Character Strengths and Entrepreneurial Alertness–Model

1. Abstract

The Character Strengths and Entrepreneurial Alertness–Model (CS-EAM), developed by Homa Pirhadi, Sohrab Soleimanof, and Alireza Feyzbakhsh (2023), is an integrative psychometric measurement model designed to investigate the dispositional and cognitive microfoundations of entrepreneurial cognition. Grounded in the intersection of positive psychology—specifically the Values in Action (VIA) classification of character strengths—and Kirznerian entrepreneurial alertness theory, the instrument captures how specific character strengths foster the three sequential dimensions of entrepreneurial opportunity identification. The scale operationalizes three foundational character strengths—Valor (courage), Industriousness (persistence), and Critical Thinking (judgment/open-mindedness)—adapted from the validated inventories of Wright et al. (2017), alongside the three recognized cognitive dimensions of entrepreneurial alertness: Scanning and Search, Association and Connection, and Evaluation and Judgment, derived from Tang et al. (2012).

The instrument features two tailored 18-item versions: one standardized for university student populations and one calibrated for practicing entrepreneurs. All items are scored on a 7-point Likert scale ranging from 1 (“strongly disagree”) to 7 (“strongly agree”). Validated using samples of university students (N = 210) and active entrepreneurs (N = 154) across Iran, the instrument underwent rigorous cross-cultural adaptation using Brislin’s (1980) classic back-translation methodology. Confirmatory Factor Analysis (CFA) demonstrated exceptional model fit in both the student cohort (χ²/df = 1.97, CFI = 0.96, TLI = 0.95, RMSEA = 0.04, SRMR = 0.04) and the entrepreneur cohort (χ²/df = 1.27, CFI = 0.97, TLI = 0.97, RMSEA = 0.04, SRMR = 0.04). Psychometric evaluations established robust internal consistency (Cronbach’s α = 0.74–0.87; Composite Reliability = 0.65–0.89), convergent validity (standardized loadings > 0.60; AVE > 0.40), and discriminant validity supported by the Fornell–Larcker criterion. Harman’s single-factor test confirmed that common method variance accounts for only 34% of variance, precluding method bias. The CS-EAM serves as a critical diagnostic and empirical tool for entrepreneurship educators, organizational psychologists, and venture incubators seeking to identify and cultivate the positive psychological traits driving opportunity discovery and venture creation.

2. Keywords

Character Strengths, Entrepreneurial Alertness, Valor, Industriousness, Critical Thinking, Opportunity Recognition, Positive Organizational Scholarship, Structural Equation Modeling, Psychometrics, Entrepreneurial Cognition, Opportunity Evaluation, Cross-Cultural Measurement

3. Authors

The Character Strengths and Entrepreneurial Alertness–Model was developed and psychometrically validated by a collaborative team of scholars specializing in entrepreneurship, organizational behavior, and technology management:

• Homa Pirhadi, Ph.D. — Department of Management and Economics, Sharif University of Technology, Tehran, Iran. Specializes in entrepreneurial cognition, positive psychology in venture creation, and individual differences in opportunity identification.
• Sohrab Soleimanof, Ph.D. — Stephenson Department of Entrepreneurship & Information Systems, E. J. Ourso College of Business, Louisiana State University, Baton Rouge, Louisiana, USA. (Corresponding author: [email protected]). Research focus encompasses entrepreneurial human capital, venture strategy, cognitive antecedents of new firm formation, and quantitative research methodologies.
• Alireza Feyzbakhsh, Ph.D. — Department of Management and Economics, Sharif University of Technology, Tehran, Iran. Renowned researcher and educator in technology-based entrepreneurship, entrepreneurial leadership, and venture incubation ecosystems.

4. Purpose

The primary purpose of the Character Strengths and Entrepreneurial Alertness–Model (CS-EAM) is to decipher and quantify the psychological microfoundations that precede entrepreneurial alertness. While the entrepreneurship literature has long acknowledged that individuals differ substantially in their capacity to notice profitable business opportunities without engaging in formal search (Kirzner, 1973, 1979), the specific character-based antecedents driving these cognitive variations remained largely unmapped. Early research frequently relied on broad personality taxonomies such as the Big Five personality traits, which, although informative, often lack the malleable, behavioral specificity needed to inform developmental interventions, entrepreneurship pedagogy, and targeted mentoring.

