Management Science Letters 11 (2021) 1715–1724

Contents lists available at GrowingScience

Management Science Letters

homepage: www.GrowingScience.com/msl

Entrepreneurial self-efficacy and small business performance in Pakistan

Muhammad Khalila, Mukaram Ali Khanb*, Syed Sohaib Zubairc, Hina Saleemd and Syed Nadeem
Tahirb

aRiphah International University, Pakistan

bIAS, University of the Punjab, Pakistan
c
DAS, University of the Punjab, Pakistan
d
IBIT, University of the Punjab, Pakistan
CHRONICLE ABSTRACT

Article history: Entrepreneurial Self Efficacy (ESE) has gained immense importance in the past few years in the
Received: December 12, 2020 field of entrepreneurship. The focus of this study is to test the effect of each of the five dimensions
Received in revised format: of ESE and understand their importance in connection with firms’ performance. This study was
December 29 2020
carried out among small businesses entrepreneurs in Pakistan and a valid sample of 353 entrepre-
Accepted: February 17, 2021
Available online: neurs was selected for this purpose. A survey technique was used for data collection and AMOS
February 17, 2021 was used for data analysis. In line with expectation, the analysis concluded a significant positive
Keywords: relationship between ESE dimensions and performance of small businesses. It was also concluded
Entrepreneurial Self Efficacy that the Risk dimension of ESE contributes majorly in the improvement of firms’ performance
(ESE) whereas the financial control dimension of ESE contribution was least. It is also suggested that all
Performance five dimensions of ESE are important to achieve desirable performance outcomes.
Small Businesses
AMOS
Pakistan
© 2021 by the authors; licensee Growing Science, Canada

1. Introduction

Although entrepreneurship has a long history, Entrepreneurial Self-efficacy (ESE) has also gained tremendous attention from
entrepreneurship researchers since the beginning of this century. It is an important concept when it comes to the research of
various entrepreneurial functions. ESE has been defined in different perspectives by different researchers but its importance
has been realized by all scholars when it comes to the study in entrepreneurial context. There have been a large number of
studies which emphasized the role of entrepreneurs’ self-efficacy and its importance in achieving and realizing the entrepre-
neurial goals. Bandura (1977) was the one who firstly introduced the concept of self-efficacy in his theory of social learning.
It was defined as “an individual’s belief in his or her personal ability to achieve a precise set of tasks”. It is further described
as an entrepreneur’s cognitive assessment of his or her capacity to organize the motivation, conceptual abilities and action
plans required to exercise control over the operational requirements (Bandura, 1990). Self-efficacy focuses on more than one
dimension to predict achievements (Bandura, 1977). As per Cassar and Friedman (2009), the first dimension - specific context,
refers to an individual’s self confidence in successfully achieving a particular task, whereas, the second dimension – “activity
domain”, is defined as a person’s self-confidence in his or her abilities needed for several other related domains (Cassar &
Friedman, 2009). In continuation of recommendation by Bandura, ESE construct was proposed by a number of researchers.
They defined ESE as to have the belief in oneself to attain entrepreneurial goals. In spite of extensive research on this concept,

* Corresponding author.

E-mail address: mukaramali@ias.edu.pk (M. A. Khan)

