Regulatory focus theory of entrepreneurship

What is the regulatory focus theory of entrepreneurship?

Regulatory focus theory was developed by psychologist E. Tory Higgins of Columbia University in the 1990s. At the core of regulatory focus theory is the idea that individuals change between two states dubbed a promotion focus and a prevention focus.

When in the promotion focused state, individuals attempt to bring themselves into alignment with their need for growth and advancement (their ideal self), causing them to focus on potential gains from risk-taking. By contrast, when individuals are in the prevention focused state, they tend to succumb to their needs for security and safety (their ought self), causing them to focus on potential losses from risk-taking. A recent meta-analysis confirms that regulatory focus is associated with several organizational outcomes.

Brockner et al., (2004) borrow regulatory focus theory to explain entrepreneurial phenomena. They argue that entrepreneurial process requires a greater promotion focus during the idea-generating phase, and a greater prevention focus during the idea filtering stage. Their research suggests that if entrepreneurs are able to match their promotion and prevention focus phases to the demands of the entrepreneurial stage they are encountering, then they should perform better.

Some research suggest that entrepreneurs with a promotion focus perform better in dynamic environments, whereas those with a prevention focus perform better in stable environments (Hmieleski and Baron, 2008).

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Sources:

Baas, M., De Dreu, C. K., and Nijstad, B. A. (2008). A meta-analysis of 25 years of mood-creativity research: Hedonic tone, activation, or regulatory focus?. Psychological bulletin, 134(6), 779.

Brockner, J., Higgins, E. T., and Low, M. B. (2004). Regulatory focus theory and the entrepreneurial process. Journal of Business Venturing, 19(2), 203-220.

Higgins, E. T. (1998). Promotion and prevention: Regulatory focus as a motivational principle. In Advances in experimental social psychology (Vol. 30, pp. 1-46). Academic Press.

Hmieleski, K. M., and Baron, R. A. (2008). Regulatory focus and new venture performance: A study of entrepreneurial opportunity exploitation under conditions of risk versus uncertainty. Strategic Entrepreneurship Journal, 2(4), 285-299.