By integrating the Values in Action (VIA) framework established by Peterson and Seligman (2004) with the multidimensional entrepreneurial alertness architecture established by Tang, Kacmar, and Busenitz (2012), the CS-EAM explicitly bridges positive psychology and entrepreneurial cognition. The instrument was designed to resolve several fundamental research and applied problems:

• Deconstructing Alertness as a Process: Alertness is not a monolithic intuition; it represents a tripartite sequence involving environmental scanning, conceptual pattern recognition, and commercial evaluation. The scale captures how distinct individual character traits differentially activate each phase of this cognitive chain.
• Differentiating Novice from Experienced Thinkers: The development of parallel measurement structures for university students and established entrepreneurs enables comparative developmental research. It allows researchers to investigate how character strengths manifest in nascent, untrained student populations versus seasoned venture founders who operate under real market volatility.
• Diagnostic Applications in Entrepreneurship Education: Higher education institutions and business accelerators require validated tools to diagnose students’ and incubatees’ baseline cognitive and dispositional strengths. The scale allows educators to tailor experiential curricula that cultivate courage (valor), rigorous work ethic (industriousness), and analytical objectivity (critical thinking) alongside opportunity discovery exercises.
• Organizational and Venture Assessment: Venture capitalists, angel investors, and corporate entrepreneurship managers can employ the CS-EAM as a diagnostic framework to evaluate whether entrepreneurial leadership teams possess the psychological balance required to search broadly, connect obscure market signals, and critically screen out non-viable projects.

5. Psychological Construct

The CS-EAM operationalizes six distinct yet interrelated psychological constructs divided into two overarching domains: Focal Character Strengths and Entrepreneurial Alertness Dimensions. Each subscale represents a discrete latent variable with clearly demarcated behavioral indicators.

Character Strengths Constructs

• Valor (Courage): In positive psychology, valor denotes the voluntary stance to confront danger, difficulty, or risk without retreating, encompassing moral bravery and resistance to social conformity. In the entrepreneurial context, valor reflects an individual’s willingness to assert unconventional insights, challenge market dogmas, and take action under conditions of severe uncertainty when peers hesitate. For example, a high-valor individual maintains conviction in a disruptive business hypothesis despite pervasive skepticism from established market incumbents.
• Industriousness (Persistence / Diligence): Belonging to the virtue class of temperance and conscientiousness, industriousness represents the disciplined expenditure of sustained effort toward goal attainment, task completion despite fatigue or roadblocks, and the resourceful mastery of operational obstacles. In entrepreneurship, industriousness drives the exhaustive, iterative work required to gather obscure market information, run feasibility experiments, and follow through on nascent venture concepts.
• Critical Thinking (Open-Mindedness / Judgment): This cognitive strength involves examining evidence from multiple perspectives, systematically questioning initial assumptions, evaluating arguments objectively, and deliberately thinking before acting. Unlike dogmatic decision-makers who fall victim to confirmation bias, an entrepreneur endowed with critical thinking actively seeks disconfirming evidence to ensure that an apparent commercial opportunity is structurally sound rather than an illusion generated by wishful thinking.

Entrepreneurial Alertness Dimensions

• Scanning and Search: Derived from the Kirznerian perspective and formalized by Tang et al. (2012), this initial stage entails open, proactive environmental vigilance. It encompasses wide information acquisition, avid browsing of digital and industrial trends, and continuous surveillance of unsolved consumer problems. An alert scanner constantly absorbs shifting regulatory, technological, and demographic cues without necessarily knowing in advance what specific opportunity will emerge.
• Association and Connection: This creative cognitive stage involves combining disparate, seemingly disconnected streams of information into meaningful, novel patterns. Colloquially termed “connecting the dots,” this dimension enables individuals to observe an emerging technology in one industry and link it to an unmet customer pain point in an entirely different sector, formulating the blueprint for a novel product or service.
• Evaluation and Judgment: The final cognitive gatekeeping stage involves assessing the commercial feasibility, competitive defensibility, and economic viability of the newly synthesized business pattern. Individuals high in this dimension demonstrate acute business judgment, intuitive yet rigorous feasibility filtering, and the capacity to separate high-value, scalable opportunities from marginal or unprofitable distractions.

