The Relationship Between Self-awareness and Self-efficacy

Abstract

This paper shows the relation of Self-awareness and self-efficacy. Self-awareness has been proved as an important component which leads to achievement of success. So also, Self-efficacy enhances the spirit of achievement. For the same reason this paper has been written to analyse that if a person is self-aware, would his Self-efficacy also get enhanced. If so, then this paper would help in ensuring that young youth should be made Self-aware which in turn will help them in boosting their Self efficacy and thus would lead to budding of future entrepreneurs.

Introduction

Entrepreneurship is the creation of new combinations (Schumpeter, 1934) and an entrepreneur‘s intentions to start a business and the decisions that occur before startup shape the subsequent goals, strategies, and structures of the new venture (Bird, 1988).

According to Cantillon “An entrepreneur is a person who buys factor services at certain prices with a view to selling its product at uncertain prices”. Entrepreneur, according to Cantillon, is a risk taker who deliberately allocates resources to exploit opportunities in order to maximize the financial return. Cantillon emphasized the willingness of the entrepreneur to assume risk and to deal with uncertainty. Entrepreneurial intent is characterized by innovation and risk-taking.

The exploitation of entrepreneurial opportunities may include actions such as developing a business plan, hiring the human resources, acquiring financial and other required resources, providing leadership, and being responsible for the venture's success or failure. Entrepreneur is a person of telescopic faculty drive and talent who perceives business opportunities and promptly seizes them for exploitation. To attain the entrepreneurial characteristics and intent, it becomes important for a person to be self-aware and work on his strength and weaknesses to become high on Self efficacy.

Self-awareness is ability, skill or, in the case of the trait EI model, a self-perceived ability to identify, assesses, and controls the emotions of oneself, of others, and of groups. It is the way of recognizing, understanding, and choosing how we think, feel, and act. It shapes our interactions with others and our understanding of ourselves. It defines how and what we learn; it allows us to set priorities; it determines the majority of our daily actions. Research suggests it is responsible for as much as 80% of the success in our lives.

Self-efficacy as defined by Bandura (1997) is “people’s judgement of their capabilities to organise and execute courses of action required to produce given attainments” and have the consequence that “people’s level of motivation, affective states, and actions are based more on what they believe than on what is objectively true.” Individuals need to have an accurate sense of self-image to prevent negative outcomes. According to McGee et al (2009), entrepreneurial self-efficacy (ESE) is a “construct that measures a person’s belief in their ability to successfully launch an entrepreneurial venture.” People's beliefs about their efficacy can be developed by various sources of influence. The self - efficacy components are Need for achievement, Tolerance of ambiguity, Locus of control, risk-taking propensity.

Need and Scope of the study

In India, the youth and the experienced people too carry the entrepreneurial capabilities abut many a times they are not aware of their own self. That is one of the reason that these people lie in the category of job seekers and not job generators. Indian economy needs entrepreneurs and even the education system of the country has realized that it is important to produce entrepreneurs from the colleges and not just efficient graduates.

Such training programs thus should be developed that can help youth in becoming self - dependent and job providers. There is a huge need for a lecturing update to be done to help students to become successful entrepreneurs (Ngwenya Tshepiso, The business Review, Cambridge, 2007)

This research would help in understanding how Self - awareness is related to Self - efficacy, which in turn would help youth to take initiative to become Entrepreneur. This would help in developing effective behavioral training programs for the budding and existing entrepreneurs. Further research should be done to study other factors that lead to development of entrepreneurial intention.

Review of Literature

Building on competency modeling techniques and self-awareness literature, Camuffo a, Gerli F, Gubitta P, (2012) explored link between personal characteristics and competencies of entrepreneurs and the performance of their firms. He too further suggested that lot of work needs to be done in order to enhance the entrepreneurial competencies of management students. For the same reason it becomes important to understand how these entrepreneurial competencies and intentions can be developed in an individual. Based on the same, B- schools can come up with effective entrepreneurial development training models.

Johanna Mair, “Entrepreneurial Behaviour in a large traditional firm: Exploring key drivers” 2002 conducted an empirical study through which he proved that Managers cognitive and social variables significantly influenced the way they perceived their supportive context. Self-awareness had a negative impact on the freedom to act. Self-awareness had a positive impact on the Entrepreneur's behavior.

