politecnico di milano pannia... · cinque anni, un lungo viaggio, un percorso accidentato fatto di...

POLITECNICO DI MILANO

School of Industrial and Information Engineering

Master of Science in Management Engineering

Entrepreneurial Intentions in Developing Countries

The impact of EMPRETEC course with a focus on Proactive

Personality and Overconfidence

Supervisor: Prof. Lucia PISCITELLO

Co-Supervisor: Dott. Valentina ROTONDI

Master Thesis by:

Gianfranco PANNIA

Matr: 852320

Riccardo PIAZZOLLA

Matr: 841909

Academic Year 2016/2017

Acknowledgements

Vorremmo ringraziare innanzitutto il Professor Stefano Elia per averci permesso di far

parte di un gruppo di lavoro serio ed entusiasmante, rendendo possibile una nostra

collaborazione diretta con organi prestigiosi ed internazionali quali l’UNCTAD e

indirettamente le Nazioni Unite.

Un gentile grazie alla Professoressa Piscitello per la sua immensa disponibilità e affabilità

nell’accompagnarci in questo percorso umano e professionale che sicuramente porteremo

dentro di noi per tutta la vita.

Un ringraziamento che viene dal profondo del cuore alla Dott.ssa Valentina Rotondi per

averci guidato e sostenuto fin dai primi istanti di stesura della tesi. Ricorderemo i tuoi

consigli, la tua disponibilità e soprattutto i tuoi modi rassicuranti, sereni e pacati che ci

hanno permesso di superare i momenti di sconforto e di duro lavoro con la massima

armonia.

Infine, vorremmo esprimere una reciproca e vicendevole gratitudine per tutto ciò che è stato

portato a termine con successo in questi mesi. Ci siamo conosciuti durante i primi mesi di

università e da allora abbiamo condiviso praticamente ogni momento degli ultimi cinque

anni. Senza la nostra solida amicizia e profonda sintonia non avremmo raggiunto risultati

tanto eccellenti ed esemplari in maniera così distesa e spensierata.

Gianfranco e Riccardo

Cinque anni, un lungo viaggio, un percorso accidentato fatto di alti e bassi che si conclude

oggi.

Un giorno che, tornando indietro nel tempo, mi aspettavo di vivere in maniera diversa. In

cinque anni sono cambiate tante cose, alcune persone sono andate via, altre sono entrate

nella mia vita alterando e rinnovando tutto ciò che mi sta intorno.

Stendere una tesi è un lavoro duro, faticoso, spesso esasperante ed estenuante, ma in

conclusione si rivela essere un progetto che modelli a tua immagine e somiglianza.

Rappresenta il tuo modo di essere e di fare, per cui spesso si sente il bisogno di vicinanza e

calore di quelle persone che sono presenti in ogni altro momento della vita.

Pertanto, il mio pensiero oggi va a coloro che ci sono sempre stati dimostrandomi sentimenti

e peculiarità che il tempo non può variare o scalfire. Questo traguardo è dedicato a Voi che

meritate una dedica diretta ed esclusiva; ciò che segue rappresenta il mio Grazie.

Comincio con Te, Papà, a tutti i tuoi valori che ti hanno reso e continuano a renderti un

maestro di vita. Specialmente al tuo coraggio e alla tua voglia di lottare contro le ingiustizie

che la vita ci ha riservato e che insieme abbiamo imparato a condividere.

A Te, Mà, alla tua smisurata forza che nel corso del tempo ti ha reso la pietra più solida su

cui si erge la nostra famiglia, nelle gioie e nelle avversità. Al tuo modo di essere che ti rende

una donna come poche ed una mamma che tutti dovrebbero invidiarmi.

A mio fratello Michele, alla sua fermezza e risolutezza, da sempre esempio da seguire e

unico legame tra ciò che è stato e ciò che in futuro sarà. Sono sicuro che con il passare degli

anni continuerai ad essermi sempre vicino come lo sei sempre stato.

Ai miei Parenti, quelli sempre presenti, e alla vostra coinvolgente vicinanza, durante

qualsiasi evento che mi tocchi in prima persona, che non mi fa mai sentire solo o trascurato.

Un enorme grazie e una menzione particolare a Te, zio 'Nzino, mio secondo padre e ancora

di salvezza per tutta la famiglia, specialmente per mio Padre, nei momenti più avvilenti e

demoralizzanti; e a Zia Lina, la persona che, geograficamente, mi è stata più vicina e che

spesso mi ha fatto sentire a casa nonostante i 1200 km di distanza.

Un ultimo pensiero a Nonno Ciccio, Nonno Michele, Nonna Mica, Nonna Lorenza e tutte

quelle persone che avrebbero voluto essere qui con me ma la cui assenza oggi non è una

vera assenza.

Oggi lontani ma vicini più che mai...

Gianfranco

Sono sempre stato una persona di poche parole, preferisco dimostrare piuttosto che

esprimermi sulla scia del noto detto: “Verba volant, scripta manent”.

Devo tuttavia ringraziare principalmente i miei Genitori e la mia Tata, senza i quali, la

persona che sono diventata oggi non sarebbe potuta realizzarsi. Prima ancora delle

possibilità offerte, sono i valori che mi hanno insegnato ad avermi formato come uomo. Sono

fiero del loro insegnamento.

Un abbraccio va alla mia sorellina Beatrice, nonostante qualche suo capriccio, mi ha

aiutato nel mio percorso di maturità, mostrandomi in prima persona quanto siano

importanti le responsabilità.

Un saluto va in generale a tutti i miei familiari, da chi mi è stato più vicino a chi meno al

netto della distanza reale. Essere il primo nipote è sempre speciale, mi sento in debito per

tutte le attenzioni che ho ricevuto durante la mia infanzia, spero di potermi sdebitare un

giorno.

Un grande GRAZIE, si proprio in maiuscolo, va alla mia Prof del liceo scientifico, Laura

Benzoni. Un rullo compressore nei cinque anni di liceo scientifico attraverso le varie

materie umanistiche (un controsenso!); a distanza di anni, comprendo ora e apprezzo ogni

giorno maggiormente i suoi insegnamenti.

Infine, un caloroso saluto a tutti i miei amici, chi per poco e chi per molto tempo, da ognuno

ho imparato qualcosa e sono quello che sono anche grazie a voi.

Chiudo con una citazione di un Professore che mi ha cambiato la prospettiva del mondo

universitario e forse anche migliorato: “Give, and you will be given”

Riccardo


i

Table of Contents

Abstract ............................................................................................................................1

Abstract Italiano ..............................................................................................................3

Executive Summary .........................................................................................................5

Chapter 1. ....................................................................................................................... 11

Entrepreneurship for development ............................................................................... 11

1.1 Why is entrepreneurship important for development? ............................................. 11

1.1.1 Entrepreneurship and development economics ................................................. 12

1.1.2 Entrepreneurship and policies ........................................................................... 14

1.1.3 The three big ideas of development economics ................................................. 15

1.1.4 Evidences ......................................................................................................... 17

1.2 Entrepreneurship education and training (EET) programs ....................................... 18

1.2.1 Classification of EET programs ........................................................................ 18

1.2.2 Effects of existing programs around the world .................................................. 22

1.2.3 Entrepreneurship Training – Potential Entrepreneurs (ETPo)............................ 24

1.2.4 Entrepreneurship Training – Practicing Entrepreneurs (ETPr) .......................... 27

1.3 Individual characteristics of managers as moderating effects................................... 30

1.3.1 Intro: ................................................................................................................ 30

Chapter 2. ....................................................................................................................... 67

Object of the study ......................................................................................................... 67

2.1 Hypothesis ......................................................................................................... 67

2.2 Definitions ......................................................................................................... 67

2.3 Measures ........................................................................................................... 69

Chapter 3. ....................................................................................................................... 75

Socio-economic analysis of the Republic of Panama .................................................... 75

3.1 The institutional framework................................................................................... 75

3.2 Dynamics of the population ................................................................................... 75

3.2.1 General census ............................................................................................... 75

3.2.2 Net migration ................................................................................................. 76

3.2.3 General data ................................................................................................... 77

3.3 Distribution of the population on the territory ........................................................ 78

3.3.1 Administrative division .................................................................................. 78

ii

3.3.2 Ethnic groups ................................................................................................. 82

3.3.3 Religions ....................................................................................................... 83

3.3.4 Languages...................................................................................................... 84

3.4 Economic activities ............................................................................................... 84

3.4.1 GDP............................................................................................................... 84

3.4.2 Debt ............................................................................................................... 85

3.4.3 Unemployment Rate ...................................................................................... 86

3.4.4 FDI ................................................................................................................ 89

3.4.5 Imports .......................................................................................................... 91

3.4.6 Exports .......................................................................................................... 92

3.4.7 Entrepreneurship in Panama ........................................................................... 93

3.5 Infrastructures ....................................................................................................... 95

3.5.1 Air ................................................................................................................. 95

3.5.2 Maritime ........................................................................................................ 95

3.5.3 Road .............................................................................................................. 95

Chapter 4. ...................................................................................................................... 97

The Methodology ........................................................................................................... 97

4.1 Regression analysis ......................................................................................... 100

4.2 Difference-in-Difference ................................................................................. 102

Chapter 5. .................................................................................................................... 105

The EMPRETEC course ............................................................................................. 105

5.1 The competitive advantages ................................................................................. 110

Chapter 6. .................................................................................................................... 113

Expected results ........................................................................................................... 113

6.1 Demographic information about the sample ..................................................... 113

6.2 T-test ............................................................................................................... 115

6.3 Hypothesis ...................................................................................................... 118

6.3.1 H1 Discussion................................................................................................. 118

6.3.2 H2 Discussion................................................................................................. 121

Chapter 7. .................................................................................................................... 125

Findings........................................................................................................................ 125

7.1 Results for H1 for y1 ............................................................................................. 125

7.2 Results for H1 for y2 ............................................................................................. 126

7.3 Results for H2 ....................................................................................................... 128


iii

Chapter 8. ..................................................................................................................... 133

Conclusions .................................................................................................................. 133

Bibliography ................................................................................................................. 137

Appendix .......................................................................................................................... a


v

Figures Index

Figure 1: Classification of ETT programs ………………………………………………………....19

Figure 2: The Conceptual Framework………………………………...……………………………22

Figure 3: Relation between Proactive Personality and Job Search Outcome .................................. 41

Figure 4: Crant’s model about Proactive behaviours ..................................................................... 48

Figure 5: Determination ............................................................................................................... 70

Figure 6: Innovativeness .............................................................................................................. 70

Figure 7: Self Confidence ............................................................................................................ 71

Figure 8: Entrepreneurial Aspirations ........................................................................................... 72

Figure 9: Future Attitudes ............................................................................................................ 73

Figure 10: General censuses on the population (Thousands) ......................................................... 76

Figure 11: Net Migration.............................................................................................................. 77

Figure 12: Political Map of Panama ............................................................................................. 81

Figure 13: Ethnic groups in Panama (%) ...................................................................................... 83

Figure 14: Religions in Panama (%) ............................................................................................. 83

Figure 15: GDP (US$) in Billions ................................................................................................ 85

Figure 16: Central government debt (% of the GDP) .................................................................... 86

Figure 17: Fluctuation of the unemployment rate .......................................................................... 87

Figure 18: Comparison between the two genders (% of the respective labour force) ..................... 89

Figure 19: FDI. Net Inflows growth from 2009 ............................................................................ 90

Figure 20: Pillar comparison ........................................................................................................ 94

Figure 21: Percentage of a total new effort for a 10-point improvement ........................................ 94

Figure 22: DD Methodology ...................................................................................................... 103

Figure 23: EMPRETEC in numbers ........................................................................................... 106

Figure 24: Potential benefits of the programme .......................................................................... 108

Figure 25: Entrepreneurs trained by the EMPRETEC Global Network ....................................... 109

Figure 26: The 37 countries where EMPRETEC has been established, highlighted in orange ...... 110

Figure 27: Gender distribution of the groups (%) ........................................................................ 113

Figure 28: Age distribution of the statistic population (%) .......................................................... 114

Figure 29: Education distribution of the statistic population (%) ................................................. 114

Figure 30: t-statistics illustration ................................................................................................ 115

Figure 31: T-test on the variable "Gender" at t = 0…………………....……………………………116


vii

Tables Index

Table 1. Program list: ETPo - List of evaluations……………………………….…………………25

Table 2. Program list: ETPr - List of evaluations………………………………………..………....27

Table 3: Total population from 1996 to 2015 (Thousands) ............................................................ 75

Table 4: Five-year estimates of net migration ............................................................................... 76

Table 5: General data of Panama .................................................................................................. 77

Table 6: Provinces, Comarcas and Municipalities (2016 Projections – 2010 censuses) .................. 78

Table 7: Largest Panamanian cities .............................................................................................. 81

Table 8: Ethnic groups and respective locations............................................................................ 82

Table 9: Current GDP from 1995 to 2015 ..................................................................................... 85

Table 10: Central government debt (% of the GDP) from 1995 to 2015 ........................................ 86

Table 11: Unemployment rate (% of total labour force) ................................................................ 87

Table 13: FDI, Net Inflows (Numbers written in Millions) ........................................................... 90

Table 14: Imports of goods and services (% of the GDP) .............................................................. 92

Table 15: Exports of goods and services (% of the GDP) .............................................................. 92

Table 16: Top 10 GEI scores in 2017 ........................................................................................... 93

Table 17: Summary statistics of the dataset ................................................................................ 117

Table 18: Overall expected impact of each variable on entrepreneurial intentions ....................... 121

Table 19: Expected impact of the program ................................................................................. 123

Table 20: Difference-in-Difference empirical results (H1-y1) ...................................................... 125

Table 21: Difference-in-Difference empirical results (H2-y2) ..................................................... 127

Table 22: Entrepreneurial Aspirations – DDD ............................................................................ 129


1

Abstract

The required mind-sets and skills necessary to exploit entrepreneurial opportunities are

recognized not to be natural-born traits. On the opposite, they can be learnt and trained. The

object of this study is to evaluate the impact of EMPRETEC training program (ETW), the

capacity-building program of the United Nations Conference on Trade and Development

(UNCTAD), whose goal is to boost the willingness to start an entrepreneurial activity and

internationalize it. More specifically, the aim of this work is to assess the impact of Proactive

Personality and Overconfidence as moderators of the effect of EMPRETEC in terms of

willingness to open a new venture and internationalize it. Through the Difference-in-

Difference methodology, we found that participation in the ETW has a positive and

statistically significant impact on the intention to open a private business. On the opposite,

we find no statistically significant effect in terms of internationalization. Moreover, knowing

a foreign language and being married increase the probability of an individual to be willing

to open a new business, with the first one increasing also the probability of

internationalization. Finally, Overconfidence positively influenced the effectiveness of the

course, while Proactive Personality negatively influenced it. Potential improvements for

EMPRETEC program are proposed. The research has been developed in collaboration with

UNCTAD.

Keywords: Entrepreneurship, Development, Training Programs, EMPRETEC,

Entrepreneurial Intentions, Internationalization, Proactive Personality, Overconfidence,

UNCTAD, United Nations.


3

Abstract Italiano

La mentalità nonché le abilità richieste per sfruttare al meglio le opportunità imprenditoriali

non sono riconosciute come innate. Al contrario, possono essere apprese e coltivate.

L’obiettivo di questo studio è quello di valutare l’impatto del workshop formativo

EMPRETEC (ETW), il programma di sviluppo delle competenze organizzato dalla

Conferenza delle Nazioni Unite sul Commercio e lo Sviluppo (UNCTAD), il cui target

consiste nell’incrementare l’inclinazione a fondare nuove realtà imprenditoriali ed

internazionalizzarle. Specificamente, lo scopo del lavoro è quello di stimare l’impatto di una

Personalità Proattiva e di una Sicurezza in sé stessi, intesi come moderatori dell’effetto di

EMPRETEC in termini di intenzione ad aprire nuove venture e ad internazionalizzarle.

Attraverso la metodologia Difference-in-Difference, si è scoperto che la partecipazione

all’ETW ha un impatto positivo e statisticamente significativo sull’intenzione di aprire un

business privato. Al contrario, non è stato trovato un effetto statisticamente significativo in

termini di internazionalizzazione. Inoltre, conoscere una lingua straniera ed essere sposati

aumenta la probabilità di un individuo di essere intenzionato a fondare nuove realtà

imprenditoriali, con la prima che aumenta anche la possibilità che l’impresa venga

internazionalizzata. Infine, la presenza di Sicurezza in sé stessi impatta positivamente

sull’efficacia del corso, mentre la Proattività ha un impatto negativo. Sono proposti inoltre

suggerimenti su potenziali miglioramenti del corso. La ricerca è stata effettuata in

collaborazione con l’UNCTAD.

Parole Chiave: Imprenditorialità, Sviluppo, Programmi Formativi, EMPRETEC, Intenzioni

imprenditoriali, Internazionalizzazione, Personalità Proattiva, Sicurezza in sé stessi,

UNCTAD, ONU


5

Executive Summary

The promotion of entrepreneurship and the promulgation of SMEs policies have become

important development levers in recent years (World Bank, 2005). This phenomenon is the

result of the general objective of a State, intended as an organized political community, to

initiate and maintain a sustainable development strategy for its citizens. There have been

other measures attempted, but after continuous failures, developing countries are now

focusing on their business environments. This would create economic spaces, which may be

conducive to private enterprises. In fact, national governments are beginning to focus on

improving business and investment environments for entrepreneurship as a part of their

economic development programs. This approach is not a substitute of the traditional

strategies, such as import substitution and export promotion, rather, it is consistent with them

and even complementary (Acs & Audretsch, 2009). The main goal should be ensuring

market access to those potential entrepreneurs who are able to enter, set up businesses and

thrive (or fail) without unnecessary barriers. This is the moment where the State is necessary:

policymakers should focus on creating an enabling environment where talented people can

flourish.

Considering the entrepreneurship literature, there seems to be a U-shaped relationship

between the level of development of a Country, (measured by GDP per capita) and

entrepreneurship (Naudè, 2010b). The relationship implies a higher rate of entrepreneurial

activity in low-income countries than in middle-income ones (Wennekers, Van Stel, Thurik,

& Reynolds, 2005). Considering self-employment, strongly sought by people living in

developing countries, as measures of entrepreneurship, we should expect to see greater

amount of entrepreneurial activity in these places (Ho & Wong, 2007). However, these

results suggest the fact that entrepreneurs in developing countries are less innovative or tend

to be more motivated by necessities rather than being proactive as it happens in high GDP

countries (Acs, Desai, & Hessels, 2008). In fact, developed countries are associated with a

higher level of innovation related to entrepreneurship. Due to the numerous available

opportunities, developing countries are going to be the engine of the world economic

development, although the biggest issue resides in boosting the entrepreneurial process,

creating a positive environment.

6

Another consideration is that researchers have been always concerned with the who, why

and how of entrepreneurship rather than studying its impacts. In fact, there is a lack of clear

empirical evidence concerning the question whether entrepreneurship drives economic

growth, productivity, or employment. It is widely theoretically believed that

entrepreneurship is beneficial, however, empirical cases are not yet concrete. Therefore,

several deficiencies in the literature remain: relatively little is known about the relation in

developing countries between economic growth and entrepreneurship, and the determinants

of high-impact or high growth entrepreneurship.

Given the issue of establishing a promising environment where talented entrepreneurs can

exploit their knowledge and abilities for developing new activities, the literature provides

some guidelines. First, a continuous transformation of what, how and where production and

consumption takes place is required. Second, development is a multi-dimensional concept

that requires more than just the eradication of income poverty. Third, market failures are

prevalent; then, the State has an important coordinating and regulatory role to play. Scholars

have recognized institutions and States as the ultimate determinant of development, they

affect not only the supply, but, also the allocation of entrepreneurship. In addition, it is

accepted that the mind-sets and skills necessary to recognize and capitalize entrepreneurial

opportunities, are not natural-born traits, but they can be learnt through educational training

programs (Valerio, Parton, & Robb, 2014)

Today, Entrepreneurship Education and Training programs, hereafter EET, are recognized

to be the principal methods aiming at teaching the required skills and mind-sets needed by

potential entrepreneurs. They represent both academic education and external training

interventions. They are distinguished from one another by their variety of program objectives

or outcomes. Education programs focus on building knowledge and skills, while Training

programs explicitly aim at the preparation for starting or operating a business. EET

beneficiaries include both potential and practicing entrepreneurs who are traditional students

enrolled in degree programs, early school leavers, adult learners, women, individuals with

doctoral degrees and urban as well as rural populations.

The object of this study is to evaluate the impact of the United Nations’ EMPRETEC training

program on specific characteristics of an individual, such as the willingness to start any

entrepreneurial activity in the immediate future or the eagerness to internationalize it. In


7

detail, we are going to analyze, through a Difference-in-Difference model, some indicators

of entrepreneurial intentions before and after the program for both a treated and a control

group of participants. Secondly, we will mainly focus on the role of two factors, Proactive

Personality and Overconfidence, as moderators of the relationship between participating in

the course and willingness to open a new business.

Considering the purpose of our study, we need to understand the basics of the two variables

of interest. In doing so, a review of available literature has been undertaken. First, the reason

why individual characteristics became relevant for the Entrepreneurial domain is due to the

study of Knight and Cavusgil (2004) regarding the Born Global firms, hereafter BG. They

said BG are likely to be found by those entrepreneurs who possess an important

entrepreneurial orientation and a strong marketing orientation. The last one represents the

skill component, while the first represents the constant looking for the success. It is

composed of personality traits (internal environment), perception of the external

environment (cognition) and actions or behaviors (manifestation of the internal into the

external environment).

Proactive Personality has originally been studied in Psychology as a personal behavior and

mental trait. Then, considering its significant role for entrepreneurs and managers, it has

been associated to an economic perspective, in detail it plays a central role for entrepreneurs.

It is important to highlight two main studies which are determinant for this study. The first -

Bateman and Crant (1993) - is recognized to be the pioneer in connecting Proactive

Personality with the economic domain, providing a definition and a method to measure its

scale. They claimed that some people are relatively passive – they react to, adapt to, and are

shaped by their environments, while Proactive people scan for opportunities, show initiative,

act, and persevere until they reach closure by bringing changes. In other worlds, it is possible

to distinguish Proactive people from Reactive ones. One may take charge, launch new

initiatives or generate constructive changes. The other may try to maintain, get along, look

for stability, being a good custodian of the status quo. The first person is proactive; the

second is not. The second - Crant (2000) - a decade later, provides a broader review of the

topic, summarizing the studies accomplished since the first study of Bateman and Crant

(1993) and creating a model which aims at explaining the Proactive Behavior in terms of

causes and consequences. Some years before, Crant has been the first to empirically

demonstrate that Proactivity is associated with entrepreneurial intentions. Becherer and

8

Maurer (1999) following Crant, associated Proactive Personality to Entrepreneurship finding

Proactive people to promote entrepreneurial activities such as starting new businesses.

Overconfidence has been studied by numerous psychologists since the beginning of the past

century; however, only in the last decades, it has been associated with the economic domain.

In fact, only with the emergence of International Entrepreneurship, Overconfidence has

gained more relevance when identifying the characteristic of the prototypical entrepreneur.

Considering the psychological field, Larwood and Whittaker (1977) build the idea of “better

than average” effect, testing empirically its validity. Individuals underestimate dimensions

of potential outcomes because they tend to overestimate their ability, rather than assessing

risks or potential threats. It seems Overconfidence to be a negative characteristic; however,

it has been proved that overconfident individuals, following their gut, produce a positive

spillover for the community. Unknowingly, they behave altruistically, following irrational

initiatives which are on their own detriment, but at the same time, this helps their team. This

is not valid, if within the group there are few or too many Overconfident people, whose

behaviors would cause a negative effect (Bernardo and Welch 2001). It is surely true

Overconfidence is related to the Risk concept. In the past the literature has postulated that

entrepreneurs have greater risk tolerance than others McClelland (1961), Lucas Jr (1978),

Kanbur (1979), Kihlstrom and Laffont (1979). However, empirical literature found

entrepreneurs not to appear to behave differently from wage earners. (Brockhaus (1980),

Masters and Meier (1988), Miner and Raju (2004)). A solution has been given by Wu and

Knott. They argued that the disparity between intuition and theory lies in the dimensionality

of uncertainty. They identified two distinct components of uncertainty. The first is the market

demand-uncertainty; the second reflect one’s own entrepreneurial ability-uncertainty. They

said entrepreneurs show risk-aversion with respect to demand uncertainty, but demonstrate

Overconfidence or “apparent risk seeking” with respect to ability uncertainty. In other

worlds, entrepreneurs could appear to be risk seeking when in fact they are not. Therefore,

there may be scenarios where they will bear economic risks related to uncertain demand only

if they think they have enough abilities.

Finally, individual Overconfidence is associated with more aggressive entrepreneurial

investment decisions (Friedmann, 2007). It appears more frequently in uncertain

environment, where Overconfidence plays a relevant role, characterizing the entrepreneurial

setting. Friedman verified that overconfident individuals are more likely to undertake


9

nascent activities to investigate entrepreneurial opportunities. In other worlds, the more

Overconfident, the more likely to start new ventures.

Building on the literature review, we propose the following definitions:

“The Proactive Personality prototype is a person who actively and intentionally takes

actions to change actual situations or create new environments. He should have an

aggressive approach to the market, scanning for opportunities, and should have the desire

to overcome problems reaching his expected best scenario. In this sense, he sees the

environment with a different perspective, anticipating and preventing potential issues. He

perseveres towards the goals he set, aiming at achieving successful results”

“The Overconfident prototype is a person who believes to stand above the average,

independently from environment he works in. He shows optimism and self-assurance as if

he already knows what it is going to happen; he has a vision of the environment which is

different from the others and, because of that, he behaves and acts risky and incautiously to

the eyes of other individuals “

The level of Proactive Personality and Overconfidence has been measured through a

questionnaire developed by a Politecnico di Milano team. Four different pairs of students

had focused on their specific objects – ours are Proactive Personality and Overconfidence –

creating a full set of questions for a complete and broader analysis aimed at studying the

Entrepreneurial development in developing countries. The whole research has been

developed in collaboration with UNCTAD (United Nations Conference on Trade and

Development). The analysis of the answers has been accomplished using a regression

methodology, in the specific the Difference-in-Difference, hereafter DD, and the Difference-

in-Difference-in-Differences, hereafter DDD, model. The first one examines the differential

effect determined by a phenomenon on a ‘treatment group’, versus a ‘control group’ over an

experiment. In this research, the phenomenon occurred is the EMPRETEC program. The

second identifies the moderating factors which influence the impact of the ETW on the

participants, in terms of willingness to open a private business and internationalize it.

We defined two hypotheses to be verified, which are:

10

H1:

Participation in ETW has a positive impact on the intention to open

a private business and to internationalize an already existing one

H2:

Proactive Personality positively influences the outcome of EMPRETEC in terms of

willingness to open a private business and intention to internationalize. Overconfidence

positively influences the outcome of EMPRETEC program in terms of willingness to open

a private business and intention to internationalize

Our analysis has found the following relevant results.

Result 1: The hypothesis H1 (y1) is verified. The participation in the ETW has a positive

impact on the intention to open a private business.

Result 2: Among the controls, knowing a foreign language and be married increase the

probability of an individual to be willing to open a new business.

Result 3: The hypothesis H1 (y2) is not verified. The participation in the ETW has a

(statistically insignificant) negative impact on the intention to internationalize an already

existing activity

Result 7: A self-confident individual withstands a greater impact of the workshop, in terms

of willingness to entry.

Result 8: The effect of the program is more pronounced, for what concerns

internationalizations, if the self-confidence of the participant increases.

It emerges an important consideration: the EMPRETEC course has a great positive impact

on the subjects’ intentions to open a private business, but it fails on the internationalization

dimension. Secondly, results show that the more a person is Overconfident, the more the

course is efficient (greater impact) on both the dependent variables. On the other hand, the

more a person has a Proactive Personality, the lower is the impact regarding the start of any

entrepreneurial activity.

The study is organized as follows: Chapter 1 reviews the preceding literature about

Entrepreneurship & Development and our variables of interest (Proactive Personality and

Overconfidence). Chapter 2 presents the object of the study. Chapter 3 consists in a socio-

economic analysis of the Republic of Panama. In Chapter 4 a detailed explanation of the

methodology used is described. Chapter 5 presents insights about EMPRETEC. In Chapter

6 and 7 the expected results and the actual findings are interpreted. Finally, Chapter 8

summarizes the conclusions of the entire study.


11

Chapter 1.

Entrepreneurship for development

One of the primary objective of a State, intended as an organized political community living

under a single system of government (Thompson & Della, 1995), is to initiate and maintain

a sustainable development strategy for its citizens. In the last century, developing countries

have used a number of policies and strategies in their development pursuits, such as import

substitution and export promotion, which require a strong State intervention but are as

successful as expected. After continuous failed attempts, these countries are now focusing

on their business environments and creating an economic space which may be conducive to

private enterprises (Acs & Audretsch, 2009); indeed, the promotion of entrepreneurship and

the promulgation of SMEs policy has become an important development lever in recent years

(World Bank, 2005). Both national governments and major international organizations, as

part of their economic development programs, are beginning to focus on improving business

and investment environments for entrepreneurship. While a focus on entrepreneurship for

development may appear to be a separate approach to development itself, Acs & Audretsch’s

study (Acs & Audretsch, 2009) claims it is consistent with and even complementary to the

older and more traditional strategies.

