Lecture 3: Who becomes an

entrepreneur and why?

Who becomes an entrepreneur?

Versus
 Personal Character Traits: • Opportunistic
• Innovative
• Need for independence • Self-confident
• Need for achievement • Proactive & self motivated
• Internal locus of control • Visionary with flair
• Ability to live with uncertainty & • Ability to live with uncertainty &
take risks take greater risks

Antecedent Influences:
Start-up
Situational Factors: • Family
Influences
• Employment • Ethnicity
• Unemployment • Gender
• Immigration • Education
• Economic opportunity • Previous employment
• Religion
• Social group
• National culture
 Personality Approach

Need for independence

Controlling your own destiny, doing things differently, being in a situation

where you can fulfill your potential.

“I enjoy the independence of single-

handling a boat. I like controlling the elements,
making the wind and the waves and the water
work for me.”
Gerry Schwartz
 Personality Approach
Need for achievement

Achievement does not necessarily mean that money is an end itself. It may allude to
employing the 100th person, meeting the first million pound mark etc.

Internal locus of control

Believing you can exercise control over your environment and ultimately your
destiny.

You can believe in Fung Shui if you want,

but ultimately people control their own
fate.”
Li Ka Shing
 Personality Approach
Ability to live with uncertainty and take measured risks

A regular income is a requirement in any job and the cause of much upheaval
and stress. People tend to be risk averse and less willing to be risky with their
own money. In this manner managers and entrepreneurs are very different.

“It was an extremely satisfying experience. Taking

smart risks can be very gratifying.”

Reed Hastings
Opportunistic

Entrepreneurs exploits change for profit.

They seek out opportunities to make money.

“Don’t spend so much time trying to choose

the perfect opportunity, that you miss the right opportunity.”
Michael Dell
Innovative

The ability to spot opportunities and to innovative are the

most important distinguishing features of entrepreneur.
Innovation is the prime tool entrepreneurs use to create or
exploit opportunity.

Self-confident

Confident in your own judgement and ability to start up

your own business with the risks and uncertainty that they face.
Don’t confuse with some entrepreneurs being
arrogant or being delusional.
 Personality Approach
Proactive and self-motivated

Entrepreneurs are highly driven and possess determination. They are impatient,
work long hours, committed and determined to succeed. This strong drive is what
psychologists call type ‘A’ behaviour. They are highly driven by money, their goals,
success, etc.

Visionary with flair

Clear vision of what they want, how they will achieve it and when.

"Our vision is to be the world's most consumer-centric company, where customers

can come to find anything they want to buy online.“
Jeff Bezos

Great risks and uncertainty

Large amounts of capital and time are required. For example, entrepreneurs are
known to put up their homes as collateral or capital.
 Personality Approach Theories
McClelland’s (1961) The Achieving Society

•Need for Achievement

•Proactive person – lots of initiative and assertive
•Committed to aims and achieving them

Key characteristics:

•Achievement
•Calculated risk-taker
•High internal locus of control
•Creativity
•Innovative
•Need for authority
•Ambiguity tolerance
•Vision
•Self-efficacy
 Personality Approach Theories

Merideth et al. (1982)

The 5 core traits of entrepreneurship:

• Confidence
• Risk-taking
• Flexibility
• Achievement orientation
• Independence

Meredith, G.G., Nelson, R.E. and Neck, P.A. (1982). The Practice of
Entrepreneurship, International Labour Office, Geneva.
 Personality Approach Theories

Timmons (1994)

• Some acquired traits, some innate

• Need for achievement
• Vision and ability to inspire
• Responsibility for actions / decisions
• Ambitious
• Achieved personal goals / ambitions
• Able to cope with failure
• Creative

Timmons, J.A. (1994). New Venture Creation: Entrepreneurhsip for the 21st
Century, 4th Edition, Irwin: Chicago, IL.
 Methodological Problems

• Characteristics are not stable and change over time.

• They require subjective judgements.
• Measures tend to ignore cultural and environmental
influences.
• The role of education, learning and training is often
overlooked.
• Issues such as age, sex, race, social class and education
can be ignored.
 Antecedent Factors

• Family
• Ethnicity
• Gender
• Education
• Previous employment
• Religion
• Social group
• National culture
 Situational Factors

• Employment
• Unemployment
• Immigration
• Economic opportunity
 Personal character traits:

•Need for independence – Lots of evidence, from him as a boy setting out to get the money to buy his own
bicycle to his serial entrepreneurship.

•Need for achievement – Duncan is a millionaire and is not content to retire. He continues to strive to
achieve.

•Internal locus of control – Again lots of evidence from the bicycle episode to the episode where he helped
finish the building work on the care home himself.

•Ability to live with risk and uncertainty – Duncan constantly ploughed back proceeds from one successful
business into the next opportunity.

•Opportunistic – Many examples such as converting houses into bed-sits for rental to unemployed people
and the gym idea.

•Innovative – One example of Duncan’s ability to innovate was the scoop episode with his ice cream
business.

•Self-confident – Just watch Duncan on Dragon’s Den.

•Proactive and self-motivated – Evident from everything he has done.

•Visionary with flair – Duncan could see how he care homes could be expanded and equally he could see
the profit potential of the gym.
 Antecedent influences:

•Family – Large family, working class background.

•Ethnicity – A Scot!
•Gender – Male.
•Education – Left school at 15.
•Previous employment – Numerous, but no apparent connections other
than property development.
•Religion – No information.
•Social group – Working class.
•National culture – Whilst Scots seem to spread around the world, they are
not particularly known for being (or indeed not being) entrepreneurial.
 Situational factors:

•Employment/Unemployment – Duncan spent his twenties

moving from job to job with no security of employment. His
first real entrepreneurial venture was the ice cream van in his
early thirties.

•Immigration – A Scot in England….probably does not count!

•Economic opportunity – Duncan’s real big break came from

the change in Government rules to help unemployed people in
rented premises. He bought houses and converted them into
bedsits.
 Reading
Chell, E. (1985) The Entrepreneurial Personality: A Few Ghosts Laid to Rest?
International Small Business Journal, 3, 43-54.

Hisrich, R., Langan-Fox, J. and Grant, S. (2007) Entrepreneurship Research

and Practice: A Call to Action for Psychology. American Psychologist, 6(6),
575-589.

McClelland, D.C. (1987) Characteristics of Successful Entrepreneurs. The

Journal of Creative Behavior, 21(3), 219-233.