© 2021 by the authors; licensee Growing Science, Canada

doi: 10.5267/j.msl.2021.2.011
1716

there is still not a plentiful explanation to prove the exact type of association between an ESE and firm’s performance specif-
ically in the context of small businesses (McGee et al., 2009).
This research contributes in many areas as self-efficacy has a large theoretical base and robust academic support to understand
potential performance (Wood & Bandura, 1989; Luthans & Peterson, 2002; Bandura & Schunk, 1981; Bandura, 1982, 1986).
According to Bandura (1977), building on the concepts of the Social Learning Theory (SLT), ESE may contribute to “task-
specific” outcomes. In particular, individuals having strong faith in themselves to achieve entrepreneurial roles and activities
that are said to have ESE (Lindsley et al., 1995; Bandura, 1986). These entrepreneurs set difficult yet attainable goals, exhibit
perseverance, put in a great deal of efforts towards entrepreneurial tasks, and recuperate quickly from their failures (Trevelyan,
2011; Cervone & Peake, 1986). Many researchers contend that entrepreneurs having self-efficacy usually set challenging
growth targets for their ventures and show perseverance towards achievement of their goals. Furthermore, due to these per-
sistent efforts, a positive outcome is usually evident (Wood & Bandura, 1989). In other terms, their beliefs are converted into
effort due to the positive role of ESE, which lead to improved venture performance.
Self-efficacy construct was developed using 22 items with the foremost work of Chen et al. (1998) and termed as ESE and
helped anticipate the prospect of a person to become an entrepreneur, and composed of five dimensions termed as “marketing,
innovation, management, risk taking, and financial control”. This study has adopted the constructs used by Chen et al. (1998)
in context of small businesses in Pakistan and these measures have been taken on the basis of few other researchers who used
these dimensions later in their studies as well (Hmieleski & Baron, 2008; Torres et al., 2013; Cumberland et al., 2015;
McGee & Peterson, 2019). Small businesses are taken for analyzing ESE because they play a crucial part in the economic
growth of a country specifically in developing countries like Pakistan and as suggested by (Bonsu & Kuofie, 2019), although
the survival rate of such businesses is low, their growth rates at times are huge.
The prevalent method to measure business performance in terms of growth has been income, employment, and profitability,
and as far as profitability is concerned, many researchers cited its difficulty to measure because of varying technical issues of
accounting practices. Many researchers emphasize the importance of performance measurement in small business in order to
gauge its success or failure (Coad, 2007). Despite the fact that growth can be of various types, venture performance as per
(Venkatraman & Ramanujan, 1986) can be measured in different numbers of ways. Self-efficiency, being the belief of people
to achieve desired outcome (Bandura, 2000) has been reported as a strong predictor of entrepreneurial performance (Markman
et al., 2005). Moreover, performance has been evaluated on basis of two specific yet subjective measures which have been
cited by a number of studies earlier i.e., growth of revenues and employment (Baum & Locke, 2004; Ensley et al., 2006;
Cumberland et al., 2015). As per Carland et al. (1988), a distinguishing feature between an entrepreneur and other businesses
is that the pursuit of high growth is more visible in entrepreneurs along with other growth tendencies.
Some studies have established that entrepreneurs usually display higher self-efficacy than other individuals. For instance,
there is a higher level of self-efficacy present in the patent inventors who are mostly actively involved in creation of ventures
as compared to those patent inventors who never started a new venture (Markman et al., 2002). Some researchers have argued
that due to the robust nature of ESE theory, it is still considered as not properly developed, and it has not adequately established
itself in multiple dimensions (McGee et al., 2009). The contribution of this study is to validate the Chen et al. (1998) dimen-
sions of ESE in context of small businesses operating in Pakistan and to identify the relationship between ESE and small
businesses performance. It must be noted that no such study has been conducted to date in context of small businesses (only)
operating in Pakistan hence; this study will contribute in terms of identifying ESE dimensions in small businesses and their
effect on performance of the small businesses. Small businesses play a vital role in the development of the economy and in
this context, the prime objective of this study is to identify the role of each dimension of ESE and their impact on firms’
performance.
Pakistan being a developing country is going through an economic crisis and the importance of small businesses cannot be
neglected in such circumstances where unemployment level is already on rise. Such firms play a vital role in the development
of the economy and analyzing ESE can add well for entrepreneurs operating in small businesses. Improving ESE can contrib-
ute well for entrepreneurs to operate better eventually leads to better performance. Moreover, this study can provide better
understanding to other stakeholders, specifically governments who can come up with better policies to facilitate small busi-
nesses in improving ESE in order to compete in this dynamic industry. Lastly, the government can facilitate small businesses
in screening entrepreneurs with high ESE across all dimensions so that they can improve the performance level of their firms.
2. Hypotheses Development and Research Framework

As per Hmieleski and Baron (2008), recent studies to assess the role of ESE on performance of firms have shown different
results, reporting both strong and weak relationships (e.g., Amatucci & Crawley, 2011; Chandler & Jansen, 1997; Prajapati
& Biswas, 2011). Many studies were unable to provide justifications for the disparity of the relationships in their literature
however majority of the studies have shown a positive association between ESE and firms performance. A study to assess
work-related performance, a meta-analysis of 114 research studies reported a strong relationship between self-efficiency and
performance (Stajkovic & Luthans, 1998). Numerous other empirical studies have found a positive relationship between per-
formance and entrepreneurial self-efficacy (Torres & Watson, 2013; Cumberland et al., 2015; Miao et al., 2017; McGee &
Peterson, 2019; Kale, 2020). Despite the majority of research studies showing a positive ESE – performance relationship,
 M. Khalil et al. / Management Science Letters 11 (2021) 1717