Originally defined by Bandura (1994, p. 72) as "one's beliefs in their abilities to perform a certain level of performance or desired outcomes that influence situations that affect their lives", self-efficacy has become an important variable considered in the non - cognitive study of entrepreneurial behaviour. Like Chen et al. (1998), by entrepreneurial self-efficacy, we understand the self-belief in one’s ability to adopt the role and conduct the tasks of an entrepreneur successfully.

In a given situation, entrepreneurs perceive more opportunities than those who have low levels of entrepreneurial self-efficacy, who perceive the same situation to have more costs and greater risks (Cooper & Lucas, 2005; Vecchio, 2003). People who have a higher level of self-efficacy also feel more competent to overcome perceived obstacles and they anticipate more positive results (Vecchio, 2003) and persist in the effective search and organization of activities in the midst of uncertainty (Trevelyan, 2009).

Entrepreneurial self-efficacy enables us to differentiate entrepreneurs from managers and it also correlates with the intention of owning a business, pointing to the notion that the individual who believes or feels him or herself most capable of undertaking a business concern is more prone to implementing such behavior than one who does not feel able to do so (Chen et al., 1998).

Research Gap

There are many types of research that have been done to analyse the relation between Entrepreneurial Self - awareness and Entrepreneurial success. So also, it has been proved that Self-efficacy leads to the higher success rate of an Entrepreneur. But very minimal literature shows a relation between Entrepreneurial Self - awareness and Entrepreneurial Self - efficacy leading to entrepreneurial intent. Through this paper we want to prove empirically whether there is a positive relation between Self - awareness and Self - efficacy of an Entrepreneur.

Conceptual Framework

As this study aims to investigate the relation between Entrepreneur Self - awareness and Entrepreneurial Self-efficacy, the research question and objective for this study are as below:

Research Objectives: To empirically study the relationship between Entrepreneurial Self - awareness and Entrepreneurial Self - efficacy.

Research Questions

• RQ. What is the relationship, if any, between Entrepreneurial self-awareness and Entrepreneurial Self - efficacy?
• H10 – There is no relationship between Entrepreneurial self-awareness and Entrepreneurial Self-efficacy.
• H1a - There is a significant relationship between Entrepreneurial self-awareness and Entrepreneurial Self-efficacy.

Research Methodology

• Type of research: Descriptive
• Population/ universe: MSME in Delhi/NCR.
• Sampling technique: Convenient sampling
• Sample size: 75
• Data collection instrument: Questionnaire
• Analysis tool: Correlation, regression
• Level of Significance: α = 5%

Data Analysis

Pilot Test: A pilot test was conducted using data from 70 respondents. Reliability and validity was checked. Further Confirmatory factor analysis was done to specify the number of factors required in the data and which measured variable is related to which latent variable.

Correlation and Regression were applied using SPSS. The regression estimates for the Self - awareness and self-efficacy was 1.167 and its corresponding p-value is 0.000<0.05. Since the p-value is less than 0.05, we can conclude that Self - awareness had a positive and significant impact on self-efficacy. Hence null hypothesis can be rejected, and the alternate hypothesis can be accepted.

Discussion

Through the study, we have found out that their high dependence of self-efficacy on Self - awareness of the entrepreneur. Self - awareness of an entrepreneur help them in taking a more calculated risk and effective entrepreneurs. Thus, they need to be high on their self-efficacy too, so that they can evaluate themselves thoroughly prior to quitting their original employment.

Conclusion

From the results, we can make out that Self - awareness has a positive impact on Self-efficacy. Entrepreneurs face a lot of problems starting from Capital built up to high competition which is extremely challenging. The entrepreneurs thus need to be strong on Self-efficacy which further helps in enhancing their Entrepreneurial intent. It helps them to overcome the ups and downs that they face in their business cycle.

The Indian government is putting a lot of emphasis on the development of Entrepreneurs and Startups. For the same, many institutions are providing Entrepreneurial Education across the country. Self-awareness should be made a part of the curriculum of Entrepreneurial Education. It would help the entrepreneurs in sustaining their business by enhancing their self-efficacy. Further research should be conducted taking other cognitive and non-cognitive factors like family background, experience, education, the personality of the entrepreneur, and their effect on entrepreneurial competency.