1.1 Why is entrepreneurship important for development?

According to the definition of Brinkman (Brinkman, 1995), economic development is a

“process of structural transformations” in which the entrepreneur is the best agent in charge

of the change. The recognition of the importance of the entrepreneur and the necessity of the

markets for the entrepreneur to operate has led many countries to begin to work on perfecting

their environments by eliminating barriers to entrepreneurship and other market failures,

ensuring that positive externalities – as knowledge and networks – can assist in the growth

process. Indeed, Leff’s study (Leff, 1979) asserts that entrepreneurship is essential for

development because, in developing countries, it fills in important gaps left by incomplete

and underdeveloped markets.

Entrepreneurship and SMEs have been used as synonyms in the literature although they have

different meanings. Indeed, the small business sector is just a “vehicle for entrepreneurs

Chapter 1

12

introducing new products and for people who simply run and own a business for a living”

(Thurik & Wennekers, 2004). The main goal should be ensuring market access so talented

potential entrepreneurs with good ideas are able to enter, set up businesses and thrive (or

fail) without unnecessary barriers. Therefore, policymakers should focus on creating an

enabling environment in which people who possess entrepreneurial personality traits can

flourish. A development strategy which encourages entrepreneurship should also focus on

education, skills improvements and innovation; it is also important for new firm creation,

job creation in the private sector and legitimate wealth creation. Therefore, an

entrepreneurship-based development strategy which creates the institutions and incentives

for a useful and inventive entrepreneurship can positively influence growth in developing

countries by removing all the distortions, currently existent in the market, encouraging

human capital development, better allocating scarce resources through market processes and

providing employment alternatives to the public sector.

1.1.1 Entrepreneurship and development economics

The fields of development economics and entrepreneurship both evolved briskly over the

past century as sub-disciplines within the subjects of economics and management, which in

the recent years have converged on the realization that the institutional framework in a

country or region is important for understanding the outcomes observed in each field. At the

same time, as these two fields were converging on this concept, scholars have increasingly

been arguing that entrepreneurship is important for economic development. However, two

important gaps remain, which may constrain the understanding of the role of

entrepreneurship in developing countries; first, the role itself and the function are still

relatively underappreciated in the field of development economics. Second, both fields still

treat institutions as a “black box”, difficult to be unpacked (Chang, 2007).

It is nowadays taken for granted that entrepreneurship is indispensable for economic

development. More than a billion people still live in extreme poverty; so, how does

entrepreneurship matter to them and what does this imply for the understanding of the role

of entrepreneurs for development? To answer this question, we first have to ask why the

development economics literature seems to have failed to have significantly influenced the

field of entrepreneurship and management, and vice versa (Naudè, 2010). Management and

entrepreneurship were largely concerned not with understanding the economic performance


13

of countries, but with the understanding the process of entrepreneurship. Development

economics on the other hand was attempting within the neoclassical tradition in economics

to illustrate and test theories explaining the differential economic achievements of States,

neglecting and ignoring totally the entrepreneur. This may be due to two main reasons: the

perception that entrepreneurship is too vague to be modelled formally in theories, and the

belief that it is not a binding constraint in development. Recently, much progress has been

made in clarifying the concept and advancing the measurement of entrepreneurship, since it

is now possible to formulate and test hypothesis involving the entrepreneur itself. As for the

belief that entrepreneurship may not be a binding constraint, we should consider for instance

all measures of entrepreneurship, in the form of self-employment and opportunities, which

indicate that demand for entrepreneurship is particularly high in developing countries. Thus,

we should expect to see much more entrepreneurial activity in these places (Ho & Wong,

2007).

According to Gries & Naudè (Gries & Naudè, 2010) and Goedhuys & Sleuwaegen

(Goedhuys & Sleuwaegen, 2009), entrepreneurs can play a significant initializing and

driving role in structural transformation of an economy from being predominantly rural and

agricultural based to being urban, manufacturing, and service-sector based, and that high-

growth entrepreneurship is indeed pervasive in developing countries, even in some of the

least-developed countries. Gries and Naudè make a distinction between mature and start-up

entrepreneurs and between survivalist self-employment activities in the traditional sector,

and opportunity-driven entrepreneurship in the modern one; they therefore define

entrepreneurs as the starters of new businesses through which they make productive

contributions to the economy. In their model they show how these entrepreneurs innovate,

spot profitable opportunities and re-allocate resources, demonstrating how opportunity-

driven entrepreneurship, through the concept of innovation, can accomplish significant

transformations in the economy by increasing employment and productivity in both

traditional and contemporary sectors. The authors discuss how the model can be used for

analysing policies for stimulating structural change trough financial development, promoting

entrepreneurial ability and rural development measures.

Goedhuys and Sleuwaegen continue on this focus and argue that high-growth firms’

entrepreneurs (defined as agents of firms that achieve average employment growth in excess

of 10% per year) impact on economic growth/performances of the overall economy of a

Chapter 1

14

country by creating technological capabilities and physical and human capital formation.

Analysing all the potential determinants of firm growth, based on the preceding literature,

Goedhuys and Sleuwaegen define an empirical model wherein employment, entrepreneurial

characteristics, institutional resources and industry effects, firm age and size, and technology

influence the capacity of the firm itself to grow over the years.

Despite these studies, however, several deficiencies in the literature remain: relat ively little

is known about the relation in developing countries between economic growth and

entrepreneurship, and the determinants of high-impact or high growth entrepreneurship. To

this purpose, the papers of John Bennett (Bennett, 2009), Jagannadha Pawan Tamvada

(Tamvada, 2009) and Ayal Kimhi (Kimhi, 2009) shows how entrepreneurship can allow

individuals and households to escape from both absolute and relative poverty. The papers

were essentially concerned with the aggregate development outcomes of structural change

and growth; by focusing on entrepreneurship as the mechanism for individual welfare

enhancement, the level of analysis shifts to the micro level, and asks which are the individual

benefits linked to this activity.

1.1.2 Entrepreneurship and policies

In this view, the choice has been always considered driven by necessity and survival,

offering meagre returns, along with a raise of welfare and opportunities of social mobility.

Despite the fact that income and wealth inequalities have been from the beginning a central

area of concern in development economics, there has been little formal investigation of the

relationship between entrepreneurship and poverty in developing countries. How much of

the observed income inequality is due to entrepreneurship? And do greater entrepreneurial

activity and opportunities always lead to greater inequality? These questions are explored by

Ayal Kimhi, with a focus on the contribution on household income inequality of

entrepreneurship. He finds that a uniform increase in entrepreneurial income reduces

household income inequality and increase average household income, reducing inequalities

if entrepreneurship-supporting policies are directed to low-income, low-wealth and

relatively uneducated segments of society.

In practice, however, it is clear that many countries and many individuals fail to adequately

reap the benefits of entrepreneurship due to governmental actions and market failures as well

as culture and education in a particular country, policies, infrastructure investments and


15

allocation of individuals’ abilities towards productive methods of increasing wealth.

Potential obstacles in matching entrepreneurial talent to appropriate opportunities, such as

corruption, lack of information, distorted incentives and also failure in financial markets may

arise, undermining economic development.

Entrepreneurship scholars have been always concerned with the who, why and how of

entrepreneurship rather than with the impact on development or developing countries (the

so-called “scholarly disconnect” state of affairs) (Bruton, Ahlstrom, & Obloj, 2008). It is

widely believed that entrepreneurship is beneficial for economic growth and development,

since it has been resurgent in countries that experienced substantial poverty reduction, with

the support of international development agencies and donors which have turned to

entrepreneurship to improve the effectiveness and sustainability of their aid. However,

theoretical and empirical cases to understand the developmental role of entrepreneurship are

not yet concrete; substantial confirmations on whether the entrepreneurial activities

influence growth, from an economical point of view, are not unequivocal yet still a matter

of contention. With the purpose of analysing the development-entrepreneurship relation, it

may be necessary firstly to define or reunite the role of entrepreneurship within the “grand

ideas” of development economics and to understand how this reverberates, with available

evidence, on the national and international policies (Naudè, 2013).

1.1.3 The three big ideas of development economics

In the development economics theories, there are three grand ideas. The first regards the fact

that development requires continuous transformations of what, how and where production

and consumption takes place: from low-value added, low productivity and rural-based

activities to more productive, higher value added activities in services and manufacturing

located in cities. The second idea is that development is a multi-dimensional concept that

requires more than just the eradication of income poverty. The third is the idea that market

failures are prevalent and that the State has an important coordinating and regulatory role to

play in development. The evolution in scholarly views of entrepreneurship is reflected in the

categories of behavioural, occupational and synthesis definition; scholars who share the view

of the “Schumpeterian” theory do not consider entrepreneurship to be very important in

earlier stages of economic development; they see the contribution to be much more important

at later stages, where economic growth is driven by knowledge and competition and the

Chapter 1

16

entrepreneur is defined as the coordinator of production and agent of change (Schumpeter,

1961). Other behavioural definitions allow for a more substantial role for entrepreneurship

in developing countries; Kirzner, for instance, views the entrepreneur as someone who

facilitates adjustment to change by spotting opportunities for profitable arbitrage in countries

where market disequilibria may be common (Kirzner, 1973).

Policy implication follow from this views, for instance that government policy for promoting

entrepreneurship should reduce uncertainty and transaction costs. Scholars have recognized

institutions as the ultimate determinant of development, since they affect not only the supply,

but, perhaps even more importantly, the allocation of entrepreneurship. According to

Baumol’s view (Baumol, 1990), entrepreneurial activity can be allocated towards

productive, unproductive or even destructive activities, in which the entrepreneur is defined

as “persons who are ingenious and creative in finding ways that add to their own wealth,

power and prestige”. In this view, underdevelopment is not seen due to insufficient supply

of entrepreneurs, but due to institutional weaknesses that result in a “lack of profit

opportunities tied to activities that yield economic growth” (Coyne & Leeson, 2004).

In economic theory entrepreneurship is modelled as a choice between wage-employment

and self-employment. Hence, someone will decide to become an entrepreneur if profits and

the overall benefits from self-employment exceed the utility from being in wage employment

(Reynolds, et al., 2005).

A synthesis definition has been offered by Gries and Naudè that combines behavioural and

occupational views and relates entrepreneurship to the three big ideas in development

economics; as such, this definition includes all the evolutions in the scholarly thinking about

entrepreneurship, and defines it as “the resource, process and state of being through and in

which individual utilize positive opportunities in the market by creating and growing new

business firms”. This view considers entrepreneurship as a social phenomenon that reflects

the overall characteristics of the society. Entrepreneurship is not only concerned with

business success, as measured by profits, but also with subjective welfare, but it is also

considered as a catalyst for structural change and institutional evolution (Gries & Naudè,

2010). In their model, the process of structural change is facilitated by high ability

entrepreneurs, which lead firms to adopt more complex production methods and producing

more complex and specialized intermediate inputs. Thus, the technological intensity of a


17

country’s economic structure increases; these changes have interesting implications for the

development of entrepreneurship itself, so that entrepreneurship may be itself endogenous

in the development process.

1.1.4 Evidences

The empirical literature uncovers two sets of results. First, there is a lack of clear empirical

evidence of whether entrepreneurship drives economic growth, productivity, or

employment. Second, there seems to be a U-shaped relationship between a country’s level

of development, measured by GDP per capita) and entrepreneurship itself (Naudè, 2010b).

The relationship implies a higher rate of entrepreneurial activity in low-income countries

than in middle-income ones (Wennekers, Van Stel, Thurik, & Reynolds, 2005). These results

may suggest the fact that entrepreneurs in developing countries are less innovative or tend

to be more motivated by necessities rather than being proactive (Acs, Desai, & Hessels,

2008) (Golllin, 2008). A greater GDP may therefore be associated with an higher level of

innovation related to entrepreneurship; another implication is that rather than causality

running from entrepreneurship to development, the causality may also run from development

to entrepreneurship.

Given the grand ideas in development economics the main policy considerations for

enhancing the developmental impact of entrepreneurship are to improve the quality of

entrepreneurial ability, reducing the tendency for necessity entrepreneurship. This does not

mean only improving the skills and the education of entrepreneurs, their human capital, but

focusing on their abilities to innovate. Innovation policy ought therefore to be a central focus

of the promotion in developing countries as it is in advanced economies. Stimulation of

innovation has not been paramount in most development agencies or donor’s private-sector

development programs, nor in national entrepreneurship support programmes. The only

innovation relevant aspect of such support programs have been their concern to improve the

general business environment, a prerequisite to innovate, increasing both the static and

allocative efficiency, and not the dynamic efficiency, which is more important for job

creation and growth (Evenett, 2005).

Chapter 1

18

1.2 Entrepreneurship education and training (EET) programs

Over the last two decades, entrepreneurship education and training (EET) programs, have

proliferated, considering their significant potential to improve entrepreneurial skills and

approaches. Although the number of such programs keeps expanding worldwide, the global

awareness about their impact remains thin.

There is a growing interest in the role that entrepreneurship can play as a catalyst to achieve

economic and social development objectives, including equity, employment, innovation and

growth; entrepreneurship can contribute to development through enterprises with high-

growth rates or, as in the case of entrepreneurship moved by necessity, through enterprises

that guarantee high sources of income and employment, especially for vulnerable

populations. Research suggest that mind-sets and skills, necessary to recognize and

capitalize on entrepreneurial opportunities, can be learned through educational institutions

and training programs (Valerio, Parton, & Robb, 2014).

Today, EET is recognized as an established field of study, growing in parallel with the

interest of policymakers and students. Taken as a whole, EET represents both academic

education and external training interventions that share the same objective of providing

individuals with the entrepreneurial approach and skills. EET beneficiaries include both

potential and practicing entrepreneurs who are traditional students enrolled in degree

programs, early school leavers, minority groups, adult learners, women, individuals with

doctoral degrees and urban as well as rural populations.

1.2.1 Classification of EET programs

EET programs can be classified under two distinct but related categories: education and

training programs. Both aim to stimulate entrepreneurship, but they are distinguished from

one another by their variety of program objectives or outcomes; EE programs focus on

building knowledge and skills linked to entrepreneurship, while ET programs, by contrast,

perform the same things but explicitly in preparation for starting or operating a business.

Advancing the classification of EET, programs can also be distinguished by their target

audiences (see Figure 1). The academic nature of EE means these programs target two

groups in particular: secondary education students and higher education students, the latter

both graduate and undergraduate. By contrast, ET programs target a range of potential and


19

practicing entrepreneurs who are not part of formal, degree-granting programs. This category

generally refers to the building of knowledge and skills in preparation for starting or

operating a business. Thus, the goal is to help current entrepreneurs become higher

performing, regardless of age, level of education, prior existence or circumstances.

Figure 1: Classification of ETT programs

Source: Valerio et al. 2014, Entrepreneurship education and training programs around the world, retrieved on 7th August 2016.

Defining the results of EET programs is a complex challenge, no matter whom a program

targets. The task is complicated in part because the intended outcomes can vary substantially

from program to program. Intended outcomes are not limited to the conventional

entrepreneurship measures, such as the number of new start-up ventures or their

performance; they may also focus on developing skills or changing approaches, such as

driving participants to consider entrepreneurship as a career option. The conceptual

framework categorizes EET outcomes into a series of four domains:

1. Entrepreneurial mind-sets – refers to the socio-emotional skills and overall

awareness of entrepreneurship associated with entrepreneurial motivation and future

success as an entrepreneur (self-confidence, leadership, creativity, risk propensity,

motivation, resilience, and self-efficacy).

2. Entrepreneurial capabilities – refers to entrepreneurs’ competencies, knowledge and

technical skills associate with their entrepreneurship (management skills, accounting,

marketing, and technical knowledge).

Chapter 1

20

3. Entrepreneurial status – refers to the temporal dimension of a program beneficiary,

measured through entrepreneurial activities and beyond (starting a business,

becoming employed, and achieving a higher incomes).

4. Entrepreneurial performances – refers to how indicators a venture’s performance

have changed as a result of an intervention (higher profits, increased sales, greater

employment of others, higher survival rates)

The conceptual framework also determines three dimensions that, according to the previous

researches, influence the range of EET results: (a) the context within which programs are

implemented, (b) the characteristics of individual participants, and (c) the functional

characteristics of the program itself.

a) Program Context – contextual influences on the likelihood of a program’s capacity

to generate outcomes (economics, political and cultural contexts)

i. Economic Context: include local economic conditions, such as the

investment climate and specific market opportunities, along with

financial and physical infrastructures, tax structures and incentives

patterns.

ii. Political Context: refers to both the stability of local society and

institutions as well as the leadership and will to promote

entrepreneurship through local policies and institutions (minimizing

bureaucratic barriers, ensuring grants and funding opportunities,

partnership with local ministries…)

iii. Cultural Context: refers to factors associated with local perceptions

of entrepreneurs as well as cultural attitudes toward failure, success,

and the traditional roles of determined members of the ecosystem.

These cultural dynamics can either enable or constrain

entrepreneurship in a society and, in turn, can moderate EET

outcomes.

b) Participant Characteristics – moderating influence of what participants bring with

them coming into a program (individuals’ profiles, education, experience, interests

and intentions, and behaviours)

i. Profile: refers to basic demographic identifiers and factors related to

a participant’s personality or traits. Evaluations of EET programs


21

often segment results according to factors such as gender, age, or

parental background (Wang & Wong, 2004).

ii. Education: refers explicitly to the educational background of a

participant, including both level of attainment and basic cognitive

skills flowing from formal educational exposure, such as literacy and

numeracy.

iii. Experience: refers to an EET participant’s work and employment

experience, deriving from their own work experience or from other

sources, such as entrepreneurial experience of family or

acquaintances. Experiences usually bring about a functional level of

business knowledge and familiarity with certain market or

opportunities.

iv. Interest and intentions: refers to how EET participants’ intentions

differ, depending on their profile (Pittaway & Cope, 2007) as well as

their particular motivations for participating (McClelland, 1958)

(Sengupta & Debnath, 1994), which are the most reliable predictor of

actions (Krueger, Reilly, & Carsrud, 2000) (Bullough, Renko, &

Myatt, 2013).

v. Behaviour: individuals’ decision to participate and continue

participation in a program can influence program outcomes. This

includes how participants respond to program offerings or perceive

the overall value of a program.

c) Program Characteristics – distinction of four major categories (program design,

trainers and delivery, content and curriculum, and wrap-around services)

i. Program design: refers to a set of inputs and arrangements that help

define a program’s goals, scope, financing model, and method for

determining progress. This can also include the extent to which

arrangements are made in order to facilitate the collaboration with

external and public institutions in the local community (Fuchs,

Werner, & Wallau, 2008).

ii. Trainers and delivery: refers to key program factors and

implementation inputs related to who is delivering the principles of

Chapter 1

22

the program; that is, whether programs are led by practitioners,

teachers or credential trainers, and where these individuals are taken

from. These characteristics also include the program setting

(classrooms, durations, size of participants…)

iii. Content and curriculum: include a program’s relative thematic

content areas of focus such as general business skills, socio-emotional

skills, entrepreneurial awareness and business plan development,

pedagogy and teaching techniques.

iv. Wrap-around services: aspects of a program that complement the min

content and curriculum. These can include arrangements for creating

strong networks as well as opportunities to gain access to financing

or other funding resources.

The framework situates these three dimensions as independent variables in a moderating

relationship to the outcomes of EET programs, suggesting that the first two can influence

the operational characteristics of the program itself (duration, method of delivery…). In sum,

a program’s outcomes are shaped by both its own programmatic characteristics and the

contextual and participant-based moderating factors (See Figure 2).

Figure 2: The Conceptual Framework

Source: Valerio et al. 2014, Entrepreneurship education and training programs around the world, retrieved on 7 th August 2016.

1.2.2 Effects of existing programs around the world

As a working definition, EET represents academic education or formal training interventions

that share the broad objective of providing individuals with the entrepreneurial mind-sets


23

and skills to enhance performances in a range of entrepreneurial activities. The scope of EET

interventions varies by curricula and scale. Some programs are implemented on a global

scale, while some others can be specific to an individual school or institution; further, EET

can be represent a blend of global and local – partnerships between global brands and

regional or local education ministries and institutions, involving a range of public and private

stakeholders such as governments, businesses, and non-governmental and international

organizations (Volkmann, 2009).

For governments and practitioners looking for guidance on EET interventions, the body of

available research remains relatively limited. In addition to methodological weakness among

the body of evaluations of EET programs, studies still find mixed results. For example, some

studies examining EET’s impact on entrepreneurial intentions indicate a positive short-term

influence (Luthje & Franke, 2003) (Lee, Chang, & Lim, 2005) (Fayolle, Gailly, & Lassas-

Clerc, 2006), while a set of other studies demonstrate insignificant or negative effects

(Lautenschlager & Haase, 2011).

Besides providing an exhaustive analysis of the Conceptual Framework for entrepreneurship

education and training programs (EET), the study of Valerio et al. (2014) identifies and

analyses 60 EET programs, with evaluations that totally met the following requested

standards:

a) Have an explicit definition of their expected outcomes and target goals

b) Have outcomes expressed in some measurable manner

c) Have collected credible information on participants’ outcomes

according to three tiers of rigor:

Tier 1: evaluations are randomized, controlled experiments with an experimental design

Tier 2: evaluations have a quasi-experimental design

Tier 3: evaluations are principally surveys of program participants, including tracer studies

that vary in the range of time examined, as well as monitoring and evaluation reports that

rely on administrative data.

Chapter 1

24

Limitations

Coverage of research: the study does not claim to provide an exhaustive examination

of the considerable research available on entrepreneurship. Furthermore, given the

great number and the wide scope of EET programs in operation today, the sample of

programs cannot be considered comprehensive, but limited to insight emerging from

published information

Rigor of program evaluations: many evaluations suffer from low statistical power,

measure effectiveness only within a year of training and present issues concerning

the validity and applicability across contexts (McKenzie & Woodruff, 2012)

(Pritchett & Sandefur, 2013).

Isolating which program dimension lead to success: although an evaluation may

reveal whether a program has achieved a specific result, rarely did evaluations

explain what aspect of the program contributed most the outcomes.

Availability of information on cost and financing: Information is scarce. In several

cases, implementing organizations consider this information to be proprietary by

nature.

Of that total, 19 programs were classified as entrepreneurship education (EE), while 41 were

classified as entrepreneurship training (ET); the study presents the findings from the

Conceptual Framework application, analysing the sample of EET programs by target group,

in order to enable a more focused discussion. For what concerns the ET programs, focus of

this thesis, the sample of programs is broken down as follows:

ET for potential entrepreneurs

ET for practicing entrepreneurs

1.2.3 Entrepreneurship Training – Potential Entrepreneurs (ETPo)

Of the 16 evaluations examining ETPo programs, 7 are classified as impact evaluation. ETPo

evaluations tend to examine the impact of ET on specific, often vulnerable groups of

participants, including women, unemployed youth, and welfare recipients. In targeting these

groups, evaluations pay particular attention to the extent to which these programs are able to

impact their economic well-being and generate income. On both fronts, evaluations provide

mixed evidence, but there are promising indications that training can contribute to growth in


25

entrepreneurial activity, income and employability. Several evaluations also examined the

effects on various socio-emotional skills and on participants’ psychological and social well-

being, such as participants’ self-confidence and team-work. In general, ETPo programs

evaluations tend to focus more than other types of EET do on improving the immediate well-

being of vulnerable populations. (Valerio, Parton, & Robb, 2014).

The study identified and examined a total of 16 ET programs targeted at potential

entrepreneurs (listed in Table 1). In terms of geographic distribution, there were four

programs delivered in Latin America, three in South Asia, four in the US, three in Sub-

Saharan Africa, one in Western Europe, and one in East Asia.

Table 1. Program list: ETPo - List of evaluations

Program name Country Evaluation

AAC Nicaragua Tier 1

EPAG Liberia Tier 1

GATE US Tier 1

JE Dominican Republic Tier 1

JEA Colombia Tier 1

WINGS Uganda Tier 1

YOP Uganda Tier 1

MEP Argentina Tier 2

ACTIVATE US Tier 3

BACIP Pakistan Tier 3

DCEI US Tier 3

ENBDP Sweden Tier 3

SEWA India Tier 3

SIYB Vietnam Tier 3

WEMTOP India Tier 3

WSBP+MBDP US Tier 3

Source: Valerio et al. 2014, Entrepreneurship education and training programs around the world, retrieved on 8th August 2016.

The above-mentioned programs have different objectives such as the reduction of

unemployment, economic assistance and income diversification. The targeted outcomes are

primarily concentrated in the entrepreneurial status domain and, to a lesser extent, in the

domains of entrepreneurial performance, capabilities and mind-set. Regarding the

entrepreneurial status, numerous analysis show promising results about the capacity of these

programs to increase income, employment rate and average savings for beneficiaries.

Chapter 1

26

More deeply, an evaluation of the AAC, along with some others, which provides

beneficiaries with a cash transfer, training and a productive investment grant, suggests that

there are significant increases in self-employment, household consumption, and income two

years after the end of the intervention. The evaluation of the GATE program, shows that

effects on business ownership and employment are positive and significant in the short-run,

but vanishes over the medium and long term. EPAG and WINGS programs, which target a

poor and capital- and credit-constrained sample population, also find significant impacts on

income, consumption and savings. Evaluations of ETPo programs also examined impacts on

earnings and employment beyond self-employment. For example, the evaluation of the JEA

reports that training moderately increases wages and salaries earnings, along with the

probability to have a formal sector job; on the contrary, JE and MEP show disappointing

results, finding no impact on the employment rate of participants and the short run-income.

In comparison to the findings on the status outcomes domain, findings across other ETPo

domains are comparatively weak and sparse. In firm performance, the WINGS program

evaluation records an increase in imports from major trading centres, and the ACTIVATE

program reports positive job creation results. The most promising firm performance result is

enhancing business practices, with several program evaluations indicating improved record

keeping (SIYB, formal registration (YOP), access to new loans (SEWA), and a more

strategic orientation of the business (ENBDP). In terms of the capability outcomes domain,

several ETPo program evaluations described gains in general business knowledge and skills,

as well as in business plan development, enhanced understanding of the market (SIYB,

WSBP) and enhanced vocational skills (BACIP).

ETPo programs have fewer moderating factors. Most of these programs make note of the

characteristics of all the participants before the treatment, including their gender, educational

background, and previous exposure to self-employment. Regarding contextual moderating

factors, the program outcomes are cited as being influenced by factors relating to local

economic conditions and infrastructure including access to finance and markets. Looking

across ETPo program evaluations, however, participant characteristics do at times appear to

moderate outcomes. For example, the evaluation of the JEA program demonstrated

heterogeneity in impacts, with male teens in particular being the group that most benefited

from the program. The WINGS evaluation indicated that the training had the greatest impact

on the people with the lowest initial levels of capital and access to credit. The evaluation for


27

the MEP program in Argentina, which overall did not demonstrate significant positive results

about income, described how subsets of participants did have evident gains—in particular,

younger and more educated participants and those with self-employment experience saw

improvements in income.

1.2.4 Entrepreneurship Training – Practicing Entrepreneurs (ETPr)

The most robust body of evidence within the study of Valerio et al. examines programs

targeting practicing entrepreneurs, including 11 impact evaluations with an experimental

design. ETPr provide the most direct insight on how training can impact the performance of

an enterprise, and how it can survive and grow; evaluation findings are more supportive of

the capacity of these programs to enhance participants’ business knowledge and skills as the

practices entrepreneurs implement in their businesses. While the results of ETPr evaluations

indicate that training by itself is unlikely to sufficiently transform an enterprise in the short

run to be captured by these evaluations, training programs do appear to have the potential to

strengthen existing entrepreneurs’ knowledge, skills and business practices, which may

accrue benefits to entrepreneurs and their enterprises over time.

The study identified and examined a total of 25 ET programs targeted at practicing

entrepreneurs. Geographically, two regions are dominant: nearly half are delivered in Sub-

Saharan Africa and an addition 7 are in Latin America (see Table 2).

Table 2. Program list: ETPr - List of evaluations

Program name Country Evaluation

EDC Bosnia Herzegovina Tier 1

FINCA Peru Tier 1

GNAG Ghana Tier 1

MIDA-FBO Ghana Tier 1

NRSP Pakistan Tier 1

PBS El Salvador Tier 1

PRIDE Tanzania Tier 1

ROT Dominican Republic Tier 1

SIYB-SL Sri Lanka Tier 1

ULTP Peru Tier 1

WEP South Africa Tier 1

DDFET Netherlands Tier 2

END South Africa Tier 2

FTDA Honduras Tier 2

TECH Central America Tier 2

Chapter 1

28

10KW India Tier 3

CEM Nigeria Tier 3

CREA Mexico Tier 3

DFCU Uganda Tier 3

ELP Northern Ireland Tier 3

GOWE Kenya Tier 3

INT US Tier 3

MSETTP Kenya Tier 3

PAVCOPA Mali Tier 3

WETVBI Tanzania Tier 3

Source: Valerio et al. 2014, Entrepreneurship education and training programs around the world, retrieved on 12 th August 2016.