some studies like Hmieleski and Baron (2008) have reported that in particular times, ESE has an indirect effect on entrepre-
neurs and their ventures. Various studies report both negative and positive effects as entrepreneurial self-efficacy may exert
under different circumstances. Recently, some researchers have suggested that high rates of confidence can cause excessive
arrogance or envy amongst entrepreneurs which in turn may weaken their ability to effectively lead their ventures (Hayward
et al., 2006). This issue, however, has not been potentially taken up in the literature of entrepreneurship. However, the debates
of the potential adverse consequences of high self-efficacy have raised interest in the literature in other management fields,
including strategic management and organizational behavior and theory (Vancouver et al., 2002). Before moving on to the
discussion on the association between the five key dimensions of entrepreneurial self-efficacy, it is pertinent to mention that
limited work has been done on further exploring and testing the relationships between the five dimensions and firm perfor-
mance (Bakr et al, 2017). This study by testing the model in a different way intends to bridge this gap in literature. The idea
of innovation and creativity is being highly discussed particularly in connection with entrepreneurship and is considered to be
one of the key “drivers” that help entrepreneurs in succeeding (Wei et al., 2020). The two ideas are very much connected,
scholars such as Chen and Zhou, 2017) and others argue that people with high ESE bring in more innovation in their ventures
and set higher goals. Similarly, Cooper and Lucas (2007) also emphasize that innovation, self-efficacy and business success
(owing to other various reasons as well) is very much related and influences one another. When it comes to innovation as
being a dimension of self-efficacy, Cumberland et al. (2015) emphasize that among other features of entrepreneurial self-
efficacy, innovation is one of the important factors that positively affects a firm's performance. Similarly, Herath and
Mahmood (2014) also studied this dimension of ESE in connection with the organizational performance and found a positive
and significant relationship.
Talking about the second dimension of self-efficacy, marketing self-efficacy is about expertise and skills in the field of mar-
keting. Chen et al. (1998) argue that marketing self-efficacy is an important dimension that varies with entrepreneurs and can
affect the businesses performance. Antoncic et al. (2016) explain it as expertise in “strategic marketing decision making, sales
performance, marketing communications, and marketing calculations” (p.91). They also emphasize that efficacy in marketing
can evidently influence a company’s financial performance. On the other hand, Bakar et al. (2017) testing the dimensions of
self-efficacy in the higher education sector found out that marketing self-efficacy has a relatively insignificant effect on insti-
tutional performance. Moreover, the third dimension is about management ESE which talks about the role of planning and
reducing uncertainty in connection with self-efficacy (Bakar et al., 2017). According to Cumberland et al. (2015), it was found
to be a positive and significant relationship between the management dimension of ESE and franchise performance. Similarly,
a study was conducted by Herath and Mahmood (2014) on the relationship between dimensions of ESE and firms’ perfor-
mance and it was found to have a positive relationship between defining purpose as a management dimension of ESE and
performance. In another study, the similar study was conducted in Nigeria and it reported an insignificant effect of manage-
ment dimension of ESE with the performance (Bakar et al., 2017). Moving on to the dimension of risk-taking ESE, as per
Cumberland et al. (2015), this dimension is associated with working under high pressure in connection with self-efficacy and
it is also believed that calculative risk-taking habits of entrepreneurs can lead to better performance, hence, it was revealed
that risk taking ESE and franchise performance was found to be positively and significantly related. As per the most recent
study by Bakr et al. (2017), risk taking dimension of ESE also reported to be positively related with organizational perfor-
mance. Lastly, the financial control dimension of ESE is related to the regular conduction of financial analysis and controlling
of costs. As far as its relationship with performance if concerned, it also plays a significant role towards betterment of organ-
izational performance. Cumberland et al. (2015) highlights a positive and significant relationship between financial control
ESE and franchise performance and a similar relationship was observed between these two variables in the study conducted
by Bakar et al. (2017).

Marketing ESE

Innovation ESE H1(a)

H1(b)
Management Firms Performance
H1(c)
ESE
H1(d)
Risk Taking ESE
H1(e)

Financial Control
ESE
Fig. 1. Research Framework
1718

As per research framework, there have been five exogenous variables namely Innovation ESE, Marketing ESE, Risk Taking
ESE, Management ESE, and Financial Control ESE and one endogenous variable termed as Firms Performance. Moreover,
following are the five hypotheses which have been drafted as shown in the framework with the help of discussion in the
literature review and hypotheses development section;

H1(a): Marketing ESE positively affects the firms’ performance.

H1(b): Innovation ESE positively affects firms’ performance.
H1(c): Management ESE positively affects firms’ performance.
H1(d): Risk Taking ESE positively affects firms’ performance.
H1(e): Financial Control ESE positively affects firms’ performance.

