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«THE RELATIONSIP BETWEEN ENTREPRENEUR’S LEVEL OF PERCEIVED BUSINESS-RELATED FEAR AND BUSINESS PERFORMANCE *Nevin Deniz *İlknur Taştan Boz **Öznur ...»

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Journal of Global Strategic Management | V. 5 | N. 2 | 2011-December | isma.info | 147-161 | DOI: 10.20460/JGSM.2011515805

THE RELATIONSIP BETWEEN

ENTREPRENEUR’S LEVEL OF PERCEIVED

BUSINESS-RELATED FEAR AND BUSINESS

PERFORMANCE

*Nevin Deniz

*İlknur Taştan Boz

**Öznur Gülen Ertosun

*Marmara University

**Gebze Institute of Technology

ABSTRACT

There is increasing awareness about fear’s effect on the quality of human performance in the workplace (Briksin, 1996; Garcia- Zamor, 2003; Gerst, 1995). In the light of this proposition, improving the entrepreneur’s capability to manage his or her own fears may have a high probability of increasing business performance. An expected outcome of this study is that if fear affects workplace behavior and play a significant role in workplace performance, then it would be important for entrepreneurs to understand how fear can limit their business success. Fear of the entrepreneur’s results for business performance has very few studied empirically (Collins, 2007). This study adds to the body of knowledge by exploring the fears of entrepreneurs and the relationship of fear and business performance. The result of study is valuable for both academia and practitioners.

The article proceeds in the following manner. First, we briefly review the literature regarding fear in the workplace, entrepreneurship and results for business performance. We develop hypotheses concerning the relationship between entrepreneur’s the level of perceived business-related fear on business performance. Next, we test our hypotheses using data from 255 enterprises owner from various scale firms (micro-small-medium sized and corporate firms) in Istanbul. In this study various valuable demographic description which is supported by literature is done for the participated enterprise owners. And findings of regression analyzes indicated that as a fear dimension “fear of legal issues” is a supported dimension with the association with both financial and innovative performance.

Keywords: Entrepreneurship; Fear; Business Performance

INTRODUCTION

In the literature there are numeric factors that effect business performance of entrepreneurship are investigated for a long time and most of them are well-known and can be accepted as traditional factors. For instance; being burn global (Oviatt and McDougall defined born global companies that “from inception, seek to derive significant competitive advantage from the use of the resources and sales of outputs to multiple countries” (1994, p. 49) has been found in relation with performance (Aspelund & Moen, 2005; Knight & Cavusgil, 2005; Gleason, Madura et al., 2006). In addition to this, Harting (2005), along with several others, suggests that the knowledge and experience of the business owner are key human performance factors that have a positive effect on increasing the business success (Chowdhury & Lang, 1993; Cochran, 1981; Gaskill, Van Auken & Manning, 1993;

Haswell & Holmes, 1989; Kennedy, Loutzenhiser & Chaney, 1979; Otterbourg, 1989; Worthington, 1984). As another well-known predictor is that if a company goes on after first five years, then it is a successful company. And beside these, the external and are largely economic factors are effective on business performance; such as economy, capital markets, actions, strategies adopted by competitors, changes in government policies and regulations (i.e., Shane, 2003). Apart from traditional factors that influence the success of new ventures are the actions of entrepreneurs; the decisions they make, the strategies they develop, the style of leadership that is cognitive processes play a key role in all of these activities.

Entrepreneurs‟ both cognitive and emotional process is just new and few studied. It is recently suggested that a cognitive perspective may provide important insights into key aspects of the Journal of Global Strategic Management | V. 5 | N. 2 | 2011-December | isma.info | 147-161 | DOI: 10.20460/JGSM.2011515805 entrepreneurial process. Specifically, it is proposed that this perspective can help the field of entrepreneurship to answer three basic questions it has long addressed: (1) Why do some persons but not others choose to become entrepreneurs? (2) Why do some persons but not others recognize opportunities for new products or services that can be profitably exploited? (3) Why are some entrepreneurs so much more successful than others? It is suggested that a cognitive perspective can prove beneficial both to researchers wishing to understand entrepreneurship as a process and to practitioners hoping to assist entrepreneurs in their efforts to create successful new ventures. (Baron, 2004) However, the theoretical and empirical research has been inconsistent and limited (Brundin et al., 2008; Cardon et al., 2009; Corbett, 2007; Corbett and Hmieleski, 2007) entrepreneurship research has only recently begun to focus more on the effect of cognitions and emotions. The interaction between emotions and cognition are reciprocal in nature so that, feelings shape thought and thought shapes feelings (i.e. Isen and Baron, 1991). Following current appraisal theories, cognitions (opinion, belief and judgment) are believed to play a central role in the formation of emotions (i.e. Lazarus, 1991;





