Regulatory focus theory of entrepreneurship

What is the regulatory focus theory of entrepreneurship?

Regulatory focus theory was developed by psychologist E. Tory Higgins of Columbia University in the 1990s. At the core of regulatory focus theory is the idea that individuals change between two states dubbed a promotion focus and a prevention focus.

When in the promotion focused state, individuals attempt to bring themselves into alignment with their need for growth and advancement (their ideal self), causing them to focus on potential gains from risk-taking. By contrast, when individuals are in the prevention focused state, they tend to succumb to their needs for security and safety (their ought self), causing them to focus on potential losses from risk-taking. A recent meta-analysis confirms that regulatory focus is associated with several organizational outcomes.

Brockner et al., (2004) borrow regulatory focus theory to explain entrepreneurial phenomena. They argue that entrepreneurial process requires a greater promotion focus during the idea-generating phase, and a greater prevention focus during the idea filtering stage. Their research suggests that if entrepreneurs are able to match their promotion and prevention focus phases to the demands of the entrepreneurial stage they are encountering, then they should perform better. In their words:

 

"For certain aspects of the entrepreneurial process (e.g., generating ideas with the potential to be successful), greater promotion focus is necessary. For other aspects of the entrepreneurial process (e.g., doing the “due diligence” when screening ideas), greater prevention focus is necessary."

Some research suggest that entrepreneurs with a promotion focus perform better in dynamic environments, whereas those with a prevention focus perform better in stable environments (Hmieleski and Baron, 2008).

 

Tumasjan and Braun (2012) suggest that self-promotion's role in opportunity recognition is enhanced by the entrepreneur's level of self-efficacy.

 

Examining hundreds of academics who are engaging in entrepreneurial activites, Johnson et al. (2017) find that: 

 

"The results reveal that the stronger an individual's chronic promotion focus the stronger their formal and informal commercialization intentions and a stronger individual chronic prevention focus leads to weaker intentions to engage in informal commercialization."

Sources: 

 
Baas, M., De Dreu, C. K., and Nijstad, B. A. (2008). A meta-analysis of 25 years of mood-creativity research: Hedonic tone, activation, or regulatory focus?. Psychological bulletin, 134(6), 779.

Brockner, J., Higgins, E. T., and Low, M. B. (2004). Regulatory focus theory and the entrepreneurial process. Journal of Business Venturing, 19(2), 203-220.

Higgins, E. T. (1998). Promotion and prevention: Regulatory focus as a motivational principle. In Advances in experimental social psychology (Vol. 30, pp. 1-46). Academic Press.

Hmieleski, K. M., and Baron, R. A. (2008). Regulatory focus and new venture performance: A study of entrepreneurial opportunity exploitation under conditions of risk versus uncertainty. Strategic Entrepreneurship Journal, 2(4), 285-299.

 

Johnson, M., Monsen, E. W., & MacKenzie, N. G. (2017). Follow the leader or the pack? Regulatory focus and academic entrepreneurial intentions. Journal of Product Innovation Management, 34(2), 181-200.

 

Tumasjan, A., & Braun, R. (2012). In the eye of the beholder: How regulatory focus and self-efficacy interact in influencing opportunity recognition. Journal of Business Venturing, 27(6), 622-636.