2. Methodology

Quantitative research has been carried out to fulfill the purpose of this study using survey research design. This research
design helps in testing the hypotheses of the study. For the purpose of this study, different scales have been adopted. For
measuring marketing ESE, six items have been used for innovation ESE four items have been adopted. For measuring man-
agement ESE, four items have been used. Moreover, five items have been used for measuring management ESE. For risk
taking ESE, four items have been adopted. Moreover, three items have been used to measure financial control ESE. Lastly,
firms’ performance has been measured through four items (Chen et al., 1998; Cumberland et al., 2015). There are a total 3.2
million SMEs present in Pakistan and researchers could not find any guide where they could find a cumulative number of
registered small businesses present out of 3.2 million. Moreover, researchers have focused on the central Punjab region for
sake of data collection due to relatively a greater number of registered and active small businesses with chambers of commerce
including Lahore, Sialkot, Gujrat and Gujranwala. Currently, approximately 33,500 small businesses are active and registered
in aforementioned cities i.e., 14,000 from Lahore, 8,800 from Sialkot, 7,200 from Gujrat and 3,500 from Gujranwala. Formula
by Yamane (1967) has been used in order to identify the sample size i.e., 395 where the sample has been selected using
stratified random sampling. This technique is used to gain the proportionate sample from each city. For this matter, 395
questionnaires were distributed during the period of October 2019 and January 2020 and received 353 questionnaires which
were fully filled with a response rate of 89.4%. It must be noted that this period of data collection was without the effect of
Covid-19 pandemic, therefore it does not affect the findings of the study. As far as data analysis is concerned, Analysis of
Moment Square (AMOS) has been used in order to analyze the data. Before analyzing the data, a measurement model was
constructed for testing composite reliability and construct validity such as convergent and discriminant validity. After the
measurement model, the structural model was tested to test the developed hypotheses of this study along with model fitness
indices.
3. Data Analysis

Data analysis started with the descriptive statistics of all the latent constructs comprising means and standard deviations. Mean
values show that all the values are laying near the average i.e., 3. Highest mean value reported is 3.11 which is of risk-taking
dimension of ESE and shows that respondents have highest tendency of risk taking whereas lowest mean reported is of per-
formance which shows the tendency of respondents towards performance is relatively low. Moreover, the dispersed around
mean is from 0.64 to 0.91.

Table 1
Descriptive Statistics
Mean Std. Deviation
MKT ESE 2.83 0.69
INN ESE 2.98 0.68
MGT ESE 3.03 0.78
RT ESE 3.11 0.64
FC ESE 2.52 0.81
PERF 2.57 0.91

4.1 Confirmatory Factor Analysis

The first step in the analysis part is Confirmatory Factor Analysis (CFA) and is also called measurement model. The purpose
of CFA is to identify the reliability and validity of the model along with the model fitness indices. In the first model, all
standardize factor loadings were beyond threshold value of 0.60 except first item of Marketing ESE which was 0.488 and was
removed from the model. The CFA was then conducted again and found all the Standardized Factor Loadings (SFL) beyond
the set criteria.

Before moving on to the reliability and validity of the model, measurement model fitness indices were compared for the initial
measurement model and the final measurement model. Following table shows the comparison of both models.
 M. Khalil et al. / Management Science Letters 11 (2021) 1719

Table 2
Comparison of measurement model fitness indices
Fit Index Threshold Value First Measurement Model Final Measurement Model
(χ2/df) <3 2.517 2.192
GFI > 0.90 0.886 0.905
NFI > 0.90 0.877 0.901
TLI > 0.90 0.908 0.932
CFI > 0.94 0.921 0.943
RMSEA < 0.08 0.061 0.054

Covariance based SEM involves few common fitness indices which are used in both measurement model and structural model.
Starting from relative chi-square, it is obtained by dividing minimum discrepancy with “degrees of freedom” with the thresh-
old value of up to 3 (McIver & Carmines, 1981). Table 2 shows that the final measurement model relative chi-square is well
within the range having value of 2.192. The second index is named as Goodness of Fit Index (GFI) whose threshold value is
minimum of 0.90 (Tanaka & Huba, 1985) and in this case, final measurement model GFI meets the minimum threshold with
the value of 0.905. Moving on, Normed Fit Index (NFI) possesses the same threshold as of GFI (Hair et al., 2017) and has a
value of 0.901 just meeting the minimum criteria. In addition, Tucker Lewis index (TLI) has also the same criteria of at least
0.90 (Bentler & Bonett, 1980) and meets the threshold in this case with a value of 0.932. However, Comparative Fit Index
(CFI) minimum threshold is little rigid i.e., 0.940 as compared to other fitness indices (Hooper et al., 2008) and as per table
2, CFI is 0.943. Lastly, RMSEA minimum threshold is up to 0.080 and in this case, it is 0.054 meeting the minimum threshold
(Hair et al., 2006).