6. Theoretical Framework

The conceptual architecture of the CS-EAM resides at the nexus of two prominent paradigms in modern behavioral science: Positive Psychology’s Character Strengths Theory and the Austrian School’s Theory of Entrepreneurial Discovery.

The Values in Action (VIA) Classification

Pioneered by Christopher Peterson and Martin Seligman (2004), the VIA classification categorizes 24 ubiquitous human character strengths under six core universal virtues: Wisdom and Knowledge, Courage, Humanity, Justice, Temperance, and Transcendence. Peterson and Seligman conceptualized character strengths as the psychological ingredients—the specific, measurable, and displayable processes—that define virtues. Unlike immutable genetic traits, character strengths are environmentally responsive, capable of being nurtured, and manifested across diverse situational demands.

Pirhadi et al. (2023) identified valor, industriousness, and critical thinking as the psychological bedrock of entrepreneurial action. Grounded in Wright, Quick, Hannah, and Hargrove’s (2017) conceptualization of character development in organizational contexts, these three strengths correspond precisely to the behavioral demands of entrepreneurial uncertainty: valor provides the emotional resilience to initiate action amidst ambiguity; industriousness provides the stamina for exhaustive information processing; and critical thinking provides the cognitive discipline necessary to guard against overconfidence and cognitive biases.

Kirznerian Alertness and the Tripartite Cognitive Model

Israel Kirzner (1973, 1979, 1997) introduced the concept of “entrepreneurial alertness” (alertness to profit opportunities) to explain how markets equilibrate and innovate. Kirzner argued that markets are characterized by pervasive disequilibrium and distributed ignorance; entrepreneurs are individuals who possess a heightened sensitivity to market imbalances, gaps, and unrecognized customer needs. However, Kirzner initially treated alertness as an innate, almost metaphysical “propensity” without articulating its psychological mechanics.

Tang, Kacmar, and Busenitz (2012) resolved this limitation by operationalizing alertness as a behavioral, cognitive tripartite process: (1) scanning and searching for information, (2) processing and associating previously unconnected information, and (3) evaluating and judging the commercial potential of the generated associations. The theoretical model developed by Pirhadi et al. posits that character strengths serve as direct antecedents that fuel and govern this cognitive pipeline. Valor fosters the exploratory courage to step into unknown search domains; industriousness sustains relentless search and associative effort; and critical thinking governs the evaluation and judgment stage, preventing reckless commitment to flawed business models.

7. Validity

The measurement model was subjected to comprehensive psychometric evaluation across multiple validity domains, confirming that the scale accurately represents the theoretical constructs across both student and entrepreneur populations in cross-cultural settings.

Content and Translation Validity

Because the original items for character strengths (Wright et al., 2017) and entrepreneurial alertness (Tang et al., 2012) were drafted in English, their cross-cultural adaptation into Farsi followed the rigorous back-translation protocol established by Brislin (1980). Two independent bilingual organizational scholars translated the items from English to Farsi, after which two alternate bilingual experts who had never seen the original English versions back-translated them into English. A panel of academic psychometricians and entrepreneurship professors reviewed both versions to resolve nuances, ensuring linguistic equivalence, contextual appropriateness, and conceptual preservation across all 18 indicators.

Convergent Validity

Convergent validity was evaluated through standardized factor loadings and Average Variance Extracted (AVE) calculations in structural equation modeling:

• All standardized item loadings across both the student and entrepreneur measurement models were statistically significant (p < 0.001) and exceeded the established 0.60 psychometric benchmark, indicating that each indicator shares substantial variance with its underlying latent construct.
• The Average Variance Extracted (AVE) for all six latent constructs exceeded the recommended 0.40 threshold (ranging between 0.42 and 0.68 across constructs), satisfying the criteria established by Fornell and Larcker (1981) for newly adapted and multidimensional behavioral scales.

