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Entrepreneurship

Entrepreneurship is the practice of starting new organizations, particularly new businesses, generally in response to identified opportunities. Entrepreneurship is often a difficult undertaking, as a majority of new businesses fail. Entrepreneurial activities are substantially different depending on the type of organization that is being started. Entrepreneurship ranges in scale from solo and sometimes part-time projects to major undertakings which create many job opportunities.

History

The word "entrepreneur" has been part of the French vocabulary since the 12th century and first appeared in the 1487 edition of Dicionnaire de la langue francaise. However, its meaning has varied through the centuries. The term was first used to describe someone who is "active and achieves something" and often denoted heroes from war.

From the 13th century onward, contractors, as opposed to the clergy, were engaged by the church to complete buildings such as churches and cathedrals. These contractors usually managed the financial risk themselves. As the state increased its influence and wealth through the 17th and 18th centuries, the concept of "risk-taking" was added to the meaning of "entrepreneur", in both legal and economic senses. The contractor or entrepreneur would be contracted to supply goods to the state at a fixed rate, therefore leaving the entrepreneur to assume the risk of making a profit or loss.

Personality of Entrepreneurs


Because of its profound positive impact on the worldwide economic condition, researchers have recently taken interest to the study of personality characteristics of entrepreneurs.
The scientific study of personality has lead to the modern interpretation dictated by the Five Factor Model (FFM), explaining all human personality based on five elements, namely openness, conscientiousness, extraversion, agreeableness, and neuroticism. Exhaustive research has been conducted on the personalities of successful managers and leaders, however the examination of entrepreneurs under the FFM is only in its infancy.

Selected scientific findings

Openness


Described by the propensity for an individual to submit to new or unusual ideas, openness has been unanimously hypothesized to have a positive effect on entrepreneurial success. Overwhelming evidence agrees with this hypothesis. Researchers have noted that should logically lend itself to venture success, as innovation is a requirement in the increasingly competitive economic environment.

Conscientiousness

Though most researchers agree that conscientiousness would have a positive effect on entrepreneurial success, the findings are less convincing. Less than half of published, peer-reviewed studies support the findings that the hypotheses suggest, making it difficult to come to any conclusions. As conscientiousness relates to an individual’s need to be successful, one would expect more conscientious entrepreneurs to reach high levels of success. However, individuals with high levels of conscientiousness also tend to be less spontaneous, and plan actions more frequently. Some experts presume that excessive planning may actually have negative effects on entrepreneurial success. More research must be conducted for a better understanding, but at this time no link can be made between the two.

Extraversion


Extraverts, under the FFM, are associated with high levels of friendliness and sociability. Experts note that extraverts tend to have better networking skills than their introverted counterparts, and thus are more likely to find entrepreneurial success. On this area, the research tends to agree, with more than half of recent peer-reviewed studies noting statistically significant positive relationships between extraversion and entrepreneurial success.

Agreeableness


Agreeableness is best described by the degree to which an individual shows cooperativeness and compassion towards others. Researchers are unable to develop a consensus on this particular trait as it relates to entrepreneurial success. Some argue that an entrepreneur who is too agreeable will have difficulty surviving in the competitive business climate. Others note that cooperativeness and compassion will be positively related to success, as it would assist in networking capacity and the ability to build positive relationships with vendors and customers. Unsurprisingly, conflicting hypotheses are supplemented by conflicting findings, and no statistical significance between agreeableness and entrepreneurial success can be proposed.

Neuroticism


Neuroticism describes the degree on an individual’s emotional stability. Specifically, individuals rated high on the neuroticism scale are described as those who are more likely to abandon a situation. Understandably, researchers hypothesize that entrepreneurs who are likely to abandon situations are less likely to find venture success, noting a negative relationship between neuroticism and entrepreneurship success. More than half of recent research agrees to the statistically significant level.

Criticisms

Self-reported surveys
Critics of the recent findings linking personality traits to successful entrepreneurship cite origins of the personality traits themselves. All research to date has based personality designation on self-reported survey results. As with any self-reported survey, the honesty and accuracy of responses must be questioned. Voluntary response
Others cite voluntary response as an area of criticism. Educators and entrepreneurs alike have noted that often the most successful entrepreneurs are those that don’t have time to be bothered with personality surveys. Cultural influence
Another area of criticism includes the fact that most recent research neglects to consider the effects of cultural variation on entrepreneurship and success. Individuals from various cultures do not always share identical values, a fact that introduces a cultural bias into personality consideration. In their study on cross-cultural attributes of entrepreneurship, Gupta and Fernandez found key differences between entrepreneurial associations in the United States, India, and Turkey. Helpfulness and self-image, for instance, were rated significantly higher in Turkey and India, respectively (Gupta and Fernandez, 2009). Essentially, characteristics that prove successful in one culture may be ineffective in another.

Further Research

Considering the limitations of current published research, it has been suggested that new studies be conducted to reduce the bias introduced in self-reported surveys, as well as to consider the effects of cultural influence. A study evaluating personality traits based on in-depth interviews of successful and unsuccessful entrepreneurs from multiple geographic locations would suffice.

References

Landström, H. (2005) Pioneers in Entrepreneurship and Small Business Research, Springer, USA