Fig. 2. Measurement Model

1720

Table 3 shows the computation of composite reliability and convergent validity. In case of composite reliability, it measures
the internal consistency of the items in the measurement model (Straub, 1989). The minimum threshold for composite relia-
bility is 0.70 (Nunnally & Bernstein, 1994). Moreover, in case of convergent validity, it refers to “the extent to which the
items measuring the same construct are correlated among each other and that they measure the same thing” (Gefen & Straub,
2005). There are three criteria to achieve for proving the convergent validity in the measurement model. First, the condition
of composite reliability with its minimum threshold should be achieved. Second, SFL should be at least 0.60 and third, Aver-
age Variance Extracted (AVE) should be minimum of 0.50 (Hair et al., 2006).
Table 3
Reliability and Convergent Validity
Latent Construct Items SFL CR AVE
Marketing ESE MKTESE_2 .713 .833 .501
MKTESE _3 .780
MKTESE _4 .683
MKTESE _5 .737
MKTESE _6 .614
Innovation ESE INNESE_1 .824 .853 .593
INNESE _2 .799
INNESE _3 .695
INNESE _4 .755
Management ESE MGTESE_1 .622 .869 .572
MGTESE _2 .735
MGTESE _3 .830
MGTESE _4 .826
MGTESE _5 .750
Risk Taking ESE RTESE_1 .774 .840 .569
RTESE _2 .767
RTESE _3 .778
RTESE _4 .694
Financial Control ESE FCESE_1 .691 .779 .541
FCESE _2 .751
FCESE _3 .762
Performance Perf_1 .765 .847 .582
Perf_2 .693
Perf_3 .822
Perf_4 .765

As per Table 3, the composite reliability of all the latent constructs have met the minimum threshold of 0.70 as the value
ranges from 0.779 to 0.869. Moreover, as far as convergent validity is concerned, CR has achieved its minimum criteria as
already discussed. SFL is also beyond the minimum threshold value of 0.60 and lastly AVE also meets the minimum threshold
of 0.50 as it ranges from 0.501 to 0.593. In nutshell, it is concluded that convergent validity has been achieved for this model
and the model is to be tested for hypothesis testing.
As far as discriminant validity is concerned, it refers to the “extent that items measuring one construct are distinct from the
items measuring other constructs” (Hair et al., 2006). Discriminant validity can be achieved when all the correlations among
the latent constructs are less than the square roots of AVE (Fornell & Larcker, 1981).
Table 4
Discriminant Validity
Latent Constructs MKT ESE INN ESE MGT ESE RT ESE FC ESE PERF
MKT ESE .708*
INN ESE .57 .770*
MGT ESE .40 .20 .756*
RT ESE .56 .43 .46 .754*
FC ESE .51 .37 .10 .13 .735*
PERF .12 .34 .41 .52 .10 .763*
*√AVE
As per the Table 4, it can be seen that the correlations of all the constructs are less than the square root of AVE. As the
minimum square root of AVE is 0.708 and maximum correlation is 0.57 and this difference shows the presence of discriminant
validity in the model as well.
 M. Khalil et al. / Management Science Letters 11 (2021) 1721

Moreover, Common Method Bias (CMB) is used to test the “Harman Single Factor Test” (HSFT) which is referred to observe
whether “change in single factor affects all the variables in the data and that variance should be less than 0.5 to avoid CMB”
and in present research, value of HSFT is found to be 0.39, therefore it is reported that data is not suffering from CMB
(Podsakoff & Organ, 1986). However, there are few limitations associated with technique (Podsakoff et al., 2003), hence,
“Common Latent Factor” (CLF) test is used through SEM by “comparing standardized regression weights (SRWs) with and
without CLF and found that SRWs without CLF were higher than SRWs with CLF with the difference of less than 0.05”,
ultimately concludes that data is not having CMB (Gaskin, 2012).
4.2 Structural Model
The purpose of the structural model is to check the model fitness indices after giving latent constructs the direction set in the
research framework and then testing of the set hypotheses. As per the model fitness indices, it can be seen that the relative
chi-square value is 2.136, GFI value is 0.908, NFI value is 0.903, CFI value is 0.946, TLI is 0.935 and RMSEA is 0.053 an
all the model fitness indices are well within the threshold values as discussed in the portion of CFA.

Fig. 3. Structural Model

As far as hypothesis testing is concerned, the aforementioned structural model shows the acceptance of first sub-hypothesis
with a very weak positive relationship of 0.12 (p=0.027) between marketing ESE and small business performance. Moving
on to the second sub-hypothesis which states that a positive significant relationship exists between innovation ESE and small
business performance, which has been accepted as well as there exists a positive relationship between both latent constructs
with path coefficient of 0.34 (p=0.000). Moreover, as far as third sub-hypothesis is concerned, the structural model shows the
acceptance of a third hypothesis with positive and significant relationship of 0.41 (p=0.000) between management ESE and
small business performance. Moving on to the fourth sub-hypothesis that states a relationship between risk taking ESE and
small business performance, results show the acceptance of this hypothesis as well as there exists a positive and significant
relationship of 0.52 (p=0.000) between both latent constructs. Lastly, as far as the relationship between financial control ESE
and small business performance is concerned, both possess the positive and significant relationship with a path coefficient of
0.10 (0.038) between both constructs leading to the acceptance of fifth sub-hypothesis.
5. Discussion and Conclusion

