Self-efficacy theory of entrepreneurship
Self-Efficacy Theory: Why Believing "I Can" Determines Success
Why do some highly skilled people remain employees, while others with less skill take the leap into entrepreneurship? The answer often lies in Self-Efficacy.
Proposed by psychologist Albert Bandura (1977), Self-Efficacy is not a measure of your actual skills, but rather your belief in your ability to execute those skills.
The Antecedent to Intention
In entrepreneurship, self-efficacy is viewed as the primary "antecedent" (precursor) to intention. The logic is a simple binary:
- High Self-Efficacy: If you believe you have the ability to achieve a goal, you form the intention to pursue it.
- Low Self-Efficacy: If you doubt your ability, you will not form the intention, even if the opportunity is profitable.
If a potential entrepreneur deems a challenge too difficult, they will likely choose salaried employment—not because they lack the skill, but because they lack the belief.
How Self-Efficacy is Built
Bandura argues that this trait is not fixed; it is developed over time through four specific channels. Entrepreneurs build their confidence through:
- Mastery Experiences (Past Achievements): Success breeds success. Mastering a task is the strongest way to build belief.
- Vicarious Learning (Modeling): Observing others succeed. If you see someone similar to yourself succeed ("If they can do it, I can too"), your self-efficacy rises.
- Social Persuasion: Positive feedback from peers and mentors. Being told "you are good at this" reinforces the belief.
- Self-Reflection: Managing physiological states (stress/anxiety) to interpret them as excitement rather than fear.
The Parental Effect: Social Learning
Scherer et al. (1989) applied this to the children of entrepreneurs. They found that individuals who perceived their parents as high-performers were significantly more likely to start businesses themselves.
Why? Because of Social Learning. The offspring of entrepreneurs view themselves as having a higher level of competence because they have had a front-row seat to the "vicarious learning" of running a business. They have seen the tasks performed, demystifying the process.
Video: Bandura’s Self-Efficacy Theory
References
Bandura, A. (1977). Self-efficacy: toward a unifying theory of behavioral change. Psychological Review, 84(2), 191.
Scherer, R. F., Adams, J. S., & Wiebe, F. A. (1989). Developing entrepreneurial behaviours: A social learning theory perspective. Journal of Organizational Change Management, 2(3), 16-27.
