Critically evaluate the contribution of psychological theories to our Essay

Critically evaluate the contribution of psychological theories to our understanding of the entrepreneur - Essay Example In the process the paper undertakes a comparison and contrast of the two approaches; critique on their use in entrepreneurial settings, for making decisions, and for commercial and business purposes; and a discussion of other factors besides traits and behavior that also contribute to understanding how and why entrepreneurs behave and differ in their rates of success. The paper concludes by answering the question of whether or not psychological approaches complement existing entrepreneurship theory. The traits approach, as the name suggests, focuses on personality traits and how those personality traits in the case of entrepreneurs help explain their nature, and their success or failure in their ventures (Rauch and Frese 2007; McCrae 1987). The cognitive approach, on the other hand, focuses on so-called cognitive processes as keys to understanding the psychology of entrepreneurs, and what makes for successes and failures. This school of thought basically also discounts the power of t he traits approach to make sense of entrepreneurs and entrepreneurial behavior and dynamics, and argues for looking into the thought processes of entrepreneurs and the way they relate to behavioral outcomes (Psychology and Entrepreneurship 2013, slides 14-22; Barron 1998; Busenitz and Barney 1997). II. Discussion A. Traits Approach vs. ... On the other hand, studies which prove the fluidity of behavior of people in general in different situations put forth the conclusion that personality traits are not consistent at all, and that therefore they cannot be relied on as the foundation of an approach to understand entrepreneurs and their motivations (Mischel and Peake 1982; Psychology and Entrepreneurship 2013, slides 12-13). The same argument is posited by those who point to studies that say that in terms of personality traits entrepreneurs are not much different from other people who are not entrepreneurial (Baron 1998, pp. 275-277). Meanwhile, the cognitive approach moves away from personality traits and the language of the traits approach, to focus on entrepreneurial thought processes and cognition processes, and the way entrepreneurs make use of heuristic thinking, are prone to cognitive biases of all sorts, and focuses generally on an explanation of behavior rather than on the prediction of behavior for entrepreneurs . The cognitive approach is seen as overcoming the static and related biases of the traits approach, and is regarded as being more effective in complex, dynamic settings. Both meanwhile have some success in explaining the risks, financial considerations, and the kind of creative and open-ended thinking, as well as the cognitive shortcuts and biases, that go into entrepreneurial thinking (Psychology and Entrepreneurship 2013, slides 14-22; Barron 1998; Busenitz and Barney 1997). B. Critique on Use in Entrepreneurial and Commercial Settings, in Decision Making Decision-making between entrepreneurs and ordinary managers make clear that cognitive approaches, as well as