Learning from African entrepreneurship—on the psychological function of entrepreneurial preparedness

Frese, Michael Article — Published Version Learning from African entrepreneurship—on the psychological function of entrepreneurial preparedness Small Business Economics Provided in Cooperation with: Springer Nature Suggested Citation: Frese, Michael (2024) : Learning from African entrepreneurship—on the psychological function of entrepreneurial preparedness, Small Business Economics, ISSN 1573-0913, Springer US, New York, NY, Vol. 63, Iss. 4, pp. 1365-1380, https://doi.org/10.1007/s11187-024-00960-w This Version is available at: https://hdl.handle.net/10419/315612 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. http://creativecommons.org/licenses/by-nc-nd/4.0/ Vol.: (0123456789) Small Bus Econ (2024) 63:1365–1380 https://doi.org/10.1007/s11187-024-00960-w RESEARCH ARTICLE Learning fromAfrican entrepreneurship—on thepsychological function ofentrepreneurial preparedness MichaelFrese Accepted: 31 July 2024 / Published online: 13 September 2024 © The Author(s) 2024 Abstract Psychological preparedness for entrepreneurial actions helps to connect macro-institutional support for entrepreneurs to actions of entrepreneurs. Action knowledge and personal initiative are part of entrepreneurial preparedness, and there are two training concepts that have been developed to increase the number of entrepreneurs among BA and high school students in lowand middle-income countries and to improve the skills and mindset of entrepreneurs. I discuss large-scale randomized controlled interventions in both of these areas with the STEP and personal initiative training. Showing that psychological preparedness for entrepreneurial actions can be enhanced, the question is whether methods shown to work in low-income countries can inform entrepreneurship research in general. Issues that seem to speak against generalizing are often seen in necessity, survivalist, and informal entrepreneurship. These issues are discussed and are deemed of lower importance for generalization of findings. There are also methodological advantages when doing research in lowand middle income countries.Practical and policy implications are also provided. Plain English Summary Entrepreneurship is about taking action and seizing opportunities. People often think of African entrepreneurs as just trying to survive, but thereis more to it. In fact, Africa has likely many more entrepreneurs than the West, and these young business people are keen to learn and grow. We have created training programs for university and high school students to boost the number of entrepreneurs and improve their skills. Wehave tested these programs with over 6000 students across 11 developing countries, and theyhave been successful: Training participants started 30% more businesses than the control group. We have also developed a training called personal initiative to help entrepreneurs increase their profits by up to 30%. This has been tested with thousands of participants in ten countries. What makes these training programs special is that they are scientifically tested and proven to be highly effective (the tests were similar to examining the effectiveness of a new medicine). They focus on immediate skill and mindset learning. Psychological training helps entrepreneurs be ready to make the most of government and macro-economic support for businesses. So, thereis a lot we can learn from entrepreneurship in Africa. Keywords Entrepreneurship· Entrepreneurial actions· Personal initiative· Economic psychology JEL Classification L26· D91· G41 M.Frese(*) Asia School ofBusiness (in collaboration withMIT Sloan Management), KualaLumpur, Malaysia e-mail: [email protected]y; [email protected] M.Frese Department ofManagement & Organisation, Leuphana University, Lüneburg, Germany 1366 M.Frese Vol:. (1234567890) 1 Introduction In this article, I argue for the importance of psychology for studying entrepreneurship, for methodological advantages of doing research in lowand middleincome countries (LMICs), and for the usefulness of studying entrepreneurship in LMICs.1 Psychological research on entrepreneurship is interesting for theoretical and practical reasons: Actions are central to entrepreneurship, and therefore, the process of improving those actions needs to be studied for practical applications (Frese, 2021; Frese & De Kruif, 2000). Psychological action theory allows to understand how actions influence entrepreneurial success (Frese, 2005; Frese & Fay, 2001). Studying entrepreneurship can help to reduce poverty—one of the grand challenges for management and entrepreneurship scholars (George et al., 2016) and a United Nations Sustainable Development Goal. At any moment in time, there are around 210 million firm creations in LMIC countries across the globe (Reynolds, 2012). If interventions improve their actions, it would help economic development. At the very least, the poverty of the owners of micro and small enterprises can be reduced