What is the self-efficacy theory of entrepreneurship?
Bandura (1977) proposed that an individual’s belief in their ability to perform a given task can be conceptualized as self-efficacy. Self-efficacy is viewed as an antecedent to the formation of intentions. If an individual believes that they have the ability to achieve a goal, they are more likely to develop the intention to achieve the goal. By contrast, if an individual believes that they do not have the ability to achieve a goal, then they will not form intentions to purse the goal.
Individuals develop self-efficacy over time as they obtain a variety of skills (cognitive, social, linguistic, or physical) through life experiences. Past achievements (e.g., mastery of a given task) reinforce self-efficacy, thus leading to more ambitious intentions (i.e., higher aspirations). Self-efficacy can also be gained via modeling the behaviors of others through close observation (i.e., vicarious or social learning), self-reflection, and social persuasion (positive feedback). Thus, if an individual performs well at a task as compared with similar others that they observe and are told they are performing well by others, they may decide that they indeed have the skills necessary to pursue the next, more challenging task. Self-efficacy theory suggests that entrepreneurs will only pursue an entrepreneurial venture if they believe they have the skills and abilities necessary to tackle the challenges that a particular opportunity presents. If the potential entrepreneur deems the challenge to be too difficult, he or she may then consider other options, such as salaried employment.
Scherer et al. (1987) finds that individuals who perceived that their own parents were high-performers are more likely to think they will themselves start a business when compared to those who perceived their parents as lower performing or who did not have any such role models. Entrepreneurs’ offspring also tend to view themselves as having a higher level of competence with regard to performing entrepreneurial tasks needed to start a business.