The most common stated objectives of ETPr programs relate to firm performance outcome

domain, which corresponds to the immediate needs of the target audience, practicing

entrepreneurs. Some of the most common addressed performances include increases in

productivity, profits, expansions in other markets, financing and investment indicators and

the implementation of better business practices. In terms of profits or revenues, evaluations

found limited effects. For example, the evaluation of the FINCA program in Peru did not

demonstrate higher values; however, it led to a 4-percentage point increase in the client

retention rate, which corresponded to with increased net revenues for trainees’ firms. The

more promising results on this indicator were from the ROT program, where a subset of

beneficiary entrepreneurs registered a substantial increase in revenues during bad week, at a

significant level of 5 percent, and an increase in savings of about 6 percent. Among program

evaluations indicating improvement in sales, enterprise growth shows mixed results. For

example, The END program also indicated positive effects on the sales growth of the

beneficiary firms; the SIYB-SL indicated that trainees’ enterprises were more profitable.

Additionally, the ULTP program in Peru did not find statistically significant effects on sales

increases or employment gains. More promising findings emerged from the INT program

evaluation in the US, which demonstrated gains in firm revenues as well as full-time

employment, and from the TECH, whose evaluation suggested that the intervention led to

an expansion of the businesses in the treatment group through job creation, and increases in

wage and benefits as well as revenue.

The review of these business training programs conducted by McKenzie and Woodruff

(2012) indicates that few studies found significant impacts on profit or sales, although they

did find modest effects on practicing entrepreneurs’ decision to implement better business


29

practices. In few cases, however, better business practices did appear to lead to more

profitable enterprises in the long run. ETPr programs targeting entrepreneurial status as a

common outcome domain, reflected in training programs that aim to help existing enterprises

survive as well as enhance the personal income and saving of training participants. For

example, the GNAG found that to raise the probability of enterprise survival by 8 or 9

percentage points, while the evaluation of the EDC found that it did not appear to influence

business revival. In the capabilities domain, some of the rigorously evaluated ETPr programs

indicate positive outcomes. These programs include PRIDE in Tanzania, whose evaluation

found gains in business knowledge, and the WEP program in South Africa, which

demonstrated statistically significant gains across several areas, including business

knowledge and business skills. Lastly, a handful of ETPr evaluations indicated an interest in

strengthening the entrepreneurial mind-set of practicing entrepreneurs, in particular,

focusing on self-confidence (10KW, WEP) as well as broader life skills. Program

evaluations’ measurement of these mind-set outcomes, however, were rather sparse. The

exception to this analysis is the WEP program (South Africa), which statistically showed

compelling improvements in the entrepreneurial characteristics and orientation of

participants, including confidence building.

In the relatively more targeted programs at the ETPr level, there is an implicit appreciation

of the potential for individual and contextual factors to influence entrepreneurial outcomes.

Nonetheless, the field of ETPr programs shows a number of moderating influences. At the

level of the participant, evaluations highlighted participant profiles, including gender, level

of literacy and education, and past experiences as entrepreneurs. in addition to profile,

programs appear to acknowledge the role of participant behaviours, in terms of participation

and retention. In terms of context, ETPr programs cited the broader economic environment

as both an opportunity and a constraint, specifically the investment climate, financial

infrastructure, and access to markets. Additionally, cultural moderators, such as attitudes

toward gender, were also identified as influencing outcomes; the role of contextual

moderators was surprisingly underemphasized, perhaps again related to the targeted nature

of these programs.

Governments can play an important role in potential entrepreneurship programs, being a

partner in allowing the use of physical space within public training institutions. However,

they may also get involved in directly funding, or enable other entities to do so, ET programs.

Chapter 1

30

Given that these kinds of programs usually target specific populations that the government

may already be generally interested in supporting, the public good is often more closely tied

to program objectives (enhancing equity, reducing poverty…) than to what the program

actually delivers (knowledge and skills) (Valerio, Parton, & Robb, 2014).

1.3 Individual characteristics of managers as moderating effects

1.3.1 Intro:

In this paragraph a brief excursus about the features of traditional entrepreneurs will be

given. As discussed in the previous paragraphs, entrepreneurship has been studied for years

by experts, but there is still no specific definition about what its main characteristics are and

what are the must-have of a general entrepreneur. It can be argued that entrepreneurs are

both endowed of skills and the so-called entrepreneurial orientation. The first are capabilities

and knowledge, which can be learned over time. Skills make the difference in businesses

and in founding a start-up, however they do not provide any divergence between an

entrepreneur and a skilled manager. On the other hand, the entrepreneurial factor is

considered as an intrinsic characteristic that cannot be learnt. It directly concerns the

personality and the mind-set of a person. We must study these traits if we want to understand

the entrepreneurs’ features; leading us to define the differences from common workers.

Knight and Cavusgil (2004), in their studies, said that Born Global firms are likely to be

found by those entrepreneurs that base their foreign ventures on an important entrepreneurial

orientation accompanied with a strong marketing orientation. This reflects the firm’s overall

mentality forward innovations and reactiveness in the pursuit of international markets. The

results are shown in firms’ ability to develop processes and practices, together with a deep

decision making activities. The marketing orientation represents the skill component, while

the entrepreneurial orientation represents the constant looking for the success.

Also Oviatt & McDougall, 1994 remind us of the pivotal role of entrepreneurship when

dealing with INVs (International New Ventures) which are similar to the Cavusgil &

Knight’s born global firms, but still quite different. (Oviatt and McDougall 1994)indeed,

define INVs as “business organizations that, from inception, seek to derive significant

competitive advantage from the use of resources and the sale of outputs in multiple


31

countries”. Additionally, international entrepreneurship is defined as “a combination of

innovative, proactive and risk-seeking behavior that crosses national borders and is

intended to create value in organizations”(McDougall and Oviatt 2000).

For our purposes, the unit of analysis is the individual level. The entrepreneurial orientation

is composed of personality traits (internal environment), perception of the external

environment (cognition) and actions or behaviors (manifestation of the internal into the

external environment).

Past researches about personal variables in the entrepreneurship field, has identified several

characteristics that tend to distinguish some entrepreneurs from others (McClelland,

Atkinson et al. 1953) (Brockhaus 1975, Brockhaus and Horwitz 1986); (Collins and Moore

1970); (Gartner 1990); (Homaday and Aboud 1971); (Palmer 1971); (Shapero 1975);

Swayne and Tucker (1973). Based on these researches, four constructs are commonly used

when dealing with business motivation:

Need for achievement (McClelland 1961);

Locus of control (Levenson 1973); (Rotter 1966);

Self-esteem (Crandall 1973);

Innovation (Kirton 1976, Kirton 1978).

However recent studies have brought up new areas of interest regarding entrepreneur

personality. Here, a list of new factors is provided:

Overconfidence

Risk aversion

Risk elicitation

Proactive Personality

Psychic distance

Ambiguity aversion

Position tenure as CEO

Achievement orientation/motivation

Global orientation

Our study will deal with only two of them; the focus is on:

Proactive Personality;

Overconfidence.

Chapter 1

32

The following paragraphs will provide a more accurate literature review regarding the two

factors, with a higher level of detail for each of them.


The Proactive Personality construct has been studied with different perspectives in the last

decades. It has originally been studied in Psychology as a personal behavior and mental trait.

Then, considering its significant role for entrepreneurs and managers, it has also been

associated to an economic perspective since its central role for entrepreneurs and managers.

Finally, the organizational behavior domain found Proactivity as a factor able to explain

behaviors and their consequences in companies and in general in work environment.

It is important to highlight that there are some studies, which are pivotal for the literature:

(Bateman and Crant 1993, Crant 2000). The first is recognized to be the pioneer in

connecting Proactive Personality with the economic domain, providing a definition and its

description. In addition, it provided a method to measure its scale. The second, a decade

later, provides a review about all studies concerning this new domain intersection

(Personality traits with economics), creating a model which aims at explaining the Proactive

Behavior in terms of causes and consequences in behaviors.

We provide now an excursus of the Proactive Personality literature, following for each topic

associated the historical development.

Starting with the psychology domain, the most important principle in the organizational

behavior literature concerns the interactionism phenomenon. It holds that situations are the

result of people interactive behaviors which are both internally and externally controlled

(Schneider 1983). Theorists consider a dynamic interaction between person and environment

relationship, due to reciprocal causal links (Magnusson and Endler 1977). People,

environments and behaviors continuously influence one another (Bandura 1986).

Consistent with the broad perspective of interactionism, people are assumed capable of

intentionally change the above explained relationship in different way such as selection,

cognitive restructuring, evocation, or manipulation of casual responses by others. Current

circumstances (social or not social) are actually possible to be changed by every person, in

direct or indirect way, even intentionally or not (Buss and Finn 1987). Bateman and Crant

defined it as the essential characteristic of a proactive behavior.


33

Among psychologists, Bandura (1986) stated, “People create environments and set them in

motion as well as rebut them. People are fore active, not simply counteractive” (Bandura

1986). Maddi (1989) divided individual behaviors in categories; among them, the

transcendent one indicates that people transform or surmount situations rather than adjusting

or accepting them. Weisz (1990) distinguishes between primary and secondary control

(changing objective conditions, versus the secondary, accommodating to them). Similarly,

among the interpersonal orientations described by Harre (1984), an active (agent) versus a

passive (patient) emerges.

In effect, people and environments continuously affect one another (Bandura 1986),

suggesting that individuals are not simply “passive recipients of environmental presses”

(Buss and Finn 1987) but instead they exert influence over their environments. This concept

is perfectly explained in Bandura’s work: human activity is agentic and intentionally driven

by people, aiming at making things happen.

Some years later, (Gartner 1990), while studying the argument, identified eight themes. One

of these themes focuses on entrepreneurs as individuals, everyone with unique personality

characteristics and abilities. Within this domain of research, five attributes constantly

emerged: need for achievement, locus of control, risk-taking propensity, tolerance for

ambiguity, and Type-A behavior (Brockhaus 1982, Brockhaus and Horwitz 1986);(Furnham

1992).

Despite these findings, a number of scholars have expressed dissatisfaction with existing

knowledge of the personality-entrepreneurship relationship. Chell, Haworth et al. (1991)

suggested that the impeding research progress is due to the shared disagreement on

"entrepreneurship" meaning.

Gartner (1988) stated in its study that a new perspective is needed. He suggests including

variables far from personality traits domain, creating in this way a benefits for those

theoretical models aiming at explaining entrepreneurship. Robinson, Stimpson et al. (1991)

argued for more dynamic models of the entrepreneurship process. Shaver and Scott (1991)

identified the methodological weaknesses of much entrepreneurial trait research (including

the research that generated the attributes listed above) and argued for consistency between

the specificity of measures and underlying constructs.

Chapter 1

34

Critics has encouraged researchers to push forward a deep examination of personality traits

and entrepreneurship relation. Considerable efforts have been devoted to develop ambitious

models with the aim to describe various entrepreneurial processes.

A model developed by Gartner (1985) integrated four major dimensions of entrepreneurship:

characteristics of the individual who starts the venture,

the organization which is created,

the environment surrounding the new venture,

the process by which the new venture is started.

Gartner highlighted to fact that the combination of interactions of these dimensions’ result

in incredibly numerous patterns of new business creation.

The psychological model of Shaver and Scott (1991) attempts at explaining entrepreneurial

activity in terms of variable interactions, where the inputs are the persons, the processes and

the choices made. In their theoretical framework, it is strongly rejected the solo role of the

"personological" approach. To understand entrepreneurship, we must understand both how

the external environment is perceived in entrepreneurs’ mind (social cognition) and how the

person chooses to act. It is critical to figure how cognitive representations in their mind get

transformed into actions. More recently, other models have followed this idea of highlighting

the interaction among different variables.

Herron and Sapienza (1992) proposed a model which links individual traits to the situational

context experienced by entrepreneurs in the process of new ventures creation. The personal

characteristics role, interacting with perceptions of situational factors build the basis for the

entrepreneurial motivation model developed by Naffziger, Hornsby et al. (1994).

These recent multi-dimensional models support the importance of the interface between the

environment or situation and the individual traits of potential entrepreneurs, in understanding

the process of venture creation. While these multidimensional and interactive models of

entrepreneurship do not discount the role of individual traits, they do emphasize the need to

include the environment or the general context as a perceived factor by the single potential

entrepreneur. The work of Woo, Daellenbach et al. (1994) presents an interesting perspective

which proposes for the entrepreneurs’ interpretation and approach to the environment, an

even more relevant role. Their perspective parallels Glade (1967) in the way that the success


35

of an organization depends on the capacity of the entrepreneur to perceive and then exploit

environmental opportunities.

This notion of a proactive orientation has been discussed with different perspective within

the entrepreneurship process domain. Shapero and Sokol (1982) dealt with the tendency

toward immediate actions and initiatives while discussing the social dimensions of

entrepreneurial events. From this point of view, Krueger (1993) and (Krueger 1993, Krueger

and Brazeal 1994) have included the concept of "propensity to act", identifying desirability

of control scale as a proxy for propensity to act.

Considering the first study of Bateman and Crant (1993), from now on the following

paragraphs will focus on findings concerning specifically the Proactive Personality

construct.

“The purpose of this paper is to empirically introduce Proactive behavior as a

dispositional construct that identifies differences among people in the extent to which they

take action to influence their environments”.

In this way Bateman and Crant introduced their idea, describing how the Proactive

Personality implies a proactive behavior that directly alters the environments. Considering

its nature from a behavioral domain, this characteristic has both personal and situational

causes (Lewin 1938). They also claimed it must be considered as a personal disposition, a

relatively stable behavioral tendency. People are assumed to be differentially predisposed to

behave toward their personal situations (Bateman and Crant 1993).

It is rooted in people’s mind the need to manipulate and control the environment (White

1959, Langer 1983). This is the proof that this construct is strictly related to the psychology

world described above. Considering the findings of psychologies such as Bandura, Maddi,

Weisz and Harre, Bateman and Crant identified the proactive behavior as a process that is

fore active more than counteractive, transcendent more than acquiescent, a means of primary

more than secondary control, and as an active agent more than passive.

They declared that the Proactive Personality construct occurs also at the level of groups and

organizations (organizational behavior literature). In both level, there is always a person who

directly engage to change environmental conditions, but also who defends its status/stability,

adapting to changes. The premise of Bateman and Crant is similar: people can initiate and

Chapter 1

36

maintain actions that directly alter the surrounding environment, but everyone in its own

way. Again, the psychological approach: the relative influence of person, behavior and

environment varies not only across activities and circumstances, but across people (Bandura

1986). However, differences in personality reflect the personal orientations of people toward

multiple scenarios.

Based on the previous literature from the psychology and organizational behavior’s domain,

Bateman and Crant provide a first definition for the Prototypic Proactive Personality:

“is one who is relatively unconstrained by situational forces, and who effects

environmental change”.

Other people are relatively passive – they react to, adapt to, and are shaped by their

environments. Proactive people instead scan for opportunities, show initiative, act, and

persevere until they reach closure by bringing changes (Bateman and Crant 1993).

Leavitt and Bahrami (1988) call them “pathfinders”, people who change their organization’s

mission or find and then solve problems. They impact on the world while the non-proactive

people, show opposite patterns.

A self-report scale used to measure the Proactive construct has been developed over the

years. Its validity has been tested assessing the relationship with other following variables:

Big Five superordinate personality dimensions:

Past literatures, from different dimensions of systematic research on personality

traits, have converged on a common conclusion: the domain of personality can be

represented by five superordinate constructs (Digman 1990). These are known as the

Big Five (Costa and McCrae 1989, Digman 1990). These factors are not intended to

replace other old personality systems; rather, they are intended to be useful for

interpreting other personality constructs.

Here are the categories:

(a) Neuroticism, or emotional instability;

(b) Extraversion, described by being sociable, gregarious, and ambitious;

(c) Openness to Experience, represented by flexibility of thought and tolerance of

new ideas;


37

(d) Agreeableness, represented by a compassionate interpersonal orientation;

(e) conscientiousness, or the degree of organization, persistence, and motivation in

goal-directed behavior.

Three specific personality traits:

Need for Achievement, Locus of Control and Need for Dominance are considered

the most prominent and valid in the field of organizational behavior. The tendency

toward proactive behavior is associated with instrumental rather than cognitive

(affective) traits. Instrumental traits are a category of behavior with strong emotional

component (Buss and Finn 1987). Proactivity thus differs fundamentally from

affective traits like empathy and well-being. In this sense, a Proactive Personality is

closer to “Need for Achievement” and “Need for Dominance” rather than Locus of

Control.

The proactive disposition also differs from beliefs of personal control (Greenberger

and Strasser 1986, Greenberger and Strasser 1991) and from other control

perceptions such as outcome control, control over behavior, or the ability to predict

one’s environment (Staw 1986, Bell and Staw 1989).

However, the general tendency to exhibit proactive behavior is also unique and

distinguishable from the needs for achievement and dominance. 1 It is broader in

domain; need for dominance is limited to the non-social task performance domains

with no requirement to cause changes. Finally, Proactivity is one of the personal

dispositions (i.e. anxiety) that are so generalized to include both social and non-social

behavior (Buss and Finn 1987).

Three criterion variables: the nature of people’s extracurricular and civic activities,

the nature of their personal achievements and the transformational leadership.

1 This is the main reason why, in this study, the Achievement Orientation effect has been excluded. Due to the

strong correlation with the Proactive Personality, as Buss and Finn (1987) said, it is broader in domain with

respect to the Achievement Orientation: a person cannot be proactive without being achievement oriented, but

the opposite could be true. If we considered both Achievement Orientation and Proactive Personality as

independent variable, we would have a conflict of correlations. Thus, we preferred to analyze the bigger

variable, excluding the smaller construct.

Chapter 1

38

Considering the above-mentioned reasoning, Bateman and Crant identified five hypotheses

that has been verified analyzing data provided by surveys and questionnaires to

undergraduate and MBA students.

HP1: Scores on the proactive scale will be positively correlated with extraversion and

conscientiousness, but not with agreeableness neuroticism or openness.

HP2: Scores on the proactive scale will be more strongly (positively) associated with need

for achievement and need for dominance than with locus of control.

HP3: Individual’s scores in the proactive scale will be positively related to their degree of

involvement in extracurricular and service activities the mission of which is to effect

constructive change.

HP4: Individual’s scores in the proactive scale will be positively related to the degree of

constructive environmental change revealed in their most significant personal achievement.

HP5: Individual’s scores in the proactive scale will be positively related to identification by

peers as transformational leaders.

The Proactive Personality: Job Performances, Career and Job Search Success

Two years later, Crant kept studying the construct of Proactive Personality; he examined the

criterion validity of the Proactive Personality Scale by Bateman and Crant (1993), analyzing

its connection with the job performance. Four domains were associated: two among the Big

Five factors (Conscientiousness and Extraversion), general mental ability (GMA), work

experience and social desirability. Results showed that the Proactive Personality Scale could

be a valuable addition to the array of individual measures predicting job performance (Crant

1995). Crant assumed Proactivity to be related to job performance due to its implication with

personal behaviors; this led to the following hypothesis:

HP: Proactive Personality Scale is a measure to predict job performances.

Crant tested his assumption examining 146 real estate agents. The average age of the sample

was 47 years; the average job experience was 8 years. Fifty-six percent of the agents were

women (Crant 1995). Proactivity was analyzed through Bateman and Crant’s 17-item

measure. According with the interactional psychology perspective (Bandura and Walters


39

1977) which gave start to the first studies of Bateman and Crant, results indicated that scores

on the Proactive Personality Scale are associated with objective job performance, even when

controlled for experience, social desirability, GMA, Conscientiousness and Extraversion

variables. These results provide evidence that specific personality measures can have

incremental validity over the Big Five factors.

Another study, in 1999, provided evidence of positively relationship between Proactive

Personality and career success. Seibert, Crant et al. (1999) widened the study using diverse

set of occupations and organizations. They found Proactive Personality to be positively

associated indicators of career success. Both self-reported objectives index (salary and

promotions) and subjective index (career satisfaction). The first (objective) refers to

observable career accomplishments, while the second (subjective) reflects people’s feelings

of satisfaction with their careers.

Some years before, Terborg (1981) defined the process whereby individuals select, interpret

and change situations, very close to the Bateman and Crant definition of Prototype Proactive

Personality. Based on Terborg’s study, the career success is affected by the tendency of

individual to shape their work environment leading them to benefits from a place they

designed. Here some example: anticipating changes, altering positively some methods or

processes, influencing decisions which affect rewards.

Consistent with this interactionist perspective, the hypotheses developed by Seiberg and

Crant are the following:

HP 1: There will be a positively relationship between individuals’ Proactive Personality and

objective career success.

HP 2: There will be a positively relationship between individuals’ Proactive Personality and

subjective career success.

Data were gathered by a sample of 496 alumni of a large, private Midwestern university who

graduated 3 – 30 years before the date of the study (1999). Results showed Proactive

Personality was significantly and positively associated with the employees’ current salary,

number of promotions received and their career satisfaction. The same results even after

controlling for career-related variables (age, gender, marital status, spouse’s employment

status, ethnic background and socioeconomic status for demographic variable; level of

Chapter 1

40

education, occupation, years since college graduation and the number and length of

employment gaps for human capital variables; number of hours worked and one’s desire for

upward mobility for motivational variables) (Seibert, Crant et al. 1999).

The studies regarding the relationship between the Proactive Personality and everything

concerning the job domain, such as job seeking, performance or satisfaction, has been carried

on after Crant and Seibert’s work in 1995 and 1999.

In 2006, Brown, Cober et al. (2006) published their study (Proactive Personality and the

Successful Job Search: A Field Investigation with College Graduates) aiming at testing a

model of Proactive Personality and job search success. The sample used, was composed of

180 graduating college students. They focused on the relations among Proactive Personality

and four job-related variables:

job search self-efficacy,

job search behaviors,

job search effort,

job search outcomes.

They found that Proactive Personality has significantly influenced the success of college

graduates’ job search. It was partially mediated through job search self-efficacy and job

search behavior, and independent from self-esteem and conscientiousness (Brown, Cober et

al. 2006).

Frese and Fay (2001) argued that the impact of Proactive Personality on behavior and

outcomes is mediated through specific orientations such as self-efficacy (Figure 3).

Following Frese and Fay, they hypothesized that:

HP: Proactive Personality will be positively related to an individual’s job search self-

efficacy


41

Figure 3: Relation between Proactive Personality and Job Search Outcome

Self-Efficacy, based primary on the Proactive Personality construct, should have a direct

role in Job Search Outcome variable. From the data collected, they found that Proactive

Personality was significantly related to job search self-efficacy, job search behavior, job

search effort, the job searches outcome variables, and conscientiousness. This scheme

provides preliminary evidence that proactive personality is an important precursor to an

effective job search. Finally, job search self-efficacy was significantly related to both job

search outcome variables.

The Proactive Personality: Entrepreneurial Intentions and Born Global Entrepreneurs

In 1996, Crant (1996) was the first to empirically demonstrate that Proactivity is associated

with entrepreneurial intentions. The Proactive Personality Scale seemed to have the potential

for providing further insight into the relationship between personality traits and the

entrepreneurship. It is due to the intuitive idea that entrepreneurs may have a personal

disposition toward proactive behaviors (Crant 1996). This led to the following hypotheses:

HP1: The extent to which people possess a Proactive Personality will be positively

associated with entrepreneurial intentions.

Chapter 1

42

Considering long-lasting literature, Crant assumed other hypotheses that must be verified

empirically:

HP2: Females will express lower entrepreneurial intentions than males.

HP3: Education will be positively associated with entrepreneurial intentions.

HP4: Subjects with a parent who is an entrepreneur will have higher entrepreneurial

intentions than those whose parents are not entrepreneurs.

A sample of 181 university students was studied. One-half the students were undergraduates

(n = 91) and half were MBA students (n = 90). The average age of the sample was 23 years;

33 percent were female. The undergraduate students had little or no full-time work

experience; the MBA students averaged three years of work experience. Results showed

Proactivity was positively associated with entrepreneurial intentions. Enlarged results with

significant amount of additional variance forward entrepreneurial intentions, came up

considering other control variables (gender, education, and having an entrepreneurial

parents) into the model (Crant 1996).

Becherer and Maurer (1999) associated Proactive Personality to Entrepreneurship. Using a

sample of small company presidents, they linked the Proactive disposition to their

entrepreneurial behavior in terms of:

Starting a new business,

The number of startups and the types of ownership.

The relationships of proactivity to the firm's entrepreneurial posture, its performance and the

extent of the president's delegation of authority were also examined.

Proactivity by Bateman and Crant emphasizes how people influence their environments; this

was considered by Becherer and Maurer as an important variable in understanding

entrepreneurial behaviors. Not only Proactivity fits the emerging models of

entrepreneurship, but it also would appear to be a broad individual construct whose effects

show entrepreneurial initiatives such as starting a business (Becherer and Maurer 1999).


43

Then their hypothesis:

HP: The proactivity disposition of a company president is directly related to the

entrepreneurial posture of the firm he or she manages.

Control variables such as change in sales and profits, day-to-day and long-term decisions

and similar, were added. Results showed that a Proactive Personality disposition is related

to entrepreneurship in several facts:

1) Proactive president uses his or her firm to actively shape the environment;

2) Significant change in sales, but not in profit;

3) Great chance to start new business start-ups. Not only their current businesses, but

also more other businesses;

4) Entrepreneurial pursuits are a way through which proactive individuals act out their

aggressive approach to the environment;

5) No links between Proactivity and the choice of centralized/decentralized decision-

making style in either day-to-day managerial and long-term one.

More recently, after the Born Global idea was explained by (Knight and Cavusgil 2004)

becoming one of the most popular topic to discuss (International Entrepreneurship (IE)

domain), personality traits has been associated with the so called Entrepreneurial Orientation

(EO). Thus, the EO has been recognized as the topic to be studied in future.

Persinger, Civi et al. (2011), asserts that the Proactive Personality plays a key role for

entrepreneurs, mostly for those in contexts of emerging markets. Persinger’s aim was to

study the Born Global entrepreneur exactly in the context of an emerging market.

Specifically, the focus is on the entrepreneur’s knowledge and behaviors required to start a

Born Global firm.

Considering the past literature, Persinger claimed that a Proactive Personality reflects the

individual’s orientation toward the environment. A proactive entrepreneur will scan for

opportunities and takes a bold and aggressive approach to the market. This match the Born

Global firm nature of scanning opportunities and being aggressive in the marketplace. The

desire to overcome an environmental problem is directly related to proactivity, the more

proactive, the higher is the extent to take actions for influencing the environment (Becherer

Chapter 1

44

and Maurer 1999). The global entrepreneur must have a strong temperament for surmounting

the structural limitations present in emerging economies accompanied by a high level of

perseverance. Thus, the following hypothesis:

HP: The more proactive the entrepreneur, the more perseverance the entrepreneur will

exhibit in overcoming the environmental conditions of an emerging market.

Persinger added as variable embedded in the Global Entrepreneur personality, the

Achievement Motivation and what he called the Born Global Orientation.

Emerging markets present opportunities, but only the Born Global firms whose founder has

the mentioned characteristics along with high need for achievement, Proactive Personality

and global orientation would be able to catch and exploit them. These entrepreneurs possess

what is necessary to become successful in the turbulent and risky business environment of

the emerging economies (Persinger, Civi et al. 2011).

The Proactive Personality: A first review

Six years after their first study about Proactive Personality Scale, Bateman and Crant (1999),

provided further research about characteristics of proactive managers. In details focusing on

the challenges for most companies regarding the proactive behavior and identifying when

proactivity is positive and when counterproductive for overall firms’ performance.

Considering the characteristics of proactive people, they provided example of behaviors

based on which it was possible to distinguish Proactive people from Reactive ones. Two

people in the same working conditions may deal with the job in very different ways. One

may take charge, launch new initiatives or generate constructive changes. The other may try

to maintain, get along, look for stability, being a good custodian of the status quo. The first

tackles issue head-on and works for constructive reform. The second "goes with the flow"

and passively conducts business as usual. The first person is proactive; the second is not.

To be proactive is changing things, toward intended directions. Proactive behavior

distinguishes individuals from the mass as organizations from the rest of the marketplace.

Everyone can make actions that bring changes, but not all of them are truly proactive. For

instance, changes can be evoked unintentionally, for a negative as well as a positive outcome.

Second, people can engage in cognitive restructuring by psychologically reframing or


45

reinterpreting situations. This can be useful and beneficial, (threats are turned to

opportunities), but can also be detrimental, as when managers deny the existence of real

problems. These are not proactive behaviors; they just change perceptions without changing

the reality.

Differently, people can make conscious decisions to leave or enter situations (taking a new

job, making acquisition or divestment decisions). Again, and most important here, people

can intentionally and directly change things through the creation of new circumstances, or

the active alteration of current ones. These are forms of proactive behavior; they place people

and firms in different environments. This is what is meant by true proactive behavior

(Bateman and Crant 1999).

Previous examples are summarized in a list of behaviors associated with a Proactive

Personality:

Scan for opportunities of change;

Set effective, change-oriented goals;

Anticipate and prevent problems;

Do different things, or do things differently;

Take actions;

Persevere;

Achieve results.

The impact of Proactive people, influences their performance in terms of career success and

goal achievement; this implies that firms whose employees are proactive would benefit as

well.

Bateman and Crant claimed that firms need to generate high level of proactivity inside their

organizations. It is a function of both individual dispositions and the work environment.

Thus, it can be harvested, grown, and sustained via appropriate approaches in selecting,

training, liberating, and inspiring (Bateman and Crant 1999).

The Proactive Personality: Charismatic Leadership

The following year, Crant and Bateman (2000) published a new study where the focus was

given to test a potential relationship between Proactive Personality and perceptions of

charismatic leadership. A sample of 156 managers completed measures of Proactive

Chapter 1

46

Personality while the charismatic leadership measure was rated by their immediate

supervisors’.

