What makes an entrepreneur? Are some people entrepreneurs from Day 1? There are so many stories of successful entrepreneurs who started out as kids hustling lemonade stands, making money in all sorts of inventive ways, and this theme carries on throughout their lives. Or, can you teach, train or learn to be an entrepreneur?
There are two different points of view to support each theory; the economic perspective and the behaviourist approach.
The economist point of view leans toward entrepreneurship as a concept that can be taught, or one that someone can learn. Mark Casson considers an entrepreneur to be a person that specialises in roles to carry out the function of entrepreneurship. These roles are:
- a risk bearer – this is a person who bears the risk of an activity, with the idea that they will see an higher return from that activity.
- an arbitrageur – a speculator, or a person who purchases a stock or commodity in a low priced market, with the idea of immediately selling in a higher priced market, to profit from the difference between the two.
- an innovator – Entrepreneur Inc. identifies the role of an entrepreneurial innovator as someone who pushes the boundaries of the known world; a change agent who is relentless in making things happen and bringing new ideas, products, markets or technology to execution.
- and someone who specializes in taking judgmental decisions about the co-ordination of scarce resources. This could be a person who is able to shift a low productivity area into a high productivity area, either using the resources available, or finding resource holders and convincing them to allocate and commit resources to the new project.
The behaviourist school of thought is one researched by sociologists and psychologists, and (arguably) points toward an entrepreneur being born. The focus here is more on individual personality and characteristics.
General characteristics include self-confidence, flexibility, energy, creativity and a positive attitude towards hard work. However, the three characteristics more widely concentrated on are: the need for achievement, a risk-taking propensity, and a high internal locus of control.
A person with a need for achievement will demonstrate traits such as: self-motivation and internal drive, high goal setting, a desire for excellence, and a drive to succeed in competitive situations.
In terms of risk taking, the ability to see opportunity in situations that others may see as having little potential, taking calculated risks, and learning to manage risks are all general characteristics of an entrepreneur. These characteristics are largely influenced by the mental shortcuts a person uses to solve complex problems (also known as cognitive heuristics). Entrepreneurs who are more likely to take mental shortcuts will tend to develop simple decision-making processes. They will consider a low number of alternatives, based on limited amounts of information, tend to disregard consequences of their decisions, and have no dependable estimation of their outcome or chance of success. Perhaps going on instinct to make a decision?
The third characteristic of an entrepreneur from a behaviourist perpective is a high internal locus of control. A person’s locus of control is the extent to which they believe they are able to control events that affect them. Those with a high internal locus of control believe their own behaviour and actions can determine events and influence outcomes. A person with a high external locus of control believes that chance or fate, or influential people around them determine events. If a person realizes and understand an internal locus of control, they are able to positively affect their own motivation and personal control.
So, a person’s predisposition to entrepreneurship can be observed by looking at their characteristics, both from an economic view and from a behavourist perspective. An individual is not necessarily limited to one school of thought or characteristic, more by a combination of several. A person can demonstrate all the traits of an entrepreneur, but may not use them in a practical way. Or, a person could hold all the practical knowledge, but may miss big opportunities by having an extremely conservative approach. It takes balance of the two to make things happen. What would you need to work on to balance the two out?