There have been a number of studies which support the findings of the current study. For instance, first sub-hypothesis ac-
ceptance with narrow margin shows that although marketing ESE plays its role in escalating the small businesses’ perfor-
mance, small businesses in Pakistan put less emphasis on the marketing dimension of ESE. Reason being the already squeezed
revenues of the small businesses and taking the marketing as expense instead of investment. Out of all five sub-hypotheses,
this relationship was proved to be the second weakest. Moreover, the innovation dimension of ESE has shown a relatively
better relationship with small businesses performance. There are a number of small businesses in Pakistan who work on to try
1722

new ideas and come up with the modification of existing products or with new products and procedures which reflect posi-
tively upon their performance. Moving on to the relationship between the management dimension of ESE and small businesses
performance, study has shown a positive and significant impact due to better management styles prevailing in the small busi-
nesses. Goals/plans are properly defined and executed within timelines in most of the cases which leads to the better perfor-
mance level of small businesses in Pakistan. Due to uncertainty and dynamic conditions of the industry in Pakistan, entrepre-
neurs have to play the important role of risk taking to either survive in the competition or maneuver the growth of their set
ups in a positive way. This role of risk taking by the entrepreneurs eventually leads them for the betterment in the performance
level and this sub-hypothesis has shown a highest path-coefficient among all latent constructs. Lastly, as per financial control
dimension of ESE, it has been the least path coefficient out of all five dimensions. The reason for having the weakest rela-
tionship in the model is the absence of records or non-maintenance of proper financial control systems present in small busi-
nesses. Most of the economy in Pakistan is already undocumented and even those who have registered themselves are not
having the proper systems in place to control the financial cash flows. In nutshell, it is concluded that ESE exists in the small
businesses of Pakistan and there is a significant positive relationship with the performance of small businesses. Similarly, this
study suggests that all five dimensions of ESE are important to develop to achieve reasonable performance level.
5.1 Practical Implications
This study provides guidelines to the management of new ventures or other start-ups in a way that the investment should be
done on building and enhancing ESE level. Investors should focus on developing ESE of the entrepreneurs by taking a few
mandatory steps who want to start their ventures. Moreover, those individuals who are the nascent entrepreneurs and want to
start the business, they should consider themselves in scoring reasonably good in all of the five dimensions if they want to
escalate the performance level of their start-ups. As far as small businesses are concerned, state can build some mechanisms
to screen such small businesses owners which have high scores across all five dimensions of ESE and owners of such small
businesses in future can work on developing the ESE of their key prospective employees which they can further use in starting
their own venture in future and this can be done through educational training courses on innovation, management, risk taking,
marketing and financial analysis.
5.2 Limitations and Future Directions
Although this paper has a number of contributions, there are few limitations as well. For instance, ESE scale is having the
self-reported measures which are adopted from the well-established study however, using objective measures instead of self-
reported measures to determine the performance could be more useful. The major issue for getting objective measures of
performance in this study was the lack of data available in most of the small businesses. As per Dess and Robinson (1984), in
case of absence of objective measures, subjective measures can be obtained. In addition, this study was conducted using single
construct of ESE with five dimensions which did not affect the validity of the scale; however, one can use different constructs
in future which can affect the performance of small businesses such as level technological turbulence, environment uncertainty
and level of government support to assess the effect on the endogenous variable. Moreover, data can be collected from other
provinces to gain more representation. Lastly, prior experience plays an important role in the life of entrepreneurs specifically
in case of ESE (Cassar & Friedman, 2009), therefore, future research can be conducted considering prior experience of entre-
preneurs as such entrepreneurs with prior experience can exhibit better ESE and can further escalate the performance.
References
Amatucci, F. M., & Crawley, D. C. (2011). Financial self‐efficacy among women entrepreneurs. International Journal of
Gender and Entrepreneurship, 3(1), 23-37.
Antoncic, B., Antoncic, J. A., & Aaltonen, H. M. (2016). Marketing self-efficacy and firm creation. Journal of Small Business
and Enterprise Development, 23(1), 90-104.
Bakar, M. S., Ramli, A. B., Ibrahim, N. A., & Muhammad, I. G. (2017). Entrepreneurial self-efficacy dimensions and higher
education institution performance. IJMS, 24(1), 119-137.
Bandura, A. (1977). Self-efficacy theory: Toward a unifying theory of behavioral-change. Psycho- logical Review, 84, 191-
225.
Bandura, A. (1982). Self-efficacy mechanism in human agency. American psychologist, 37(2), 122-147.
Bandura, A. (1986). The explanatory and predictive scope of self-efficacy theory. Journal of Social and Clinical Psychol-
ogy, 4(3), 359-373.
Bandura, A. (1990). Perceived self-efficacy in the exercise of personal agency. Journal of Applied Sport Psychology, 2(2),
128-163.
Bandura, A. (2000). Cultivate self-efficacy for personal and organizational effectiveness. Handbook of principles of organi-
zation behavior, 2, 11-21.
Bandura, A., & Schunk, D. H. (1981). Cultivating competence, self-efficacy, and intrinsic interest through proximal self-
motivation. Journal of Personality and Social Psychology, 41(3), 586-598.
Baum, J. R., & Locke, E. A. (2004). The relationship of entrepreneurial traits, skill, and motivation to subsequent venture
growth. Journal of Applied Psychology, 89(4), 587.
Bentler, P.M. & Bonett, D.G. (1980). Significance tests and goodness of fit in the analysis of covariance structures. Psycho-
logical Bulletin, 88(3), 588-606.
 M. Khalil et al. / Management Science Letters 11 (2021) 1723