Several behaviors associated with charismatic leadership appear to have roots in proactivity.

This gives insights about the notion that expectations of attributions of charisma in people

could be triggered by the Proactive Personality construct. By some past literatures,

charismatic leaders are known to be active innovators (Conger and Kanungo 1987), to be

pro-socially assertive (House and Howell 1992), and to seek changes for new status (Conger

and Kanungo 1987). Charismatic leaders have a vision for different scenarios, challenge

their followers’ beliefs, and get them excited about the novelties (Bass and Stogdill 1990).

Based on their previous definition of Proactive Personality Scale, (“is one who is relatively

unconstrained by situational forces, and who effects environmental change”), which

presume to underlie above mentioned topic as innovation, prosocial assertiveness and

change efforts; it is reasonable to associate Proactivity with charismatic leadership (Crant

and Bateman 2000). Thus, here is the hypothesis:

HP: Managers’ Proactive Personality will be positively associated with their supervisors’

ratings of their charismatic leadership.

From their results, managers who scored themselves higher on Proactive Personality were

high rated by their bosses on charismatic leadership measure. This relationship was

consistent, and held true even after entering some other control variables (in-roll

performance and the Big Five personality dimensions) in the regression model (Crant and

Bateman 2000).

The Proactive Personality: A new Milestone

In the same year, Crant (2000) published a new study where he reviewed diverse set of

literatures that directly address the proactive behavior at the organizational level. He

designed a model aiming at explaining the proactive behavior, using four constructs:

Proactive Personality, personal initiative, role breadth self-efficacy, and taking charge. In

his study, he also summarized most of the literature known at that time. Some were already


47

described above (job performance, charismatic leadership, entrepreneurship, career

satisfaction and success) others were added.

Here a list of new literature.

Kirkman and Rosen (1999) who associated Proactive Personality to work team; they showed

that team-level proactivity was positively related to team empowerment. Team proactivity

was also positively related to several crucial team-level outcomes, including productivity

and customer service. More proactive the team, the higher the levels of job satisfaction,

organizational commitment, and team commitment. This research was the first to apply the

Proactive Personality construct at team level, providing empirical evidence of the important

role of proactive behaviors in team based activities.

Morrison (1993) focused his research on proactive socialization on newcomers’ initiatives

in gathering information over their first six months on the job.

Deluga (1998)’s idea was to match the perceptions of leadership and leadership effectiveness

to Proactive Personality. He investigated the profile of each American president rated by

experts, in order to understand who among them had a Proactive Personality. Ratings, when

confronted with independent ratings of presidential charismatic leadership and some archival

ratings of presidential performance, were found positively associated with Proactive

president.

Parker (1998) associated Proactive Personality with an array of organizational practices and

innovations. His study was made at firm level (glass manufacturing company), in a context

where numerous management initiatives were undertaken. According to the results,

Proactive Personality was linked positively, in a significant manner, to the use of

communication means for distributing information, to the membership particular

improvement groups, and to the gain of job enrichments and enlargements. These findings

suggest proactive individual usually benefits from organizational interventions.

Crant provided a new definition for Proactive Behavior:

“as taking initiative in improving current circumstances or creating new ones; it involves

challenging the status quo rather than passively adapting to present conditions”.

(Crant 2000)

Chapter 1

48

Employees can engage in proactive activities as results of in-role behaviors required by the

job position. For example, sales agents might proactively seek feedback on their techniques

for closing a sale with an ultimate goal of improving job performance.

Extra-role behaviors (i.e. to redefine one’s role in the organization) can also be proactive.

For example, employees might engage proactive behaviors by identifying and acting on

opportunities, not because they are proactive, but to change the scope of their jobs or move

to more desirable position.

Crant created a model (Figure 4) considering all the literature he found matching in a

database the keyword “proactive” and “initiative” for the period from January 1967 to June

1999.

Figure 4: Crant’s model about Proactive behaviours

He identified two categories of antecedents:

1. Individual Differences

2. Contextual Factors.

The first represents constructs specifically designed to capture the individual disposition

toward proactive behaviors; the second appears in the model as antecedents, since contextual


49

factors are associated with the decision to behave in a proactive way. The final output of the

model provides the consequences of proactive behaviors.

Among the Individual Differences, Crant described the proactive behavior’s constructs. The

way in which employees approach and define their work roles and their efforts to improve

things in the workplace, are element taken into account. They incorporated employees’

changes to the work environment. A concept already included by Bateman and Crant (1993),

in their definition of Prototypical Proactive Personality.

Crant concluded his study summarizing the main findings on proactive behaviors:

1) It is exhibited by individuals in organizations;

2) It occurs in an array of domains;

3) It is important because is linked to many personal and organizational processes and

outcomes;

4) it may be constrained or prompted through managing contexts (Crant 2000).

In 2010, Thomas, Whitman et al. (2010), following the work of Crant, investigated the

comparative relationship among focal proactive constructs defined by Crant (Proactive

Personality, personal initiative, voice, and taking charge) and key organizational variables

(i.e. job performance), personality traits (i.e. the Big Five), and individual variables (i.e.

work experience).

Their study specifically investigates the intensity of these relations. They provide some

hypotheses:

HP 1: There is a positive correlation between proactivity and overall job performance

HP 2: There is a positive correlation between proactivity and work satisfaction

HP 3: there is a positive correlation between proactivity and affective organizational

commitment.

HP 4: There is a positive correlation between proactivity and social networking

HP 5: There is a positive correlation between proactivity and conscientiousness, emotional

stability, extraversion, openness; while negative with agreeableness

Additional tests analyzed the Proactive Personality with control variables and individual

factors as age, experience (tenure) and general mental ability (GMA). Results confirmed the

strong positive relationship between proactivity and performances. Satisfaction was found

Chapter 1

50

to be significantly correlated with Proactive Personality. Considering analyses for the Big

Five, results revealed meaningful correlations; indeed, conscientiousness, emotional

stability, extraversion, and openness were to be correlated with the Proactive Personality

(Thomas, Whitman et al. 2010).

Overconfidence

In this paragraph a detailed literature review about the construct of Overconfidence is given.

Like the Proactive Personality concept, this new construct has its root in the psychological

domain. Lot of psychologists have tried to study this characteristic since the first years of

the past century but only in the last decades, Overconfidence has been studied also in

different domains: in judgments of physicians (Lusted 1977), clinical psychologists

(Oskamp 1965), lawyers (Wagenaar and Keren 1986), negotiators (Neale and Bazerman

1991), engineers (Kidd 1970) and security analysts (Von Holstein 1972).

In the recent years, detailed analysis have been performed to understand the relationship

between Overconfidence and some economic and financial behaviors, assumed by managers

and investors. In addition, with the emergence of International Entrepreneurship, the

Overconfidence construct has gained more relevance when identifying the characteristic of

the prototypical entrepreneur.

Concerning the object of this study, the most interesting works are the one which focuses on

the relationship between Overconfidence and entrepreneurial decision, defined as modes of

market entry and decision making processes.

The Psychological Domain

During the past decade, psychologists showed that people are usually overconfident about

their abilities and about the precision of their knowledge (Fischhoff, Slovic et al. 1977,

Alpert and Raiffa 1982). Overconfidence creates a state of mind in which individuals

underestimate dimensions of potential outcomes. The concept is that they do so because they

tend to overestimate their ability rather than not assessing risks or potential threats.

Accordingly, a number of researchers have noted that individuals often consider themselves

better than what seems objectively warranted (Miller and Ross 1975, Regan, Gosselink et

al. 1975). Thus, for example, Schopler and Layton (1972) noted that their subjects


51

unreasonably viewed their interceptive behavior as successful. Fischhoff and Beyth (1975)

found that people recall their powers of prediction as being superior to those they

demonstrate. Similarly, gamblers investigated by (Blascovich, Ginsburg et al. 1975)

overestimated the probability of successful outcomes in actual gambling situations.

Following the evidence found by (Kidd and Morgan 1969) about the fact that pervasive "self-

serving biases" usually results in overly optimistic future planning by managers, Larwood

and Whittaker (1977) build the idea of “better than average” effect that has been recognized

as a milestone for explaining the Overconfidence construct.

As Kidd and Morgan noted, managers in the production unit of firms persistently predicted

superior performances for their operations than was later obtained; Larwood and Whittaker

focused on whether self-serving biases operate at the level of overall business planning and

marketing units.

Their idea was that managers who believe that are superior to the average, might reasonably

expect to perform (measured in terms of comparative sales volume) more than the average

results of the marketplace. They expected to find a generalized tendency to predict and plan

for higher sales than those possible for the average firm to obtain.

They tested undergraduate management students enrolled in marketing courses, about their

prediction of “better than average” competences. Then, the same test was replied to

randomly chosen male presidents of 48 manufacturing firms in New York. Numbers

provided evidence of Overconfidence:

- 72 students participating in the study, only 10 felt that they were merely of average

intelligence relative to their own classmates. Only two thought themselves below

average.

- 27 of the 48 executives predicted that their firm would do better than the average,

whereas only four estimated worse performances.

Larwood and Whittaker indicated that self-serving biases are a wide-ranging phenomenon

that can affect managerial decision making through the process of overly optimistic planning

(Larwood and Whittaker 1977).

In the past, one way to validate degrees of confidence was the calibration test. It consists of

a set of statements given by the tested candidate, analyzing the probability of giving the

correct answer.

Chapter 1

52

An individual is calibrated if, over the long run, the number of correct proportions is equal

to the probability assigned. This studies have been made by psychologists such as

Lichtenstein, Fischhoff, and Phillips. Based on their experiments, the primary conclusion

was that people tend to be overconfident. They exaggerate the extent to which what they

know is correct.

In 1977, Fischhoff, Slovic et al. (1977) found, through five different experiment among

calibration tests, that people tend to be wrong too often when they are sure to be right. They

are overconfident in their knowledge, assessing higher probabilities. Usually, asked

questions concerns topics people cannot have a ready answer stored in memory. They must

deduce it from other information. Then, people reach conclusions about what they have seen

or remember by reconstructing their knowledge from fragments of memory. During this

phase of reconstruction, a variety of cognitive, social, and motivational factors can distort

the output of the process Fischhoff, Slovic et al. (1977).

(Koriat, Lichtenstein et al. 1980) discussed an information-processing mechanism that

would produce Overconfidence. Their procedure was to focus first on considerations

consistent with a chosen answer, then provide to people contradicting considerations to their

answers. Such a predisposition could emerge gradually during memory search and retrieval

process. The search toward evidence supporting a tentatively preferred answer is involuntary

biased, mostly in a post decisional stage where the evidence is reviewed and confidence

assessed.

Two-phase experiments were done: the first stage which consists in searching one's

knowledge, is concluded when an answer is given. During the second stage, the evidence is

reviewed and the confidence assessment is made (probability of being correct).

Results suggested two biases are present in knowledge use and elicitation, one for each

cognitive stage. The first bias involves considering more relevant positive rather than

negative evidences. The second was the tendency to disregard contradictory evidence. Based

on the results, in fact, the authors found that Overconfidence derives in part from that

tendency (Koriat, Lichtenstein et al. 1980).

Griffin and Tversky (1992) tried to explain the circumstances where Overconfidence could

occur. They said that a person assessment of confidence, typically needs the integration of


53

different evidences. They proposed that people focus on the strength (extremeness) of the

evidence adjusting at the end, in response to its weight (predictive validity). The distinction

between the strength of evidence and its weight can be interpreted considering the distinction

between the size of an effect (difference between two opposite poles) and its reliability (the

standard error of the difference). The strength of the evidence tends to dominate its weight

if an appropriate statistical model is not applied. In addition, with this procedure, people tend

to underutilize other variables that control predictive validity.

Building on this hypothesis they built a pattern of Overconfidence and under confidence:

“If people are highly sensitive to variations in the extremeness of evidence and not

sufficiently sensitive to variations in its credence or predictive validity, then judgments will

be overconfident when strength is high and weight is low, and they will be underconfident

when weight is high and strength is low.” (Griffin and Tversky 1992)

“Perhaps the most robust finding in the psychology of judgment is that people are

overconfident”

(De Bondt and Thaler 1995)

Quoting De Bondt and Thaler (1995) is the best way to conclude the psychological domain

and enter the more recent studies concerning economic, financial and entrepreneurial

perspectives.

Studies have shown Overconfidence to be related to several economic choices. It has been

associated with greater riskiness of product introductions by managers, it provides an

explanation of difference between manager and entrepreneur, it is associated with the

corporate investment by CEOs and generally to the decision-making activities and processes

of people. The following paragraphs provide a summary of important studies by different

authors, clustered by topic.

Overconfidence in entrepreneurial decision making:

(Busenitz and Barney 1997) found that entrepreneurs exhibit higher Overconfidence in their

predictive abilities rather han managers. However, they were equal in their accuracy

measured by assessments on a set of real-world questions (whether cancer or heart disease

Chapter 1

54

is the leading cause of death in the United States). Overconfidence, manifested through

biased perceptions, will likely affect the founder’s decisions.

They claimed that entrepreneurs are more susceptible to the use decision making biases and

heuristics than manager in large organizations. They examined differences between

entrepreneurs and managers with respect of two biases and heuristics: Overconfidence and

Representativeness.

The fundamental hypotheses are that: first, under uncertainty and complexity conditions,

biases and heuristics can be an effective guide in decision making (Pitz and Sachs 1984),

while comprehensive and cautious decisions are impossible to take. Second, the decisions

complexity matters, it may lead to pitfalls, but biases and heuristics make the situation

clearer. Those who are more susceptible to the use of biases and heuristics, are the ones who

are most likely to become entrepreneurs. averagely, their decisions would be at higher level

of complexity. A secondary variable is the enthusiasm. It creates that feeling that encourage

entrepreneurial behaviors as starting a new venture. Results showed that their hypothesis

were correct; in addition, entrepreneurs and manager behave in substantial different way.

This divergence arises from the different use of biases and heuristics. They become a

simplifying mechanism enabling entrepreneurs to deal with multiple complex problems.

More specifically, Overconfidence may be particularly beneficial in implementing a specific

decisions and convincing others of its correctness. This mechanism also explains failures of

startups in few years due to the Overconfidence takeover (Busenitz and Barney 1997).

Since Overconfidence directly influences decision making, it is logical to investigate the

effects that overconfident managers’ decisions on investments will have on corporate

policies and firm value.

(Bernardo and Welch 2001) deepened their analysis about the relations between decision

making processes and Overconfidence, focusing on two principal questions. First, economic

principles as explanation for overconfident behaviors (demonstrated to be irrational).

Secondly, the persistence of such irrational behaviors, even if it leads to mistakes most of

the time. They created a framework where overconfident entrepreneurs represent the engine

for the welfare development. They are like public goods, needed by everyone, but irrational

to exist from the economic point of view. When overconfident individuals follow their own

information, they broadcast them (spillover), down weighting the information in the herd.


55

Unknowingly, overconfident entrepreneurs behave altruistically, following irrational

initiatives which are on their own detriment, but at the same time help their groups; then

their hypothesis:

HP: Groups with some overconfident individuals have an evolutionary advantage over

groups without such individuals.

Overconfident behaviors generate large positive externalities on public information

aggregation and small costs on its perpetrators, which allows Overconfidence to survive. It

can persist because of the broadcasting of valuable private information (which would be lost

by rational individuals). They can give start new forms of overconfident behaviors. A group

with too few entrepreneurs, is going to fall easily into wrong choices because of the poor

aggregation of information across individuals. By contrast, similar results occur when too

many entrepreneurs are together. They would rely their own information, suffering from

attrition. This represents the social optimum trades off between the information externality

and attrition (Bernardo and Welch 2001).

In 2007 Gervais, Heaton et al. (2007) studied the interaction of managerial Overconfidence

and their compensation in firms’ investment policy context. They developed a simple capital

budgeting problem where managers must take a decision. Information about the prospects

of a risky projects was the main source to decide whether their firm should undertake or drop

it in favor of safer alternatives. Their study complements the one of Bernardo and Welch

(2001) summarized above.

They found that managerial Overconfidence can provide benefits for firms (increase its

value) if its compensation properly adjust with the manager’s bias. Be careful: an increase

in Overconfidence without an adjustment in compensation would lead to losses. Distorted

investment decisions or value destruction are the typical example. On the other hand, less

incentive compensations are needed to make them pursue risky investment opportunities.

Without a proper compensation, unbiased risk-averse manager would forego some risky

projects even if valuable to the firm. Bigger incentives are needed for this kind of managers

to undertake risky projects. In this way, both firms and managers further benefit from

Overconfidence. Similar studies are provided by (Westerfield and Adrian 2007, Goel and

Thakor 2008, Palomino and Sadrieh 2011).

Chapter 1

56

Friedman (2007) examined the Overconfidence effect on the entrepreneurial investment

choices. Individual Overconfidence is associated with more aggressive entrepreneurial

investment decisions. Friedman used the Panel Study of Entrepreneurial Dynamics (PSED)

to measure Overconfidence. He provided also a broader definition of Overconfidence

compared to the previous one: “excessive confidence in relation to abilities, knowledge, and

beliefs”, inspired by previous works of (Hayward, Shepherd et al. 2006), Grinblatt and

Keloharju (2008). He argued that Overconfidence is more frequent in some types of

environmental decisions, where some factors such as uncertainty, increase the

Overconfidence and biased decision-making processes that characterize the entrepreneurial

setting. In particular, uncertain environments tend to exacerbate Overconfidence (Hayward,

Shepherd et al. 2006), and biased decision-making is exacerbated by uncertainty (Nisbett

and Ross 1980).

Friedman introduced also the concept of nascent entrepreneur. Building on the Shane and

Venkataraman (2000) framework concerning the process of entrepreneurship he gave a

definition of “nascent”. The framework is composed of two stages: discovery and

exploitation. A nascent entrepreneur is an individual who has decided to enter the discovery

process by pursuing startup activities. When the nascent entrepreneur creates an operating

business from a startup activity, he opened the exploitation process becoming an operational

entrepreneur (Friedman 2007). In general, overconfident individuals were expected to

overvalue returns from their activities.

In uncertain environments, the Overconfidence would manifest more, causing higher

overvaluation:

HP: Overconfident individuals are more likely to be nascent entrepreneurs

In addition, Overconfidence enable nascent entrepreneurs to sustain their beliefs they can

overcome any risks and challenges, even if they discovered new issues during the startup

phase. Nascent entrepreneurs, who are overconfident, are more likely to believe that

opportunities worth. This leads them to act upon, making them begin to start operations in

new ventures or exploiting the entrepreneurial opportunity:

HP: Nascent entrepreneurs who are overconfident will be more likely create an operational

business from their startup activity.


57

Friedman also tested Overconfident entrepreneurs over control variables: Financial and

Human Capital Investment and finally Investment Risk, leading to the following hypotheses:

HP 1: Overconfident entrepreneurs will invest more of their personal financial capital in

their ventures rather than external financial capital

HP 2: Overconfident entrepreneurs will invest more of their human capital in their ventures

HP 3: Overconfident nascent entrepreneurs will enter riskier industries

Results showed that overconfident individuals are more likely to undertake nascent activities

to investigate entrepreneurial opportunities. The most overconfident are more likely to start

their ventures as real business. Both hypotheses 1 and 2 were confirmed: overconfident

nascent entrepreneurs are more likely to have and maintain a positive perception of their

entrepreneurial opportunities from entering the startup phase to the reaching operational

phase.

By contrast, no correlation has been found for Overconfidence and the riskiness of

entrepreneurial investment. Similarly, no significant correlation when focusing on

Overconfidence influence on financial or human capital invested in the venture. Here a trade-

off is present: overconfident entrepreneurs are supposed to overestimate the return to

investment relative to other investment options. On the other hand, because of the excessive

confidence in their abilities, it may lead entrepreneurs to believe they can overcome

obstacles and achieve success with less resources. They may underestimate the required

resource endowments (Hayward, Shepherd et al. 2006) ceteris paribus.

Friedman concluded saying it is needed additional research to determine which effect

prevails.

Overconfidence and Entry in Markets

Camerer and Lovallo (1999) explored whether Overconfidence could play influence on

economic behavior considering a specific setting: entry into competitive games or markets.

As suggested by (Roll 1986), Busenitz and Barney (1997) before; the idea of Overconfidence

as cause of business entry mistakes, was surely perceived, but has never been tested.

Chapter 1

58

Camerer and Lovallo created an experimental setting with basic features of business entry

situations. The only source of success depended on candidates’ relative skills. The common

thought among participants was that only their profit would turn positive while the others

turned negative, a traditional example of “better than average” theory by Larwood and

Whittaker (1977).

They found a positive feedback about the main hypothesis; there was a larger amount of

entry (and lower profit) when people were betting on their own relative skills. Reference

group negligence clearly made the Overconfidence effect stronger.

This concept showed that entry is much larger when voluntary subjects participate under the

assumption that payoffs would depend on their own skills only. They seemed to neglect the

fact that they are competing with a reference group of subjects who all think they are skilled

too. Camerer and Lovallo were the first to conceptualize this mechanism and to find evidence

about its veracity.

A direct implication is that Overconfidence also predicts that people prefer performance-

based incentives schemes more often than what standard theory assumes. The standard

theory claims that when output variance shows up, principals who can bear risk should offer

less output-sensitive contracts to agents. Overconfidence predicts that agents will be

relatively insensitive to risk; indeed, when risk is high Overconfidence may lead them to

prefer riskier contracts because they think they can go against the odds. Secondly Reference

group negligence predicts that when agents compete on personal skills, they will not be

focused on the quality of competition, leading to higher probability of failure (Camerer and

Lovallo 1999).

Following Camerer and Lovallo, some years later their publishing, Simon and Houghton

(2003) provided new evidence concerning this question, focusing on the introduction of

innovative products.

In this sense, the research provided a definition and some suggestions about the

Overconfidence effects in decision making. In particular, Simon and Houghton examined

whether Overconfidence varied with the extent to which the product introduction is

pioneered. Here, Overconfidence is very likely to manifest rather than in incremental

decision contexts. They suggested that the presence of Overconfidence encourages managers


59

to pursue riskier actions than they might take without it. Similarly, they argued that

Overconfidence is to be considered one of the causes of risks underestimation. Therefore, it

is more likely managers may take riskier initiatives (introducing a pioneering product) when

they are overconfident.

HP: Greater Overconfidence is associated with introducing products that are more

pioneering

than incremental

This also confirmed that Overconfidence occurs in actual strategic decisions, where the

scenario is ill-structured. Finally, it is highlighted that Overconfidence assumes greater

relevance when the decision context riskiness increases.

A similar study focuses on the relationship between Overconfidence and entry to new

markets. Wu and Knott (2006) jointly tested personality traits affecting individuals’ entry

decisions using empirical source rather than cognitive data. Real entry behaviors rather than

personality framework outputs.

In particular, they collected data on bank industry, all commercial banks in each of the 50

US states, plus the District of Columbia over the period 1984–1997. Their object was to

reconcile the risk-bearing concept of entrepreneurs with the idea of entrepreneurs’ exhibition

of risk-aversion profiles.

The view of entrepreneur as risk taker is probably most associated with Frank H. Knight

since the beginning of the twentieth century. Knight’s contribution was to draw a distinction

between risk and uncertainty. The difference recedes an event and in its frequency. Recurring

events whose frequency can be estimated from experience are called risks, while not

predictable unique events are called uncertainties. While risks can be managed (pooling and

insurance for instance), uncertainty requires something extra.

The entrepreneur is the one in charge of deciding what and how to do in case of uncertainties.

From this concept comes the idea of entrepreneurs as more risks-bearing than wage earners.

In the past, assumed that entrepreneurs perform a risk-bearing role, the literature has

postulated that entrepreneurs have greater risk tolerance than other agents (McClelland

(1961), Lucas Jr (1978), Kanbur (1979), Kihlstrom and Laffont (1979)). Empirical literature

aimed at testing this postulate, however surprising results found entrepreneurs to not appear

Chapter 1

60

to differ from wage earners on this trait (Brockhaus (1980), Masters and Meier (1988), Miner

and Raju (2004)).

Here it comes the great contribution of Wu and Knott; they believed that the disparity

between intuition and theory lies in the dimensionality of uncertainty. In particular, they

proposed two distinct components for uncertainty in entrepreneurial ventures:

- Uncertainty regarding market demand

- Uncertainty regarding one’s own entrepreneurial ability.

Entrepreneurs show risk-aversion with respect to demand uncertainty, but demonstrate

Overconfidence or “apparent risk seeking” with respect to ability uncertainty. The authors

suggested entrepreneurs could appear to be risk seeking when in fact they are not. Therefore,

there may be scenarios where they will bear economic risks related to uncertain demand only

if they think they have enough abilities. This arises from overestimating their capability.

According to this view, entrepreneurs know the performance distribution and expected value

of entry within a given market but they believe the distribution itself draws their ability.

Knight considered confidence as being able to handle unforeseeable events, the most

characterizing feature of the typical entrepreneur. With this idea in mind Wu and Knott

concluded saying it is not true that entrepreneurs have higher risk tolerance; but they do not

simply see the business situations as being risky.

Results showed that entrepreneurs behave rationally to the structure of payoffs. They appear

to be risk averse with respect to demand uncertainty and “risk seeking” (Overconfident) with

respect to cost uncertainty risk.

Salamouris (2013) also highlighted in his paper the importance of Overconfidence in human

behaviors. Building on Wu and Knott’s study he said that if there is a great appreciation in

the ability of the entrepreneurs, no venture is risky enough to discourage them. On the other

hand, if a high degree of uncertainty exists regarding their abilities, entrepreneurs will not

enter in such ventures due to their perception of not having enough skills to overcome the

systemic risk. It appears then if it is all about abilities and skills, information which could

reveal the level of uncertainty, somehow becomes insignificant. In reality, the non-

entrepreneurs, as rational players, will support their decisions both on private public

information; entrepreneurs would place more weight on their own information considered

as the outcome of their abilities. This reduce the value of public information, with no

assurance of this to be a correct or wrong approach.


61

Considering the topic of market entry, a recent study by Dutta, Malhotra et al. (2016) focuses

on the internationalization process of firms. Specifically, it deals with examining cross

border acquisition (CBA) decisions of multinationals considering the impact of slack of

resources and the CEO behaviors (driven by its power and influence (Overconfidence)).

Sample studied was made of 4,800 completed CBA deals by U.S. firms over a decade 2000

and 2010. Data at Transaction and firm level (information such as ownership, kind of

takeovers, target firms’ status, payment method, and so forth) were collected from Securities

Data Corporation (SDC) Platinum database.

(Giddens 1984) structuration theory as inspiration, they identified the mechanism of how

and why path-dependencies connected with CBA decisions enable strategic changes. They

showed that CEO Overconfidence together with organizational slacks play an important role.

Past empirical works have highlighted the importance of CEO personal characteristic for

strategic decision-making, among these, the most frequent were the CEO hubris (Brown and

Sarma (2007), Hayward and Hambrick (1997)) and CEO tenure (Tosi, Katz et al. (1997)).

Based on the “better than average” effect, Overconfidence arises from three reasons:

1. Overestimation of abilities, performances and controllability (chance of success);

2. Over-placement, rating himself to be better than others;

3. Over-precision due to excessive certainty to the accuracy, leading to ‘‘excess of

confidence over accuracy’’ (Moore and Healy 2008).

CEO are assumed to be influenced in future decision making by self- attribution and

confirmation bias, because of the learning from experience theory. This is possible because

CBA decisions are routinized over time, enabling experience to provide better results.

Overconfident CEOs attribute previous CBAs success to their capabilities. In very uncertain

environment, they interpret external information ex-post, with the perspective to find

supports for their previous CBA decisions. This concept, already met in other papers, comes

from the psychological domain of managerial behaviors. In fact, in uncertain conditions,

where individuals are under high pressures, they would go back to the routine option. No

matter if evidence may demonstrate better solutions based on different approaches. This

would lead CEOs to seek the routinized option, such as to engage in local search rather than

go for distant options:

Chapter 1

62

HP: CEO Overconfidence positively moderates the relationship between the multinational’s

prior experience and subsequent CBA decision

Results showed CEO Overconfidence increase the strategic persistence of CBA initiatives

because these are driven by the firm’s top management. The CEO tenure empathize the

power position of the CEO with other stakeholders; this make them more assertive in

strategic decision-making. However, they argued that the impact of CEO tenure could be

already embedded in the CEO Overconfidence impact.

Overconfidence and Corporate Investments

The “better-than-average” effect by Larwood and Whittaker (1977) was the inspiration of

numerous authors, Malmendier and Tate (2005) were one of them. They targeted the

investment decisions of CEOs, relating their decisions to top decision makers’ personal

characteristics. Following Heaton (1997) who was the first to demonstrate the presence of a

common distortion in corporate investment caused be managers’ overestimation returns;

they expanded the research. An overconfident CEO believes (incorrectly) the market is

understating the present value of investment returns while he systematically overestimates

his investment projects return. Then, he would be unwilling to issue shares to finance his

desired investment level. In this way, he would generate investment–cash flow sensitivity

even when internal resources are scarce.

CEOs would overinvest in case of sufficient internal funds available, they are not disciplined

by the capital market or corporate governance mechanisms. In case they lack in internal

funds, however, they still would be reluctant to issue new equity. Their perception of market

undervalues the stock of their company prevent them to follow this option. Malmendier and

Tate identified three main causing factors each of which triggers Overconfidence:

1. The illusion of control,

2. A high degree of commitment to good outcomes,

3. Abstract reference points that make it hard to compare performance across

individuals (Weinstein (1980), Alicke, Klotz et al. (1995)).