by increasing their effectiveness (Reynolds, 2010). Macroand micro-system approaches for effective support for entrepreneurs are often discussed just along disciplinary lines without reference to each other. Economists suggest large-scale (macrosystem) improvements to institutions and strategies of countries, for example, entrepreneurship friendly tax regimes, access to credit, good banking systems, encouragement of the private sector to collaborate with small businesses, improving human capital, encouragement of formalizing firms, and supporting good jobs, easy access to markets, and reducing barriers, such as corruption or regulatory hurdles (Wurth et al., 2022). These are also described as important by entrepreneurs (Frese et al., in prep 2024). However, we suggest that it is also necessary to understand psychological preparedness for entrepreneurial actions. Figure1 describes the relationship between macro-conditions and micro-areas: For example, good financial support by government programs can be offered and will be taken. However, users of such financial support need to be prepared to make the best use of financial resources. Preparedness for actions requires input from psychology; preparedness was originally developed by Seligman, combining biology with psychology to understand the quick development of phobias (e.g., of snakes) (Seligman, 1971). We transport this concept to combine macro-system economic concepts with micro-concepts of psychology: A match between macro-institutional offers and psychological acceptance and motivation is needed to start a company. Psychological preparedness connects the micro-world of individual entrepreneurs to the macro-world of institutional conditions. The idea is similar to the fit idea in person-environment interactions, for example, in trait activation theory (Cable & Edwards, 2004; Tett & Burnett, 2003): Psychological preparedness Market (size, munificence, Reducing regulatory hurdles Banking system, etc. processes, for example: The hinge: psychological preparedness for entrepreneurial mindsets:, for example entrepreneurial knowledge Fig. 1 Combining macroand micro-processes in the entrepreneurial ecosystem of a country 1 All of the studies reported here were done with colleagues and students in Europe and Africa as well as economists at the World Bank. I dedicate the Global Award for Entrepreneurship Research to them. I received helpful feedback on this article from Mona Mensmann, Michael Gielnik, Janina Peschmann, Philip Yang, and Amba Frese. 1367 Learning fromAfrican entrepreneurship—on thepsychological function ofentrepreneurial… Vol.: (0123456789) makes the microand macro-worlds click; the click helps to build on opportunities, to use resources well, and to put good ideas into action. In the following, I elaborate on two components of psychological preparedness and discuss them in more detail—actionoriented entrepreneurial knowledge and personal initiative (PI).2 They can be improved by two trainings: • The STEP training which focuses on the cognitive area of effective entrepreneurship (action-oriented knowledge) (Gielnik et al., 2015; Peschmann etal., 2023) • The personal initiative training which improves the motivational part of the entrepreneurial mindset—PI implies to be self-starting, future-oriented, and persistent in overcoming barriers (Frese, 2021) Before describing these trainings, I need to elaborate on two methodological advantages for doing studies in LMICs. 2 Methodological issues forstudying entrepreneurship inlow‑ andmiddle‑income countries Studying entrepreneurship in LMICs may help to address endogeneity which is characterized by omitted variables, simultaneity, measurement error, and selection (Hill etal., 2021). Entrepreneurship research often describes the problems of selection effects (range restriction), e.g., exit from the market. Often a Heckman’s instrument variable is developed to deal with endogeneity problems (Hill etal., 2021). However, it is not easy to develop a good instrument variable that takes care of ‘pre-selection’ issues. Examples of pre-selection are as follows: Potential entrepreneurs may have an idea for starting a company but stop soon afterwards; others may think long and hard about start-up ideas, before noticing that entrepreneurship is not for them; still others may even briefly start a firm for a few weeks but then take an attractive job offer. Pre-selection may lead to range restriction, which in turn causes serious underestimates of relationships (Hunter etal., 2006; Mendoza & Mumford, 1987). “…certain forms of range restriction can distort observed predictor correlations to a much greater degree” than assumed by many researchers (Sackett etal., 2007, p. 542). Some entrepreneurship researchers make a virtue of selection effects and suggest to concentrate on high-growth entrepreneurship (La Porta & Shleifer, 2014a). Shane (2009, p. 145) argued: “Stop subsidizing the formation of the typical start-up and focus on the subset of businesses with growth