Entrepreneurs are central to the creation of new businesses or ventures. They are responsible for creating new value in the form of innovations and/or new organisations (Schaper & Volery 2004). Schaper and Volery (2004 p.88) classify an entrepreneur as someone who “develops new ideas, starts an enterprise based on these ideas, and provides added value to society based on independent initiative”. Some owners do not seek out new ideas or opportunities and can be classified as owner-managers or business owners rather than entrepreneurs (Carland et al. 1984, Brockhaus
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1980, Schumpeter 1935 & 1983). Some of the distinguishing features of entrepreneurs are that they have a vision for growth and a commitment to innovation; they also persist in gathering resources and have incessant needs for achievement (Schaper & Volery 2004, Carland et al. 1984). Carland et al. (1994, p. 1,267) offers the following distinctions between entrepreneurs and small business owners:
Small business owner: is an individual who establishes and/or manages a business for the principal purpose of furthering personal goals.
Entrepreneur: is an individual who establishes and
manages a business for the principal purpose of profit and growth.
Entrepreneurs do not operate exclusively in the context of an SME and can often be found in larger organisations where they may also be referred to as ‘intrapreneurs’ (Pinchot 1985). Whilst owner- managers of small businesses may not possess many of the characteristics associated with entrepreneurs, anecdotal evidence is that many are effective and operate their businesses successfully.
According to Schaper and Volery (2004) there are two basic schools of thought on what defines an entrepreneur: the economists’ view and the behaviourists’ view. The economists’ view focuses on the roles that the entrepreneur plays including the arbitrageur, the innovator, and the co-ordinator of scarce resources. In contrast, the behaviourists’ view (including sociologists and psychologists) focuses on the psychological characteristics and personality of the individual (Schaper & Volery 2004). Table 2.4 summarises some of the common characteristics of entrepreneurs that have been identified in prior studies.
Extensive research has been conducted into understanding entrepreneurs better (Smith 1967, Kuratko, Hornsby & Naffziger 1997, Krueger & Carsrud 1993, Gundry & Welsch 2001, Robichaud, McGraw & Roger 2001, Naldi, Nordqvist, Sjoberg & Wiklund 2007, Davidsson 1989 & 2004, Liao, Murphy & Welsch 2005), small business owners (Zinger, Lebrasseur, Robichaud & Riverin 2007, Friar & Meyer 2003), and business types (Massey, Lewis, Warriner, Harris, Tweed, Cheyne & Cameron 2006, Baines & Wheelock 1998, McMahon 2001, Bridge et al. 2003, Tan, Menkhoff & Chay 2007).
Characteristics of Entrepreneurs
Self-confidence Tolerance of ambiguity Risk taking propensity Responsiveness to suggestion Flexibility Dynamic leadership qualities Independence of mind Initiative
Drive, energy & diligence Resourcefulness
Hard-work ethic Good communication skills Creativity & imagination Perseverance
The need for achievement Profit orientation Internal locus of control Perception with foresight Good problem solving ability Imagination
Prior studies in entrepreneurship have examined links between business success and a range of personality traits (Rauch & Frese 2007, McClelland 1961, Collins, Hanges & Locke 2004, Smith
Table 2.4: Common characteristics of successful entrepreneurs (but most do not possess ALL these characteristics), adapted from Schaper & Volery (2004, p. 35) and Gibb (1987 p. 6).
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1967). Research suggests that entrepreneurs are: confident (Robinson 1987); often possess a high internal locus of control, i.e. believing that they can influence their world (Schaper & Volery 2004, Gasse 1985, Hansemark 2003); have high levels of self esteem and self efficacy with a strong belief in their ability to achieve goals (Kruegel & Brazeal 1994, Erickson 2002, Frazier & Niehm 2006, Rauch & Frese 2007); and demonstrate greater levels of initiative with more positive attitudes towards risk and autonomy than the general population (Bateman & Crant 1993, Shaper & Volery 2004, Douglas & Shepherd 2002, McMullen & Shepherd 2006, Rauch & Frese 2007, Palich & Bagby 1995). In addition, successful entrepreneurs are often characterised as being creative (Feldman & Bolino 2000, Zampetakis & Moustakis 2006, Schumpeter 1935), innovative (Rauch & Frese 2007, Schumpeter 1935, Schaper & Volery 2004), resourceful (Amabile 1983), and able to improvise (Hmieleski & Corbett 2006).
Curiosity, creativity, confidence, and having a positive attitude to risk are not the only characteristics that successful entrepreneurs typify. Other characteristics are perseverance (Eisenberger & Leonard 1980, Stoltz 1997, Markman 2007, Locke & Baum 2007); propensity for risk taking (McClelland 1961, Chattopadhyay & Ghosh 2002, Stewart & Roth 2001, Sexton & Bowman 1984); variety or ‘sensation’ seeking (Zuckerman 1979); and penchant for collecting information prior to decision making otherwise referred to as ‘strong judgement’ (Learned 1992, Baron 2000, Shook, Priem & McGee 2003).
Smith’s (1967) seminal typology of entrepreneurs refers to them as ‘craftsmen’ at one extreme and ‘opportunistic’ at the other.
‘Craftsmen’ are categorised as paternalistic and autocratic with goals of independence, autonomy and producing a quality offering. Financial gain and growth are not their key motivations, and operating their own business is symbolic of their success. The ‘opportunistic’ entrepreneur on the other hand is well educated, engages in long-term planning, and is able to delegate to managers. He or she will have a well rounded education and management experience, and is risk-orientated with growth being the major goal for the company.
Kuratko et al. (1997) identified that entrepreneurs were not only motivated by extrinsic goals such as personal wealth and income opportunities but also by intrinsic goals of recognition, excitement and a sense of accomplishment. Porter and Lawler’s (1968) motivational model suggests that entrepreneurs are also motivated by the act of entrepreneurship (starting and building organisations, taking advantage of opportunities).
For the purposes of this study all participating business owners were assumed to be ‘entrepreneurs’ because classification of the owners (business owner versus entrepreneur) fell beyond the scope of this study.