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The Entrepreneurial Paradox

Updated Wednesday 16th July 2008

What makes a successful entrepreneur stand out from the crowd?


The word entrepreneur has become one of the most commonly used terms in the modern business vocabulary as the British economy has undergone a major period of restructuring  following the launch of the enterprise culture in the early 1980s.

Despite these developments there still appears to be considerable doubt as to what the word actually means and what characteristics distinguish successful entrepreneurs from the more conventional and possibly less successful business figures. In the UK an entrepreneur is differentiated from an owner-manager of a small business (a lifestyler) on the basis of their ideas being highly innovative, the fact that they adopt a strategic approach to the running of their businesses and they are driven by motives of high growth. In the USA the definition is more generalised insofar as an entrepreneur is anyone who establishes a start up business  irrespective of whether it is based on a innovative idea or not.

Entrepreneur Duncan Bannatyne [image © copyright BBC] Copyrighted image Icon Copyright: BBC

Entrepreneur Duncan Bannatyne.

Another important question is whether there is a typical person who becomes a successful entrepreneur, an archetype on which we can base our judgements about someone’s aptitude for entrepreneurship? Can anyone become an entrepreneur or does it require a certain type of person to make it really work? If it does require certain attributes are they innate or can we acquire them – in other words are successful entrepreneurs born or made?

The influence of the business founder or nascent entrepreneur  on a small business is crucial, particularly in the early days when enterprises are inseparable from their founders. They are conceived by them and survive (or not) because of their personal commitment and dedication. In later stages of growth, a management team may emerge which makes the enterprise more autonomous and capable of surviving without the founder.

Since this impact is so vital to small business survival it is important to identify and encourage the personality types who are most likely to succeed and to discourage those who are not. A number of traits or personality characteristics have been put forward such as the `Big Five` personality dimensions which include: the need for achievement, the need for autonomy (or independence), an internal locus of control (or self-determination), a risk-taking propensity and self-efficacy (or self-belief). Since these entrepreneurial traits are formed during childhood  and cannot be developed later there is and strong implication that entrepreneurs are born not made.

A further characteristic of the entrepreneur is their ability to innovate. According to the late Peter Drucker, entrepreneurship and innovation are tasks that can be and should be organised in a purposeful way and are part of any manager’s job whether he or she works in a small or large enterprise. The entrepreneurial manager is constantly looking for innovations through an organised and continuous search for new ideas. Drucker presented entrepreneurs not as people who are born with certain character traits but as managers who know where to look for innovation and how to develop it into useful products or services once they have identified the strategic space or market gap. Drucker therefore believed that these competencies could be learned and developed and involved a continuous purposeful search for new ideas and their practical application.

There are also other personality traits associated with entrepreneurs which include: a proactive approach, self-motivation, a tolerance of uncertainty and ambiguity, opportunistic behaviour, creativity, vision, impatience, energy and charisma.

It is therefore hardly surprising that successful entrepreneurs appear to be superficially so diverse. This may also have something to do with the socio-economic characteristics of their environment in terms of both the national and market conditions in which they operate and compete. These will also vary greatly from country-to-country and from sector-to-sector.

Finally, if Peter Drucker was right then perhaps the enterprise initiatives that have been launched across the UK have a high probability of success or is it more complicated than that?

Further reading

  • Organisations Evolving by H Aldrich, published by Sage
  • `The Entrepreneurial Personality; Past, Present and Future` by E Chell, in Occupational Psychologist number 38
  • Innovation and Entrepreneurship by P Drucker, published by Heinemann.
  • The Achieving Society by D McClelland, published by Van Nostrand
  • `The Dark Side of Entrepreneurship` by M Kets de Vries, in Harvard Business Review November-December 1985  

 

For further information, take a look at our frequently asked questions which may give you the support you need.

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