potential. Getting economic growth and job creation from entrepreneurs is not a numbers game. It is about encouraging high quality, high growth companies to be founded” (Shane, 2009). Shane’s paper was influential and useful because it reinforced a differentiated discussion on “gazelles” (Morris et al., 2015). Research that attempts to select only highly successful entrepreneurs often has perfect “hindsight-vision”; this may lead to good post-diction models that may not lead to an adequate understanding of high growth. Shane knew this problem and, therefore, suggested utilizing experts (venture capital providers) as predictors of gazelles. Unfortunately, venture capital providers are also not very good at predicting success for individual firms; they make their money by predicting industries rather than individual success. The small meta-analytic correlation between VC investment and returns breaks down when industry is included (Rosenbusch et al., 2013). Similarly, experts as well as artificial intelligence methods were not able to predict growth well in an African setting (McKenzie & Sansone, 2019). Davidsson (2004) suggested a thought experiment on horse racing to understand some of the effects of studies that are selecting: sucessful entrepreneurs: “We design the study so that we include only those gamblers who actually won…” (p. 62), leading to strong verification of the hypothesis that gambling leads to winning. This is obviously wrong (Davidsson, 2004). To deal with this problem, Davidsson suggested starting prediction studies as early as possible. Such studies exist, e.g., in the Global 2 Obviously, there are a number of psychological issues that contribute to action-oriented knowledge and to the mindset of Personal Initiative, such as personality variables, motivational/ affective antecedents (e.g., entrepreneurial passion), intellectual resource, and cognitive antecedents; moreover, the action oriented characteristics include a number of different concepts, such as information search, active feedback processing, and deliberate practice, and they all are contingent on cultural factors (they are described in more detail in Figure1, p. 429 of Frese & Gielnik, 2014). 1368 M.Frese Vol:. (1234567890) Entrepreneurship Monitor (GEM) or in some analyses of representative social surveys (Davidsson etal., 2009; Hopp & Greene, 2018). However, a large part of studies (my own included) tends to recruit research participants from some sort of registers of existing entrepreneurs (e.g., Dun & Bradstreet). Selection effects may then be operative—even when relatively new ventures are selected.3 Range or variance restriction reduces correlations when selection affects the variable involved in a correlation (Hunter etal., 2006); other correlations may increase.4 Therefore, it is better to study budding entrepreneurs who have no other choice but to start a business because there are no better alternatives (we will talk about “necessity entrepreneurship” a bit later in this article). For example, about one-third of Ugandans have an intention to start a company or have just started one at any one point in time (Walter etal., 2005). Given this high degree of start-up activities, selection effects are probably small. Therefore, studies done in countries like Uganda may suffer less from range restrictions than even the most sophisticated analysis and recruitment strategy in highincome countries with their welfare or unemployment support. Another frequently discussed endogeneity problem relates to causality. The best way to study causal effects is to use true experimental field studies with a random control group (randomized controlled treatment, RCT) (Hill etal., 2021). Other reasons for relying on experiments are ethical ones: I do not want to provide interventions with unclear scientific merit in LMICs. Entrepreneurial success in poor countries is important because poverty becomes worse when things go wrong. It is also unethical for unproven interventions to induce optimism and hope in people living under precarious circumstances. Thus, objective evidence for causal effectiveness of interventions is essential. Experiments also keep researchers honest and humble and stimulate new thinking when results do not support hypotheses. Practical issues also speak for doing such studies in LMICs—there is often a greater need for good interventions in such countries and a greater willingness to learn about entrepreneurship.5 We conducted experimental field studies in LMICs to test the effectiveness of new training programs to produce preparedness for entrepreneurial actions. The curricula for these training programs were based on scientific evidence. The first training aims to increase entrepreneurial action knowledge and effectiveness of entrepreneurial actions so that more students are prepared to start an entrepreneurial career; the second training improves the motivational and skill mindset of personal initiative. 