If other factors that usually influence investment stay constant, here are the two predictions:

HP1: The investment of overconfident CEOs is more sensitive to cash flow than the

investment of non-overconfident ones


63

HP2: The investment–cash flow sensitivity of overconfident CEOs is more pronounced in

equity-dependent firms

They found, in a simple model of corporate investment decision, that the sensitivity of

investment to cash flow is stronger in presence of Overconfidence. Results confirmed both

their hypotheses, a strong positive relation between the sensitivity of investment to cash flow

and executive Overconfidence.

Finally, an insight about incentives provided to overconfident managers – related to the work

of Gervais, Heaton et al. (2007) that is proposed in the following paragraph – is given.

Traditional theories, proposed timely disclosure of corporate accounts or high-powered

incentives as potential remedies. Malmendier and Tate findings suggest that these solutions

may not work effectively in addressing managerial discretion: managers, even if their

incentives are perfectly aligned, with no informational asymmetries, may still invest sub-

optimally if overconfident.

Some years later, Malmendier and Tate (2008) went deeper in their studies, examining the

extent to which Overconfidence can help to explain merger deals. As many authors suggest,

Overconfident CEOs overestimate their ability to generate returns. They overpay for target

companies leading to value-destroying mergers. The effects are strongest if they have access

to internal financing.

A sample of 477 large publicly traded U.S. firms from 1980 to 1994 has been analyzed. To

be included in the sample, a firm must appear at least four times in Forbes magazine lists

among largest U.S. companies. Data about the CEOs were collected from articles from

different newspapers such as The New York Times, BusinessWeek, Financial Times, The

Economist and The Wall Street Journal. They finally used the Securities Data Company

(SDC) and Center for Research in Security Prices (CRSP) merger databases to obtain

announcement dates and merger financing information.

They used two proxies for Overconfidence: CEOs’ personal over-investment and their press

portrayal. They argued Overconfidence predicts more mergers, especially when the CEO is

endowed of internal funding to finance the deal. In firms with large cash stocks or spare

riskless debt capacity, only the overestimation of synergies impacts the merger decisions of

overconfident CEOs:

Chapter 1

64

HP1: In firms with abundant internal resources, overconfident CEOs are more likely to

conduct acquisitions than non-overconfident CEOs

However, it is very likely overconfident managers overestimate merger synergies. They

misperceive merger opportunities with negative synergies for being value-creating deals.

Thus, they are more likely to undertake value-destroying initiatives. Moreover,

overconfident managers may overpay for the target firm. This can happen when bargaining

power of the target is high or they are competing with other bidders.

HP2: If overconfident CEOs do more mergers than rational CEOs, then the average value

created in mergers are lower for overconfident than for rational CEOs

Malmender and Tate found higher odds of acquiring (65% likely) when the CEO is classified

as overconfident. The hypotheses were confirmed both: abundant internal resources increase

overconfident CEOs possibilities to pursue acquisitions, in details they would undertake a

diversifying merger. Secondly, mergers are financed true cash based investments rather than

issuing equity by overconfident CEOs. Again, they provided a focus on the relations between

Overconfidence and the firm’s incentive policies. In their opinion, agency theory can be

interpreted with the construct of Overconfidence a new way, in fact, overconfident CEOs

believe they are maximizing company’s value, they behave for firm’s interests; differently

by those CEOs with empire-building preferences, who consciously go for their own private

interest disregarding shareholders. Thus, standard incentive contracts alone are unlikely to

correct their sub-optimal decisions.

Building on Malmender and Tate (2008), some years later Ferris, Jayaraman et al. (2013)

pursued the research about CEO Overconfidence and international mergers and acquisitions.

Using a sample of CEOs from Fortune Global 500 firms over the period 2000–2006, they

found that CEO Overconfidence is related to several critical aspects of international merger

activity.

In the latest 1986, (Roll) was the first to recognize how much influence of individual CEO

decision-makings in merger activities, is important. Roll idea was that CEOs make relatively

few mergers over their careers and hence are unable to learn from past errors. Pay attention,

we have met the opposite concept in the study by Dutta, Malhotra et al. (2016); this can be


65

explained by considering the average number of M&A in late 80’, compared to the actual

trend of nowadays.

Overconfident CEOs are convinced that their estimates on targets’ value are correct. Then,

because of their high level of Overconfidence, they tend to underestimate the risks or

overestimate the synergy gains.

In their study, two fundamental research questions concerning Overconfidence and

international mergers activity were investigated. The first focused on whether the

distribution of CEO Overconfidence could be identified in a pattern. The second investigated

whether the same results reported by Malmendier and Tate (U.S. mergers by overconfident

managers) could be reached at international level.

In addition, a focus on the process of conducing the negotiation by overconfident managers

is pursued. Ferris discovered important and numerous findings. Overconfidence is most

commonly observed in CEOs leading firms headquartered in Christian countries. With the

help of Hofstede dimensions framework, Ferris measured the national culture, the outcome

was a geographical pattern of overconfident CEOs dispersion. Specifically, individualism

positively influences the likelihood that a CEO will be overconfident. Long-term orientation

countries tend to present few overconfident CEOs. Even with some differences, CEO

Overconfidence is an international phenomenon. Considering now, the number of offer

made, an important relation has been discovered: the more confident the CEOs, the more

numerous were the offers for a target.

Finally, concerning the selection and implementation of the deal’s financing method,

Overconfidence’s role is similar for both U.S. (Malmender and Tate study) and international

mergers. In particular, overconfident CEOs prefer cash for acquiring a target because of their

general belief their firm’s value is underestimated by the capital market (Ferris, Jayaraman

et al. 2013).


67

Chapter 2.

Object of the study

2.1 Hypothesis

The object of this study is to evaluate the impact of the United Nations’ EMPRETEC training

program on specific characteristics of an individual, such as the willingness to start any

entrepreneurial activity in the immediate future or the eagerness to internationalize a

business. In detail, we are going to analyze, within the Difference-and Difference

methodology, some indicators of entrepreneurial intentions before and after program for

both a treated and a control group of participants. This will allow us to understand whether

the course has been effective and on which kind of people the discrepancies showed up most.

Secondly, we will mainly focus on the role of two independent variables, the Proactive

Personality and Overconfidence. We are going to highlight the connection between the

impact of the training course and the single individual features, identifying whether they

have a significant role and to what extent they influence the effect.

Taping on the literature review proposed in the previous chapter (see Chapter 1), we first

described the characteristic of existing training program, focusing on the EMPRETEC

typology. Second, we provide our definition of Proactive Personality and Overconfidence.

2.2 Definitions

Since the studies on the two independent variables are highly wide and assorted, it has been

possible to develop a deeper knowledge, in terms of the psychological and the economic

aspect, of the potential impact of Proactive Personality (“PP”, hereafter) and the

Overconfidence (“OC”, hereafter) on the sample of participants, independently whether they

had been treated or not.

For instance, Bateman and Crant (1993), in their numerous studies with the help of other

researchers, provided a comprehensive definition of PP, summarizing the different aspect

where it has been found relevant. We cannot say the same for OC, which is more complex

Chapter 2

68

because of the large and significantly different field of studies it concerns, starting from a

psychological domain (Oskamp 1965) and reaching the physical (Lusted 1977), the legal

(Wagenaar and Keren 1986), the bargaining (Neale and Bazerman 1991), the engineering

(Kidd 1970) and the security analysis (Von Holstein 1972). Recently, the economic domain

started to combine with the entrepreneurship and financial worlds.


Built on two main definitions given by Bateman & Crant (1993) and Crant (2000):

“is one who is relatively unconstrained by situational forces, and who effects environmental

change” Bateman and Crant (1993)

“is one who takes initiatives in improving current circumstances or creating new ones; it

involves challenging the status quo rather than passively adapting to present conditions”.

(Crant 2000)

From now one, our definition of PP can be summarized in the following statement:

The Proactive Personality prototype is a person who actively and intentionally takes actions

to change actual situations or create new environments. He should have an aggressive

approach to the market, scanning for opportunities, and should have the desire to overcome

problems reaching his expected best scenario. In this sense, he sees the environment with a

different perspective, anticipating and preventing potential issues. He perseveres towards

the goals he set, aiming at achieving successful results.

Overconfidence

The driving force of the Overconfidence concept is undoubtedly the Larwood and Whittaker

(1977) idea of “better than average” effect, since people tend to overestimate their ability

compared to the average then, consequently, they behave more risky. In the early 1900,

Knight (1921) considered the overconfident individual able to handle and anticipate

unforeseeable events. A second important definition is the one provided by Friedman (2007):

“is the one who has excessive confidence in relation to abilities, knowledge, and beliefs”

Friedman (2007)


69

Starting from these definitions, we define OC:

The Overconfident prototype is a person who believes to stand above the average,

independently from environment he works in. He shows optimism and self-assurance as if

he already knows what it is going to happen; he has a vision of the environment which is

different from the others and, because of that, he behaves and acts risky and incautiously to

the eyes of other individuals.

2.3 Measures

In the following paragraph, we are going to explain how our independent variable will be

estimated and empirically analyzed within the experimental variables. The participants to

the program have been asked to answer a survey whose answers will be used to understand

their level of Proactivity and Overconfidence. In collaboration with other Politecnico di

Milano students, we developed the survey used during the Politecnico of Milan mission to

on the Panamanian territory. Each couple of people focused on their specific variable of

interest, creating the respective questions.

In our case, obviously, the focus was on PP and OC.

Below we provide all the questions used to the purpose, explaining the reason why they have

been selected as measure.


Concerning the first variable, we took as example the famous Proactive Personality Scale

designed by Bateman & Crant in 1993. Composed of 17 questions, subjects must choose,

among a range of 7 options, the extent to which they agree or disagree for each sentence.

There are sentences which are proportional to the level of Proactivity and non-proportional

ones. Here are described the questions, regarding the selected moderating factors, whose

answer will provide as outcome the level of Proactive Personality.

Chapter 2

70

Determination

The first question measures the level of determination of the participant. This kind of

typology (Figure 5) required the subject to put a tick for each line, selecting his preference

among the given proposals, whose opposite poles are “strongly agree” or “strongly

disagree”. Each line is ascribable to the PP concept described above.

Figure 5: Determination

Innovativeness

The second question concerns the innovativeness demonstrated by the subject. The

questions’ typology (Figure 6) is equal to the previous one described. Innovation is

something that, somehow, involves Proactivity since there is no innovation without a PP.

Therefore, the following lines represent a perfect match for the evaluation we want to

execute.

Figure 6: Innovativeness


71

Overconfidence

The Overconfidence variable is a bit more complicated to explicit. A lot of different

approaches have been applied considering that, with time passing by, numerous methods

have been developed.

For instance, recently, with the number of M&A increasing as a global trend,

Overconfidence has been measured counting the number of M&As initiative undertaken by

managers. Later, also the number of article written by an individual CEO on accredited

periodicals has been identified as an index of Overconfidence. For our purposes, considering

that our sample is formed by future potential entrepreneurs, therefore at a lower level if

compared to managers or CEOs, we needed a standard approach.

We decide to apply the same structure of questions for Proactive Personality. Here are

described the questions whose answers will return as outcome the level of a subject’s

Overconfidence.

Self Confidence

The label of this question (Figure 7) is explicit by itself. Each line matches with the construct

provided in the previous paragraph.

Figure 7: Self Confidence

Chapter 2

72

Entrepreneurial Aspirations

In the literature review section, we highlighted that Overconfidence has been recently

associated with the Entrepreneurial domain since the entrepreneurial spirit is, most of the

time, carried on by the individual self-confidence. It makes risky actions appear easier than

what they are to the sample entrepreneurs’ eyes. The following questions have the purpose

to investigate to what extent subjects possess the entrepreneurial ambition.

Specifically, the first one (Figure 8) targets the willingness to start any kind of new activity

or business.

Figure 8: Entrepreneurial Aspirations

There is finally a mixed question, whose moderating factor is the Future Attitude. The

following query (Figure 9), accounts to be valid for both our variables, Proactive Personality

and Overconfidence since that the attitude of a person towards the future is strictly related

to both aspect. Proactivity is the driver that enables an individual to be positive about his

future, assuming he has an active attitude rather than a counteractive behavior. This leads

the person to change the current environment towards a more favorable situation. The role

of Overconfidence, instead, is really different. Keeping in mind the “better than average”

theory, overconfident people see the future in a more optimistically way than it is.

Overconfidence sometimes makes people blind, given that the risk is perceived differently

due to the overestimation of the own abilities.


73

Figure 9: Future Attitudes


75

Chapter 3.

Socio-economic analysis of the Republic of Panama

As highlighted in the previous chapters, the focus of the analysis is to evaluate the impact of training

programs on specific entrepreneurs’ characteristics, keeping as constraint an emerging context, in

terms of socio-economic conditions. The country chosen for this inquiry is the Republic of Panama,

since it provides a very diversified environment for what concerns the characteristics of the

population and, most of all, the income distribution within the State. To give credit to the choice, a

detailed observation of the Republic, its economic activities and infrastructure is provided in the

following sectors.

3.1 The institutional framework

The State of Panama is a presidential representative democratic republic in which the president is

both head of the state and head of the government. Therefore, he employs the executive power over

the political system which can be considered as multi-party (Liberal VS Conservative). For what

concerns the legislative power, the president is supported by the National Assembly, even if the

judiciary system remains independent from the other two powers due to the presence of magistrates

(Supreme Court) appointed for 10-years terms by the president himself.

3.2 Dynamics of the population

3.2.1 General census

The variation of the population of the Republic of Panama, analysed in the long-run, relatively to the

general censuses from 1996 to 2015, highlights a progressive demographic growth, almost constant

around the 2% from year to year (Table 3 and Figure 10). The total population in 2015 counts

3.929.141 inhabitants, divided in 1.959.384 females (49,868% of the total) and 1.969.757 males

(50,132% of the total).

Table 3: Total population from 1996 to 2015 (Thousands)

Source: World Bank, http://data.worldbank.org/country/panama, retrieved on 15th October 2016.

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

2794 2852 2911 2970 3028 3086 3144 3202 3260 3319

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

3378 3438 3498 3559 3620 3681 3743 3805 3867 3929

http://data.worldbank.org/country/panama

Chapter 3

76

Total population is computed according to the de facto definition, which counts all residents no matter

their legal status or citizenship. Increases in human population, whether a result of immigration or

more births than deaths, may negatively influence the country’s sustainability through impacts on

natural resources or social infrastructures. A significant increase in population, in fact, generates an

increased demand on food, energy, water and social services.

Figure 10: General censuses on the population (Thousands)


3.2.2 Net migration

What contributes mostly in the increase of the number of resident is without doubts the concept of

net migration, that is, the total number of immigrants less the annual number of emigrants, including

both citizens and non-citizens (Table 4 and Figure 11). Migrants contribute to the economies of both

their host country and their country of origin even if it is intensely difficult to collect data and reliable

information, since the phenomenon has become increasingly complex involving not just refugees, but

also millions of economic migrants. In most countries, refugees are admitted for resettlement and are

included in population census, although they are treated according the national law of the State in

which they relocate.

Table 4: Five-year estimates of net migration

1992 1997 2002 2007 2012

1954 9797 16119 22244 28105


The trend is clearly increasing over the years, with a variation of almost +13% from 1992 to 2012,

and it is expected to grow even in 2017. The main reason may be the approval of the new migration

2700

2900

3100

3300

3500

3700

3900

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015




77

law from the Government, updating the last one which dated 1960, that have positioned Panama as a

very attractive country for migrants, along with the economic growth rate without precedents in the

recent years.

Figure 11: Net Migration


3.2.3 General data

Panama encompasses approximately 75420 square kilometres, is 772 kilometres in length, and

between 60 and 177 kilometres in width. Its population density, defined as midyear population

(except refugees not permanently settled in the country of asylum) divided by the land area in square

kilometres (total area excluding inland water bodies, national claims to continental shelf and

exclusive economic zones), is 52.854 Hab/Km2. (Table 5)

Table 5: General data of Panama

Surface area Km2 75420

Density Hab/Km2 53

Households 1061892

Average members per household 3.7

Crude birth rate (x1000 people) 19.407

Crude death rate (x1000 people) 5.014

Population with less than 15 years 27.165 % of the total

Population with more than 65 years 7.632 % of the total


0

5000

10000

15000

20000

25000

30000

1992 1997 2002 2007 2012



Chapter 3

78

Crude birth and death rates indicate, respectively, the number of live births and deaths occurring

during the year, per 1.000 population estimated at midyear (that represents, the population exposed

to risk of death in that period, usually expressed in terms of 1000 people; for human populations, the

period is usually one year and if the population is changing in size over the year, the divisor is taken

as the population at the mid-year). Higher crude death rates can be found in some developed countries,

despite high life expectancy, because typically they have a much higher proportion of older people,

due to lower recent birth rates and lower age-specific mortality rates. Subtracting the crude death rate

from the crude birth, the rate of natural increase is obtained, which is equal to the rate of population

change in absence of migration.

Development policies in a country are usually determined also by the age composition of the

population, since the age structure is useful to set planning goals and evaluate the impact of the

inhabitants on the current resources and the environment itself. In many developing countries, the

once rapidly growing population group of under-15 is shrinking; the World Health Organization

estimates that worldwide, the proportion of older people in the total population is increasing at

incredible rates and, before 2020, for the first time in history, the population of people aged 65 and

older will overcome the number of children under the age of five.

Panama seems to be a very youthful country; this data highlight an element of advantage with respect

of other Latin American States because, usually, an elder society is less dynamic from an economic

point of view and tends to invest, consume and risk over the future.

3.3 Distribution of the population on the territory

3.3.1 Administrative division

Panama is divided into ten provinces (Spanish: Provincias) and three provincial-level indigenous

regions (Spanish: Comarcas Indigenas). There are two indigenous comarcas within provinces that are

considered equivalent to a corregimiento (municipality). Table 6 shows the administrative division.

Table 6: Provinces, Comarcas and Municipalities (2016 Projections – 2010 censuses)

Provinces Name Capital Area (Km2) Population

Bocas del Toro Bocas del Toro 4657.2 160994

Chiriquì David 6490.9 454083

Coclè Penonomè 4949.6 259322

Colòn Colòn 4575.5 281094

Darièn La Palma 11892.5 55055


79

Herrera Chitrè 2362.0 118334

Los Santos Las Tablas 3809.4 95291

Panama Panama City 9166.4 2109086

Panama Oeste La Chorrera 2786.1 464038 (2010 census)

Veraguas Santiago de Veraguas 10587.5 245284

Comarcas Name Capital Area (Km2) Population Emberà Union Chocò 4393.9 12041

Guna Yala El Porvenir 2358.2 43274

Ngabe – Buglè Chichica 6814.2 203185

Sub Provinces Name Province Area (Km2) Population

Kuna de Madugandi Panama 2318.8 4350 (2010 census)

Kuna de Wargandi Darièn 755.0 809 (2010 census)

Source: CityPopulation, http://www.citypopulation.de/php/panama-admin.php, retrieved on 18th October 2016

Bocas del Toro is in the western part of the country, near the border with Costa Rica. It is made up of

several large islands and encompasses approximately 200 square miles. The capital city, also called

Bocas del Toro, is located on Isla Colon and has recently become a popular tourist destination, but

much of the province remains relatively untouched by tourism.

Chiriquí Province is also in the western region of Panama. It is bordered to the north by Bocas del

Toro Province, to the west by Costa Rica, to the east by the Veraguas Province, and to the south by

the Pacific Ocean. It encompasses mountains, rolling hills, highlands and coastal plains.

Coclé Province is one of Panama’s central provinces, and is located on Panama’s southern coast, near

the provinces of Panama, Colon, Veraguas and Herrera. Coclé’s economy is mostly based on

agricultural activities, but is fast developing into a popular tourist destination. It encompasses many

sites of archaeological importance, with significant artefacts being recovered from burial sites and

ruins throughout the region.

Colon Province extends along the Caribbean coast of Panama on its northern side, and

Panama and Cocle Province along the southern side. The capital of Colon province is Colon city,

which is located at the entrance to the Panama Canal on the Caribbean side. The city of Colon remains

essentially an industrial area with few tourist attractions, but renovations have been undertaken and

some of Colon's most notable architecture has already been restored.

Darien province is at the eastern end of Panama, sharing a border with the country of Colombia. This

province is the largest in Panama. It is rugged, sparsely populated, and offers few attractive locations

for tourists. It is characterised by mountains, water streams, jungles and beaches.

http://www.citypopulation.de/php/panama-admin.php

Chapter 3

80

Herrera Province is a small province located on what is called the Azuero Peninsula. It is bordered

by Coclé, Los Santos and Veraguas, and touches on the Pacific Ocean. Herrera is mainly agricultural,

with few tourist attractions. The interior of the province is mostly farmland, cattle pasture, and towns.

Los Santos Province is located on the Azuero Peninsula, bordering on Herrera and Veraguas

Provinces. It is divided into 7 districts. The capital city is Las Tablas, a small town that is thought of

as the centre of Carnival in Panama. Los Santos Province has approximately 125 miles of coastline,

with many well-renowned beaches.

Panama Province is located on the Pacific side of Panama, bordering on the provinces of San Blas,

Colon, Darien and Coclé. The capital of this province is Panama City, which is also the capital of the

country.

Veraguas Province is located in central Panama, and is the only province with both Caribbean and

Pacific coastlines. The capital of Veraguas is Santiago, which is the fourth largest city in Panama.

Recently Panama has decided to make a 10th Province (Panama Oeste) since the population within

this area had increased over the recent years; it is turning into a giant suburb of Panama City and

includes the entire region on one side of the Canal.

Embera Comarca in Panama is formed by two non-contiguous districts surrounded by the Darien

Province. This comarca is extremely far from the urban area, since there are no roads that connects

the two zones, but is home to 17,000 people, mostly Embera with a Wounaan minority.

Kuna Yala comarca is inhabited by the Kuna indigenous people. The name means "Kuna-land" or

"Kuna mountain" in the Kuna language. The area was formerly known as San Blas.

Ngobe-Bugle Comarca of Panama is made up of small regions of Veraguas, Chiriqui and Bocas del

Toro Provinces. It is inhabited by the Ngobe-Bugle (formerly Guaymi), which are Panama's largest

Indigenous group with around 164,000 members.

Kuna de Madugandi is a comarca in Panamá. It was created in 1996 from the east part of the province

of Panamá, in the district of Chepo. The comarca is not divided into districts and is located near

the Bayano River.

Kuna de Wargandí is a comarca indígena and corregimiento in Pinogana District, Darién Province,

inhabited by the Kuna people. Its status is local township, so has no political subdivision or capital.

It is located in the basin of Chucunaque River, in the territory segregated between the districts of

Pinogana Chepigana and the province of Darien.

https://en.wikipedia.org/wiki/Pinogana_District


81

Figure 12 shows the political map of the State.

Figure 12: Political Map of Panama

Source: MapsOfWorld, http://www.mapsofworld.com/panama/, retrieved on 24th October 2016

As highlighted by table 7, there are two big cities which constitute the 30% of the entire population;

among them, the major relevance is represented by the Capital, Panama City, which covers the 23%

of the inhabitants (but only the 0,3% of the total surface). Other cities such La Chorrera, Pacora and

Santiago de Veraguas, have a higher surface with respect to the residents, which is translated into a

very small density, if compared to the other areas. Finally, very interesting case are the city of San

Miguelito, with a population of 350019 inhabitants within a surface of “only” 50 Km2, and Colon,

78000 persons within an area of 2.4 Km2.

Table 7: Largest Panamanian cities

City Population Province Surface (Km2) Density (Hab/Km2) Panama City 880691 Panama 275 3203

San Miguelito 315019 Panama 50 6300

Tocumen 103177 Panama 63.9 1615

David 89442 Chiriquì 176 508

Las Cumbres 89000 Panama 27.8 3201

Colon 78000 Colon 2.4 32500

La Chorrera 68896 West Panama 337 204

Pacora 52494 Panama 399.4 131

Santiago de Veraguas 50877 Veraguas 975 52

Chitrè 46191 Herrera 12.4 3725

Source: GeoNames, http://www.geonames.org/PA/largest-cities-in-panama.html, retrieved on 20th October 2016.

http://www.mapsofworld.com/panama/

http://www.geonames.org/PA/largest-cities-in-panama.html

Chapter 3

82

3.3.2 Ethnic groups

Due to its unique geographical location, economic importance, and historical significance, Panama

has become a blend of many cultures and ethnicities. The Panama Railroad and later the Panama

Canal attracted workers from China, the West Indies, and Africa. Commercial opportunities attracted

merchants from Europe, India, and the Middle East. The involvement of France and the United States

in the building of the Panama Canal also influenced immigration. Panama is also home to a diverse

group of indigenous people, which currently inhabit five comarcas (Table 8).

Table 8: Ethnic groups and respective locations

Group Location

Emberà Darien, by the banks of rivers, Tuira, Balsas, Chico, Jaquè, Sambù, Rio Bagre

Wounaan

By the banks of Rio Chagres en Alto Chagres,

Mocambo Abajo, San Antonio, Gamboa, Emberà

Gatun

Kunas Archipielago of Kuna Yala

Ngobe – Bugle Chiriquì, Bocas del Toro and Veraguas

Teribe Western part of Bocas del Toro, along the banks of

Teribe river

Bokotà Bocas del Toro and Veraguas

Bri Bri On the border with Costa Rica, Bocas del Toro

Source: FamilySearch, https://familysearch.org/wiki/en/Panama_Ethnic_Groups ,retrieved on 20th October 2016.

The culture, customs, and language of Panama are predominantly Caribbean Spanish. The population

is 65% Mestizo (mixed white, Native American), 12.3% Native Americans, 9.2% Black, 6,8%

mulattoes and 6.7% White (Figure 13). Ethnic groups include Spanish British and Irish, Dutch,

French, Germans, Italians, Portuguese, Poles, Russians or Ukrainians and Americans. Afro-

Panamanian groups include West indies/Caribbean nationalities, in which thousands of Barbadian

and Jamaican workers played a role in the construction of the Panama Canal. During the Atlantic

Slave Trade, thousands of West African were transported to various places within the country.

https://familysearch.org/wiki/en/Panama_Ethnic_Groups


83

Figure 13: Ethnic groups in Panama (%)

Source: CIA, https://www.cia.gov/library/publications/the-world-factbook/geos/pm.html, retrieved on 20th October 2016.

3.3.3 Religions

Freedom of religion is protected by the Constitution of Panama. Although with some reservations,

the government generally respects this right. Panama’s constitution states that Roman Catholicism

is the majority religion and should be taught in public schools; parents do, however, have the right

to exempt their children from religious instruction (Figure 14).

Figure 14: Religions in Panama (%)

Source: MapsOfWorld, http://www.mapsofworld.com/panama/society-and-culture/religion.html, retrieved on 20th October 2016

65

12,3

9,2

6,76,8

Mestizo Native Americans Black White Mulattoes

75,2

16,2

4,62

1,2

0,8

2

Catholics Protestants Agnostics & Atheists

Other religions Other Christians Christians

https://www.cia.gov/library/publications/the-world-factbook/geos/pm.html

http://www.mapsofworld.com/panama/society-and-culture/religion.html

Chapter 3

84

3.3.4 Languages

Spanish is the official spoken language, but others are spoken the different regions of the Country.

Panama’s seven indigenous groups speak a variety of dialects of Wounaan, Teribe, Emberá, Kuna,

and Ngöbe-Buglé (Guayamí), with the latter two being the most widespread since they are the largest

indigenous communities. On the Caribbean Coast people from Jamaica and Barbados have brought

their customs and traditions in the State even if, more recently, their descendants are starting to speak

Spanish and English, along with a Caribbean dialect called Guari Guari. Finally, Chinese immigrants,

many of whom work as merchants, continue to speak their native tongue. Adding to this mélange is

Arabic, spoken by immigrants from the Middle East.

3.4 Economic activities

3.4.1 GDP

GDP is defined as the sum of gross value added by all resident producers in the economy plus any

product taxes and minus any subsidies not included in the value of the products. It is calculated without

considering depreciations or degradation of natural resources. The general composition of Panama’s

GDP is 79.1% services, 16.6% industry, and 4.3% agriculture (Table 9 and Figure 15). Transport and

communications make up the biggest chunk of the service arena, followed by property and services,

commerce, and financial services. Here’s a breakdown of all areas and the percentage of GDP they

represent:

Private Education 0.7%

Social Services/Private Healthcare 0.8%

Fishing 1.1%

Mining/Quarrying 1.4%

Utilities 2.8%

Farming, ranching, hunting, and forestry 3.2%

Real estate and rental activities 5.2%

Manufacturing 5.6%

Construction 5.8%

Financial intermediation 8.2%

Banking 8.6%

Wholesale and retail 14.6%

Transport, storing and communications 26.4%


85

Table 9: Current GDP from 1995 to 2015

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

9.9 10.7 11.6 12.1 12.3 12.5 13 13.7 15 16.4

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

18.1 21 24.5 26.6 29 34.4 40 44.9 49.2 52.1


Figure 15: GDP (US$) in Billions


In 2016, supported by expansions in the construction field, public utilities and services

sectors, GDP growth increased from a 4.6% in Q1 to a stronger 5.2% in Q2. The stronger

second quarter shows that the Panama Papers scandal leaked in April had limited economic

impact and that the country’s macroeconomic conditions remain solid. Data released by the

Contraloría General de la República showed that the acceleration was driven by a recovery

in the services sector, although the contraction in agriculture and the sharp deceleration in

the industrial sector. The Panamanian economy is expected to keep growing at a constant

pace.