Discriminant Validity

Discriminant validity was established via the Fornell–Larcker criterion. For every latent construct in both the student and entrepreneur models, the square root of the AVE was strictly greater than the correlation coefficients between that construct and any other construct in the model. This confirmed that the six subscales (Valor, Industriousness, Critical Thinking, Scanning/Search, Association/Connection, and Evaluation/Judgment) represent empirically distinct cognitive and behavioral dimensions rather than a general, undifferentiated positive response style.

Nomological and Predictive Validity

The structural modeling results published by Pirhadi et al. (2023) confirmed the hypothesized theoretical paths between character strengths and alertness dimensions. Valor significantly predicted scanning and search, as well as association and connection. Industriousness was strongly associated with sustained environmental search. Critical thinking exhibited powerful predictive paths to opportunity evaluation and judgment. These findings demonstrate that the scale behaves in accordance with established cognitive theory, establishing high nomological and predictive validity.

8. Reliability

The reliability of the Character Strengths and Entrepreneurial Alertness–Model was thoroughly evaluated using multiple indicators of internal consistency across both empirical cohorts (university students, N = 210; practicing entrepreneurs, N = 154).

Internal Consistency Metrics

The scale developers assessed both Cronbach’s alpha (α) and Composite Reliability (CR) to account for potential limitations associated with tau-equivalence assumptions in conventional alpha coefficients:

• Cronbach’s Alpha: Across all subscales in both cohorts, Cronbach’s alpha coefficients ranged between 0.74 and 0.87. These values comfortably surpass the standard 0.70 benchmark for research instruments, indicating robust internal consistency without excessive item redundancy.
• Composite Reliability (CR): The CR values for the six latent constructs ranged from 0.65 to 0.89, with the vast majority exceeding the 0.70 threshold. This confirms that the latent variables are stably measured by their respective sets of observed indicators.

Common Method Variance (CMV) Analysis

To ensure that the observed correlations and reliability metrics were not inflated by common method bias arising from self-report instruments, Pirhadi et al. administered Harman’s single-factor test using Exploratory Factor Analysis (EFA). Unrotated principal component analysis on all 18 items revealed that the first factor accounted for only 34% of the total variance in the student cohort and a similarly low percentage in the entrepreneur cohort. Because this value falls substantially below the critical 50% threshold, common method variance is not a confounding factor in the scale’s score reliability.

9. Factor Analysis

The underlying factor structure of the CS-EAM was rigorously validated using Confirmatory Factor Analysis (CFA) conducted via Structural Equation Modeling (SEM) software.

Goodness-of-Fit Parameters

Model fit was evaluated using multiple independent indices recommended by Hooper, Coughlan, and Mullen (2008) and Kline (2015), including the relative chi-square ratio (χ²/df), the Comparative Fit Index (CFI), the Tucker–Lewis Index (TLI), the Root Mean Square Error of Approximation (RMSEA), and the Standardized Root Mean Square Residual (SRMR).

Both models exhibited outstanding data-to-model fit across all evaluation parameters. The student model yielded a chi-square/df ratio of 1.97, CFI of 0.96, TLI of 0.95, and identical RMSEA and SRMR values of 0.04. The entrepreneur cohort demonstrated even stronger fit statistics, with a chi-square/df ratio of 1.27, CFI of 0.97, TLI of 0.97, RMSEA of 0.04, and SRMR of 0.04. These results substantiate the 6-factor structure (Valor, Industriousness, Critical Thinking, Scanning and Search, Association and Connection, and Evaluation and Judgment) as an accurate, stable representation of entrepreneurial cognitive architecture.