3 Interventions toimprove action‑oriented entrepreneurial knowledge andpersonal initiative: STEPand Personal Initiative (PI) training 3.1 STEP training (student training for entrepreneurial promotion) STEP targets Bachelor, high school, and technical college students aiming to increase the frequency of successful entrepreneurship (“make job providers out of job seekers”). STEP is highly action-oriented. For example, it mandates that groups of 5–6 students start an informal business in their first or second session; this is crucial to gain experiences in actions.6 STEP trains action knowledge and skills, providing, for example, action knowledge to successfully initiate and manage a new venture 3 A extreme example on the problems of selection effects occurred in Collins’ book Good to Great (Collins, 2001). Collins selected companies that were originally average and then improved their stock returns to three times the market. He underestimated the dynamics of the market, however. A bit later two of Collin’s great companies went bankrupt, and on average, his group of “great companies” did worse than the general market (Codrington, 2011). 4 The selection effects may pose particular problems in qualitative studies; they are usually based on small samples; also retrospective interpretations prevail because interesting results or new theory can be found only when new details are unearthed. Then hindsight errors and self-serving attributions are frequent; retrospectively, entrepreneurs’ reports are based on sense-making based on lay theories about events and their reactions. 5 Our pilot studies revealed that in Western countries, only a small fraction of entrepreneurs showed interest in skillenhancement programs like Personal Initiative training, thereby limiting the potential sample size. 6 Action theory suggests to base trainings not on simulation, but to use real-life actions as much as possible (Frese, 2021). Also real-life actions provide better learning when errors occur—people learn more from important consequences (Horvath etal., 2021). 1369 Learning fromAfrican entrepreneurship—on thepsychological function ofentrepreneurial… Vol.: (0123456789) including business opportunity identification, marketing, leadership and strategic management, psychology of planning and implementation, including how to deal with one’s mistakes, and financial bootstrapping. Personal Initiativeis also integrated into the STEP training. STEP differs from traditional business training due to its emphasis on learning while acting and being guided by scientific knowledge; the content istiedto participants’ new informal start-ups. The multi-disciplinary STEP training uses “action principles”—minimally necessary rules of thumb to be well-functioning based on research; the curriculum development radically reduced the curriculum content to its absolute minimum of principles for action.7 Thus, there is little abstract teaching—everything relates to the new business just started. For instance, marketing’s 5 or 6 Ps (Product, Price, Promotion, Place, and People + Passion) are not presented abstractly. Instead, participants relate each P to their group’s business, developing steps for effectively marketing their products or services as well as product/service adaptations. Active forms of getting negative feedback from customers are developed, taught, and incorporated. After the 12th and final session, their businesses are dissolved. Usually, they received seed capital in the beginning (e.g., USD 100 for each group) with the expectation to get it paid fully back after the training—about 80–90% is usually paid back. STEP accepts “honest mistakes” resulting in financial loss (using them as training material); but trainers expect students to recover and to continue efforts to repay the initial amount. Training sessions consist of three parts: presentation of action principles, experiential learning with real-world tasks, and students’ ventures. Students present achievements, next steps, problems encountered, and solutions implemented. Trainees and trainers provided positive and negative feedback referring to specific action principles for performance improvement. Trainers emphasize that errors should be interpreted as learning opportunities rather than as setbacks(Frese & Keith, 2015). Over time, participants increasingly take over to provide feedback to their peers, shifting the responsibility from trainers to trainees. STEP training—developed between 2006 and 2008 with instructors from Makerere University Business School in Uganda—aims to alleviate poverty. African Bachelor of Arts students often struggle to secure employment in the existing economy. Consequently, the primary dependent variable is the number of businesses started. As the training was conducted during the final semester of their studies, it was feasible to determine soon after graduation and one year later whether or not they had launched businesses (Gielnik etal., 2015). The RCT proved that the training group had a 30 percent higher rate of starting a business than the control group