3.4.2 Debt

Debt is defined as the direct government fixed obligations to others outstanding on a

particular date. It includes domestic and foreign liabilities such as currency and money

deposits, securities other than shares, and loans. In 2015 Panama’s public debt was 20,212

0

10

20

30

40

50

60

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

2004

20

05

20

06

20

07

20

08

20

09

2010

20

11

20

12

20

13

20

14

20

15



Chapter 3

86

million dollars, increased by 1,981 millions since 2014. This amount means that the debt in

2015 reached 38.8% of Panama GDP, a 1.7 percentage point rise from 2014, when it was

37.1% of GDP (Table 10). It has risen since 2005 in global debt terms, when it was 10,231

million dollars although it has fallen as a percentage of GDP, when it amounted to 62.5%

(Figure 16). According to the last data point published, Panama per capita debt in 2015

was 5,144 dollars per inhabitant. In 2014 it was 4,714 dollars, afterwards rising by 430

dollars, and if we again check 2005 we can see that then the debt per person was 3,053

dollars. In 2020 the government debt as a percentage of GDP is expected to grow to 44.17.

Table 10: Central government debt (% of the GDP) from 1995 to 2015

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

68.5 63.4 61.2 58.1 56.4 60.9 60.0 59.0 61.9 62.5

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

57.7 50.0 42.6 41.3 40.2 37.3 35.7 35.0 37.1 38.8


Figure 16: Central government debt (% of the GDP)


3.4.3 Unemployment Rate

Unemployment and total employment are the broadest indicators of economic activity as

reflected by the labour market. The International Labour Organization (ILO) defines the

30

40

50

60

70

80

90

199

5

199

6

1997

199

8

199

9

200

0

200

1

200

2

2003

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5




87

unemployed as members of the economically active population who are without work but

available for and seeking work, including people who have lost their jobs or who have

voluntarily left work. From 1995 to 2015, the variation in the rate has decreased of 8.9

percentage point, along a fluctuating path without any trend (Table 11).

Table 11: Unemployment rate (% of total labour force)

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

14.5 13.4 14 11.8 13.5 14 13.5 13 11.7 9.8

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

8.7 6.4 5.6 6.6 6.5 4.5 4 4.1 4.8 5.1


The rate is the lowest in Central America and is mostly due to the Indios which live in the

reserves. The main reasons for this datum are the expansion of the projects regarding the

Canal, the enlargement of the real estate market, along with an increasing central role in the

commercial theatre and the particular fiscal condition which makes Panama one of the most

well-known offshore heaven worldwide. However, in 2020, the rate is expected to grow to

5.8%, confirming the fluctuation of the last years (Figure 17).

Figure 17: Fluctuation of the unemployment rate


0,00

2,00

4,00

6,00

8,00

10,00

12,00

14,00

16,00

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

2003

2004

2005

2006

2007

2008

200

9

201

0

201

1

201

2

201

3

201

4

201

5



Chapter 3

88

What happened in 2012?

Panama’s economy continued to boom until 2012, driven by substantial government

expenditures and foreign direct investments in infrastructure projects. However, one of the

problem facing the economy was the increasing inflation in oil prices (transportation costs),

food and beverages and goods and services among the others (respectively + 13.6%, + 6.1%

and + 7.8%). On the other hand, the political class approval ratings continued to fall in 2012

because of several serious corruption scandals and ongoing confrontations with indigenous

groups, labour unions, and the political opposition. Indigenous groups and labour unions

engaged in significant protests throughout the year against government policies aimed at

further privatizing the economy.

The difference in unemployment among the two genders is very pronounced (Table 12 and

Figure 18). Since 2009, Panama has taken a step backward in gender equality in terms of

access to basic rights such as health, education and employment. Part of this can be attributed

to the persistent culture of women as housewives; indeed, women are globally paid less than

men, earning on average only 60 to 75 percent of men’s wages. Nowadays, the State of

Panama is committed nationally and internationally to the promotion of activities aimed at

highlighting women’s contributions to national development in order to support efforts to

achieve gender equality and equity through the implementation of macroeconomic policies,

revision of laws and administrative practices for accessing credit and so on and so forth.

Table 12: Female and Male unemployment rate (% of the respective gender labour force)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

20.2 20.3 18.3 20.9 17.1 17.8 18.9 18.5 18.1 16.5

10.8 11.5 10.8 10.3 9.0 11.1 11.3 10.7 10.1 9.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

13.4 11.9 8.8 7.7 9 8.6 5 5 5.2 5.6

7.7 6.9 5.0 4.4 5.2 5.3 4.2 3.4 3.5 3.6

Source: World Bank, http://data.worldbank.org/country/panama, retrieved on 31st October 2016.



89

Figure 18: Comparison between the two genders (% of the respective labour force)

Source: World Bank, http://data.worldbank.org/country/panama, retrieved on 31st October 2016.

3.4.4 FDI

Foreign direct investment rare defined as the sum of equity capital, reinvestment of earnings,

and other capital referred to cross-border investment in which one economic actor has a

significant influence on another enterprise that is resident in another economy. Ownership

of 10 percent or more of the ordinary shares of voting stock is the criterion for determining

the existence of a direct relationship. Panama actively encourages foreign investment, and

with few exceptions, the Government makes no distinction between domestic and foreign

companies for investment purposes. With a strategic location nestled between the two

Americas, top-class infrastructure, and a position as a global financial centre, the State is

today a hub of international commerce. Looking to position themselves in one of the world’s

most important logistics centres, many multinationals have established their headquarters in

the country over recent years, and many more are soon expected to arrive. With the Canal

the bedrock of its economy, Panama has consistently been one of the fastest-growing

countries in Latin America over the past decade, as well as one of the world’s most stable

economies at times of widespread global uncertainty.

Panama is the top recipient of FDI in Central America with an annual average of USD 1.75

billion of FDI flows between 2004 and 2009. Despite the slowdown observed in 2009 due

0,00

5,00

10,00

15,00

20,00

25,00

Female Male


Chapter 3

90

to the weak international situation, FDI flows started to increase the next year in 2010 and

have maintained their dynamic growth since then, providing an important source of growth

for the country’s economy. In 2014, FDI influx into the country reached almost USD 5

billion, accounting for 11.3% of the country’s GDP. This good performance is due to the

advantageous regulations for FDI and the incentive measures that the country adopted in

2011 (Table 13).

Table 13: FDI, Net Inflows (Numbers written in Millions)

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

415.5 1299 1203 755.6 827.8 606.8 247.1 1051 1278 1104

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

2944 2224 2390 1085 2549 4396 3382 4272 4761 5760

Source: World Bank, http://data.worldbank.org/country/panama, retrieved on 3rd November 2016.

Panama continues to enjoy the strongest economic growth in Latin America (Figure 19). It

benefits from stable and consistent economic policies and a government that consistently

supports trade and open markets. While international indices generally rate Panama as one

of the best countries in Latin America for business and investment, weak laws, poor skilled

workers and staffed employees, and corruption in the public institutions are all causes of risk

and complication to business affairs and dealings.

Figure 19: FDI. Net Inflows growth from 2009


0

1000

2000

3000

4000

5000

6000

199

5

199

6

199

7

199

8

1999

2000

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5




91

When looking at Panama’s economy through the eyes of foreign investment potential, there

are some immediate signs that match its reputation. For starters, Panama is far less regulated

than a lot of Latin American countries, without losing its economic safety and currency

stability. This opens the doors for a lot of new business to operate out of Panama, both from

foreign and domestic companies. Industries like banking, shipping, industrial construction,

and real estate are some of the hottest growth industries; and they are fiercely competitive.

Low interest rate loans make it easy to get a head start, plus favourable tax exemptions for

corporations give Panama an edge that is virtually unmatched in the Americas.

Summarizing, why a firm should invest in Panama?

Strong points

Political stability

Economic stability (Inflation = 2%)

Reduced taxes

Credit facilities

Easiness in managing projects

Weak Points

Irregularities on property rights

Freedom of non-guaranteed work

High level of corruption in the PA

Slow judicial system

3.4.5 Imports

Imports are computed as the sum of goods and service imports and primary income

payments. Panama, situated between North and South America, has a significant trade

because of its strategic location and the presence of the Panama Canal, which is an important

hub of several international transactions. During the last five years the imports of Panama

have increased at a yearly rate of 1.9%, from $26B in 2009 to $28.5B in 2014 (Table 14).

The most recent imports are led by crude petroleum which represent 15.1% of the total

imports, followed by refined petroleum, which accounts for 14%. Along with these two

goods (respectively $4.31B and $3.99B), its top imports are passengers and cargo ships

Chapter 3

92

($2.68B), sulphonamides ($1.16B) and special purpose ships ($820M). The top import

origins of Panama are the US ($5.81B), Colombia ($3.64B), China ($3.43B), South Korea

($2.8B) and Singapore ($2.41B).

In 1982 Panama entered the Bilateral Investment Treaty (BIT) with the United States; the

agreement is intended to protect the United States’ private investment in the nation and to

support the development of Panama’s economy. Additionally, a free-trade agreement was

signed by the US and Panama in 2007, although both countries are yet to implement it.

Table 14: Imports of goods and services (% of the GDP)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

101.1 84.7 88.4 83.6 69.8 72.0 68.0 64.2 60.4 65.9

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

71.2 71.6 76.2 84.5 67.0 75.6 83.4 79.7 68.6 61.4


3.4.6 Exports

Exports of goods is the sum of goods and service exports and primary income receipts.

During the last five years the exports of Panama have decreased at a yearly rate of -14%,

from $9.8B in 2009 to $4.62B in 2014 (Table 15). The most recent exports are led

by passenger and cargo ships which represent 12.1% of the total export, followed by refined

petroleum, which account for 12%. Along with these first two goods (respectively $557M

and $555M), its top exports are coal tar oil ($362M), petroleum gas ($308M) and packaged

medicaments ($266M). The top exports destinations of Panama are Ecuador ($919M),

Guatemala ($657M), South Korea ($462M), the US ($237M) and El Salvador ($148M).

Table 15: Exports of goods and services (% of the GDP)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

86.0 71.3 77.0 67.7 56.9 62.0 62.1 57.6 54.3 57.8

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

64.5 65.5 69.4 72.6 67.1 66.3 72.9 70.7 60.5 53.6





93

3.4.7 Entrepreneurship in Panama

According to the GEDI (Global Entrepreneurship and Development Institute),

entrepreneurship is the crucial engine for the economic growth. This means that without

entrepreneurs there would be a significant lack of innovation, productivity growth and, most

of all, an employment crisis would arise worldwide. Anyway, the methodology used for the

research consists in assigning an index to every country in the world by taking into

consideration the mix of resources, infrastructure, abilities, aspirations and attitudes that

form the entrepreneurial ecosystem. The so-called Global Entrepreneurship Index (GEI)

annually measures the health of the ecosystems themselves providing a picture of how each

country performs in both the domestic and the international context. This process creates 14

pillars which GEDI uses to assign a value to each of the ecosystems inserted into the analysis.

Table 16 shows the Top 10 GEI scores assigned in 2017.

Table 16: Top 10 GEI scores in 2017

Rank Country GEI Score

1 United States 83.4

2 Switzerland 78

3 Canada 75.6

4 Sweden 75.5

5 Denmark 74.1

6 Iceland 73.5

7 Australia 72.5

8 United Kingdom 71.3

9 Ireland 71

10 Netherlands 67.8

Source: thegedi.org, https://thegedi.org/global-entrepreneurship-and-development-index/, retrieved on 17th March 2017

Panama places itself at the 68th position of the World Rank and on the 8th of the Regional

one, with an overall GEI Score of 26.1508, a bit too far from the Top countries in terms of

best entrepreneurial ecosystems. In detail, the analysis provides further data about the 14

pillars with the Panamanian boundaries, along with a forecast of the effort needed to cover

to abovementioned gap. In figure 20 a radar graph describes the AS-IS situation of the

country in terms of the 14 elements, while in figure 21 a computation of the minimum effort

to gain 10 point of improvement for each pillar is indicated.

https://thegedi.org/global-entrepreneurship-and-development-index/

Chapter 3

94

Figure 20: Pillar comparison

Source: thegedi.org, https://thegedi.org/countries/Panama, retrieved on 17th March 2017

Figure 21: Percentage of a total new effort for a 10-point improvement

Source: thegedi.org, https://thegedi.org/countries/Panama, retrieved on 17th March 2017

https://thegedi.org/countries/Panama

https://thegedi.org/countries/Panama


95

3.5 Infrastructures

Panama’s infrastructure is one of the best in Latin America and is well developed around

urban areas thanks to a strong network of roads and railroads, and several international

airports. In addition, water transportation is what the country is famous for, with the Panama

Canal serving as a pipeline between the Atlantic and Pacific Oceans. In 2013, the President

of Panama launched a five year $13.6 billion investment plan to improve trade, logistics,

tourism, and exports. The plan hopes to draw in foreign investments and reduce

unemployment, boosting the economy.

3.5.1 Air

Airfields are popular within the country; however, only about 41 of 105 are paved. Only

five have full services with immigration and customs. The major airport is Tocumen in

Panama City, whose terminals were recently reconstructed to accommodate larger

aircrafts. The government has already launched modernization projects to better connect

different areas of the country and boost tourism. These include remodelling the airport in

Columbus, expanding the runway in Albrook, and extending and repairing the runway in

Chiriqui. The major project is building a new major airport in Rio Hato on the Pacific coast,

which will allow travellers to go straight to the beach instead of flying into Panama City.

3.5.2 Maritime

In addition to the Panama Canal, the country has about 500 miles of waterways that can be

navigated by boat. In 2006 a $5.25 billion project has been launched to increase the capacity

of the canal and allow the transit of larger vessels that do not meet the size constraints of the

current locks. Since the industry keeps growing, Panama must try to keep up and meet the

demands and continue to be able to generate profits from its infrastructure.

3.5.3 Road

Panama’s roads are in good condition around the urban areas, but remain poor in rural parts

of the country. In total, only about 34% of the roads are paved. The main corridor is the

Pan-American Highway that connects the western border of Costa Rica and the Darien

Province. A new public transportation system is in the works that will build a new subway

system and expand the bus system. The metro line will connect the Albrook bus terminal

with high population areas in the centre of Panama City, which will help to improve well-

Chapter 3

96

being and productivity in the city. The government is launching a transportation project,

putting 1,200 new buses into service to alleviate traffic and encourage the use of public

transportation. This project began in early 2011 and the first subway line is slated to be

completed in late 2017.


97

Chapter 4.

The Methodology

At the beginning of this paper, we described educational programs offered by institutions as

the United Nations. Now, to understand better this mechanism, we need to know whether

these programs work or not, and in case they fail, where to operate to make them successful,

following the concept: is not possible to improve something you do not know.

This lead to a second issue, how can we understand whether programs are efficient? Do they

create benefits or do they just cause a waste of resources?

In order to answer this question, we may focus on causal “if-then” questions such as “If a

person attends a program, will he be able to found a firm or undertake any entrepreneurial

activity in the future?” Any rational person would answer positively. It is very likely that

this is going to happen, but we want to prove it pursuing a scientific method based on

analytical data. Therefore, the real question is: would the data back this up?

A first way to identify a brief and general answer, is to compare the average value between

who attended the program and who did not, considering how subjects behave after the

program. However, this approach is too much simplistic, it does not consider numerous

variables. For example, individual and socio-economic one such as personality, economic

outcomes, willingness to participate, cultural background, between the participants and the

control group.

Another possibility to consider is the eventuality of not logical results, given a situation. As

it happened in numerous experiments, such as the studies of (Ashenfelter, 1978) and

(LaLonde, 1985), their findings were different from the expected logical outcomes. They

found that after government-subsidized training programs the non-attending participants

earned more than attending groups. How was that possible? To understand this, we may get

some help using the example provided by the book written by (Angrist & Pishcke, 2008).

They explained this phenomenon discussing over a simple example concerning

hospitalization: Do hospitals make people healthier?

Chapter 4

98

Gathering data by NHIS (National Health Interview Survey), they modeled the problem in

the following way. 𝐷𝑖 = {0.1} represents the hospital treatment described as a dummy

variable:

𝐷𝑖 = {0, 𝑡he subject never went to a hospital1, 𝑡he subject went to a hospital

Similarly, the potential output dependent on the hospital treatment was the following:

𝑝𝑜𝑡𝑒𝑛𝑡𝑖𝑎𝑙 𝑜𝑢𝑡𝑐𝑜𝑚𝑒 = {𝑦1𝑖 , 𝐷𝑖 = 1𝑦0𝑖 , 𝐷𝑖 = 0

The object is to study the difference between the potential outcome Yi regarding the people

who went to hospital and who did not. It represents the causal effect of hospitalization.

𝑦𝑖 = {𝑦1𝑖 , 𝐷𝑖 = 1𝑦0𝑖 , 𝐷𝑖 = 0

= 𝑦0𝑖 + (𝑦1𝑖 − 𝑦0𝑖)𝐷𝑖 (1)

Remember that every person would react differently to the same treatment, in addition, we

cannot see the potential outcome on the same person (we cannot go back in time and change

the choice regard hospitalization); this means the only way to compare outcomes is to

compare the average health of those who have been hospitalized and who have not.

𝐸 [𝑦𝑖 |𝐷𝑖 = 1] − 𝐸 [𝑦𝑖 |𝐷𝑖 = 0] =

𝐸 [𝑦1𝑖|𝐷𝑖 = 1] − 𝐸 [𝑦0𝑖|𝐷𝑖 = 1] + 𝐸 [𝑦0𝑖|𝐷𝑖 = 1] − 𝐸 [𝑦0𝑖|𝐷𝑖 = 0] (2)

Considering the formula, we can distinguish two terms:

The first term is the average casual effect of hospitalization for people who went to

hospitals, meaning what would have happened to them without hospitalization.

The second term is the so-called Selection Bias; it represents the difference in

average outcomes between who was hospitalized and who was not. It represents,

from a conceptual point of view, all kind of issues that a mathematical model is not

able to consider, for instance it can be thought as the fact that who goes to hospital

is probably more sick averagely before the treatment, so their outcomes are already


99

influenced. In addition, hospitals are full of other sick people who may increase the

probability of getting sick for other patients.

This explain for instance why, regarding the governmental-subsidized programs, the not

attending people could earn more than attending; Selection Bias, when big in size, can

completely mask a positive treatment effect, making it negative.

The goal of the research is to eliminate the Selection Bias, at least to decrease its effects

before commenting the clean results obtained.

We need to understand now, how it is possible to avoid the Selection Bias effect. Considering

some statistic maneuvers, a way to reach our goal, is to randomize the assignment of 𝐷𝑖

variable. This randomization makes 𝐷𝑖 independent of the potential outcomes 𝑌𝑖.

Mathematical procedure follows:

𝐸 [𝑦𝑖|𝐷𝑖 = 1] − 𝐸 [𝑦𝑖|𝐷𝑖 = 0] =

𝐸 [𝑦1𝑖 |𝐷𝑖 = 1] − 𝐸 [𝑦0𝑖|𝐷𝑖 = 0] = 𝐸 [𝑦1𝑖|𝐷𝑖 = 1] − 𝐸 [𝑦0𝑖|𝐷𝑖 = 1]

Where the independence of 𝑦0𝑖 and 𝐷𝑖 allows us to swap 𝐸 [𝑦0𝑖 |𝐷𝑖 = 1] for 𝐸 [𝑦0𝑖 |𝐷𝑖 = 0]

in the second line. In fact, given random assignment, this simplifies further to

𝐸 [𝑦1𝑖|𝐷𝑖 = 1] − 𝐸 [𝑦0𝑖 |𝐷𝑖 = 1] = 𝐸 [𝑦1𝑖 − 𝑦0𝑖 |𝐷𝑖 = 1]

= 𝐸[𝑦1𝑖 − 𝑦0𝑖 ].

Randomization has always been important in science and mathematical/physics

development; the history is plenty of examples. In the pharmaceutical industry for instance,

at the beginning of the Century, randomized process was the main way to discover casually

numerous drugs we use nowadays. Considering our purpose, randomized trials are not

common yet in social science, but they are becoming more popular and frequent. Education

research – the domain this paper belongs to – is one of the area in which this random

procedure is growing fast.

Regarding this method, a first question to consider is whether the randomization is

successfully able to balance subject’s characteristics for each treatment group. To assess the

validity of balances it is common to compare treatment and control group across some

variable before the treatment itself. Because randomization eliminates Selection Bias, the

Chapter 4

100

difference in outcomes across treatment groups captures the average causal effect. In

practice, the difference in means between treatment and control groups, can be obtained from

a regression of test scores on dummies for each treatment group. Obviously, randomized

trials are not perfect, there are some limits as logistic difficulties, a long duration of

experiments and finally the high costs they bring. It can also happen, people among treatment

or control group leave the experiment or are reassigned somewhere else, compromising the

validity of the experiment itself. However, in general, issues as the ones explained do not

affect the main conclusion experiments.

Although the limits described above; this is the methodology we decided to use in our study.

The following paragraph explains how to define and estimate the empirical model discussed

above.

4.1 Regression analysis

This is the typical methodology that scholars use for studying data gathered from

experiments. In particular, this is one of the most popular method when studying causal

questions.

Let’s now focus on the explanation of the methodology.

Identified a treated group and a control group, consider a scenario where both are influenced

by the treatment effect equally, then:

𝑌1𝑖 − 𝑌0𝑖 = 𝜌, a constant

With constant treatment effects, we can rewrite equation above (1) concerning the causal

effect in the form:

𝑌𝑖 = ∝ + 𝜌 ∗ 𝐷𝑖 + 𝜂𝑖 , (3)

Where:

∝ = 𝑌0𝑖

𝜌 ∗ 𝐷𝑖 = 𝑦1𝑖 − 𝑦0𝑖

𝜂𝑖 = 𝑌0𝑖 − 𝐸 (𝑌0𝑖 ) representing the randomness of 𝑌0𝑖


101

Now, remember the dummy variable 𝐷𝑖, it represents the participation or the non-

participation to an event, in the example of Joshua D. Angrist and Jörn-Steffen Pischke

described above, it meant the hospitalization of people. If we insert this participation to the

treatment through the probabilistic conditional expectation tool, this is the result:

𝐸 [𝑌𝑖|𝐷𝑖 = 1] = ∝ + 𝜌 + 𝐸[𝜂𝑖|𝐷𝑖 = 1]

𝐸 [𝑌𝑖|𝐷𝑖 = 0] = ∝ + 𝐸[𝜂𝑖|𝐷𝑖 = 0]

computing the difference of the previous formula, we obtain:

𝐸 [𝑌𝑖|𝐷𝑖 = 1] − 𝐸 [𝑌𝑖|𝐷𝑖 = 0] = 𝜌 + 𝐸[𝜂𝑖|𝐷𝑖 = 1] − 𝐸[𝜂𝑖|𝐷𝑖 = 0]

Similarly to the formula (2), we can identify the treatment effect represented by 𝜌, and the

Selection Bias as second term. Thus, Selection Bias amounts to correlation between the

regression error term, 𝜂𝑖, and the regressor, Di. Since:

𝐸[𝜂𝑖|𝐷𝑖 = 1] − 𝐸[𝜂𝑖|𝐷𝑖 = 0] = 𝐸 [𝑦0𝑖|𝐷𝑖 = 1] − 𝐸 [𝑦0𝑖 |𝐷𝑖 = 0],

this correlation reflects the difference in (no-treatment) potential outcomes between those

who get treated and those who don’t. We can develop more than one regression, with the

usage of covariates. Covariates are defined as control variables who represent subjects’

characteristics.

A regression where covariates are included might results different from the same without

them, we would not understand the reasons without analyzing the details.

The important notions of covariates are the following, if these controls, nominated 𝑋𝑖, are

independent from the treatment 𝐷𝑖, then the treatment effect 𝜌 will not be affected.

this means that the estimates of 𝜌 in the long regression,

𝑌𝑖 = ∝ + 𝜌 ∗ 𝐷𝑖 + 𝑋′𝑖 ∗ 𝛾 + 𝜂𝑖

will be close to short regression estimates of 𝜌, (3).

Chapter 4

102

Nevertheless, the estimate of the causal effect we want to analyze would result more precise

if control variables 𝑋𝑖 are included. Even in case of non-correlation between the control

variables, 𝑋𝑖 and the variable Di, they provide relevant explanatory considerations for the

potential outcome Yi. In addition, they reduce the residual variance, leading to a decrease in

the standard error of the regression estimates. Regression methodology is fundamental in the

empirical economic research because of its well-suited property to experimental data’s

analysis. Its role is sometimes pure description; in other cases, it approximates experiments

whose random assignment is not available. Among regressions’ methods, we are going to

focus on the Difference-in-Difference model.

4.2 Difference-in-Difference

The Difference-in-Difference model, DD from now on, studies the differential effect

determined by a phenomenon on a ‘treatment group’, versus a ‘control group’ over an

experiment. In economic researches, the phenomenon is a treatment – in our case a Training

Program.

In the detail, the DD model measures the treatment effects (by a variable representing the

treatment) on a specific outcome (a response variable). It compares, in the first phase, the

average change over time regarding the chosen outcome for the treatment and control group;

then it compares the difference in changes for each group.

Let’s see now, the structure of the model, starting from the simplest set up.

Consider the period T. At T = before, there are two groups of people: the first is exposed to

the treatment while the other is not. Now, after the treatment, T = after, the difference in time

would exist only for the first group, called ‘treatment group’, while nothing happened for

the second group, we call ‘control group’. The DD measures the difference between the

difference overtime of ‘treatment group’ and the difference overtime of ‘control group’. In

this simple case, the term difference overtime of ‘control group’ is null, then the outcome is

given only by the difference overtime of ‘treatment group’. Leaving aside the formulas and

mathematical composition of the model, we can graphically describe the DD methodology

(Figure 22).


103

Figure 22: DD Methodology

A key assumption of the DD model is that the treated group, in the absence of the treatment

would have followed the trend of the control group. The dashed line in the graph represents

exactly this assumption, we call that counterfactual effect. Considering the simplest case

described above, the control group line would be horizontal, while the treatment group would

follow the lead showed by the graph.

A further evolution of the DD model, is the so-called Difference-in-Difference-in-

Differences, from now on DDD. It includes as third term what is known as moderating factor.

It has the role of circumscribing the treatment effect to a subgroup of people who have in

common the moderating factor itself.

Because it is quite difficult the treatment group and control group are identical, it is possible

their difference in outcomes derives not from the treatment, but due to other properties. To

overcome this issue DD measures the normal difference in outcomes, representing what

would it be in case of no group was exposed to the treatment.


105

Chapter 5.

The EMPRETEC course

EMPRETEC is a capacity-building project of the UNCTAD (United Nations Conference on

Trade and Development) coordinated from Geneva (Switzerland) by the Division on

Investment and Enterprise. UNCTAD works in the fields of trade and development, finance,

technology, entrepreneurship and sustainable growth, fostering the process of integration of

emerging countries in the global economy. The Conference, on a four-year basis, steers the

debates and the political considerations towards the integration of national policies and

international actions in order to hasten growth and improve the socio-economic conditions

on an equitable basis worldwide. In practice, the major scope of the Division consists in

boosting sustainable development through researches, policy analysis and technical

assistance to over 150 countries, creating a universal consensus on specific issues such as:

Making economies independent and sustainable

Limiting economies’ exposure to financial turnarounds

Attracting foreign investments and capital

Increasing access to innovation

Improving the efficiency and the effectiveness of firms’ value chains

Protecting individuals from abuse

Speeding up the flow of goods and services across nations

Using natural resources more effectively

EMPRETEC (contraction for the two Spanish words emprendedores and tecnologia) was

launched by the UNCTC (United Nation Centre on Transnational Corporations) in 1988 in

Argentina and was gradually transferred to UNCTAD in 1998, with an expansion to over 37

nations around the world (2017), assisting around 370.000 entrepreneurs, small and medium

enterprises, young people and general employees through a solid cooperation with local

representatives (Figure 23).

Chapter 5

106

Figure 23: EMPRETEC in numbers

Source: EMPRETEC Annual Report 2014, http://empretec.unctad.org, retrieved on 10th February 2017

The target of the programme is focalized on fostering entrepreneurship in developing

countries with economies in transition to start and develop their businesses, contributing to

the development of dynamic private sector. The programme is part of UNCTAD’s purpose

to strengthen international competitiveness for the benefit of economic development,

poverty eradication and equal participation of countries in the world economy.

Entrepreneurship is probably the preferable instrument to uproot extreme poverty and

remove inequalities since products and services offered by these businesses make economies

less vulnerable to highs and lows in particular economic sectors. With these goals in focus,

EMPRETEC influences behaviours and results of entrepreneurs’ operations through a wide

range of training and motivational services, the establishment of trustful international

networks and the design of successful methodologies along with advisory reports. The core

product offered by UNCTAD is the EMPRETEC Training Workshop (ETW) which aims at

building specific competencies and practices acquirable by entrepreneurs on their daily lives

in order to run their own enterprises successfully. Training is offered to participants (selected

on the basis of proven entrepreneurial ambitions and innovative approach) by 600 local

certified partners and 60 international master entrepreneurs and is based on the finding of

David McClelland that everyone has inner motivations which can be improved.

http://empretec.unctad.org/


107

There are ten Personal Entrepreneurial Competencies which form the basis of the ETW:

Opportunity-seeking and initiative: Entrepreneurs constantly search for opportunities and

take initiatives to create new business situations.

