roles and tasks of an
entrepreneur (Boyd & Vozikis, 1994; Chen et
al., 1998; De Noble et al., 1999; Krueger &
Brazeal, 1994). Researching ESE is important,
since it can affect individuals’ willingness to
engage in entrepreneurship as well as the
behaviour of those who already are entrepreneurs (Urban, 2009). Previous research on
ESE has been related to the pursuit of
entrepreneurial activity in various ways, for
instance, where general self-efficacy (GSE) is
related to perseverance in difficult fields and
greater personal effectiveness (Chen, Gully &
Eden, 2001; Markman, Balkin & Baron, 2002),
and where ESE is influenced by the way in
which entrepreneurs make strategic decisions
(Forbes, 2005). The value of understanding
ESE to help predict how well entrepreneurs
perform the tasks associated with the venture
creation phases cannot be underestimated
(McGee et al., 2009; Poon et al., 2006).
Since self-efficacy beliefs are domain
specific, it is important to consider what is
being measured and how. Some measures of
ESE, while multi-dimensional, are based on
general management tasks such as marketing,
strategic planning, and business decisionmaking. These more generalised measures of
ESE however do not assess confidence in
performing specific tasks associated with
planning, launching, and growing a new
venture. Another way of measuring selfefficacy of a broader domain, such as
entrepreneurship, as Chen et al. (1998) did
with ESE, is to develop a conceptual
framework of task requirements on the basis of

355

which self-efficacy of a domain is aggregated
from self-efficacy of various constituent subdomains. Many studies have conceptualised
self-efficacy as a task specific or state like
construct (SSE). De Noble et al. (1999)
developed a measure of ESE consisting of six
sub-scales tailored specifically to the venture
creation phases.
Despite these efforts there is inconsistency
in the manner in which researchers attempt to
capture the dimensionality of the ESE
construct which impedes further development
and effective application of the construct.
Indeed much of the preceding empirical
research has relied on ‘total ESE’ scales and
the results of such research have shed little
light on how the underlying dimensions of
ESE influence entrepreneurship and which
ones, if any, are most important for
strengthening ESE. While most theorists argue
that ESE is best conceptualised as a multidimensional construct, much of the empirical
research has relied on limited-dimensional or
even one-dimensional measures of ESE
(Arenius & Minniti, 2005; Baum & Locke,
2004). While the ESE construct holds promise,
it remains empirically underdeveloped and
many scholars have called for further
refinement of the construct (for example,
Forbes, 2005; Lee & Bobko, 1994; Kolvereid
& Isaksen, 2006).
In a recent study McGee et al. (2009)
demonstrate the multi-dimensional nature of
the ESE measure by testing it within a fourphase venture creation framework. This
framework builds in the direction of new
venture creation being conceptualised in terms
of broad stages or as entrepreneurial tasks
within a venture creation model (Stevenson &
Jarillo, 1990; Timmons, 2002). These stages
are labelled (1) searching, (2) planning, (3)
marshalling, and (4) implementing (Kickul et
al., 2009; Mueller & Goic, 2003; McGee et al.,
2009).
1) The searching phase involves opportunity
identification and development. Lumpkin,
Hills and Shrader (2004) argue that the
creation of successful businesses follows
successful opportunity development and
also involves the entrepreneur’s creative
work.

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2) The planning phase consists of activities
by which the entrepreneur converts the
idea into a feasible business plan. Here the
idea or business concept is evaluated in
terms of various market and profitability
criteria.
3) The marshalling phase involves assembling
resources to bring the venture into existence.
To bring the business into existence, the
entrepreneur gathers (marshals) necessary
resources such as capital, labour,
customers, and suppliers without which
the venture cannot exist or sustain itself.
4) The implementing phase requires that the
entrepreneur grow the business and ensure
the sustainability of the venture. To this
end, the successful entrepreneur applies
management skills and principles, particularly in implementing people management
and financial management.
On the basis of above theory and in line with
empirical evidence, by recognising the multidimensional nature of ESE within a four-phase
venture creation framework, six hypotheses
are formulated which allow for specific
explanations to emerge based on expected
relationships with venture competiveness.
H1: There will be a strong positive relationship
between ESE concerning the searching
venture phase and competitiveness.
H2: There will be a strong positive relationship
between ESE concerning the planning
venture phase and competitiveness.
H3: There will be a strong positive relationship
between ESE concerning the marshalling
venture phase and competitiveness.
H4: There will be a strong positive relationship between ESE concerning the
implementing people venture phase and
competitiveness.
H5: There will be a strong positive relationship
between ESE concerning the financial
management venture phase and competitiveness.
H6: There will be a strong positive relationship
between attitude toward venturing and
competitiveness.
Following McGee et al. (2009) the hypotheses
take into account the multidimensional and
sequential nature of entrepreneurial tasks. The
theoretically grounded four-dimensional structure

