1. Regulatory focus and intent to pursue an entrepreneurial career after a business failure: The mediating role of occupational self-concept
Ning Chen
Stephanie Warner
Clarion University of Pennsylvania
Study 1
Study 2
Research Questions
Would promotion (vs. prevention) focus encourage a person to pursue an entrepreneurial career after a business failure?
If so, what would be the possible underlying mechanism?
N = 140
IV: Entrepreneurial failure (pre-tested)
Entrepreneurial Failure Condition: participants were asked to
imagine that they started a business two years ago but have to
close the venture last week.
Control Condition: participants were asked to imagine that they
started a business two years ago.
DV: Entrepreneurial intention (5 items, α = .90)
Entrepreneurial Decision Making Scale (Chen, Greene, & Crick, 1998)
--e.g. “How interested are you in setting up your second
business?” (1=very little, 5=very much)
Moderator: Regulatory focus (Higgins et al, 1994)
Promotion Focus Condition: participants were asked to list the
attributes of the kind of person they would ideally like to be.
Prevention Focus Condition: participants were asked to list the
attributes of the kind of person they believe they ought to be.
Control Variables: Age & Gender
N = 168
IV: Promotion focus (6 items, α = .71)
Regulatory Focus Scale (Higgins et al., 2001)
--e.g. “How often have you accomplished things that got you
‘psyched’ to work even harder?”
(1 = never or seldom, 5 = very often)
DV: Entrepreneurial intention (5 items, α = .93) (the same as Study 1)
Mediator: Entrepreneurial identity (5 items, α = .92)
Entrepreneurial Identity Aspiration Scale (Farmer et al., 2011)
--e.g. “Being an entrepreneur would be an important part of
who I am.”
(1 = strongly disagree, 6 = strongly agree)
Control Variables: Prevention focus, age, gender, ethnicity, the number of business classes they had taken, past entrepreneurial experience, working experience, and whether they had family members or friends who were entrepreneurs.
Introduction
Data from the Global Entrepreneurial Monitor reports have revealed that every year millions of people around the globe consider starting their own business. Although most entrepreneurs are extremely committed to their business, their dedication does not guarantee business survival. About fifty percent of new firms close their business within their first four years (Headd, 2003; Wiklund, Baker, & Shepherd, 2010). After a business failure, why do some entrepreneurs continue to strive for the entrepreneurial dream while others simply exit that career path?
We argue people’s career choice is contingent on their regulatory focus. Regulatory Focus Theory proposes that individuals operating primarily in a promotion (vs. prevention) focus strive for growth and advancement needs (Higgins, Shah, & Friedman, 1997). These needs motivate them to pursue ideal selves, thereby making them persist longer at challenges (Higgins & Scholer, 2009; Pham & Avnet, 2009). After a business failure, promotion-focused individuals are more likely to focus aspirations rather than duties and responsibilities (Higgins et al., 1994). In particular, the aspiration of their entrepreneur identity increase their entrepreneurial engagement. Specifically, we hypothesize:
H1: Regulatory focus moderates the relationship
between an entrepreneurial failure and subsequent
entrepreneurial intentions.
H2: Promotion focus strengthens entrepreneur identity
aspiration, which in turn makes people continue to
pursue an entrepreneurial career.
Entrepreneur Identity
.65***
.45***
.15 (.43**)
Promotion Focus
Entrepreneurial Intentions
Results.
Individuals with strong promotion focus are more likely to experience entrepreneur identity aspiration after a business failure, which in turn makes them to pursue their entrepreneurial career.
Interaction b = .56, SE b = .28, p = .046
Conclusion
In Study 1, we found that promotion focus increased one’s entrepreneurial intention (EI) after a business failure, compared with the control condition. Study 2 further revealed that individuals with promotion focus strongly identified with entrepreneur group thereby causing them to be more likely to pursue an entrepreneurial career after a failure. These findings shed light on the function of regulatory focus in the undesired end-state.
Results.
When promotion focused, people were more likely to re-start a business after they experienced a business failure, compared with the control condition. By contrast, when prevention focused, people had approximately the same likelihood to re-start a business when they had an unsuccessful entrepreneurial experience, compared with the control condition.