Persistence: Successful entrepreneurs tend to stick with activities rather than abandoning

them when difficulties show up.

Fulfilling of commitments: No matter how big the sacrifices, everyone should keep their

promises.

Demand for quality and efficiency: There is always the need to find new ways to perform

activities better, faster or cheaper.

Calculated risk-taking: This is one of the primary and most important prerequisite in the

entrepreneurial decision-making process.

Goal-setting: None of the rest competencies would be functional without setting meaningful

and stimulating objectives.

Information-seeking: Entrepreneurs always search for new information about their clients,

suppliers, stakeholders and the general contexts.

Systematic planning and monitoring: Acting in a methodological way and checking the

intermediate results is fundamental for the overall success.

Persuasion and networking: Leaders influence other people to follow them or do

something for them, without coercion or subjection.

Independence and self-confidence: Entrepreneurs have a quiet self-assurance in their

capabilities when involved in projects or simple activities.

The services offered within the ETW can be divided into four main categories: training

events, training packages, advisory services and networking. Therefore, there are two types

of training – basic motivational seminars for entrepreneurs and specialized packages after

they have attended the first one – aimed at discovering significant skills and potentials and

at selecting the best candidates to work with. In all the countries, the seminars are developed

and customized according to the local demand and cover topic as quality management,

business plan development, finance and marketing management. For what concerns the

consulting activities, they show the same characteristics of the first two, since they are

individualised following a case-by-case logic and require, in some cases, external help to

carry out all the analysis. Finally, EMPRETEC highlights the importance of the development

Chapter 5

108

of linkages between entrepreneurs, local firms, transnational corporations and public

institutions; a solid network is fundamental in order to promote a huge variety of events such

as symposiums, conferences, forums and, nonetheless, to increase the probability the be

successful in the entire community and individually.

Effectively, the direct beneficiaries of the project include small and medium enterprises that

have proven discrete business performances, transnational corporations, potential start

uppers with promising ideas, and youth and women entrepreneurs (EMPRETEC - Inspiring

entrepreneurship, 2016). Especially for the last case, EMPRETEC fosters the reduction of

the gap between men and women participation rates in the work field, since the latter

category usually carry an extra burden: the balance between the working hours and the time

spent with the family. Therefore, training is not enough; other services such as assistance

and mentoring should be tailored to their needs in order to make them achieve their own

goals (Figure 24).

Figure 24: Potential benefits of the programme

Source: EMPRETEC – UNCTAD, http://empretec.unctad.org/?page_id=61, retrieved on 9th February 2017

In a nutshell, the programme is meant to track down promising entrepreneurs, to provide

them with training and improve their business capabilities giving access to appropriate

services, networks and resources. According to the statistics provided by UNCTAD, the

number of entrepreneurs trained has increased of more than 70% since the launch of the

programme (Figure 25), but the numbers enlarge even more if we consider the number of

individuals which have been “advised” and benefited from advisory services (more than 30%

of the participants in the first two years of operation).

http://empretec.unctad.org/?page_id=61


109

Figure 25: Entrepreneurs trained by the EMPRETEC Global Network

Source: EMPRETEC Programme Evaluation, UNCTAD, retrieved on 10th February 2017

Besides the overall objective of the programme there are a variety of intermediate goals,

which are necessary in order to increase the entrepreneurial capacity at a national level,

linked to the abovementioned services such as:

Creation of new SMEs: Most participants already possess their own business before

joining EMPRETEC. For those who do not, it is estimated that within three years,

the proportion of “Empretecos” who starts a new business ranges between 9% and

33%.

Increase in sales: After a period of three years, Empretecos already involved in a

business increase their sales by 10% to 80%, especially in those countries where the

economy is still underdeveloped with respect to the advanced ones.

Increase in export sales: After a period of three years, Empretecos already involved

in a business increase their export sales by 10% to 80%, especially in those countries

where export expansion strategies have been already adopted before.

Survival: In general, the survival rate of small and medium enterprises is notoriously

low, independently from the country in which they operate, rarely exceeding 70%

after three years of operation. The UNCTAD’s data claim that the rate of new

Chapter 5

110

businesses, whose owners have attended the programme, ranges between 30% and

85% while for already existing ones the percentage increases to 70%-92%.

5.1 The competitive advantages

At the time of the launching, the programme benefited from the classic first-mover

advantage; but then, as time went on, many alternatives have emerged and competition has

increased in all respects. For instance, universities have created development programmes

in their networks, consulting firms have entered the market and even former trainers have

offered similar initiatives in direct competition with UNCTAD’s. Yet there is still a

substantial demand for EMPRETEC and the numerous leads for new projects are the natural

proof of this claim. Nonetheless, it keeps taking advantages of the large international

network which probably represent its mayor asset (Figure 26).

Figure 26: The 37 countries where EMPRETEC has been established, highlighted in orange

Source: EMPRETEC Annual Report 2014, http://empretec.unctad.org, retrieved on 11th February 2017

However, the network is not the only critical success factor of the programme; several

elements are directly referred to the degree of success of the development strategy such as

macroeconomic conditions, managerial claims and, most of all, the amount of available

resources. For example, the government interest in promoting entrepreneurial initiatives is a

fundamental prerequisite as long as the presence of substantial financial resources provided



111

by donors, or other associations, and the ability to provide quality services at the lowest cost

possible generating enough income to meet the financial needs. Anyway, according to field

analysis, the EMPRETEC concept seems to be valid and adaptable to the most different

environments, nonetheless still in high demand on the global scale when the abovementioned

preconditions are respected (Denis, Bullon, & Kamel, 2000).


113

Chapter 6.

Expected results

6.1 Demographic information about the sample

To evaluate the impact of the EMPRETEC course, following the explanation given in the

methodology section, we need to verify the presence of a counterfactual scenario. The

purpose is not to monitor the phenomenon, which would lead to its simple description, rather

to extrapolate precious considerations that may be useful for improving the program.

However, rarely this kind of information is a valid measure of the program’s impact on

subjects. In fact, a simple comparison between the final and initial state, due to the

intervention, could be influenced by several external factors, that obscure the real impact.

To bypass this issue, a control group is necessary, since it represents what would have

happened in case of no-treatment. It makes the initial comparison valid, explicating the

counterfactual effect. The selection of the treated and the control group is, therefore, central.

In this project, we selected a pool of potential beneficiaries. Among this pool, some were

randomly assigned to be treated (80 people) and some were randomly assigned to the control

group (80 people too). The control group will receive the treatment in 2018, 1 year later.

This section presents some socio-demographic characteristics of the 2 groups. From a

demographical point of view, the sample presents several characteristics such as a small

majority of female attendants over the male counterpart (Figure 27).

Figure 27: Gender distribution of the groups (%)

43% 57%47% 53%0%

10%

20%

30%

40%

50%

60%

Control Treated

Male Female

Chapter 6

114

For what concerns the distribution of ages the sample is variable, with 37% of participants

aged more than thirty-five years old, and 63% between eighteen and thirty-four years old

(Figure 28).

Figure 28: Age distribution of the statistic population (%)

In terms of education more than the half of the entire population have an advanced diploma

or a Bachelor degree, followed by a 29% who attended and successfully completed the

secondary level of school. Overall, the sample is well educated despite a total 5% of

participants who never attended school or concluded their course of study at the primary

level (Figure 29).

Figure 29: Education distribution of the statistic population (%)

11%

23%

29%

27%

9%

1%

0% 5% 10% 15% 20% 25% 30% 35%

18-24

25-34

35-44

45-54

55-64

65-99

1%4%

29%

54%

9%4%

0%

10%

20%

30%

40%

50%

60%


115

6.2 T-test

The methodology used to analyse the entire database has been the difference-in-differences

(DD). The first step consisted in verifying the validity of the population through a paired t-

test on the variables; the DD model, indeed, compares two sets of observational data,

isolating the effects of one factor of interest, in this case the EMPRETEC programme, from

all the others who may influence the analysis and act as confounding components. To this

purpose, there is the need for two groups (control and treated) to be statistically comparable

at time (t) = 0, at the beginning of the observation. Therefore, the T-test is aimed at

determining whether the difference between the means of the two groups is significant or

not, analysing the null hypothesis.

H0: The difference between the means of the control and the treated group is different from

0 at t = 0

The statistical parameter t is defined as the ration of the mean to the standard error of the

mean.

𝑡 =𝑋1 − 𝑋2

√𝑠1

2

𝑛1+

𝑠22

𝑛2

Since the standard error of the mean measures the variability of the sample mean, the smaller

the standard error, the more likely that our sample mean is close to the true population mean

(Figure 30):

Figure 30: t-statistics illustration

Source: UCLA, http://stats.idre.ucla.edu/stata/output/t-test/, retrieved on 23rd March 2017

http://stats.idre.ucla.edu/stata/output/t-test/

Chapter 6

116

The difference among the subjects means is the same in all three cases illustrated. What

changes in the three graphs is the variability of sample means: in the second graph, we have

a huge variability of sample means and the two populations overlap, on other hand the

difference is more clear as it is in shown in the third graph, with small variability. The smaller

the standard error of the mean, the larger the magnitude of the t-value and therefore, the

smaller the p-value. To make an example of a T-test, we choose the variable “Gender” and

see what happens statistically in terms of output of the analysis (Figure 31):

Figure 31: T-test on the variable "Gender" at t = 0

What does 𝐻𝑎 ∶ 𝑑𝑖𝑓𝑓 ≠ 0 Pr ( |𝑇| > |𝑡| ) mean?

That is the two-tailed p-values computed using the t distribution. It is the probability of

observing a greater absolute value of t under the null hypothesis. By convention we have

defined an acceptable level of α equal to 0.05; this means that if the p-value is less than α

then the mean difference between the control and the treated group is statistically

significantly different from zero. Therefore, in the abovementioned example, the p-value of

0.6443 (greater than 0.05) suggests that the null hypothesis can be totally rejected.

A statistical description of all the studied variables is provided in Table 17, which indicates

the name, the means of each group, the maximum and the minimum range of the

observations, and finally the output of the T-tests at t = 0 and t = 1.


117

Table 17: Summary statistics of the dataset

Name TR

Mean

C

Mean Max Min

T-test

t = 0

T-test

t = 1

So

cial

-dem

og

rap

hic

s

Gender 0.375 0.325 1 0 0.6443 0.9084

Age 3.9 4.225 7 2 0.2421 0.3508

Education 3.875 3.65 6 1 0.2447 0.0918

Marital Status 1.725 1.7 1 0 0.0133 0.002

Child 0.625 0.8 1 0 0.0858 0.4

Family Business 0.25 0.225 1 0 0.7959 0.364

Network 0.9 0.675 1 0 0.0136 0.051

Employ Full 0.1 0.1 1 0 1 0.204

Employ Part 0.55 0.55 1 0 1 0.523

Employ Self 0.3 0.125 1 0 0.0568 0.034

Employ House 0.25 0.1 1 0 0.17 0.002

Unemployed 0.128 0.225 1 0 0.266 0.114

Entr

epre

neu

rship

Exp.

& M

indse

t

Past

Entrepreneurial

Experience

0.725 0.7 1 0 0.807 0.161

Future Attitudes 3.7927 3.831 4.6 3 0.623 0.983

Self-confidence 2.1375 2.271 3.2 1.1 0.184 0.304

Determination 2.375 2.1 4.5 1 0.147 0.011

Innovativeness

(Find Ideas) 2.175 1.925 4 1 0.200 0.264

Innovativeness

(Change) 2.3 2.325 5 1 0.922 0.528

Innovativeness

(Accept Ideas) 3.325 3.475 5 1 0.568 0.962

Innovativeness

(Methods) 3.425 3.675 5 1 0.280 0.795

Rel

atio

ns

Family Relation

Quality 4.275 4.025 5 2 0.263 0.347

Social Relation

Quality 7.97 8.18 10 3 0.628 0.852

Organizational

Participation 0.125 0.2 1 0 0.36 0.612

Chapter 6

118

Inte

rnat

ion

al

Foreign Spoken

Languages 0.05 0.15 1 0 0.139 0.04

Past Exp. Living

in Foreign

Countries

0.275 0.15 1 0 0.176 0.21

Past International

Entrepreneurial

Experience

0.125 0.1 1 0 0.728 0.45

The T-tests performed on the variables suggest that the two groups can be considered

statistically similar as the null hypothesis H0 is rejected, except for marital status and

entrepreneurial network. Anyway, although the two samples may differ along several

characteristics, the DD approach indicates that if such differences are assumed constant over

time, they do not influence the estimation of treatment effects.

6.3 Hypothesis

The impact evaluation of the EMPRETEC programme is computed through the analysis of

two different groups: a control group, whose member did not attend the workshop, and a

treated group, whose members attended it. As stated in the previous chapters the

observations are carried out in order to identify potential fixed effects, stand-alone from the

treatment, and isolate the net effect of the programme itself. Hence, both groups had to

perform the survey before the treatment (pre) and after (post) so that any possible fixed effect

determined by the time passed between the two sessions could be neutralized by the DD

methodology. Since the variables considered respected the condition of being statistically

comparable between the two groups (T-test outcomes) we proceeded to formulate the

research hypothesis.

H1: Participation in ETW has a positive impact on the intention to open a private business

and to internationalize an already existing one.

H2: Proactive Personality positively influences the outcome of EMPRETEC in terms of

willingness to open a private business and intention to internationalize. Overconfidence

positively influences the outcome of EMPRETEC program in terms of willingness to open

a private business and intention to internationalize


119

6.3.1 H1 Discussion

This hypothesis can be split in two parts: the intention of an entrepreneur to start a private

business in his home country (y1) and the intention to internationalize the private business

itself in the first years of operations (y2). In this section, a description of all the control

variables used in the regression equation, for the DD methodology, is provided.

Socio-demographic

Among the set of socio-demographic controls we included gender, age, marital status,

education level, employment status and entrepreneurial network.

Gender

Considering the preceding literature, we assumed that male have a natural higher inclination

to start a business so that the ratio of women to men regarding entrepreneurship is low

(Camelo-Ordaz, Diànez-Gonzalez, & Ruiz-Navarro, 2016). Thus, we expect a higher

inclination of men for self-employment choices.

Age

According to Curran & Blackburn (Curran & Blackburn, 2001) and Weber & Schaper

(Weber & Schaper, 2004), age is indirectly connected to entrepreneurial intention. This

means that older people are much less likely to act as entrepreneurs with respect to younger

people. Our hypothesis follows this thinking.

Marital status

Katundu and Gabagambi (Katundu & Gabagambi, 2014) suggest that married people are

more inclined to entrepreneurial actions since they fell the risk associated with it shared with

the partner.

Education

Our assumption consists in considering a higher degree of education negatively affecting the

intention to start a business. Although the wider skills and knowledge, these individuals are

more aware of the implication that derives from entrepreneurial actions. Evidence about this

hypothesis have already been discussed by Gold and other authors (Gold, Falck, & Heiblich,

2011).

Chapter 6

120

Employment status

For what concerns this variable, the literature is discordant. We have decided to join the

school of thinking of Davidsson, Lindmark and Olofsson (Davidsson, Lindmark, &

Olofsson, 1994), according to which unemployment and firm opening are positively

correlate. Thus, full-time employees are less inclined to start a new business with respect to

part-time workers or unemployed.

Entrepreneurial Network

We considered as entrepreneurial network the totality of connections of an individual with

people who have already started a business in the previous years. Our hypothesis is that the

stronger the network, the higher the intention to start a new personal business.

Entrepreneurial experience and mind-set

Among the set of entrepreneurial mind-set and experience controls we focused on past

entrepreneurial experience.

Past entrepreneurial experience

It would be logical to consider a positive relation between this variable and the creation of

entrepreneurial knowledge. Instead, the study of Kautonen, Luoto and Tornikoski

(Kautonen, Luoto, & Tornikoski, 2010) has shown a surprisingly weak linkage. However,

our hypothesis follows the logical thinking of a positive correlation.

International proneness

The focus is on the characteristics which might influence the international dimension of an

entrepreneur and his own business. The analysed variables are the ability to speak foreign

languages and the experiences collected out of the native country.

Foreign spoken languages

It seems logical that being able to speak other languages besides the native one may represent

a significant advantage in destroying communication barriers and respecting other people’s


121

culture. Hence, polyglot entrepreneurs will be more inclined to open new business abroad or

internationalize existing ones.

Table 18 summarizes the expected impact of each variable on entrepreneurial intentions.

Table 18: Overall expected impact of the variables on entrepreneurial intentions

Variable Expected impact on the

variable “ENTRY”

Expected impact on the

variable

“INTERNATIONAL”

Gender + +

Age - -

Marital status + +

Education level - -

Employment status: House keeper + +

Entrepreneurial network + +

Past entrepreneurial experience + +

Foreign spoken languages + +

To the purpose of our study, we have decided to focus on the highlighted moderating factors

highlighted in the previous table. The actual results will be discussed in Chapter 7.

6.3.2 H2 Discussion

As the previous case, the H2 hypothesis can be split in two different parts: the intention to

start a private business in the home country (y1) and the intention to internationalize the

private business during the first years of operations (y2). The analysis which has been made

to discover the existence of characteristics of the subgroups that determine heterogeneity in

the ETW’s effect is the DDD, triple interaction regressions, for the variables (y1, y2).

𝑌𝑔𝑡𝑥 = 𝛼 + 𝛾𝐺 + λ𝑑𝑡 + 𝛽𝐷𝑖𝑡 + θ𝐷𝐷𝑖𝑡 + 𝑋𝑔𝑖𝑡𝛿

We have decided to focus on the following moderating factors:

Future attitudes

Determination

Self-confidence

Innovativeness

Entrepreneurial aspiration

Chapter 6

122

For each of them we have computed an index to understand how they mediate the relation

with the dependent variable. Econometrically, there was the need to transform each factor

into a dummy variable in which the output could follow a binary distribution. As the survey

suggests, some questions were not structured as binary therefore, a cleaning of the data was

necessary before adopting the DD and the DDD methodologies. For instance, the

innovativeness factor interpretation was based on several scale questions in which the

participant had to answer according to his belief and personal line of thinking. In this case,

what we did was, first, restructuring the answers to condensate all the possible alternatives

into two main output, one confirming the attitude and the other denying it. Once this

adjustment was done, it was necessary to create an index of all the sub questions of the

category by summing all the binary answers that were oriented to that attitude and then

dividing the total by the number itself of the sub questions.

After that all the index had been computed, the regression analysis following the DD and

DDD methodology were ready to be performed.

A general description about the moderating factors is provided below:

Innovativeness

Following the Schumpeterian view, we assume that the higher degree of innovativeness of

an entrepreneur, the higher the intention to start a new business.

Future attitudes

This variable condensates the confidence and the optimism towards the future. It also refers

to the capacity of an individual to take control over the outcome of events in their personal

lives. We think that the higher the degree of optimism over the future, the higher will be the

intention to start a new business.

Self-confidence

We expect for a higher level of self-confidence a greater inclination to open a business, since

this variable reflects the perception of participants about themselves as entrepreneurial

persons.

Determination

Obviously, determination is a necessary condition for success. Determination while

implementing entrepreneurial choices is fundamental to reach the top in all the aspects of


123

the working career. Thus, people with more determination will probably reveal higher

intention to become entrepreneurs.

Entrepreneurial aspiration

Logically, we expect to find that people with a greater entrepreneurial aspiration more likely

to open their own business and internationalize it in the first years of operation. This factor

is influenced both by the “pure” aspiration variables and the expected purposes that makes

an individual willing to internationalize.

Table 19 shows the expected impact of the program, according to our hypotheses, for an

increase of the single moderating factor.

Table 19: Expected impact of the program

Moderating Factor Expected impact of the program

Innovativeness (+) +

Future Attitudes (+) +

Self-confidence (+) +

Determination (+) +

Entrepreneurial Aspiration (+) +

For each moderating factor, a different model has been created and analyzed. Results can be

found in the following chapter.


125

Chapter 7.

Findings

7.1 Results for H1 for y1

Table 20 depicts the results of the empirical analysis.

Result 1: The hypothesis H1 (y1) is verified. The participation in the ETW has a positive

impact on the intention to open a private business.

The regression’s outcome, reported in Table 20, shows that after the treatment, there is an

increase of 24.8% of the probability for a participant to be willing to open a private business

with respect to a non-participant. This is a logical result, since EMPRETEC tries to boost

subjects’ skills and attitudes. However, we are talking about willingness to make

entrepreneurial actions, therefore, at this point in time, we cannot predict what is going to

happen in the immediate future. Further research is needed.

Result 2: Among the controls, knowing a foreign language and be married increase the

probability of an individual to be willing to open a new business.

As expected, having a stable partner make a subject perceive the risk, connected to

entrepreneurial actions, to be shared and thus less worrisome. Similarly, knowing a language

different from the native one is a great advantage for an entrepreneur if we think about the

communication barriers and the difference in cultures that sometimes make the connections

problematic and ambiguous.

Table 20: Difference-in-Difference empirical results (H1-y1)

(y1)

Entry

Time -0.0403

(-0.41)

Treatment -0.0314

(-0.36)

Chapter 7

126

Time##Treatment 0.248*

(1.91)

Gender 0.0481

(0.60)

Age -0.0752

(-1.12)

Foreign Language 0.193*

(1.71)

Educational Level -0.0600

(-0.87)

Marital Status 0.224***

(2.97)

Household Role 0.0577

(0.79)

Family Business -0.00553

(-0.07)

Entrepreneurial

Experience

0.0349

(0.49)

N 139

Marginal effects; t statistics in parentheses

(d) for discrete change of dummy variable from 0 to 1

* p<0.10, ** p<0.05, *** p<0.01

For what concerns the control variables gender, household role, entrepreneurial experience,

and age they also have a positive impact on the intention towards entrepreneurship but

statistically these outcomes are not significant as the previous ones.

7.2 Results for H1 for y2

Result 3: The hypothesis H1 (y2) is not verified. The participation in the ETW has a

(statistically insignificant) negative impact on the intention to internationalize an already

existing activity


127

As reported in Table 21, the first outcome that catches the eye is the negative impact that the

ETW generates upon the participants in terms of the willingness to become an international

entrepreneur. However, this could be expected considering that the program characterizes

itself for a focus on national principles and developing realities (and Panama is already

considered as developing economy). Hence, participants tend to consider as primary

objective the development of their own native country, without considering too much the

idea of expanding abroad.

Table 21: Difference-in-Difference empirical results (H2-y2)

(y2)

International

Time -0.0500

(-0.41)

Treatment -0.114

(-1.03)

Time##Treatment -0.0290

(-0.18)

Gender -0.0664

(-0.66)

Age -0.0782

(-0.92)

Foreign Language 0.447***

(3.12)

Educational Level -0.0757

(-0.87)

Marital Status 0.0978

(1.03)

Household Role 0.0615

(0.67)

Family Business -0.0280

(-0.29)

Chapter 7

128

International

Entrepreneurial

Experience

0.209

(1.63)

N 137



* p<0.10, ** p<0.05, *** p<0.01

Result 4: Married women (below the age of 35) without a bachelor degree and in charge of

the family are more inclined to internationalize an already existing activity (statistically

insignificant).

In this case, we have some different outcomes with respect to the entry intention. In fact, if

males are usually more willing to start a new business, it is also true that they do not tend to

internationalize it once it is open. What we also notice is that a participant who knows at

least one non-native language has increase of 44.7% of the probability to access foreign

markets, which was predictable but we did not expect to such extent. Finally, similarly as

the previous case, having entrepreneurial experience abroad stimulates the willingness to

expand of the own country’s boundaries.

7.3 Results for H2

Table 22 provides data about the DDD model presented in the previous section. We are here

exploring the role of some individual characteristics as moderators of the participation in the

EMPRETEC course. The variable of interest is, therefore, the triple interaction between

time, treatment and our variables of interest, i.e., MEDASP, MEDCONF, MEDINN,

MEDPERS, and MEDFUT. These variables have been discussed in section 2.3.

Table 22 reports the results of the six models estimated with the triple interactions. Thus,

each line corresponds to a different model, which are reported in their full versions in the

appendix.


129

Table 22: Entrepreneurial Aspirations – DDD

(y1) (y2)

Entry International

Time##Treatment##MEDASP 0.342

(0.45)

1.307

(1.38)

Time##Treatment##MEDCONF 1.941***

(2.91)

1.742**

(1.98)

Time##Treatment##MEDINN -0.466 1.025

(-0.73) (1.26)

Time##Treatment##MEDPERS -0.649* 0.375

(-1.75) (0.77)

Time##Treatment##MEDFUT -0.358 -0.900

(-0.38) (-0.75)

N 135 133

Control variables as reported in the summary statistics. * p<0.10, ** p<0.05, *** p<0.01

From table 22 the following results can be derived:

Result 5: The greater the aspiration of an individual, the higher the effect of the program in

terms of willingness to entry (statistically insignificant).

Result 6: The effect of the program is positive, but rather insignificant, in terms of foreign

entrepreneurial actions (internationalizations).

This means that aspiration does not determine heterogeneity for the variable y1 and y2,

intention to expand open a business or go international, even though it has a positive effect

on both.

Result 7: A self-confident individual withstands a greater impact of the workshop, in terms

of willingness to entry.

Chapter 7

130

Result 8: The effect of the program is more pronounced, for what concerns

internationalizations, if the self-confidence of the participant increases.

The ETW program has positive and heterogenous effect on the participants based on their

self-confidence. Thus, when this moderating factor is developed within the personal

characteristics of an individual, he will be more inclined to make entrepreneurial actions on

both national and international scale.

Result 9: The innovative participant does not need the program to boost his willingness to

become entrepreneur (statistically insignificant).

Result 10: The effect of the program, in terms of foreign investments, is directly proportional

to the degree of innovativeness of an individual (statistically insignificant).

The innovativeness moderating factor displays discordant outcomes in terms of dependent

variables. In both cases, there is no heterogenous effects but, while on y1 the effect of the

program is negative, on y2 the impact on participants is positive.

Result 11: A determined attitude usually translated in entrepreneurial action. Indeed, these

kinds of people do not need the program to maintain this tendency.

Result 12: Insignificantly from a statistical point of view, the contribution of the program

on internationalizations is greater if determination increases.

Another heterogenous effect may be found in the determination factor. For what concerns

the willingness to entry, EMPRETEC is not useful when a participant shows a determined

personality. We cannot claim the same outcome if we consider the internationalization

dependent variable, since the impact of the program is totally positive but rather statistically

insignificant.

Result 15: If the positivity of a participant towards the future increases, the effect of the

program decreases (statistically insignificant).


131

Result 16: Even for y2, the efficiency of the program decreases if the individual has a higher

positivity (statistically insignificant)

Without statistical significance, we can claim that a person who demonstrates to be positive

towards the future withstands a decreased impact of the workshop.

Result 17: Overall, the hypothesis H2 is verified, since there are some moderating factors

of the analysed variable (Proactive Personality and Overconfidence) which influence the

outcome of the EMPRETEC program, both in terms of willingness to open a private business

and intention to internationalize.

Finally, if we consider the H2 hypothesis we can state that it is verified for both the dependent

variables – Entry and International – for determined indexes: determination for y1,

motivation goals for y2, self-confidence for both.


133

Chapter 8.

Conclusions

This study had as first object the determination of the impact of the EMPRETEC

Entrepreneurship Training Workshop (ETW) on the participants. The second purpose was

the evaluation of the role of two individual characteristics, Proactive Personality and

Overconfidence, as moderators of the course impact.

The first phase of the literature review has been accomplished, regarding the available

Educational Programs and the variable of interests. This enabled us to develop a definition

for each variable and consequently to design a survey for measuring the subjects’

predisposition regarding these individual constructs.

In detail, we aimed at verifying the hypothesis we explicated in the chapter 6 considering as

EMPRETEC course success, two main indicators:

The willingness of attending subjects to open a private business,

The willingness to internationalize it.

More specifically, we expected a positive impact on participants regarding the opening of a

private business and its internationalization. Secondly, we expected that the more a person

had a Proactive Personality and showed Overconfidence, the greater would have been the

impact of the course in terms of opening a private business and internationalize it.

Using a Difference-in-Differences design, and its extension, the Difference-in-Difference-

in Differences model, we found some important results.

Concerning the first hypothesis, the results confirmed our expectation about the positive

effect on intention to create a business, but a negative effect on its internationalization even

though the latter was found to be statistically insignificant. In fact, outcome showed an

increase of 24.8% of the probability for a participant to open a private business with respect

to non-participants, but a statistically insignificant decrease of 2.9% of probability to

internationalize it. In other words, subjects, after the EMPRETEC program showed higher

Chapter 8

134

intentions to open a private activity, but also a lower intention to internationalize it,

compared to their initial intentions, and to people who did not uptake the course.

Concerning the second hypothesis, we found a positive influence for Overconfidence and a

negative influence for Proactive Personality traits on the impact generated by EMPRETEC

on participants.

In other words, the more a person is Overconfident, the more the course is effective (i.e., it

has a greater impact) on both the dependent variables. On the other hand, the more a person

has a Proactive Personality, the lower is the impact regarding the start of any entrepreneurial

activity.

Considering now the motivational factor related to Overconfidence, results showed

interesting findings. The Self-confidence factor is strongly relevant while the

Entrepreneurial Aspirations is not – even if with a positive impact – in terms of open a private

business. A similar result emerges considering the internationalization hypothesis. Further

investigations are required to fully understand why only the first factor is relevant.