Roseman, 2001; Barsade and Gibson, 2007). Thereby, emotions are defined as affective experiences, including such things as joy, surprise, anger, fear and hope. By defining entrepreneurship as a cognitive process (i.e. Shane and Venkataraman, 2000; Shane, 2003), scholars have analyzed cognitive biases that distinguish entrepreneurs from other groups of people (Baron, 1998; Sarasvathy et al., 1998).

According to related researches once fear or any other emotion is elicited, can influence the cognitive processes, such as decision-making, even when the emotion does not stem from the objects, persons, or events being evaluated (Forgas, 2000; Gangemi and Mancini, 2007; Foo, 2010). As Hareli, Shomrat and Biger (2005) state emotion as a related factor on explaining failures both in social psychology and organizational research; according to Runyan (2005) fear is a powerful emotion that typically contributes to the inability to make progress toward goals. In addition to this Burn de Pontet (2004) says that fear in terms of feeling threatened by potential failure, anxiety, self-doubt and rejection is one of reason for business failure. The fear factor then leads to avoidance behavior and inaction and without action that causes failure. Grichnik et al. (2010) in their study investigated emotional experiences effect on entrepreneurial behavior; the results show that positive and negative emotions significantly decrease the preferences of entrepreneurs to allocate additional time and resources to the exploitation of new opportunities. Spesifically Colins (2007) studied the entrepreneurs‟ fear factor on performance and found a significant association between the variables.

Based on such suggestions this study is designed to determine the fear factor on overall business performance.

LITERATURE REVIEW

Entrepreneurship:

Entrepreneurship is the practice of starting new organizations or revitalizing mature organizations, particularly new businesses generally in response to identified opportunities. Entrepreneurship is often a difficult undertaking (Shahhosseini, 2011). Howorth, Tempest, Coupland (2005) and Jack, Anderson (1999) state that a solid definition of entrepreneurship or an entrepreneur continues to generate debate and a single definition has not yet been embraced across the various paradigms. This study uses the common working definition put forth by Jones (2002) that an entrepreneur is an individual who establishes and manages a business for the principles of profit and growth. Entrepreneurs known as taking at least moderator level of risks such as: economic, social, carrier, psychological and health (Naktiyok, 2004).

Entrepreneurship is a dominant factor in the economy; researchers have examined a number of factors that may explain entrepreneurial activity, though a good deal of recent research has tended to focus on the characteristics of the business and industry environment or the characteristics of the entrepreneurial opportunity itself (Kaufman & Dant, 1998). Beside this, corporate ecosystem and entrepreneurial substructure (Börü, 2003, p.13) that is legal issues are important detrimant on entrepreneurship (Robson, 2009, p.444).

Our understanding of entrepreneurship will not be complete unless we understand the motivation of the individuals involved (Venkataraman, 1997). Recent research suggests that motivational traits and creativity are important factors in entrepreneurial activity and success (Baum, Locke & Smith, 2000;

Journal of Global Strategic Management | V. 5 | N. 2 | 2011-December | isma.info | 147-161 | DOI: 10.20460/JGSM.2011515805 Stewart & Roth, 2001). Research on the motivational traits of entrepreneurs seems especially promising for helping to identify those individuals that might be best suited for identifying and exploiting entrepreneurial opportunities in the market place (Shane & Venkata Raman, 2000).

