Are individuals born with certain characteristics that predispose them to entrepreneurial endeavors? Is there a set of traits that can be attributed to an entrepreneurial personality? Or does environmental context, such as early exposure to entrepreneurialism make the entrepreneur? Questions such as these are often the topic of inquiry and debate among researchers in the field of entrepreneurship.
Considering the fact that small businesses have created nearly all of the net new jobs (number of new jobs created minus number of jobs that have been terminated) in recent years (Office of Advocacy, 1998), it is the practical significance of whether entrepreneurs are born or made that makes this question important. This digest will explore various perspectives on the origins of entrepreneurial behavior. In addition, criticisms of existing approaches will be discussed, and implications for entrepreneurship education will be suggested.
Finally, resources for self-testing entrepreneurial capabilities will be listed. Are Entrepreneurs Born or Made? Professor of Psychology Alan Jacobowitz, holds that entrepreneurs are born, not made (Cohen, 1980 July). Through interviews with over 500 entrepreneurs over a three year period, Jacobwitz observed that entrepreneurs commonly share certain personality characteristics. These include: restlessness, independence, a tendency to be a loner, and extreme self confidence
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Other researchers have added innovative, action oriented, high on need for personal control and highly autonomous to the list of what they see as uniquely entrepreneurial characteristics (Schein, 1994, Solomon, 1989). In addition to identifying personality traits common to entrepreneurs, Jacobwitz devised a chronological schema of entrepreneurial indicators he calls the five ages of the entrepreneur. The ages include: early childhood exposure, trouble in school, problems with work, desire to risk, and bliss in business independence.
Trait theories such as Jacobowitz’s suggest that entrepreneurial aptitude is static-that is, either people are born with the related characteristics, or they are not. While this approach was supported by the majority of theorists at the dawn of entrepreneurial research, some criticize that it has yet to be empirically proven (Naffziger, Hornsby, & Kurtado 1994). Aspects of trait theories have not been completely eschewed by entrepreneurship researchers, however.
Various researchers support Jacobwitz’s identification of entrepreneurial-type characteristics, but most opt for a more dynamic approach to entrepreneurial personality in which personality traits and subsequent behavior are shaped by a variety of factors (Krueger & Brazil, 1994, Naffziger, Hornsby, & Kurtado 1994, Solomon, 1989). Kreuger and Brazeal (1994) offer a dynamic model that suggests entrepreneurial intention is based on the interaction between personal characteristics, perceptions, values, beliefs, background and environment (situational context).
They base this approach on Shapero’s model of the entrepreneurial event in which entrepreneurship is defined as “the pursuit of an opportunity irrespective of existing processes” (Kreuger & Brazeal, 1994). Unlike the traits models, Shapero’s approach incorporates the influence of environment, and the notion that entrepreneurial behavior is planned and intentional. This approach is process-focused in that the interaction of several factors are examined in order to predict behavior. Kreuger and Brazeal argue that beliefs, perceptions and assumptions are learned within the context of a given environment (such as a business or community).
They also argue that these attitudes and perceptions predict intentions which in turn influence behavior. Thus by indirect relationship, the Kreuger and Brazeal model suggests that entrepreneurial intention is mediated in the following manner: the environment or event causes an individual to form perceptions, attitudes and assumptions (consider the assumptions and beliefs that might be formed in a change-oriented environment as opposed to a static environment). These perceptions then translate themselves into intentions, or potential, which are expressed through behavior.
Thus, this model suggests that entrepreneurial characteristics not only can be learned, but can vary across individuals and situations (1994). Naffziger et al (1994) take the dynamic approach to entrepreneurial behavior a step further by declaring a model that explains sustained and repeated entrepreneurial behavior. In essence, the model moves beyond attempting to explain why individuals initiate ventures to why or how entrepreneurs are motivated to continue with the behavior as a career choice.
