A Psychological Approach to Entrepreneurship
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A Psychological Approach to Entrepreneurship

Selected Essays of Dean A. Shepherd

Dean A. Shepherd

Within an entrepreneurial context, what a person thinks and feels and how they behave are hugely consequential. Entrepreneurs often work in scenarios of considerable time pressure, task complexity, uncertainty and high performance variance. This fascinating volume explores the unique psychological qualities of individuals directly involved in the entrepreneurial process.
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Chapter 22: The fallacy of “only the strong survive”: The effects of extrinsic motivation on the persistence decisions for under-performing firms

Dawn R. DeTienne, Dean A. Shepherd and Julio O. De Castro

Extract

Although well-established theoretical perspectives (e.g. economic, population ecology) propose under-performing firms will be selected out of the environment, other research suggests that performance alone does not fully explain the persistence of under-performing firms. Why would one entrepreneur make a decision to persist with an under-performing firm while another would choose to discontinue operations? Gimenoetal.(1997) propose that heterogeneity among entrepreneurs may lead to different thresholds of performance. Other research into reference points and entrepreneurial aspirations (e.g. Kahnemanand Tversky, 1979; Stewart et al., 1999) seems to support this perspective.

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