SAJEMS NS 15 (2012) No 4

of ESE, includes the modification that the
dimension of ‘implementing’ has two sub
dimensions (one representing the ‘people
aspects of implementation’ and the other
representing the ‘financial aspects of implementing’). Attitude toward venturing is included
in the set of hypotheses, as the theory of
planned behaviour (TPB) (Ajzen, 1991) identifies
attitudinal antecedents of intentions, which
reflect the perceived desirability and the
perceived feasibility of intentions and is thus
related to perceptions of self-efficacy. Furthermore path analysis confirms that the correlation
between attitudes and behaviour is explained
by attitude – intentions behaviour links (Kim &
Hunter, 1993; Krueger, Reilly & Carsrud,
2000).
Although venture performance is influenced
by a host of factors including the sector in
which the firm operates, firm age and size, as
well as cultural and environmental contexts
(Luiz & Mariotti, 2011), it is specifically
argued for purposes of this paper that the
competitiveness of the SME is influenced by
the ESE of individuals as conceptualised
through the different venture creation phases.
3

Methodology
3.1 Sampling and data collection
Much of the existing empirical research on
ESE has relied on data collected exclusively
from samples of university students. This
lack of diversity in those populations sampled
and tested has proved an obstacle in the
development of an appropriate ESE construct.
The sampling frame was identified from the
SME Toolkit SA which is affiliated with the
World Bank and Business Partners locally
(SME Toolkit, 2011), and the Johannesburg
Chamber of Commerce and Industry (JCCI),
which collectively represent a population of
approximately 4400 businesses. The sampling
frame for this study was based on businesses
operating in the greater Johannesburg area.
Johannesburg is situated in the Gauteng
province, the economic hub of South Africa,
which has the highest number of businesses in
the country (Gauteng Provincial Government,

SAJEMS NS 15 (2012) No 4

2008; South African Business Guidebook,
2005/6).
In line with the objectives of the study the
focus was on ventures that have navigated the
different venture phases and performed tasks
required beyond start-up activities. Addressing
ESE within this venture phase framework at
the firm level corresponds to similar studies’
sample characteristics (Kreiser, Marion &
Weaver, 2002). As ESE refers to an owner’s
self-perception of a firm’s strategic orientation,
their self-perception will be closely related to
the behaviour of the venture. Consequently
ESE measures the owners’ self-perception and
accordingly serves as a relevant proxy for
measuring the entrepreneurial tasks within the
venture creation phases. Considering that SMEs
in South Africa can employ up to 200 people
(Econometrix, 2002; South Africa Survey,
2006/2007), and in line with the global entrepreneurship monitor (GEM) studies’ operational
definitions (Bosma & Levie, 2009), mediumsized ventures were targeted represented by
new business owner-managers who currently
own and manage a new business that has paid
salaries for more than three months but not
more than 42 months. Sample parameters,
which served as control variables, included: (a)
gender, (b) age, (c) education level, (d) ethnic
group, (e) work experience, (f) business sector,
and (g) firm employment size class set as
medium ventures. These ventures operated in a
variety of business sectors including manufacturing, financial services, and retail and
wholesale.
Based on the eligibility criteria 677
potential respondents were surveyed. The
survey was solicited physically with periodic
reminder telephone calls. Based on eligibility
criteria, 199 usable responses (an effective 29
per cent response rate) was generated as the
final sample. To test for non-response bias
archival sources were used where firm size and
age were compared with non-responding firms
by using secondary data. Results of t-tests
comparing these firms with the current study
sample’s mean scores on select ESE variables
revealed no differences (p >.10), suggesting
that the sample appears to be representative of
the population from which it is based (Cooper
& Emory, 1995).