one year after the training (Gielnik etal., 2015). The most important mediators between training and starting a firm after the training were entrepreneurial actions and opportunity identification—both of these were strongly influence by STEP training. STEP also increased action knowledge, number of entrepreneurial actions, and planning and entrepreneurial goal intentions (Gielnik etal., 2015). STEP training has been implemented in 11 LMICs across approximately 22 universities. Long-term studies across 2 years based on 6000 Bachelor students with 15,600 observations showed 30% higher business ownership in the trained group, with total income approximately 10% higher than in the control group (Peschmann etal., 2023). The participants’ employability was also enhanced, with the treatment group getting more jobs than the control group. STEP training did not just increase start-ups in university students but also in 800 high school students (Herrmann etal., n.d. in preparation). It is crucial to note that some researchers expressed concern that highly motivating trainings may inadvertently increase start-up rates for individuals who are not adequately equipped for entrepreneurship in terms of personality, strategies, or genetics (Shane, 2009). According to this hypothesis, the much larger group of STEP training start-ups would have poorer performance than the smaller and less encouragedgroup of firms started by the non-training control group—the latter group did not receive extra motivation and would be a more ‘natural’ selection of start-ups. The results dismiss this hypothesis; businesses founded by training participants were as profitable as those in the control group in the long run (Peschmann et al., 2023). In summary, by enhancing concrete action-oriented knowledge and the preparedness to utilize opportunities to start businesses, STEP helps to improve the hinge between microand macro-subsystems. 7 Financial literacy has shown this to be useful somewhat later, as well (Drexler etal. 2014). 1370 M.Frese Vol:. (1234567890) 3.2 Personal initiative (PI) training for psychological preparedness Personal Initiative (PI) improves preparedness by enabling entrepreneurs to detect and exploit opportunities, to utilize resources, and to achieve high entrepreneurial success. PI, as a behavioral syndrome of self-starting, future thinking, and overcoming barriers, is particularly well-suited to describe successful entrepreneurship. The three components of PI interact with each other and reinforce each other (Frese, 2021). First, self-starting is a central concept for entrepreneurship because entrepreneurs do not usually have bosses who tell them what to do. Thus, entrepreneurs are always self-starting to some extent. However, entrepreneurs can also be reactive and thus show signs of the opposite of self-starting, for example, when they mimic competitors or trends in the market. Of course, entrepreneurs can and should learn from others, but when learning from competitors, they should not mimic blindly, but at least slightly change their offerings. Therefore, self-starting includes some degree of creative and innovative add-onsto products, services and processes. Second, future-orientation implies thinking of upcoming opportunities and problems and preparing for them now. Future thinking may lead to new ideas or stimulate innovativeness by thinking about future directions of the market or one’s position in the market. Third, overcoming barriers. It is a defining characteristic of entrepreneurship that difficulties appear: Most entrepreneurs have little resources and have to fight for customers, difficulties with suppliers, and problems in actually getting everything done. As entrepreneurs usually work in a competitive environment, competitors may erect barriers. They may take away customers with better prices or better products. Some researchers conceptualized persistence as part of the concept of grit (Mueller etal., 2017); at first sight, this looks to be the same; however, I prefer the construct “action characteristic” of overcoming barriers; the action-oriented concept includes the changeability of skills anddoes not share the problems of the grit concept, as gritis highly related to the personality trait conscientiousnessand traits are usually assumed to be less easy to change (Crede etal., 2017).8 PI is not just related to general performance but also to creative performance and employee productivity (Tornau & Frese, 2013). The opposite of personal initiative is to be reactive—a reactive approach is driven by the situation and/or by others; there is little to no planning or working towards a goal. Reactive implies that entrepreneurs respond to each problem separately and to each situational demand without trying to influence the situation. Of course, there may be some situations where reactive performance is useful, for example, when environmental difficulties surprise entrepreneurs or when planning becomes a form of procrastination. We think of personal