10. Instrument / Measurement Tool

• Test Type: Multi-dimensional self-report assessment inventory designed for academic, diagnostic, and educational evaluation.
• Target Population: Adults (18 years and older), including undergraduate and graduate students, nascent founders, corporate innovators, and experienced entrepreneurs.
• Item Count: 18 items per model. Two specialized versions exist: the Student Version (18 items) and the Entrepreneur Version (18 items), each comprising six 3-item subscales.
• Response Format: 7-point Likert scale (1 = Strongly Disagree, 2 = Disagree, 3 = Somewhat Disagree, 4 = Neither Agree nor Disagree, 5 = Somewhat Agree, 6 = Agree, 7 = Strongly Agree).
• Construct Breakdown:
  • Valor: 3 items measuring moral/behavioral courage under ambiguity.
  • Industriousness: 3 items measuring persistence and goal-directed task completion.
  • Critical Thinking: 3 items assessing objective evidence evaluation and deliberate reasoning.
  • Scanning and Search: 3 items capturing active, broad environmental information seeking.
  • Association and Connection: 3 items measuring creative synthesis and dot-connecting across distinct domains.
  • Evaluation and Judgment: 3 items measuring business opportunity appraisal and viability screening.
• Scoring Guidelines: All items are positively framed (no reverse-scored items). Subscale scores are calculated by computing the mean or sum of the three designated items per subscale. Composite scores for Character Strengths (sum/mean of the 9 character items) and Entrepreneurial Alertness (sum/mean of the 9 alertness items) can also be derived for higher-order structural modeling. Higher scores denote greater dispositional character strength and elevated entrepreneurial alertness.
• Administration Time: Approximately 5 to 8 minutes.

11. Permissions & Fee and Test Year

The Character Strengths and Entrepreneurial Alertness–Model was published in 2023 in the Journal of Small Business Management. The model items were adapted from previous seminal works by Wright, Quick, Hannah, and Hargrove (2017) and Tang, Kacmar, and Busenitz (2012).

Fees and Licensing: The measurement tool is free of charge for non-commercial, academic, and educational research purposes, provided appropriate scholarly attribution is accorded to the authors and original publication sources. Researchers intending to utilize the scale in commercial diagnostic environments, proprietary assessment platforms, or organizational consulting should contact the corresponding author, Dr. Sohrab Soleimanof ([email protected]), and the publisher (Taylor & Francis / Informa UK Limited) to secure appropriate permissions.

12. References

• Baron, R. A. (2006). Opportunity recognition as the detection of meaningful patterns: Evidence from cognitive science. Journal of Business Venturing, 21(1), 104–126. https://doi.org/10.1016/j.jbusvent.2005.04.004
• Brislin, R. W. (1980). Translation and content analysis of oral and written materials. In H. C. Triandis & J. W. Berry (Eds.), Handbook of cross-cultural psychology (Vol. 2, pp. 389–444). Allyn & Bacon.
• Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1), 39–50. https://doi.org/10.1177/002224378101800104
• Hooper, D., Coughlan, J., & Mullen, M. R. (2008). Structural equation modelling: Guidelines for determining model fit. Electronic Journal of Business Research Methods, 6(1), 53–60. https://doi.org/10.34190/ejbrm.6.1.005
• Kirzner, I. M. (1973). Competition and entrepreneurship. University of Chicago Press.
• Kirzner, I. M. (1979). Perception, opportunity, and profit: Studies in the theory of entrepreneurship. University of Chicago Press.
• Kirzner, I. M. (1997). Entrepreneurial discovery and the competitive market process: An Austrian approach. Journal of Economic Literature, 35(1), 60–85. https://www.jstor.org/stable/2729693
• Kline, R. B. (2015). Principles and practice of structural equation modeling (4th ed.). Guilford Press.
• Peterson, C., & Seligman, M. E. P. (2004). Character strengths and virtues: A handbook and classification. Oxford University Press / American Psychological Association.
• Pirhadi, H., Soleimanof, S., & Feyzbakhsh, A. (2023). Unpacking entrepreneurial alertness: How character matters for entrepreneurial thinking. Journal of Small Business Management, 61(1), 155–186. https://doi.org/10.1080/00472778.2021.1907584
• Tang, J., Kacmar, K. M., & Busenitz, L. (2012). Entrepreneurial alertness in the pursuit of new opportunities. Journal of Business Venturing, 27(1), 77–94. https://doi.org/10.1016/j.jbusvent.2010.07.001
• Wright, T. A., Quick, J. C., Hannah, S. T., & Hargrove, M. B. (2017). Best practices for the use of character in organizational research: Moving from rhetoric to reality. Journal of Organizational Behavior, 38(8), 1258–1278. https://doi.org/10.1002/job.2209

13. Items of the Scale