357

3.2 Measures
3.2.1 Predictor variables
ESE during venture phases: Instruments
utilised in previous studies were scrutinised for
construct validity and reliability. In previous
studies the items for the ESE factors produced
values for Cronbach’s alphas above 0.80,
indicating high reliability (Chen et al., 1998;
De Noble et al., 1999; McGee et al., 2009;
Urban, 2006). Similarly in previous studies,
the factor structure of the ESE items was tested
using a confirmatory factor analysis approach
and using covariance analysis. The factor
analysis model provided evidence of
convergent validity (the items included in the
model share a relatively high degree of the
variance of their respective underlying
constructs, as indicated by the factor loadings
being statistically significant at p = .05)
(McGee et al., 2009). Given the evidence
supporting the application of these scales
confirms that their further use is justified.
Based on the a priori inclusion of compelling
theory, as well as evidence for discriminant
and convergent validity of these measures, the
present study retests the internal consistency of
items measuring ESE within the four-phase
new venture creation phases, for this study’s
sample.
Five ESE dimensions are used which were
previously conceptualised in the hypotheses
section, and are labelled as: (1) searching, (2)
planning, (3) marshalling, (4) implementingpeople, and (5) implementing-financial (McGee
et al., 2009). In the original study, to test the
discriminant validity of these five ESE
dimensions and to better understand the
nomological validity of the ESE dimensions,
items representing attitude toward venturing
were included and are subsequently also used
in this present study. To measure ESE across
the venture phases, three items were used to
measure the ESE search dimension, four for
ESE planning, three for ESE marshalling, six
for ESE people, and three for ESE financial,
and three items for attitude toward venturing.
All items were measured on a 5-point Likert
scale where respondents were asked to indicate
their confidence on their ability to perform
ESE dimensions (1 = very little to 5 = very

358

much). Cronbach’s Alphas were calculated
indicating relatively high reliability (Nunnally,
1978) across dimensions: (1) searching ? =
0.77, (2) planning ? = 0.71, (3) marshalling ? =
0.65, (4) implementing-people ? = 0.81, (5)
implementing-financial ? = 0.88 and (6)
attitude toward venturing ? = 0.85.
3.2.2 Dependant variables
Competitiveness was measured in terms of two
venture outcomes: (1) capability development,
and (2) strategic repositioning. Seven items in
total were used to measure these two indicators
of competitiveness, where respondents were
asked to what extent they agree or disagree (1
= strongly disagree to 5 = strongly agree), with
statements indicating levels of attaining
capability and positioning. The following
items measured competitiveness (Ireland et al.,
2009), and are reported as a consolidated score
in further analysis:
• Ability of venture to develop capabilities in
order to exploit entrepreneurial opportunities;
• Venture capacity to create and sustain an
economically viable industry position;
• Venture use of entrepreneurial initiatives to
explore new technologies or productmarket domains;
• Venture use of entrepreneurial initiatives to
exploit existing technologies or productmarket domains;
• Strategic positioning of the venture within
its pre-existing product-market domains;
• Strategic positioning of the venture to alter
the attributes of their product-market
domains;
• The ability of venture to assume a new
strategic position in relation to its competitors.
An overall Cronbach’s Alpha of 0.83 was
obtained for these two combined sets of
measures representing overall competitiveness.
3.2.3 Control variables
Variables measuring gender, education, ethnic
group affiliation, work experience, and a
question pertaining to relatives or friends who
either are or have been entrepreneurs were
surveyed. These variables provided a fuller
picture of the sample characteristics. There is a
prior theoretical basis for expecting these

SAJEMS NS 15 (2012) No 4

variables to have a systematic relationship with
either the dependant or independent variable,
or both (Minniti & Bygrave, 2003), where for
instance Chen et al. (1998) showed that prior
education and gender were related to ESE, and
Drnovsek & Glas (2002) showed that prior
entrepreneurial experience was related to ESE.
However, as the focal point of this study was
the influence of ESE on competiveness, not on
the of the potential influence of other
individual level variables, only firm size was
included as a control variable which coincided
with sampling parameters. This restriction
ensured that a manageable number of variables
were used in the correlation and regression
analysis.

3.3 Data analysis
Descriptive statistics were first calculated,
followed by correlational and regression
analysis. Common method response bias was
controlled for by safeguarding respondent
anonymity, as well as ensuring that the
questions relating to the dependent variables
were located away from the independent and
control variables in the instrument. Furthermore, all items relating to independent,
dependent and control variables were explored
in a single principal component analysis
(PCA), using Harman’s one-factor test
(Podsakoff et al., 2003) to check if one
component accounted for most of the variance.
Six components with eigenvalues greater than
1.0 were detected, which accounted for 63 per
cent of the variance. The largest component
accounted for only 15 per cent. Consequently
no evidence of common method bias was
identified.