Bonsu, S., & Kuofie, M. (2019). Small Business Survival. Journal of Marketing & Management, 10(1). 51-63.
Carland, J. W., Hoy, F., & Carland, J. A. C. (1988). “Who is an entrepreneur?” is a question worth asking. American journal
of small business, 12(4), 33-39.
Cassar, G. & Friedman, H. (2009). Does self-efficacy affect entrepreneurial investment? Strategic Entrepreneurship Jour-
nal, 3(3), 241–60.
Cervone, D., & Peake, P. K. (1986). Anchoring, efficacy, and action: The influence of judgmental heuristics on self-efficacy
judgments and behavior. Journal of Personality and social Psychology, 50(3), 492-501.
Chandler, G. N., & Jansen, E. (1997, August). FOUNDER SELF-EFFICACY AND VENTURE PERFORMANCE: A LON-
GITUDINAL STUDY. In Academy of Management Proceedings (Vol. 1997, No. 1, pp. 98-102). Briarcliff Manor, NY
10510: Academy of Management.
Chen, C.C., Greene, P.G., & Crick, A. (1998). Does entrepreneurial self-efficacy distinguish entrepreneurs from managers?
Journal of Business Venturing, 13(4), 295–316.
Chen, Y., & Zhou, X. (2017). Entrepreneurial self-efficacy and firms' innovation behavior: The negative mediating role
of social capital. Social Behavior and Personality: An International Journal, 45(9), 1553-1562.
Coad, A. (2007). Firm growth: A survey. Retrieve from https://halshs.archives- ouvertes.fr/file/index/docid/155762/file-
name/R07024.pdf
Cooper, S. Y., & Lucas, W. A. (2007). Enhancing self-efficacy for entrepreneurship and innovation: An educational ap-
proach. In University collaboration for innovation (pp. 79- 98). Brill Sense.
Cumberland, D. M., Meek, W. R., & Germain, R. (2015). Entrepreneurial self-efficacy and firm performance in challenging
environments: Evidence from the franchise context. Journal of Developmental Entrepreneurship, 20(01), 1-19.
Dess, G. & Robinson, R. (1984). Measuring organizational performance in the absence of objective measures: The case of
the privately-held firm and conglomerate business units. Strategic Management Journal, 5, 265–73.
Ensley, M. D., Hmieleski, K. M., & Pearce, C. L. (2006). The importance of vertical and shared leadership within new venture
top management teams: Implications for the performance of startups. The leadership Quarterly, 17(3), 217-231.
Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement
error. Journal of Marketing Research, 18(1), 39-50.
Gaskin, J. (2012). Confirmatory factor analysis. Gaskination’s StatWiki.
Gefen, D., & Straub, D. (2005). A practical guide to factorial validity using PLS-Graph: Tutorial and annotated example.
Communications of the Association for Information Systems, 16(1), 91-109.
Hair Jr, J. F., Matthews, L. M., Matthews, R. L., & Sarstedt, M. (2017). PLS-SEM or CB-SEM: updated guidelines on
which method to use. International Journal of Multivariate Data Analysis, 1(2), 107-123
Hair, J. F., Black, W. C., Babin, B., Anderson, R., & Tatham, R (2006). Multivariate Data Analysis. Upper Saddle River,
NJ: Prentice Hall
Hayward, M. L., Shepherd, D. A., & Griffin, D. (2006). A hubris theory of entrepreneurship. Management science, 52(2),
160-172.
Herath, H. M. A., & Mahmood, R. (2014). Dimensions of entrepreneurial self-efficacy and firm performance. Global Journal
of Management And Business Research, 14(4), 22-30.
Hmieleski, K. M., & Baron, R. A. (2008). When does entrepreneurial self‐efficacy enhance versus reduce firm perfor-
mance?. Strategic Entrepreneurship Journal, 2(1), 57-72.
Hooper, D., Coughlan, J. & Mullen, M. (2008). Structural Equation Modelling: Guidelines for Determining Model Fit. Elec-
tronic Journal of Business Research Methods, 6(1), 53-60.
Kale, E. (2020). Attachment styles and job performance in the hospitality industry: the mediating role of general self-effi-
cacy. Journal of Human Resources in Hospitality & Tourism, 19(1), 23-42.
Lindsley, D. H., Brass, D. J., & Thomas, J. B. (1995). Efficacy-performing spirals: A multilevel perspective. Academy of
Management Review, 20(3), 645-678.
Luthans, F., & Peterson, S. J. (2002). Employee engagement and manager self-efficacy. The Journal of Management Devel-
opment, 21(5), 376-387.
Markman, G. D., Balkin, D. B., & Baron, R. A. (2002). Inventors and new venture formation: The effects of general self–
efficacy and regretful thinking. Entrepreneurship Theory and Practice, 27(2), 149-165.
Markman, G. D., Phan, P. H., Balkin, D. B., & Gianiodis, P. T. (2005). Entrepreneurship and university-based technology
transfer. Journal of Business Venturing, 20(2), 241-263.
McGee, J. E., & Peterson, M. (2019). The long‐term impact of entrepreneurial self‐efficacy and entrepreneurial orientation
on venture performance. Journal of Small Business Management, 57(3), 720-737.
McGee, J. E., Peterson, M., Mueller, S. L., & Sequeira, J. M. (2009). Entrepreneurial self‐efficacy: refining the measure. En-
trepreneurship Theory and Practice, 33(4), 965-988.
McIver, J., & Carmines, E. G. (1981). Unidimensional scaling (No. 24). Sage.
Miao, C., Qian, S., & Ma, D. (2017). The relationship between entrepreneurial self‐efficacy and firm performance: a meta‐
analysis of main and moderator effects. Journal of Small Business Management, 55(1), 87-107.
Nunnally, J.C. & Bernstein, I.H. (1994). Psychometric Theory, 3rd ed., McGraw-Hill, New York, NY.
Podsakoff, P.M. & Organ, D.W. (1986). Self-reports in organizational research: problems and prospects. Journal of Manage-
ment, 12(4), 69-82.
1724

