Introduction

This paper is concerned with the concept of entrepreneur and seeks to provide insight into
the nature of entrepreneurial self-efficacy. In addition, it also aims to differentiate the concept of
Entrepreneurs and smaller business owners, as well as providing critical analysis of the
relationship between entrepreneurial self-efficacy and business performance.
About the concept of entrepreneur
Interestingly, much popular as it is, there is no universally accepted definition of the term
entrepreneur. The use of the term entrepreneur is at some point connected to individuals who
start a business and legally own a firm, but this term is also broadened to include individuals
operating as self-employed, whether or not a legal entity is involved. However, it is worth notice
that not all small business owners should be referred to as an entrepreneur. A key feature of an
entrepreneur is their willingness to take risk and uncertainty. An entrepreneur is also
characterized by creating new demand or finding new ways of exploiting existing markets. (Paul
Burn, 2012). In research field the entrepreneur has been given a range of different meanings,
depending on the perspective of the researcher.
An explanation of the distinction between an entrepreneur and a small business owner
Since the early of entrepreneurship research, the two concepts of entrepreneurs and small
business owner have been intentionally equated. However, until the 1980s, Carland et al. (1984)
argued that it is important to make distinguish between these two terms (p. 358):
An entrepreneur is an individual who establishes and manages a business for the
principal purposes of profit and growth. The entrepreneur is characterized principally by
innovative behavior and will employ strategic management practices in the business.
A small business owner is an individual who establishes and manages a business for the
principal purpose of furthering personal goals. The business must be the primary sources
of income and will consume the majority of ones time and resources. The owner
perceives the business as an extension of his or her personality, intricately bound with
family needs and desires.
Hence, an entrepreneur is not the same as a small business owner. Small business owners
were described and conceptualized in terms of statistic and specifically characterized by small
organizations including limitation of capital raising capacity and business is perceived as
extension of personal characteristics. An entrepreneur, on the other hand, is characterized by

participant who engages in the process of creating a new business venture with innovation of
behavior in the business at its core. An important aspect of entrepreneurship in business is
entrepreneurial self-efficacy. The next part will explore entrepreneurial self-efficacy and its
theoretical foundation.
A discussion of the literature on entrepreneurial self-efficacy and its theoretical
foundations
To begin with, the theoretical foundations of entrepreneurial self-efficacy roots from the
social cognitive theory in which it has something related to self-efficacy. The term self-efficacy
is a construct defined by Albert Bandura (1982) as self-judgment of ones ability to perform a
task in a specific domain. Following Banduras recommendation, entrepreneurship researchers
proposed the construct of entrepreneurial self-efficacy (ESE). Entrepreneurial self-efficacy as
being employed in the entrepreneurial theories has been regarded as entrepreneurs specific selfefficacy in accomplishing entrepreneurial tasks. To be more specific, entrepreneurial selfefficacy refers to the individual belief in his or her ability to achieve or accomplish various
entrepreneurial tasks. In entrepreneurship research, the term Entrepreneurial self-efficacy (ESE)
is an important construct. Within the entrepreneurship literature, there has been a great deal of
research developed to investigate the effects on and relationship between entrepreneurial selfefficacy and individual or business performance. In much of the literature, researchers have
concentrated on the perspective that entrepreneurial self-efficacy should emphasize on
individuals perceptions regarding their ability to perform entrepreneurial tasks (Kickul &
Barbosa 2007) or the skills required to launch a new venture (Sequeira, Mueller & McGee
2007).

Research on entrepreneurial self-efficacy has a long time of existence since earlier

research by Chen, Greene and Crick (1998) and De Noble, Jung and Ehrlich (1999). Studies
conducted by these researchers concluded that there was a significant association of
entrepreneurial self-efficacy with the likelihood of becoming an entrepreneur or entrepreneurial
intention.
The

relationship

between

entrepreneurial

self-efficacy

and

business/individual

performance and the influence of ESE on performance

By its nature, self-efficacy has been commonly related to performance. Hence, this also
exists in case of entrepreneurial theory. In the field of empirical entrepreneurial research, the

relationship between entrepreneur self-efficacy and business or individual performance has not
always been in one dimension. This can be both positive and negative.
As for the positive aspect is concerned, an entrepreneurs self-efficacy plays a significant
role in his or her entrepreneurial development of intentions as well as influencing entrepreneurial
actions. The influence of entrepreneurial self-efficacy on performance is shown through its
impact on the entrepreneurs interests, motivations and perseverance levels. Within the interest
level, entrepreneurs with high level of self efficacy are interested in doing business tasks. They
also have more confidence to their ability therefore they engage passionately in achieving
business tasks, which as a result leads to higher performance. Since they have strong belief of
their ability, these entrepreneurs have been greatly motivated in doing business actions.
Additionally, entrepreneurs with high levels of self efficacy are likely to have higher belief in
their own ability to make or develop new products and market opportunities, build an innovative
environment, cope with unexpected challenges and define core purpose. Thus they make
processes and changes happen and accordingly may function as highly innovative employees or
be more likely to be the force driving. High level of self-efficacy of individual will also help to
reduce the entrepreneurs self-doubts, enabling them to perform at their best. They can thus
successfully complete a series of entrepreneurial tasks. To sum up, an entrepreneur high in selfefficacy seems to be higher in the firms they lead to grow more quickly and be more profitable
than those led by entrepreneurs who are comparably lower in entrepreneurial self-efficacy
(Hmieleski and Baron 2008). This is also backed up in some empirical studies where researchers
have revealed the positive relationship between entrepreneurial self-efficacy and business
performance in terms of growth of profits and employment (e.g. Baum and Locke, 2004;
Hmieleski and Baron, 2008; Kickul et al., 2009).
However, there is also negative relationship between entrepreneurial self-efficacy and firm
performance at some points. It is generally believed that low self-efficacy of entrepreneurs would
be less conflicted between the benefits of opportunity exploitation and their moral value than
high entrepreneurial self-efficacy individuals would be. Hence,
Low self-efficacy entrepreneurs have no or less tendency to take the challenges and goals they
set for themselves and also have no commitment to them. These individuals put less or even no
effort forth in given endeavors. They normally keep no persevere in facing with obstacles. They
show no resilience to adversity. These all lead to low performance.

Conclusion
To sum up, this essay has discussed on three important aspects of Entrepreneurship and Business
Management. First, the concept of entrepreneur has been revised and identified as being atypical
with both personal perspective and theoretical ground. Second, the differences between an entrepreneur
and a small business owner have also been explained. Finally, the essay has to some extent critically
analyzed the relationship between entrepreneurial self-efficacy and business performance.

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