4
Results
4.1 Sample characteristics
The profile which emerges from the sampling
procedure is that the typical respondent is
predominantly male, 41 years old, university/
college graduate, with more than six years
work experience. The dispersion of respondents
in terms of ethnic groups (Indian = 14 per cent;
Black = 66 per cent; White = 19 per cent;
Coloured = 4 per cent), reflects South Africa’s

SAJEMS NS 15 (2012) No 4

359

multiracial society. Additionally several
respondents indicated they had parents (51 per
cent), friends (85 per cent) or relatives (75 per
cent) who are or had been entrepreneurs.

competitiveness (r = 0.45, p < .01), providing
support for hypothesis 1.
ESE concerning the planning was positively
and significantly correlated with competitiveness (r = 0.37, p < .01), providing
support for hypothesis 2.
ESE concerning the marshalling phase
was positively and significantly correlated
with competitiveness (r = 0.35, p < .01),
providing support for hypothesis 3.
ESE concerning the implementing people
phase was positively and significantly
correlated with competitiveness (r = 0.20,
p < .05), providing support for hypothesis 4.
ESE concerning the implementing finance
phase was not significantly correlated with
competitiveness (r = 0.28), not providing
support for hypothesis 5.
Attitude toward venturing was positively
and significantly correlated with competitiveness (r = 0.19, p < .05), providing
support for hypothesis 6.
The control variable of firm size was not
significantly correlated with competitiveness
or any of the ESE venture phases.

•

4.2 Correlation and multiple regression
Mean scores, standard deviations and correlation
coefficients are displayed in Table 1. Descriptive statistics indicate that mean scores are
leaning towards the ‘mostly agree’ end of the
scale. These high average scores across all the
dimensions, suggest that individuals have high
levels of confidence in performing tasks
through the different venture stages. In terms
of competitiveness the mean score is 3.786
suggesting a well-positioned and competitively
capable venture.
For the correlation matrix, refer to Table 1,
the Pearson Correlation Coefficients are
reported with levels of significance denoted.
The interpretation of these correlations and the
corresponding levels of significance allowed
for acceptance or rejection of the hypotheses,
as follows:
• ESE concerning the searching phase was
positively and significantly correlated with

•

•

•

•

•

Table 1
Descriptives and correlations for venture creation phases and competitiveness
Mean

SD

1

2
1

3

.489**

4

5

6

1

Searching

4.186

0.651

2

Planning

3.981

0.600

.485**

3

Marshaling resources

4.085

0.597

.508**

.520**

4

Implementing people

4.334

0.505

.404**

.483**

.521**

5

Implementing financial

3.991

0.842

.142*

.332*

.161*

.315**

6

Attitude to venturing

4.534

0.544

.272**

.277**

.368**

.402**

.195*

7

Competitiveness

3.786

0.651

.458**

.376**

.354**

.208*

.286

1

7

.505**

.408**

.142*

.276**

.457**

.527**

.489**

.334**

.277**

.373**

.523**

.162*

.365**

.354**

.317**

.408*

.202*

.192*

.025

1

1

1

1
.194*

.191*
1

* p ? .05; ** p ? .01, two-tailed.

To further evaluate the relationship between
the ESE dimensions and competitiveness,
multiple regression analysis was conducted.
Refer to Table 2 for the full set of results.
Multiple regression analyses, using ordinary
least squares regression, were performed to
determine the predicted relationship between
the specified variables. Firm size as the control
variable was included in the regression
analyses by means of an appropriate dummy
variable. A significance level of 5 per cent was
considered appropriate for this research and all

statistical tests were carried out at this level.
Table 2 represents the independent variables
regressed on the various dependent variables.
The use of multiple regressions allows for the
partitioning of variance with correlated
predictors, thereby reducing the likelihood of
making a Type 1 error (Cohen & Holliday,
1998). It is worth noting that although the
coefficient of determination (R-squared) does
not exceed 30 per cent, the relationships
determined through the regression analysis,
while they may be weak, are nevertheless

