Background of the Study
Interest in the functioning of the human mind can be traced back to Plato and Aristotle who dealt with issues of perception and motivation. While the Greeks may have contemplated the human condition, the modern study of the human mind can be traced back to Sigmund Freud (1900) and the psychoanalytic movement. He began the exploration of both conscious and unconscious factors that propelled humans to engage in a variety of behaviors. The concern in this study lies not in the above, but in the determination of the cognition and motivation, that shape successful entrepreneur’s mindset and its effect on the survival and sustainability of businesses in Nigeria.
Entrepreneurship is the moving engine of business innovation, competition, job creation and economic growth. The European Commission, 2003 asserts that Entrepreneurship is what makes a new idea to be transformed into a real successful business. It is the process that brings into existence a new business. Entrepreneurship is what gives a chance to people with fewer opportunities in the job market to create their own employment and to improve their status in society. The important role of entrepreneurial activities for the conversion of technological and organizational innovation into new and more efficient products and services is a known fact. In order for individuals to be motivated to become entrepreneurs, they should be aware of the concept of Entrepreneurship; and for the entrepreneurial ventures to develop into healthy firms, supportive framework conditions are essential.
Business success in any economy is not merely a function of relevant skills but also entrepreneurial mindset. In the words of Dhilwayo and Vuuren (2007), entrepreneurial mindset indicates a way of thinking about business and its opportunities, formed through formal learning (of expertise law, position, policies), perception (feelings, convictions, causes, purposes, insight, impression, subconscious, observations, facts, assumptions, formulas, facts, data, biology, sociology), personal experience (direct knowledge from the senses), orientation, mentorship, among others, in such a way that captures the benefits of uncertainty. It portrays the innovative and energetic search for opportunities and facilitates actions aimed at exploiting opportunities (Senges 2007). Establishing an entrepreneurial mindset is relevant for the sustenance of competitiveness of economic organizations and the economic lifestyles of the population through value and job creation. This importance is viewed from the point that it enables supporters of new ideas to establish organisations with new valuable ideas. The resources needed are drawn and developed within an enabling culture (Thompson, 2004). The importance of developing an entrepreneurial mindset has been highlighted worldwide. In Europe, the most recent is the 2003 Green Paper on entrepreneurship document. The document identified the strategies and actions that the European Countries should take for the improvement of entrepreneurship in the area. Among the different policy options contained in it were the need to work at three levels – individuals, firm and society (European Commission, 2006). There is a clarion call by Ireland, Hitt and Sirmon (2003) for the future generation to be more entrepreneurial; that is, creative and innovative, with the ability to act on opportunities. This perspective is in line with the stipulation that the successful future strategists will exploit an entrepreneurial mindset – the ability to rapidly sense, act, and mobilize, even under uncertain conditions. McGrath and MacMillian (2000) further assert that individuals and SME owners capture these benefits in their attempts and search to exploit high potential opportunities commonly associated with uncertain business environments.
To sense and adapt to uncertainty distinguishes a critical entrepreneurial resource (Ireland, 2003; Krauss, 2005; McGrath & MacMillian 2000), while the ability to act, sense and organize may be central to entrepreneurship. Entrepreneurial mindset focuses primarily on cognitive processes that slow down adaptive cognitions in the face of dynamic, uncertain environments (Mitchell, Busenitz, Lant, McDaugall, Morse, and Smith, 2002), decision heuristics (Alvarez & Busenitz, 2001; Busenitz & Barney, 1997), and overconfidence bias (Hayward, Shepherd & Griffin, 2006), which investigates those cognitive processes that enable entrepreneurs to think beyond existing knowledge structures and heuristics. The foundation of entrepreneurial mindset is cognitive adaptability, which is defined as the ability to be dynamic, flexible and self-regulating in one’s cognition, considering the dynamic and uncertain task environments.
The history of industrial growth in developed and developing countries has shown that SMEs are the driving force of industrial development due to their small initial capital requirement and their contributions to output, employment and growth (Diejomaoh, 1980). The role of SMEs is dynamic, accelerating increase in per capita income, output, employment opportunities, and enhancing regional economic balance through industrial dispersal, effective resource utilization, development of local technology, diffusion of management skill and stimulation of indigenous entrepreneurship (Adenuga, Ohuche and Ogujuba, 2004).
The SMEs sector accounts for about 70.0 percent of industrial employment worldwide (World Bank, 1995). SMEs have become the focus of industrial policy in recent times as revealed by the Central Bank of Nigeria (CBN Report, 1997). In the same vein, they have also become the engine of economic growth and development in many nations since such industries are likely to facilitate the development of broad-based indigenous entrepreneurial culture and value added to domestic industrial production (Olorunsola, 2001). In developed economies such as the United States, SMEs have played an important role in their transition from the industrial age to the post industrial information technology era (Soludo, 2005). Similarly, in the Asian countries such as Japan, South Korea, Indonesia, Singapore among others, SMEs have considerably contributed to their GDP and served as a linkage between the industrial sector and other sectors of the economy through the production of raw materials, spare parts and machineries (Otaru, 2008). Today, about seventy percent of the values of export of Japanese large enterprises are traceable to SMEs (Soludo, 2005).