They conclude that, like the intention to act entrepreneurially, the decision to continue behavior is influenced by the interaction of various factors. These include individual characteristics, individual environment, business environment, an individual’s personal goal set, and the existence of a viable business idea. Through these interacting factors, individuals make several comparisons between their perceptions of a probable outcome, their intended goals, intended behavior and actual outcomes.
The model predicts that when the outcomes meet or exceed perceived outcomes, positive behavior (continued engagement in entrepreneurialism) is reinforced. It also predicts that the opposite occurs when the perceived outcomes are not met. This model clearly incorporates psychological, behavioral and situational factors. While it would appear that the “made” side of the born/made argument is winning at this point in entrepreneurial research, criticisms exist for both sides. The way in which entrepreneurship is defined differs across approaches and studies.
Some define it as having the intent to own, or already owning a business (Crant, 1996, Langan-Fox & Roth, 1995). Others counter that among business owners, there are qualitative differences that determine true entrepreneurialism from engaging in business ownership as a means of financial survival (Schein, 1994, Solomon, 1989). Schein (1994) asserts that while some individuals may have a heightened sense of autonomy, which could predict an individual’s predisposition to own a business, the underlying reasons for the desire for autonomy are what defines an entrepreneur.
According to Schein, true entrepreneurs initiate ventures for creative rather than economic reasons. This is supported by Solomon (1989) who surveyed 150 entrepreneurs and found that the desire to create something different, not the desire to gain economically was the primary motivator of entrepreneurial behavior. Schein indicates that this differentiation is especially pertinent in the current economy where corporate downsizing has forced many individuals into small business as a means of financial subsistence. Hence, when addressing the question of entrepreneurial origins, the way in which entrepreneurship is defined should be considered.
Implications for Entrepreneurship Education A rising trend in the number of entrepreneurship education initiatives supports the idea that entrepreneurs can be made, and thus the sentiment that entrepreneurship can be taught. Twenty two percent of the MBA class of 1998 (national) indicated that they planned to initiate ventures within five years of graduating (Lord, 1999). The interest in entrepreneurship education has been matched by programs and centers throughout the 317 accredited business schools in the United States.
Currently, entrepreneurship centers are opening at a rate of one per month, and 120 business schools worldwide offer programs or majors in entrepreneurship (twice as many as existed 3 years earlier) (Lord, 1999). It is suggested that economic shifts have sparked the increased interest in entrepreneurship. Between 1988 and 1993, 1. 8 million jobs were created by companies with fewer than 500 employees (definition of small business), while corporations only created 100,000 jobs during the same period (Lord, 1999). Corporate restructuring and downsizing have been credited as the driving forces behind the increase in small businesses.
A return to Schein’s warning about the differences between true entrepreneurs and business owners complicates the purposes of entrepreneurship education. In light of the suggested factors influencing the increased demand for entrepreneurship education, consideration of why entrepreneurship education is demanded should certainly play into how it is prescribed. While researchers argue that it is too soon to empirically test the effectiveness of graduate entrepreneurship education, persuasive arguments for both sides of the born/made arguement have been made.
Beyond the role of formal education, Krueger and Brazeal (1994) assert that environment plays an important role in cultivating entrepreneurial behavior. The authors examined the literature in corporate and business enterprise contexts. They found that in both environments, entrepreneurialism was mediated by an atmosphere that fostered innovation and change and provided appropriate mentors and role models. Information cues about the norms and culture of a given environment appear to be important, informal sources of education for would-be entrepreneurs. Conclusions
Are entrepreneurs born or made? Simply answered; entrepreneurs themselves and the topic of entrepreneurship are more complex than either possibility. It appears that entrepreneurial behavior is no different than most human behaviors in that its origins can only be traced to a complex interaction of innate, background, and environmental factors. As small business has been deemed the icon of economic force for the twenty-first century, perhaps the initial question of whether entrepreneurs can be made has been replaced by the new one of how entrepreneurship can best be facilitated.