Self-efficacy and effort in new venture development

Abstract

AbstractThere is a lot of evidence to suggest that entrepreneurial self-efficacy influences intentions and performance, but little research on ESE and actual activities. In this paper the possible dual impact of ESE on task effort is explored. On the one hand self-efficacy boosts motivation and persistence, but on the other hand high confidence in one's abilities can lead to decision-making shortcuts and reduced effort on key tasks (the overconfidence hypothesis). Propositions about the relationship between self-efficacy and effort on different types of tasks (action and judgment tasks) are developed and tested with a small sample of active entrepreneurs. Results support a positive impact of self-efficacy on effort regardless of the type of task, thereby raising questions about the overconfidence hypothesis. Understanding types of confidence (in one's ability, knowledge, and judgment) and effort (cognitive effort) may explain these results. Further research on these topics, and on entrepreneurial experience and the use of heuristics are suggested.