Quality of Self-Efficacy Evaluations in the Context of Nascent Entrepreneurship

Abstract

Is self-efficacy predictor or outcome of performance? The debate about the direction of the relationship between self-efficacy and performance is ongoing. We show that both is true when taking the development of self-efficacy over time into account. We develop a model of the development of self-efficacy and test this model using longitudinal data from N = 1682 nascent entrepreneurs. In the beginning, self-efficacy is an outcome of performance. It is of low quality and therefore only has little predictive validity. Over time and through action, the quality of self-efficacy increases. The change in quality increases the predictive validity of self-efficacy. We additionally test the effect of training on the formation of high-quality self-efficacy evaluations and show that training can accelerate the formation through increasing the level of action. Our study contributes to research on self-efficacy by explaining under which conditions self-efficacy is a positive predictor of performance. Additionally, our study contributes to research on entrepreneurship by examining the role of self-efficacy in the process of business creation among nascent entrepreneurs.