While entrepreneurship is not strictly limited to technology-driven companies targeting rapid and continuous growth, there is no doubt that entrepreneurship and emerging companies are closely linked in the press, academia and the related professional communities (e.g., lawyers and accountants). It is, therefore, worth taking a few moments to focus on the elements that may be present within the entrepreneurial mindset in order to better understand what motivates and sustains the founders and managers of emerging companies in the face of what often seems to be overwhelming business and personal challenges.
The seed for this post was an article titled "Mapping the Entrepreneurial Psyche" written byThomas K. McCraw, the Pulitzer Prize-winning business historian, that appeared in the August 2007 issue of Inc. Magazine. While discussing the career and impact of legendary economist Joseph A. Schumpeter, McGraw draws on quotes from Schumpeter's 1911 classic, The Theory of Economic Development, to provide the following description of the economist’s views regarding the psychology of the entrepreneur:
"Entrepreneurs . . . are not propelled solely by a wish to grow rich or by any 'motivation of the hedonist kind.' Instead, they feel 'the will to conquer: the impulse to fight, to prove oneself superior to others, to succeed for the sake, not of the fruits of success, but of success itself . . . There is the joy of creating, of getting things done, or simply of exercising one's energy and ingenuity."
It is important to realize that entrepreneurship was a novel, and relatively ignored, concept during Schumpeter’s lifetime and he lacked a body of empirical data that he could use to prove and support his ideas. As time has passed, however, Schumpeter’s views about economic progress and the role of the entrepreneur have been widely praised and embraced as prophetic. Moreover, attempting to identify the personality traits most commonly found among entrepreneurs has become one of the most popular areas of academic research. A few years ago, when I was working on a book about entrepreneurs and emerging companies in the United Kingdom, I did a survey of the literature and found that the traits most often mentioned were:
· A need for achievement, which goes beyond mere monetary awards to include a drive to establish and build a growing business;
· A high internal locus of control or a need among entrepreneurs to be their own bosses;
· A high propensity for risk taking and ability to absorb and learn from failure;
· A need for independence, which sometimes is evidenced by an inability to fit into a more traditional, or large, firm situation; and
· A predisposition toward innovative behavior, including creativity, vision, and capacity to inspire.
Clearly the words that Schumpeter wrote almost 100 years ago were prophetic and anticipated much of what psychologists, anthropologists and sociologists are finding today. However, while all this is quite interesting is has created a good deal of controversy since it suggests that entrepreneurs are most likely to be born and not made. If that’s the case, universities should stop offering classes and degrees in entrepreneurship and governments should shift their funding activities from training to investments in improving the environment within which these “special personalities” can perform. A more reasonable interpretation of the data, I think, is that the presence of these traits in a particular person can be used as measure of the likelihood that he or she will voluntarily choose an entrepreneurial path. This leaves open the possibility that entrepreneurship can be an acquired talent and recognizes, as I found in my study of the United Kingdom, that unforeseen circumstances, such as sudden job loss due to downsizing and offshoring, often turn loyal, long-term employees of large firms into unexpected entrepreneurs. Even more important to remember is that even if someone possesses the energy, creativity and ability to persevere linked to the entrepreneurial ideal it does not mean that he or she will be successful in launching and managing an emerging company.