initiative to be a good summary of the motivational component of effective entrepreneurship (Frese, 2021). Empirically, there are clear correlations with entrepreneurial success. Most importantly, an intervention study to improve personal initiative developed on the basis of action theory’s (Frese & Zapf, 1994) facet model (Frese & Fay, 2001) was shown to be effective: The three aspects of PI (self-starting, future-oriented, and overcoming barriers) are combined with the components of the action sequence (developing goals, knowledge about the action environment, plans, and feedback during the action and at the end of the action). For each facet, we developed action principles, exercises, small cases, etc., in the action-oriented training (Mensmann & Frese, 2017). The first randomized controlled intervention study of PI training caused Ugandan entrepreneurs to be more successful (Glaub et al., 2014). The World Bank and our research group did the first large-scale RCT study on PI training in Togo between 2014 and 2016 (Campos et al., 2017). It involved 1500 informal entrepreneurs from various industries (53% were female) who were randomly assigned to three groups: a non-treatment control group, a traditional business training, and one group receiving PI training. 8 In many cases, the literature (and including some of my earlier studies) did not sharply differentiate between traitPI and PI-action-characteristic (Tornau & Frese, 2013). A trait is defined to be stable across situations and across time. An action-characteristic is not just internal to the person but includes state-like interactions with the environment. We developed an interview measure of the state-like action characteristic (Fay & Frese, 2001). The concept of action characteristic encourages to develop interventions, in contrast to personality traits that are difficult to change. Footnote 8 (continued) 1371 Learning fromAfrican entrepreneurship—on thepsychological function ofentrepreneurial… Vol.: (0123456789) The PI training emphasizes self-starting actions that are based on innovation and opportunity identification; it leverages personal strengths and resources to generate new ideas (details in Frese etal., 2016a; Mensmann & Frese, 2017). Participants learn how to set goals that are high in innovativeness and ambitiousness. The participants are encouraged to search for negative feedback and to use errors as a learning device in line with the error management concept (Frese & Keith, 2015). PI training boosts the use of creative approaches to overcoming obstacles. The training teaches how to plan well in line with Gollwitzer’s implementation theory (Gollwitzer, 1999) (and to always have a backup plan). At the end of the training, the participants committed to a long-term business project for the next 4 to 6 months. Campos etal. (2017) showed PI training to have the highest impact on profitability, being significantly higher than the traditional business training (cf. Fig.2). The traditional business training did not significantly improve profitability compared with the control group. PI training increased the monthly profits by 30% (ca USD 60 more per month). The implementation of novel products and services was markedly higher among the PI training participations; they also increased capital and labor inputs as well as diversification of products or services. Another RCT of PI training in Mozambique led to positive effects in mostly illiterate and very poor female farmers; however, the interaction of two trainings—the PI training and the training for effective farming (agricultural extension training)—was central (Montalvao et al., 2024). The experiment included three random groups of approximately 740 participants each—one group received new practically applicable knowledge on effective farming; a second group participated in both, the PI and the farming training; and, finally, one no-training control group. PI training increased the number of add-on start-ups for income diversification and led to entrepreneurship in farming. The participants in the PI training increased the number of side-gigs by a significant degree. The most important result was that PI training led participants to use the improved farming knowledge better (e.g., planting cash crops, cf. Fig.3) than those who only received the farming training but no PI training. Even though both groupsparticipated inthe same farming training, only the PI group developed the entrepreneurial mindset to utilize their newly acquired knowledge on better farming. This shows that PI training formed the motivation to be entrepreneurial, to be open and experimental, and to get things done. PI training created the entrepreneurial mindset to improve farming as well as to develop side-businesses leading to higher profits. There are boundary conditions for the positive effects of PI training (Alibhai et al., 2019), as shown 96 106 125 90 95 100 105 110 115 120 125 130 Control Group Tradional Business Training Personal Iniave Training )sdnasuoht(scnarfAFC