Entrepreneurship

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Entrepreneurship

Entrepreneurship is the practice of starting new organizations, particularly new businesses, generally in response to identified opportunities. Entrepreneurship is often a difficult undertaking, as a majority of new businesses fail. Entrepreneurial activities are substantially different depending on the type of organization that is being started. Entrepreneurship ranges in scale from solo and sometimes part-time projects to major undertakings which create many job opportunities.[1]


History

The word "entrepreneur" has been part of the French vocabulary since the 12th century and first appeared in the 1487 edition of Dicionnaire de la langue francaise. However, its meaning has varied through the centuries. The term was first used to describe someone who is "active and achieves something" and often denoted heroes from war.

From the 13th century onward, contractors, as opposed to the clergy, were engaged by the church to complete buildings such as churches and cathedrals. These contractors usually managed the financial risk themselves. As the state increased its influence and wealth through the 17th and 18th centuries, the concept of "risk-taking" was added to the meaning of "entrepreneur", in both legal and economic senses. The contractor or entrepreneur would be contracted to supply goods to the state at a fixed rate, therefore leaving the entrepreneur to assume the risk of making a profit or loss.


Personality of Entrepreneurs


Because of their profound positive impact on the worldwide economic condition, entrepreneurs have been the topic of recent study in the social science community. To better craft entrepreneurship education, and to assist in venture-capital selection, researchers have attempted to classify the personality traits of a successful entrepreneur.

The scientific study of personality has lead to the modern interpretation dictated by the Five Factor Model (FFM). Extensive research has been conducted on the personalities of successful managers and leaders, however the examination of entrepreneurs under the FFM is only in its infancy.[2]

Selected findings

Openness


Openness has been unanimously hypothesized to have a positive effect on entrepreneurial success. Sufficient evidence exists to support the claim. Experts note that openness lends itself to venture success, as innovation is a requirement in the increasingly competitive economic environment.Cite error: Closing </ref> missing for <ref> tag[3][4] A successful entrepreneur must be open to new ideas in order to exploit an opportunity, and be willing accept to the associated risks.

Extraversion

Individuals rating high on the scale of extraversion tend to have better networking skills than their introverted counterparts, and thus are more likely to find entrepreneurial success. [5]Having a larger social and professional network, extraverted entrepreneurs are more likely to find funding for their projects, and likewise are more likely to attract customers to drive their success.[2][4]In addition to their networking capacity, extraverted individuals are known to have an optimistic outlook on their surroundings, which is imperative in an entrepreneurial setting. To be successful, an entrepreneur must understand that most ventures result in failure, while maintaining a positive vision that he or she can overcome adversity.

Neuroticism


Entrepreneurs rated highly on the scale of neuroticism tend to be more willing to abandon a situation. In practical terms, an entrepreneur with high levels of neuroticism and low levels of emotional stability may be more apt to declare bankruptcy, walk away from commitments, or simply abandon his or her business in difficult circumstances. Noting a strong negative relationship between neuroticism and entrepreneurial success, experts warn of the risks for venture-capitalists and business partners working with these types of individuals.[2][6][5]

Agreeableness

No tangible relationship between agreeableness and entrepreneurial success exists. The lack of an observable correlation may be explained by the existence of two separate and opposing effects. That is, agreeableness positively and negatively effects entrepreneurial success simultaneously. Some argue that an entrepreneur who is too agreeable will have difficulty surviving in the competitive business climate. Others note that cooperativeness and compassion is positively related to success, as it facilitates networking capacity and the ability to build positive relationships with venture-capitalists, vendors and customers.[3]

Controversy

Conscientiousness

Though most researchers suspect that conscientiousness would have a positive effect on entrepreneurial success, the relationship is unclear. Less than half of published, peer-reviewed studies support a relationship between entrepreneurial success and conscientiousness.[5][2] Some note the link between high levels of conscientiousness and low spontaneity, arguing that increased levels of planning are found to decrease the likelihood for venture success by slowing the processes of innovation and creativity. Others argue that, motivated by success, conscientious entrepreneurs would be more likely to exert more effort into a venture, and thus be more successful.[6][4][3]

Voluntary Response Population



Critics of the above findings cite voluntary response as a primary area of controversy. Educators and entrepreneurs alike have noted that often the most successful entrepreneurs are those that don’t have time to be bothered by personality surveys. As noted in much of modern research on the study of personality, most survey responses come from students and recent graduates, and from seasoned, successful entrepreneurs.

Cultural influence


Other critics of the current entrepreneur personality consensus cite the fact that most research neglects to consider the effects of cultural variation on entrepreneurship and success. Individuals from various cultures do not always share identical values, a fact that introduces a cultural bias into personality consideration. Experts have found key differences between entrepreneurial associations in the United States, India, and Turkey. Helpfulness and self-image, for instance, were rated significantly higher in Turkey and India, respectively. Characteristics that prove successful in one culture may be ineffective in another.

Other personality predictors

While the FFM has been at the focus of modern personality research, some experts question its validity and predictiveness, preferring other methods such as the Jung Typology and Myers Briggs Indicator

Further Research

Considering the limitations of current published research, it has been suggested that new studies be conducted to reduce the bias introduced in self-reported surveys, as well as to consider the effects of cultural influence. A study evaluating personality traits based on in-depth interviews of successful and unsuccessful entrepreneurs from multiple geographic locations would suffice.


References

  1. Landström, H. (2005) Pioneers in Entrepreneurship and Small Business Research, Springer, USA
  2. 2.0 2.1 2.2 2.3 Zhao, H., Seibert S. E., et al. (2010). "The Relationship of Personality to Entrepreneurial Intentions and Performance: A Meta-Analytic Review." Journal of Management 36(2): 381-404.
  3. 3.0 3.1 3.2 Ciavarella, M. A.,. Buchholtz A. K, et al. (2004). "The Big Five and venture survival: Is there a linkage?" Journal of Business Venturing 19(4): 465-483.
  4. 4.0 4.1 4.2 Kessler, A. and Frank H. (2009). "Nascent Entrepreneurship in a Longitudinal Perspective." International Small Business Journal 27(6): 720-742.
  5. 5.0 5.1 5.2 Gupta, V. and Fernandez C. (2009). "Cross-Cultural Similarities and Differences in Characteristics Attributed to Entrepreneurs." Journal of Leadership & Organizational Studies 15(3): 304-318.
  6. 6.0 6.1 Antoncic, B (2009). “The Entrepreneur's General Personality Traits and Technological Developments.” World Academy of Science, Engineering and Technology 53(3): 236-241.