McClelland's theory that achievement motivation is significantly related to both occupational choice and performance in an entrepreneurial role (Farzaneh et al. 2010). Baron has defined motivational factors of entrepreneurship as self-efficacy positive affectivity, specific skills and competencies, and situation-specific motivation (Baron, 2004). Despite the potential importance of individual characteristics, there are still many unanswered questions regarding the role that motivation and personal characteristics have on entrepreneurial activity (Shane & Venkataraman, 2000, Farzaneh et al. 2010) And also personal initiative is one of the major key to success on entrepreneurship;

entrepreneurs with high personal initiative will naturally overcome the disadvantages or weaknesses in them with their self-starting and proactive attitude (Rose et al., 2006,p.74).

As a leading factor family is also effective on being entrepreneur; Families‟ ways of behavior especially patriarchal families are strongly effective on choices and personal development (Jahoda, 1993). Liberal attitudes of parents motivates enterpreneur characteristics of the child (Erdoğan 1994).

And generally if entrepreneurship is parental, this motivates being entrepeneur; and paralel to this worker‟s and officer‟s children are influenced from father‟s occupations as well (Bridge, l998, p.54).

Moreover, in some studies their parents own business found to have a positive relationship with their success. (Rose et al.,2006, p.74) Demografic factors such as higher educational level, working experience (Rose et al., 2006), being the first child of family, being male, age, marriage, income of familiy and socio-economic statu are investigated and found with higher probability as detrimants of prefering being entrepreneur (Coulter,2001, p.16-17).

Fear in the Workplace:

Fear can be defined as a high level of emotional arousal caused by perceiving a significant and personally relevant threat. Fear motivates both protective and maladaptive action, depending on the circumstances (Witte, 1999, Thongsukmag, 2003, p25). Additionally fear is an unpleasant physical and emotional response to a detected threat or danger; or a concern or anxiety about an undetected consequence that threatens to bring bad news or bad results (Dobson, 2006; Oxford, 2006). As Goldsmith (2002, p.39) states, fear effects productivity, communication, ability to create and emotional well-being. Gibb claims that individual characteristics such as motivation, consciousness, perception, emotion, cognition, action and synergy are impacted negatively when high levels of fear are evident. For instance, when fear is felt strongly, an individual may be unable to focus affectively when examine a problem due to an impaired perception of the task at hand (Collins, 2007).

“Prolonged fear can possibly cause “maladaptive behavioral psychological and somatic responses to stressors” which is labeled as “strain” (Wofford, Goodwin, & Daly, 1999, p.688).

For nearly a century, countless studies of fear have been conducted and revisited comprehensively across a wide range of disciplines; such as psychology (LeDoux 1990, Lang, Davis & Ohman, 2000, Witte, 1992; Forbe & Roger, 1999), political field (Ahmed, 2002), architecture (Ellin, 1997), adult learning (Daloz, 1988) and sociology (Rachman, 1974, 1978, 1980, Thongsukmag, 2003, p26).

Fear in the workplace is defined as feeling threatened by possible repercussions as a result of speaking up about work-related concerns. These feelings of threat may come from four sources: actual experience, stories about others‟ experiences, assumptions and interpretations of others‟ behavior, and culturally based stereotypes about those with supervisory power (Ryan, 1991, p. 21). The notion of fear is an integral part of the workplace and can be a valuable motivating tool, driving employees to learn new skills, and perform at higher levels. According to Ashkanasy and Nicholson (2003) fear in the workplace can be defined as generalized apprehension at work. While fear can be utilized as a positive device, and cannot be eliminated from human emotion (Leon, 2002), under certain conditions fear and hostility can be an overriding negative force within an organization. From a psychological perspective fear is considered a negative emotion, because when experienced the effect is often distressing and tends to have an adverse impact on the individual (Strongman, 1996). It is also however, a normal emotion and is an appropriate response to a known threat of danger. Fear has multiple symptoms, including fatigue, depression, restlessness, aggression, loss of appetite, and insomnia (Doctor & Kahn, 1989). In other words, fear has the potential to induce certain stress responses or behaviors, such as flight or fight, suppression, or helplessness. There is indication in the Journal of Global Strategic Management | V. 5 | N. 2 | 2011-December | isma.info | 147-161 | DOI: 10.20460/JGSM.2011515805 literature that negative interpersonal behaviors at work can affect various organizational and attitudinal variables, namely higher turnover and job dissatisfaction (Cox, 1987).



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