Monthly Profit Fig. 2 Comparing personal initiative training with a traditional business training, RCT in Togo (N=1500, 500 in each group). Source: numbers from Campos etal. (2017) Fig. 3 Agricultural extension training (AE) and personal initiative training (PI) in Mozambique (N=2240; n=760 for combined training). Source: numbers from Montalvao etal. (2024), profits in Mozambican metical 0.952 1.108 1.529 0 0.5 1 1.5 2 Control GroupAgricultural Extension Training AE + Personal Iniave Cash Crops # # of Cash Crops 365 524 820 0 200 400 600 800 1000 Control Group Agricultural Extension Training AE + Personal Iniave Business Profits Business Profits 1372 M.Frese Vol:. (1234567890) by a zero result in Ethiopia; this lack of success of the PI training was probably not due to cultural differences but to the (in)effectiveness of some trainers (Wolf etal., 2024). Although there was a correlation between PI and success in this sample, many of the trainers were not able to change PI enough to make a difference. Another boundary condition on PI is time. Some of the effects continue on very long term (unpublished data show differences to prevail across the three groups in Togo up to 8 years after the training in 2014); however, we also found at times short-term effects (Ubfal etal., 2022). Can people keep up showing PI over very long time? My current thinking is that PI actions cost effort—it is hard work to prompt initiating actions again and again. Therefore, PI actions are often reduced over time; because of prior innovations, that may not affect profits negatively (Mensmann & Frese, 2019). Studies on employees show some negative well-being effects if people force themselves to show PI (Zacher etal., 2019). However, PI actions can be considered the result of skill learning. Thus, the PIskill can be reawakened if needed and will then have positive effects by taking charge of the environment and utilize new opportunities. 3.3 Recapitulation Up to this point, we showed the two most important aspects of psychological preparedness for entrepreneurial actions—PI and action knowledge—to increase the rate of entrepreneurship among students and to improve entrepreneurial success. The experimental studies were done in an environment with low restrictionof variance; after all, African entrepreneurship is often high because there is a lower chance of getting employment outside entrepreneurship. Therefore, a large part of our samples could be called “necessity entrepreneurs.” Entrepreneurship research has often argued that necessity entrepreneurs are different from opportunity entrepreneurs—thus calling into question the generalizability of our results. Some quasi-experimental and small studies in Germany and in South Africa may suggest some generalization of results (Frese etal., 2016b; Solomon etal., 2013). However, these studies do not include randomized control groups. Generalization issues are important—too often institutional or cultural factors determine differences. In the following, I discuss some obvious differences between lowand high-income countries. What looks different may be due to differences in means but that does not represent differences in “laws of nature.” I proposed that LMICs allow “better” studies of entrepreneurship, because of lower range restriction (more entrepreneurship) and higher motivation to learn better skills. These LMIC studies may help to overcome Western biases resulting from the fascination with entrepreneurship in Silicon Valley, which itself may be a very specific form of entrepreneurship. 4 “Poor” entrepreneurship asnecessity entrepreneurship The insight that a high percentage of entrepreneurs in LMICs start their business out of “necessity” because they do not have “better options” available, contributed to a differentiation between necessity and opportunity entrepreneurship (Reynolds etal., 2003, p. 36). Necessity entrepreneurs start a company to “survive” (Weiss et al., 2024) having to deal with the “liability of poorness” (Morris etal., 2020). The entrepreneurship literature is strongly influenced by this differentiation (Dencker etal., 2021). It is plausible that the reasons why a person chooses entrepreneurship would also affect the way the business is run and its eventual success or failure. A similar concept, push and pull motivation for entrepreneurship, argued that push consists primarily of negative context conditions (negative job, bad boss, unemployment, etc.), and pull refers to own motivation (positive hopes, detection of great opportunities, and aspirations) (Dawson & Henley, 2012). There are two problems with “necessity-entrepreneurship”: first, its dichotomous measure and second its assumed importance for entrepreneurial outcomes. Many researchers use the dichotomous measure of necessity versus opportunity entrepreneurship, but it was also met by criticism (Caliendo & Kritikos, 2019; Coffman & Sunny, 2021; Eijdenberg & Masurel, 2013; Weber et al., 2023). 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