Turning to Proactive Personality, results showed that a person who is innovative by nature

did not need the program to boost his intentions, which are related to his level of

innovativeness. A similar consideration is adaptable to the Determination factor. A

determinant person did not need the program given his nature.

Future Attitudes showed no relevance for opening a private business or internationalize any

activity. It means people who have a positive attitude towards the future are not willing to

become (international) entrepreneurs, even though this consideration is not statistically

significant. Indeed, the effect of the program is not positive, as expected.

From these detailed findings, it emerges an important consideration: EMPRETEC course

has a great positive impact on the subjects’ intentions to open a private business, but it fails

on the internationalization dimensions. Why is this happening?

The answer resides into the course structure; it has a greater focus on the development of

Panama’s economic growth. The object seems to be more about scanning for opportunities

in the domestic territory rather than promoting the internationalization of activities, as they

claim to do in their official document (UNCTAD, 2014)


135

Then, based on our analysis, we propose and advice UNCTAD to assume a wider

international perspective, fostering international training in parallel with the current

objectives.

It must be clear that the object of this study is to evaluate the EMPRETEC program’s impact

on the participants’ intentions, therefore we cannot predict what will effectively happen in

the future after the end of the course. Since this represent the biggest limitation of the

research, further analysis to be performed in the next months (six-twelve months) are

required to extrapolate interesting findings and considerations, focusing on whether the

intentions effectively turn into real-case interventions by the participants.


137

Bibliography

Acs, & Audretsch. (2009). Acs & Audretsch Handbook. Springer. Retrieved August 2, 2016

Acs, Desai, & Hessels. (2008). Entrepreneurship, economic development and institutions. In Small business

economics. Retrieved August 6, 2016

Alicke, M. D., et al. (1995). "Personal contact, individuation, and the better-than-average effect." Journal of

Personality and Social Psychology 68(5): 804.

Alpert, M. and H. Raiffa (1982). "A progress report on the training of probability assessors."

Angrist, & Pishcke. (2008). Mostly harmless econometrics. Retrieved March 30, 2017

Ashenfelter. (1978). Estimating the effect of training programs on earnings. The Review of Economics and

Statistics. Retrieved March 29, 2017

Bandura (1986). Social Foundations of Thought and Action: A Social Cognitive Theory. New Jersey, Prentice

Hall , Englewoods Cliffs.

Bandura, A. and R. H. Walters (1977). "Social learning theory."

Bass, B. M. and R. M. Stogdill (1990). Bass & Stogdill's handbook of leadership: Theory, research, and

managerial applications, Simon and Schuster.

Bateman, T. S. and J. M. Crant (1993). "The proactive component of organizational behavior: A measure and

correlates." Journal of organizational behavior 14(2): 103-118.

Bateman, T. S. and J. M. Crant (1999). "Proactive behavior: Meaning, impact, recommendations." Business

Horizons 42(3): 63-70.

Baumol. (1990). Entrepreneurship: productive, unproductive and destructive. In The journal of Political

Economy. Retrieved August 5, 2016

Becherer, R. C. and J. G. Maurer (1999). "The proactive personality disposition and entrepreneurial behavior

among small company presidents." Journal of small business management 37(1): 28.

Bell, N. E. and B. M. Staw (1989). "People as sculptors versus sculpture: The roles of personality and personal

control in organizations." Handbook of career theory 232: 251.

Bennett. (2009). Informal firms in developing countries: entrepreneurial stepping stone or consolation prize?

Retrieved March 19, 2017

Bernardo, A. E. and I. Welch (2001). "On the evolution of overconfidence and entrepreneurs." Journal of

Economics & Management Strategy 10(3): 301-330.

Blascovich, J., et al. (1975). "Blackjack and the risky shift, II: Monetary stakes." Journal of Experimental Social

Psychology 11(3): 224-232.

Brinkman. (1995). Economic growth versus economic development: Towards a conceptual clarification.

Journal of economic issues. Retrieved August 2, 2016

Brockhaus (1975). "I-E locus of control scores as predictors of entrepreneurial intentions." Proceedings of the

Accademy of Management.

Brockhaus (1982). The Psychology of the Entrepreneur. New Jersey, Prentice Hall.

Bibliography

138

Brockhaus and Horwitz (1986). "The psychology of the entrepreneur." The art and science of entrepreneurship:

25-44.

Brockhaus, R. H. (1980). "Risk taking propensity of entrepreneurs." Academy of Management journal 23(3):

509-520.

Brown, D. J., et al. (2006). "Proactive personality and the successful job search: a field investigation with

college graduates." Journal of applied psychology 91(3): 717.

Brown, R. and N. Sarma (2007). "CEO overconfidence, CEO dominance and corporate acquisitions." Journal

of Economics and business 59(5): 358-379.

Bruton, Ahlstrom, & Obloj. (2008). Entrepreneurship in Emerging Economies: Where are we today and

where should the research go in the future. In Entrepreneurship theory and practice. Retrieved

August 4, 2016

Bullough, Renko, & Myatt. (2013). Danger zone entrepreneurs. Entrepreneurship theory and practice.

Retrieved August 8, 2016

Burger, J. M. (1985). "Desire for control and achievement-related behaviors." Journal of Personality and Social

Psychology 48(6): 1520.

Busenitz, L. W. and J. B. Barney (1997). "Differences between entrepreneurs and managers in large

organizations: Biases and heuristics in strategic decision-making." Journal of business venturing 12(1): 9-30.

Buss and Finn (1987). "Classification of Personality Traits." Journal of Personality and Social Psychology 53:

1214-1221.

Camelo-Ordaz, Diànez-Gonzalez, & Ruiz-Navarro. (2016). The influence of gender on entrepeneurial

intention. Business Research Quarterly (BRQ). Retrieved March 24, 2017

Camerer, C. and D. Lovallo (1999). "Overconfidence and excess entry: An experimental approach." The

American Economic Review 89(1): 306-318.

Chang. (2007). Institional change and economic development. United Nations university press. Retrieved

August 3, 2016

Chell, et al. (1991). The Entrepreneurial Personality. London, Rout-ledge.

Chen, C. C., et al. (1998). "Does entrepreneurial self-efficacy distinguish entrepreneurs from managers?"

Journal of business venturing 13(4): 295-316.

Collins and Moore (1970). The organization makers. New York, Appleton-Century-Crofts.

Conger, J. A. and R. N. Kanungo (1987). "Toward a behavioral theory of charismatic leadership in

organizational settings." Academy of Management Review 12(4): 637-647.

Costa, P. T. and R. R. McCrae (1989). "Neo PI/FFI manual supplement." Odessa, FL: Psychological

Assessment Resources.

Coyne, & Leeson. (2004). The plight of underdeveloped countries. In Cato Journal. Retrieved August 5,

2016

Crandall (1973). "Measurement of self-esteem and related constructs." Measurement of social psychological

attitudes.

Crant, J. M. (1995). "The Proactive Personality Scale and objective job performance among real estate agents."

Journal of applied psychology 80(4): 532.


139

Crant, J. M. (1996). "The proactive personality scale as a predictor of entrepreneurial intentions." Journal of

small business management 34(3): 42.

Crant, J. M. (2000). "Proactive behavior in organizations." Journal of management 26(3): 435-462.

Crant, J. M. and T. S. Bateman (2000). "Charismatic leadership viewed from above: The impact of proactive

personality." Journal of organizational behavior: 63-75.

Curran, & Blackburn. (2001). Older people and the enterprise society: age and self-employment propensities.

Work, Employment & Society. Retrieved March 24, 2017

Davidsson, Lindmark, & Olofsson. (1994). New firm formation and regional development in Sweden.

Regional Studies. Retrieved March 24, 2017

De Bondt, W. F. and R. H. Thaler (1995). "Financial decision-making in markets and firms: A behavioral

perspective." Handbooks in operations research and management science 9: 385-410.

Deluga, R. J. (1998). "American presidential proactivity, charismatic leadership, and rated performance." The

Leadership Quarterly 9(3): 265-291.

Denis, Bullon, & Kamel. (2000). Evaluation of UNCTAD EMPRETEC programme. Geneva: UNCTAD.

Retrieved February 11, 2017

Digman, J. M. (1990). "Personality structure: Emergence of the five-factor model." Annual review of

psychology 41(1): 417-440.

Dutta, D. K., et al. (2016). "Internationalization process, impact of slack resources, and role of the CEO: The

duality of structure and agency in evolution of cross-border acquisition decisions." Journal of World Business

51(2): 212-225.

EMPRETEC - Inspiring entrepreneurship. (2016). Retrieved February 9, 2017, from Empretec - Unctad:


Evenett. (2005). What is the relationship between competition law and policy and economic development? In

Brooks, & Evenett, Competition policy and development in Asia. London: Palgrave MacMillan.


Fayolle, Gailly, & Lassas-Clerc. (2006). Effect and counter-effect of entreprenership education and social

context on students' intentions. Estudios de economia aplicada. Retrieved August 7, 2016

Ferris, S. P., et al. (2013). "CEO overconfidence and international merger and acquisition activity." Journal of

Financial and Quantitative Analysis 48(01): 137-164.

Fischhoff, B. and R. Beyth (1975). "I knew it would happen: Remembered probabilities of once—future

things." Organizational Behavior and Human Performance 13(1): 1-16.

Fischhoff, B., et al. (1977). "Knowing with certainty: The appropriateness of extreme confidence." Journal of

Experimental Psychology: Human perception and performance 3(4): 552.

Frese, M. and D. Fay (2001). "4. Personal initiative: An active performance concept for work in the 21st

century." Research in organizational behavior 23: 133-187.

Friedman, H. (2007). "Does Overconfidence Affect Entrepreneurial Investment?" Wharton Research Scholars

Journal: 42.

Friedmann. (2007). Does self-efficacy affect entrepreneurial investment? Strategic Management Society.

Retrieved April 1, 2017

Bibliography

140

Fuchs, Werner, & Wallau. (2008). Entrepreneurship education in Germany and Sweden. Journal of small

business and enterprise development. Retrieved August 8, 2016

Furnham (1992). Personality at Work: The Role of Individual Differences in the Workplace. London,

Routledge.

Gartner (1985). "A Conceptual Framework for Describing the Phenomenon of New Venture Creation."

Academy of Management Review 10(4): 696-706.

Gartner (1988). "Who is an Entrepreneur? Is the Wrong Question." American Journal of Small Business 12:

11-32.

Gartner (1990). "What are we talking about when we talk about entrepreneurship?" Journal of Business

Venturing: 15-28.

Gervais, S., et al. (2007). "Overconfidence, investment policy, and manager welfare." Fuqua School of

Business Working Paper.

Giddens, A. (1984). "The constitution of society Polity Press." Cambridge (oorspronkelijke uitgave 1984).

Glade (1967). "Approaches to a Theory of Entrepreneurial Formation." Explorations in Entrepreneurial History

4: 245-259.

Goedhuys, & Sleuwaegen. (2009). High-growth entrepreneurial firms in Africa: a quantile regression

approach. Retrieved March 19, 2017

Goel, A. M. and A. V. Thakor (2008). "Overconfidence, CEO selection, and corporate governance." The

Journal of Finance 63(6): 2737-2784.

Gold, Falck, & Heiblich. (2011). The long wind of change: educational impacts on entrepreneurial

intentions. Vienna: European Regional Science Association. Retrieved March 24, 2017

Golllin. (2008). Nobody's business but my own: Self-employment and small enterprises in economic

development. Journal of economic theory. Retrieved August 6, 2016

Greenberger, D. B. and S. Strasser (1986). "Development and application of a model of personal control in

organizations." Academy of Management Review 11(1): 164-177.

Greenberger, D. B. and S. Strasser (1991). "The role of situational and dispositional factors in the enhancement

of personal control in organizations." Research in organizational behavior 13: 111-145.

Gries, & Naudè. (2010). Entrepreneurship and structural economic transformation. In Small business

economics journal. Retrieved August 5, 2016

Griffin, D. and A. Tversky (1992). "The weighing of evidence and the determinants of confidence." Cognitive

psychology 24(3): 411-435.

Grinblatt, M. and M. Keloharju (2008). "Sensation seeking, overconfidence, and trading activity." Journal of

Finance.

Harre (1984). Personal Being. Cambridge, Harvard University Press.

Hayward, M. L. and D. C. Hambrick (1997). "Explaining the premiums paid for large acquisitions: Evidence

of CEO hubris." Administrative Science Quarterly: 103-127.

Hayward, M. L., et al. (2006). "A hubris theory of entrepreneurship." Management Science 52(2): 160-172.

Heaton, J. B. (1997). "Managerial optimism and corporate finance."


141

Herron and Sapienza (1992). "The Entrepreneur and the Initiation of New Venture Launch Activities."

Entrepreneursbip Theory and Practice 17(1): 49-55.

Ho, & Wong. (2007). Financing, regulatory costs and entrepreneurial propensity. In Small Business

Ecnomics. Retrieved August 3, 2016

Homaday and Aboud (1971). "Characteristics of successful entrepreneurs." Personnel Psychology: 141-153.

House, R. J. and J. M. Howell (1992). "Personality and charismatic leadership." The Leadership Quarterly 3(2):

81-108.

Kanbur, S. M. (1979). "Of risk taking and the personal distribution of income." Journal of Political Economy

87(4): 769-797.

Katundu, & Gabagambi. (2014). Demographic determinants of Tanzanian graduates' entrepreneurial entry

intentions. Research Journal of Economics, Business and ICT. Retrieved March 24, 2017

Kautonen, Luoto, & Tornikoski. (2010). Influence of work history on entrepreneurial intentions in "prime

age" and "third age". International Small Business Journal. Retrieved March 24, 2017

Kidd, J. and J. Morgan (1969). "A predictive information system for management." Journal of the Operational

Research Society 20(2): 149-170.

Kidd, J. B. (1970). "The utilization of subjective probabilities in production planning." Acta Psychologica 34:

338-347.

Kihlstrom, R. E. and J.-J. Laffont (1979). "A general equilibrium entrepreneurial theory of firm formation

based on risk aversion." Journal of Political Economy 87(4): 719-748.

Kimhi. (2009). Entrepreneurship and income inequality in southern Ethiopia. Retrieved March 19, 2017

Kirkman, B. L. and B. Rosen (1999). "Beyond self-management: Antecedents and consequences of team

empowerment." Academy of Management journal 42(1): 58-74.

Kirton (1976). "Adaptors and innovators: A description and measure." Journal of Applied Psychology 61: 622-

629.

Kirton (1978). "Have adaptors and innovators equal levels of creativity." Psychological Reports, 42: 695-698.

Kirzner. (1973). Competition and entrepreneurship. Chicago: University of Chicago Press. Retrieved August

5, 2016

Knight and Cavusgil (2004). "Innovation, organizational capabilities, and the born-global firms." Journal of

International Business Studies.

Knight, F. (1921). "Risk, uncertainty, and profitHoughton Mifflin." New York.

Koriat, A., et al. (1980). "Reasons for confidence." Journal of Experimental Psychology: Human learning and

memory 6(2): 107.

Krueger, N. (1993). "The impact of prior entrepreneurial exposure on perceptions of new venture feasibility

and desirability." Entrepreneurship: Theory and practice 18(1): 5-22.

Krueger, N. F. and D. V. Brazeal (1994). "Entrepreneurial potential and potential entrepreneurs."

Entrepreneurship theory and practice 18: 91-91.

Krueger, Reilly, & Carsrud. (2000). Competing model of entrepreneurial intentions. Journal of business

venturing. Retrieved August 8, 2016

Bibliography

142

LaLonde. (1985). The Promise of Public Sector-Sponsored Training Programs. The Journal of Economic

Perspectives. Retrieved March 30, 2017

Langer, E. (1983). "The psychology of control."

Larwood, L. and W. Whittaker (1977). "Managerial myopia: Self-serving biases in organizational planning."


Lautenschlager, & Haase. (2011). The myth of entrepreneurship education. Journal of entrepreneurship

education. Retrieved August 7, 2016

Leavitt, H. J. and H. Bahrami (1988). Managerial psychology: Managing behavior in organizations, University

of Chicago Press.

Lee, Chang, & Lim. (2005). Impact of entrepreneurship education: a study of the US and Korea. International

entrepreneurship and management journal. Retrieved August 7, 2016

Leff. (1979). Entrepreneurship and economic development: The problem rivisited. Journal of economic

literature. Retrieved August 2, 2016

Levenson (1973). "Multidimensional locus of control in psychiatric patients." Journal of Counseling and

Clinical Psychology: 397-404.

Lewin, K. (1938). "The conceptual representation and the measurement of psychological forces."

Lucas Jr, R. E. (1978). "On the size distribution of business firms." The Bell Journal of Economics: 508-523.

Lusted, L. B. (1977). A study of the efficacy of diagnostic radiologic procedures: Final report on diagnostic

efficacy, Committee on Efficacy Studies, American College of Radiology.

Luthje, & Franke. (2003). The making of an entrepreneur. R&D Management. Retrieved August 7, 2016

Maddi (1989). Personality Theories: A Comparative Analysis. Chicago, Dorsey Press.

Magnusson and Endler (1977). Personality at the Crossroads: Current issues in Interactional Psyhology. New

Jersey, Erlbaum Hillsdale.

Malmendier, U. and G. Tate (2005). "CEO overconfidence and corporate investment." The Journal of Finance

60(6): 2661-2700.

Malmendier, U. and G. Tate (2008). "Who makes acquisitions? CEO overconfidence and the market's

reaction." Journal of financial Economics 89(1): 20-43.

Masters, R. and R. Meier (1988). "Sex differences and risk-taking propensity of entrepreneurs." Journal of

small business management 26(1): 31.

McClelland, D. C. (1961). "The achievement society." Princenton, NJ: Von Nostrand.

McClelland, et al. (1953). The achievement motive. New York, Appleton-Century-Crofts.

McClelland. (1958). Methods of measuring human motivation. In Motives in fantasy, action, and society.

Princeton: Atkinson. Retrieved August 8, 2016

McDougall and Oviatt (2000). International Entrepreneurship, Academy of management journal.

McKenzie, & Woodruff. (2012). What are we learning from business training and entrepreneurship

evaluations around the developing world? Washington: World Bank. Retrieved August 8, 2016


143

Miller, D. T. and M. Ross (1975). "Self-serving biases in the attribution of causality: Fact or fiction."

Psychological bulletin 82(2): 213-225.

Miner, J. B. and N. S. Raju (2004). "Risk propensity differences between managers and entrepreneurs and

between low-and high-growth entrepreneurs: a reply in a more conservative vein."

Moore, D. A. and P. J. Healy (2008). "The trouble with overconfidence." Psychological review 115(2): 502.

Morrison, E. W. (1993). "Longitudinal study of the effects of information seeking on newcomer socialization."


Naffziger, et al. (1994). "A Proposed Research Model of Entrepreneurial Motivation." Entrepreneurship

Theory and Practice 18(5): 29-42.

Naudè. (2010). Entrepreneurship. Developing countries and development economics: New appraoches and

insights. In Small Business Economics. Springer. Retrieved August 3, 2016

Naudè. (2010b). Entrepreneurship is not a binding constraint on growth and development in the poorest

countries. In World development. Retrieved August 6, 2016

Naudè. (2013). Entrepreneurship and economic development. Retrieved August 4, 2016

Neale, M. A. and M. H. Bazerman (1991). Cognition and rationality in negotiation, Free Pr.

Nisbett, R. E. and L. Ross (1980). "Human inference: Strategies and shortcomings of social judgment."

Oskamp, S. (1965). "Overconfidence in case-study judgments." Journal of consulting psychology 29(3): 261.

Oviatt and McDougall (1994). "Toward a theory of international new ventures." ournal of International

Business.

Palmer (1971). "The application of psychological testing to entrepreneurial potential." California Management

Review: 32-38.

Palomino, F. and A. Sadrieh (2011). "Overconfidence and delegated portfolio management." Journal of

Financial Intermediation 20(2): 159-177.

Parker, S. K. (1998). "Enhancing role breadth self-efficacy: the roles of job enrichment and other organizational

interventions." Journal of applied psychology 83(6): 835.

Persinger, E. S., et al. (2011). "The born global entrepreneur in emerging economies." International Business

& Economics Research Journal (IBER) 6(3).

Pittaway, & Cope. (2007). Entrepreneurship education. International small business journal. Retrieved

August 8, 2016

Pitz, G. F. and N. J. Sachs (1984). "Judgment and decision: Theory and application." Annual review of

psychology 35(1): 139-164.

Pritchett, & Sandefur. (2013). Context matters for size. Washington: Center for Global development.


Regan, J. W., et al. (1975). "Do people have inflated views of their own ability?" Journal of Personality and

Social Psychology 31(2): 295.

Reynolds, Bosma, Autio, Hunt, DeBono, Servais, . . . Chin. (2005). GME: Data collection design and

implementation. In Small business economics. Retrieved August 5, 2016

Bibliography

144

Robinson, et al. (1991). "An Attitude Approach to the Prediction of Entrepreneurship." Entrepreneurship

Theory and Practice 16 (4): 13-31.

Roll, R. (1986). "The hubris hypothesis of corporate takeovers." Journal of business: 197-216.

Rotter (1966). "Generalized expectancies for intemal versus extemal control of reinforcement." Psychological

Monographs: General and Applied: 80.

Salamouris, I. S. (2013). "How overconfidence influences entrepreneurship." Journal of Innovation and

Entrepreneurship 2(1): 8.

Schneider (1983). Interactional psychology and organizational behavior. Greenwich, JAI Presse.

Schopler, J. and B. Layton (1972). "Determinants of the self-attribution of having influenced another person."

Journal of Personality and Social Psychology 22(3): 326.

Schumpeter. (1961). The theory of economic development. New York: Oxford University Press. Retrieved

August 5, 2016

Seibert, S. E., et al. (1999). "Proactive personality and career success." Journal of applied psychology 84(3):

416.

Sengupta, & Debnath. (1994). Need for achievement and entrepreneurial success. Journal of

entrepreneurship. Retrieved August 8, 2016

Shane, S. and S. Venkataraman (2000). "The promise of entrepreneurship as a field of research." Academy of

Management Review 25(1): 217-226.

Shapero (1975). "The displaced, uncomfortable entrepreneur." Psychology Today: 83-86.

Shapero and Sokol (1982). The Social Dimensions of Entrepreneurship. Encyclopedia of Entrepreneurship.

New Jersey, Prentice-Hall: 72-90.

Shaver and Scott (1991). "Person, Process, Choice: The Psychology of New Venture Creation."

Entrepreneurship Theory and Practice 16(2): 23-45.

Simon, M. and S. M. Houghton (2003). "The relationship between overconfidence and the introduction of risky

products: Evidence from a field study." Academy of Management journal 46(2): 139-149.

Staw, B. M. (1986). Beyond the control graph: Steps toward a model of perceived control in organizations.

The Organizational Practice of Democracy, John Wiley Chichester, UK. 3.

Swayne and Tucker (1973). The effective entrepreneur. New Jersey, General Leaming Press.

Tamvada. (2009). Entrepreneurship and welfare. Retrieved March 19, 2017

Terborg, J. R. (1981). "Interactional psychology and research on human behavior in organizations." Academy

of Management Review 6(4): 569-576.

Thomas, J. P., et al. (2010). "Employee proactivity in organizations: A comparative meta‐analysis of emergent

proactive constructs." Journal of Occupational and Organizational Psychology 83(2): 275-300.

Thompson, & Della. (1995). Concise Oxford English Dictionary (9th ed.). Oxford University Press.


Thurik, & Wennekers. (2004). Entrepreneurship, small business and economic growth. Journal of small

business and enterprise development. Retrieved August 2, 2016


145

Tosi, H. L., et al. (1997). "Disaggregating the agency contract: The effects of monitoring, incentive alignment,

and term in office on agent decision making." Academy of Management journal 40(3): 584-602.

UNCTAD. (2014). 2014 EMPRETEC Annual Report. Retrieved March 28, 2017

Valerio, Parton, & Robb. (2014). Entrepreneurship education and training programs around the world. The

World Bank. Retrieved August 8, 2016

Volkmann. (2009). Entreprenership in higher education. In Educating the next wave of entrepreneurs.

Cologny: World Economic Forum. Retrieved August 7, 2016

Von Holstein, C.-A. S. S. (1972). "Probabilistic forecasting: An experiment related to the stock market."

Organizational Behavior and Human Performance 8(1): 139-158.

Wagenaar, W. A. and G. B. Keren (1986). Does the expert know? The reliability of predictions and confidence

ratings of experts. Intelligent decision support in process environments, Springer: 87-103.

Wang, & Wong. (2004). Entrepreneurial interest of University students in Singapore. Technovation.


Weber, & Schaper. (2004). Understanding the grey entrepreneur. Journal of Enterprising Culture. Retrieved

March 24, 2017

Weinstein, N. D. (1980). "Unrealistic optimism about future life events." Journal of Personality and Social

Psychology 39(5): 806.

Weisz (1990). Development of control-related beliefs, goals and styles in childhood and adolescence: A clinical

perspective. New Jersey, Erlbaum , Hillsdale.

Wennekers, Van Stel, Thurik, & Reynolds. (2005). Nascent entrepreneurship and the level of economic

develoment. In Small business economics. Retrieved August 6, 2016

Westerfield, M. and T. Adrian (2007). Disagreement and Learning in a Dynamic Contracting Model. 2007

Meeting Papers, Society for Economic Dynamics.

White, R. W. (1959). "Motivation reconsidered: The concept of competence." Psychological review 66(5):

297.

Woo, et al. (1994). "Theory Building in the Presence of Randomness': The Case of Venture Creation and

Performance." Journal of Management Studies 31(4): 5207-5524.

World Bank. (2005). Doing business: Benchmarking business regulations. Retrieved August 2, 2016

Wu, B. and A. M. Knott (2006). "Entrepreneurial risk and market entry." Management Science 52(9): 1315-

1330.


a

Appendix

Survey

Appendix

b


c

Appendix

d

DDD – Detailed Tables

ENTREPRENEURIAL ASPIRATIONS

(y1) (y2)

Entry International

Time 0.142 0.714

(0.36) (1.47)

Treatment -0.343 0.283

(-1.08) (0.72)

Time##Treatment -0.0212 -1.045

(-0.04) (-1.43)

MEDASP -0.242 0.747*

(-0.70) (1.74)

Time##MEDASP -0.249 -0.982

(-0.49) (-1.55)

Treatment##MEDASP 0.438 -0.541

(1.03) (-1.03)

Time##Treatment##MEDASP 0.342

(0.45)

1.307

(1.38)

N 135 133



* p<0.10, ** p<0.05, *** p<0.01

SELF - CONFIDENCE

(y1) (y2)

Entry International

Time 0.117 0.248

(0.31) (0.51)

Treatment 0.658* 0.594

(1.94) (1.35)

Time##Treatment -1.208** -1.316*

(-2.37) (-1.97)


e

MEDCONF -0.0398 0.150

(-0.13) (0.37)

Time##MEDCONF -0.206 -0.409

(-0.42) (-0.64)

Treatment##MEDCONF -0.892** -0.927

(-2.03) (-1.62)

Time##Treatment##MEDCONF 1.941***

(2.91)

1.742**

(1.98)

N 138 136



* p<0.10, ** p<0.05, *** p<0.01

INNOVATIVENESS

(y1) (y2)

Entry International

Time -0.337 0.197

(-1.28) (0.59)

Treatment -0.136 0.262

(-0.62) (0.94)

Time##Treatment 0.439 -0.575

(1.27) (-1.31)

MEDINN -0.0268 0.571

(-0.10) (1.60)

Time##MEDINN 0.671 -0.440

(1.36) (-0.70)

Treatment##MEDINN 0.189 -0.728

(0.48) (-1.45)

Time##Treatment##MEDINN -0.466 1.025

(-0.73) (1.26)

N 138 136

Marginal effects; t statistics in parentheses (d) for discrete change of dummy variable from 0 to 1

* p<0.10, ** p<0.05, *** p<0.01

Appendix

f

DETERMINATION

(y1) (y2)

Entry International

Time -0.230 0.00619

(-1.05) (0.02)

Treatment 0.0389 0.0555

(0.21) (0.24)

Time##Treatment 0.708** -0.256

(2.50) (-0.69)

MEDPERS 0.312* 0.277

(1.93) (1.36)

Time##MEDPERS

0.229 -0.0932

(0.83) (-0.26)

Treatment##MEDPERS -0.110 -0.252

(-0.46) (-0.82)

Time##Treatment##MEDPERS -0.649* 0.375

(-1.75) (0.77)

N 139 137



* p<0.10, ** p<0.05, *** p<0.01

FUTURE ATTITUDES

(y1) (y2)

Entry International

Time -0.0744 -0.815

(-0.13) (-1.11)

Treatment -1.098** -0.552

(-1.99) (-0.78)

Time##Treatment 0.509 0.685

(0.68) (0.71)

MEDFUT -0.426 -0.814

(-0.83) (-1.24)


g

Time##MEDFUT 0.0509 0.979

(0.07) (1.07)

Treatment##MEDFUT 1.328* 0.559

(1.94) (0.64)

Time##Treatment##MEDFUT -0.358 -0.900

(-0.38) (-0.75)

N 135 133



* p<0.10, ** p<0.05, *** p<0.01

politecnico di milano pannia... · cinque anni, un lungo viaggio, un percorso accidentato fatto di...

Documents