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SAJEMS NS 15 (2012) No 4

statistically significant. Model 1 has an Rsquare of 0.221, which is interpreted as the
predictors (ESE dimensions in the venture
phases) explaining 22 per cent of variance in
the dependant variable (competitiveness). In
the ANOVA section (not shown) an F-value of
5.991 is highly statistically significant (0.000).
Referring to Table 2, the constant coefficient
provides a t-value of 3.908, significant at the
0.05 level (p < 0.001). The highest beta weight
(0.305) and only significant t-value (4.320, p <
0.001) is for the ESE search phase dimension.
The second highest beta was for the ESE
planning phase dimension, with a borderline

level of significance (p = 0.012). Since other
coefficients are not significant, the predictive
and explanatory power of this model is
reduced. To try and determine if the predictive
power of the regression could be improved by
only entering the significant coefficients
another model was tested where ESE search
and ESE planning were entered together with
the dependant variable. The adjusted R-square
was 0.228 in this instance suggesting a very
small improvement where the two ESE
dimensions explain only a marginally greater
variance in competitiveness.

Table 2
Regression results for ESE venture phases on venture competitiveness
?

Std. error

T-value
H0: ? (i) =0

Sig.

Reject H0
at 5%

Constant

1.623

0.415

3.908

0.000

yes

Searching

0.305

0.071

4.320

0.000

yes

Planning

0.208

0.082

2.538

0.012

yes

Marshalling

0.112

0.084

1.323

0.187

no

Implement people

-0.091

0.095

-0.960

0.338

no

Implement finance

-0.064

0.048

-1.334

0.184

no

Attitude towards venture

0.061

0.077

0.789

0.431

no

Firm size (medium)

0.096

0.131

0.738

0.461

no

Step 1?

?Variable(S) introduced in step 1include: ESE search, plan, marshal, people, finance, attitude, firm size.

Examinations of the collinearity diagnostics
reveal relatively low variance proportions for
the ESE dimensions. These diagnostics when
read in conjunction with collinearity statistics,
not shown due to space limitations, indicate
variable inflation factor (VIF) values between
0.274 and -0.022. These figures are well below
critical values and deemed as acceptable,
indicating no incidence of multicollinearity.
When the values are 10.0 or more the
regression coefficients can fluctuate widely
from sample to sample, making it risky to
interpret the coefficients as indicators of the
predictors (Cooper & Emory, 1995).
Apart from the above analysis, to try and
make further sense of the results differences in
ESE across venture phases were tested
between groupings of gender, education and
work experience. Initially the descriptives
were interrogated in terms of lower bound and
upper bound values, followed by test for
homogeneity of variances. The Levene statistic

was significant and greater than 0.05 across all
ESE dimensions for all variables. A one-way
analysis of variance (ANOVA) was used to
compare ESE mean scores on first gender and
education and then work experience. ANOVA
results were interpreted as follows (not
shown): for the ESE search dimension there is
a 0.288 probability of obtaining an F-value of
1.488 or higher if there are no differences
among group means in the population. Since
this probability exceeds 0.05 one can conclude
that for this ESE dimension as well as for all
the other dimensions there are no significant
differences among the ESE mean scores across
these variables. Further post-hoc robust tests of
equality of means were calculated and the
Brown-Forsythe statistic indicates that there
were no significant differences on ESE mean
scores across gender and education. The same
procedure in terms of ANOVA and post-hoc
comparisons were conducted for work
experience, with no significant results detected.

SAJEMS NS 15 (2012) No 4

5
Discussion
The purpose of this study was to build on
research incorporating ESE as conceptualised
through the four phases of the venture creation
process and to establish possible links to
venture competitiveness. Specifically it was
hypothesised that each of the venture creation
phases will be significantly associated with the
competitiveness of the ventures. The study
demonstrates that ESE influences how
entrepreneurs discharge their responsibilities
during the venture creation phases and that
these behaviours to which ESE corresponds
are largely concerned with tasks that are
required of entrepreneurs well beyond the
point of founding. The empirical evidence
ensuing from this study supports five out of
the six propositions, where ESE in searching,
planning, marshalling resources, and implementing people, as well as attitudes toward
venturing were significantly associated with
the competitiveness of the venture.
These findings translate into the following
entrepreneurial actions that are desirable
during the venture creation phases in order to
ensure competitiveness: (1) searching in terms
of opportunity identification and development;
(2) planning and evaluating the business
concept in terms of various market and
profitability criteria; (3) gathering (marshalling)
necessary resources such as capital, labour,
customers, and suppliers without which the
venture cannot exist or sustain itself; (4) growing
the business and ensuring the sustainability of
the venture through implementing people
management practices. The results also resonate
with the suggestion that attitudes toward
venturing may have important implications for
the competitiveness of a venture after the
founding event (Forbes, 2005).
The only non-significant result in this study,
in relation to venture competitiveness was for
the ESE implementing financial management
phase of the venture process. This means that
based on the study sample the respondents lack
the necessary beliefs in implementing financial
management activities. This is perhaps indicative
of the high rate of financial illiteracy which
has been ranked as the most important factor
inhibiting entrepreneurial activity in South