Podsakoff, P.M., MacKenzie, S.B., Lee, J.Y. & Podsakoff, N.P. (2003). Common method biases in behavioral research: a
critical review of the literature and recommended remedies. Journal of Applied Psychology, 88(5), 879-903.
Prajapati, K., & Biswas, S. N. (2011). Effect of entrepreneur network and entrepreneur self-efficacy on subjective perfor-
mance: a study of handicraft and handloom cluster. The Journal of Entrepreneurship, 20(2), 227-247.
Stajkovic, A. D., & Luthans, F. (1998). Self-efficacy and work-related performance: A meta-analysis. Psychological bulle-
tin, 124(2), 240-261.
Straub, D. W. (1989). Validating instruments in MIS research. MIS quarterly, 13(2), 147-169.
Tanaka, J. S., & Huba, G. J. (1985). A fit index for covariance structure models under arbitrary GLS estimation. British
Journal of Mathematical and Statistical Psychology, 38(2), 197-201.
Torres, J. L. N., & Watson, W. (2013). An examination of the relationship between manager self-efficacy and entrepreneurial
intentions andperformance in mexican small businesses. Contaduría y Administración, 58(3), 65-87.
Trevelyan, R. (2011). Self‐regulation and effort in entrepreneurial tasks. International Journal of Entrepreneurial Behav-
ior & Research, 17(1), 39-63.
Vancouver, J. B., Thompson, C. M., Tischner, E. C., & Putka, D. J. (2002). Two studies examining the negative effect of
self-efficacy on performance. Journal of Applied Psychology, 87(3), 506.
Venkatraman, N., & Ramanujan, V. (1986). Drivers of market orientation and performance in service firms. Journal of Service
Marketing, 12(1), 3-58.
Wei, J., Chen, Y., Zhang, Y., & Zhang, J. (2020). How Does Entrepreneurial Self-Efficacy Influence Innovation Behavior?
Exploring the Mechanism of Job Satisfaction and Zhongyong Thinking. Frontiers in Psychology, 11, 1-15.
Wood, R., & Bandura, A. (1989). Social cognitive theory of organizational management. Academy of management Re-
view, 14(3), 361-384.

© 2021 by the authors; licensee Growing Science, Canada. This is an open access article distrib-
uted under the terms and conditions of the Creative Commons Attribution (CC-BY) license
(http://creativecommons.org/licenses/by/4.0/).