361

Africa (Orford et al., 2003).
Based on the regression results the different
ESE dimensions in the venture creation phases
explain a modest, albeit significant amount of
variance in the competitiveness of the SME.
Competitiveness was conceptualised as firm
outcomes resulting from entrepreneurial action
during the venture creation phases and
measured in terms of competitive development
and strategic positioning, as a consolidated
score. Competitive development has been
recognised as important as ventures using
entrepreneurial initiatives to explore or exploit
new technologies or product-market domains,
particularly by exploiting entrepreneurial
opportunities. The same importance is often
attached to strategic repositioning, where
entrepreneurial behaviours during the venture
creation phases can place the venture in a new
position within its pre-existing product-market
domain(s).
Interlinking the empirical results of this
paper with established literature allows for
additional insights to emerge. While individuals
are thought to identify opportunities (aligned
with the searching phase) because they possess
uniquely different forms of knowledge or
human capital (Venkataraman, 1997), this
study confirms that ESE as a task specific
activity plays an important role at the start of
this process. This finding is consistent with the
view that during the venture process phases,
competent functioning requires both skills and
self-beliefs of efficacy. Operative efficacy
calls for continuously improving multiple subskills to manage ever-changing circumstances,
as typified in entrepreneurial environments,
most of which contain ambiguous, unpredictable
and often stressful elements (Chandler &
Jansen, 1992). Moreover as entrepreneurial
opportunities encompass a social learning
process whereby new knowledge continuously
emerges to resolve uncertainty inherent to each
stage of the venture creation phases, the
relevance of ESE in the searching, planning,
marshalling, and implementing phases is
confirmed. This would suggest that a major
factor influencing the process of opportunity
recognition and development which leads to
venture sustainability includes maintaining
high levels of ESE throughout the venture
creation process. The success of any venture,

362

particularly in terms of competitiveness is
more probable when an individual has the
ESE required to structure (accumulate and
strategically divest), bundle (successfully
combine), and leverage (mobilise and deploy)
its resources (Sirmon, Hitt & Ireland, 2007).
Not surprisingly the relationship between selfefficacy and performance has been found to be
mediated by strategy use and vice versa
(Forbes, 2005), which reflects the generative
capability of self-efficacy where cognitive,
social, and behaviour sub-skills are organised
into integrated courses of action. Such action
requires perseverant effort and self-doubters
are quick to abort this generative process if
initial efforts are deficient (Bandura, 1997).
In a broader framework, research on entrepreneurship, in an emerging market context as a
whole, may be considered valuable as very few
empirical studies have previously been
conducted which focus on ESE and competitiveness. Examining ESE in an emerging
market context is pivotal to understanding
entrepreneurship, since little evidence exists
that self-efficacy is salient to entrepreneurs
from non-Western cultures (Vecchio, 2003).
Investigating how different individuals under
different socioeconomic circumstances, display
ESE is important as ESE may be context
specific, and one can expect patterns of ESE to
vary depending on an individual’s situational
context (Urban, 2010). This is important as
emerging economies are unique environments
that offer the ability to obtain fresh insights to
expand theory and our understanding of it by
incorporating more contextualised considerations
(Bruton, Ahlstrom & Obloj, 2008).
By contextualising this study in the current
South African socio-economic milieu, it becomes
clear that in order to successfully navigate the
venture creation phases, entrepreneurs need
high levels of ESE. Unless entrepreneurs
perceive themselves as capable and willing to
be entrepreneurial, their venture will remain
uncompetitive and underperforming. Being
motivated is not only considered an integral
aspect of entrepreneurship but must be supplemented with education and training, since
start-ups without possessing the requisite
skills, knowledge and attitudes nullifies the
formula for more entrepreneurship.
Moreover by acknowledging the legacy of

SAJEMS NS 15 (2012) No 4

apartheid it becomes apparent that damage was
very likely to have occurred to the self-esteem,
motivation, and creativity of specific ethnic
groups in South Africa (Ahwireng-Obeng,
2006). Disadvantaged communities often suffer
from deficits in self-efficacy, where victims of
poverty visibly reflect the symptoms of learned
helplessness (Rabow, Barkman & Kessler,
1983).
Based on the present study’s sample
characteristics – mostly university educated and
with some work experience, it is apparent that
the results of the study are more in line with
opportunity-driven entrepreneurship. It is more
likely that opportunity-driven rather than
necessity-driven individuals, with higher levels
of human capital would have higher levels
of ESE which serves to organise what
opportunities they recognise and exploit marshal
resources and implement strategies in order to
promote the competitiveness of their ventures.
This line of thinking resonates with Amartya
Sen‘s (2000) ‘capability approach’, who assesses
people’s welfare in terms of their functioning
and capabilities. In terms of an individual’s
current and future activities and states of being
respectively, the ‘capability approach’ is useful
in understanding the concept of the conversion
factor which measures the individual‘s ability
to convert existing opportunities into activities
and achievement.

5.1 Implications
The practical implications of this study are that
entrepreneurs need to develop ESE throughout
the venture creation phases to ensure the
competitiveness of the venture. The specific
tasks required for this begin with the
recognition of an entrepreneurial opportunity
which is followed by the development of an
idea for how to pursue that opportunity, and
this leads to the evaluation of the feasibility of
the opportunity, then to the development of the
product or service that will be provided to
customers, and requires an assembly of human
and financial resources (Reynolds, 2011). This
means that ESE is integral during each of the
venture creation phases, and may be linked
from one stage of the entrepreneurial process
to another in terms of overall competitiveness.
In fact, it is quite plausible that ESE influences
one part of the process which has effects at that

SAJEMS NS 15 (2012) No 4

363

stage in the process and possibly affects the
later stages of the venture creation phases,
meaning that an ESE is required continuously
to ensure the venture is competitively capable.
Further implications of this study can be
advanced to the policy domain where it needs
to be stressed that government initiatives will
affect venture creation only if these policies
are perceived in a way that influences selfefficacy (Krueger et al., 2000). It has been
suggested that the emergence of entrepreneurs
in transitional economies depends on the entrepreneurial potential of the society which is, in
turn, largely a function of systematic efforts of
developing entrepreneurs with a high ESE.
Instead of hoping for a massive capital infusion
to improve business prospects, transitional
economies may well be advised to implement
formal self-efficacy programs to foster individual
initiative for entrepreneurial development
(Luthans, Stajkovic & Ibrayeva, 2000).
The practical implications of this study can
also be advanced to the classroom setting,
where consideration of self-beliefs in the
design of curriculum and teaching methodologies
can enhance learning and propel ESE.
Improving the skills base and fostering positive
ESE across the venture creation phases is
critical for ensuring sustainable ventures.

5.2 Limitations and future research
This study has typical survey design limitations
in that data was obtained from a selfadministered questionnaire, where self-serving

bias may have influenced the responses.
Secondly, since study was cross-sectional in
design, results should be interpreted with
caution and links between ESE and competitiveness cannot be confirmed unambiguously.
Moreover the entrepreneurial process can only
be understood as a constellation of personality
features of which self-efficacy is only part of.
Future studies could be extended to include
specific contextual factors to help explain the
venture formation process, and also identify
variables which may moderate levels of ESE
and venture competitiveness.

5.3 Conclusion
This study has contributed to the broader
framework of existing theory and research on
ESE, consequently enlarging scholarship in
terms of the venture creation phases.
Recognising the importance of self-belief
issues in entrepreneurship, it seems that ESE is
required continuously throughout the venture
creation phases to ensure competiveness. To
continually improve multiple sub-skills required
to manage ever-changing venture phases,
requires competent functioning which is based
on both skills and self-beliefs of efficacy. This
paper makes a unique contribution by
understanding how ESE plays an important
role in determining the essential skill set
needed throughout the four phases of the
venture creation phases which leads to
enhanced venture competitiveness.

Acknowledgements
This study is based upon work supported financially by the National Research Foundation (NRF) (any
opinion, findings and conclusions or recommendations expressed in this material are those of the author and
therefore the NRF does not accept any liability in regard thereto).

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