What makes an entrepreneur?
Many of us harbour entrepreneurial ambitions - spurred on by TV programmes...
Many of us harbour entrepreneurial ambitions - spurred on by TV programmes like Dragon's Den and The Apprentice. But would we succeed or fail? Here we consider the qualities needed to be a successful entrepreneur. You can also take a test to see if you cut the mustard.
- Duration: 10 mins
- Published on: Monday 24th October 2005
- Introductory Level
- Posted under: Business Studies
Could you be an entrepreneur? A commonly quoted research study of new venture start-ups, that has stood the test of time over the past quarter-century, was conducted through the Massachusetts Institute of Technology by Jeffrey Timmons and colleagues. They identified 14 important entrepreneurial characteristics of successful enterprise owners (see box below).which still frequently crop up in entrepreneurship research.
- drive and energy
- high initiative and personal responsibility
- internal locus of control
- tolerance of ambiguity
- low fear of failure
- moderate risk taking
- long-term involvement
- money as a measure not merely an end
- use of feedback
- continuous pragmatic problem solving
- use of resources
- self-imposed standards
- clear goal setting
Timmons admitted that few entrepreneurs would possess all traits but felt that strengths in one might compensate for weaknesses in others. Many of these characteristics are self-explanatory (such as high personal drive and energy, self-confidence and setting clear goals) and some appear to be linked.
Others may be less obvious or well-known, such as money and profits being used as a measure of success compared with others but less as an end in itself. Helping you to develop the last quality in the list, the ability to set clear goals, is the ultimate objective of the Investigating Entrepreneurial Opportunities course.
These characteristics appear consistently in other entrepreneurial research studies. For example, more than 20 years ago a study of Irish entrepreneurs identified achievement, persistence and self-confidence as general successful business characteristics as well as internal locus of control and commitment to the business, as the characteristics peculiar to entrepreneurs.
Some of the qualities that people often find a bit obscure include tolerance of ambiguity and low fear of failure. Tolerance of ambiguity is the ability to accept contradictory or unexpected evidence of something while keeping an open mind. Low fear of failure can lead to pushy, goal-dominated behaviour but, in fact, is the opposite of need for achievement. The anxiety caused by the fear can sometimes be strong enough to cause the individual to deliberately bring about the failure that is feared.
Low fear of failure means that the entrepreneur is prepared to risk things going wrong and can handle setbacks without being deterred. High achievement motivation is a great driving force but low fear of failure may be very useful in times of business chaos and uncertainty.
There is a tendency for high need for achievement people to come from very supportive backgrounds and for them to be motivated to achieve in different areas.
In contrast, high fear of failure people tend to come from disrupted or non-supportive backgrounds and focus more obsessively on areas where they are more likely to achieve their goals, though they often set goals well below their actual potential.
However, these tendencies are not set in stone and the actual experience of business can have a big effect in inducing either more caution or more confidence. Still, if you are uncertain of your own drive to succeed or your ability to persist, the wisest course of action is to consider pushing your idea as part of a team. Small groups not only provide support, they also have a wider range of abilities and skills and often come up with more considered decisions.
Perhaps a little less familiar is the quality that successful small business owners are said to have – high internal locus of control. This means that they believe that their behaviour determines what happens to them and that they can control their own behaviour. This is linked to the need for autonomy and personal independence expressed by many entrepreneurs as their prime motivation for setting up their own firms.
Internal locus of control has featured fairly consistently in studies on the psychological characteristics of entrepreneurs. Essentially, the concept implies that individuals believe:
- the outcome of events and situations are susceptible to intervention
- that individuals can intervene and influence the outcome of situations positively from their perspective
- they themselves have the skills and capacity to intervene effectively in certain situations or to influence certain events
The self-confidence, energy, flexibility and opportunism associated with entrepreneurial behaviour suggests that entrepreneurs are individuals who are accustomed to getting involved and that they expect positive results from their involvement. In other words, they are prepared to expend energy and mental effort because they expect and often receive appropriate or, in their terms, valuable rewards.
Also, they are flexible and opportunistic because they believe they have the capacity to become involved across a broad range of situations. Internal locus of control beliefs are essential to the success of self-motivated behaviour and form a central core of the entrepreneur's self-concept. However, it is equally clear that entrepreneurs will not be the only people sharing these beliefs.
Most reasonably successful students at all levels realise that their own efforts in studying have a lot to do with passing. Most people for whom sport is more than just an occasional leisure activity know the value of expending their own efforts on training and the importance of self-confidence. And in business, most chief executives and reasonably able mid-level to senior managers will be accustomed to obtaining positive responses from their personal interventions.
It seems clear that people who believe that outcomes basically depend on their own behaviour and that they can control their own behaviour will generally believe that the control of events of importance to them ultimately rests internally in themselves. This is clearly linked to self-confidence and the ability to self-motivate.
However, people with internal locus of control beliefs are in the minority. For many people, their lives are deeply affected by the decisions of people in more powerful positions than themselves which, in business, can include strong partners, customers and suppliers. Even more pervasive than the belief that powerful others exert a determining control or influence are widespread beliefs that events are determined by chance or luck.
The Entrepreneurial Attributes: Locus of Control questionnaire below provides you with an opportunity to see where you currently stand (but note that locus of control beliefs are also influenced by context and can vary over time, especially if success breeds success).
The scoring system behind this questionnaire was devised by Colin Gray for his Phd on Enterprise Culture. He retains the copyright.
The locus of control theory has been found to be useful in analysing the behaviour and beliefs of successful entrepreneurs. If you feel you scored a bit low for your own liking, this is another indication that a team approach may be best.
If you want to boost your feeling of internal locus of control, one suggestion would be to set yourself attainable objectives and push yourself to achieve them. However, it is important to bear in mind that psychological scales and tests of this kind only ever measure tendencies (not absolute and immutable behaviour that holds in all circumstances) and never attain anything like 100 per cent accuracy. And, in any case, personal belief and motivation is only one part of the entrepreneurial equation.
About this article
Taken from the Open University Business School course Investigating Entrepreneurial Opportunities.
Copyright & revisions
Originally published: Monday, 24th October 2005
Last updated on: Thursday, 13th July 2006
- Body text - Copyrighted: The Open University
- Image 'Sir Alan Sugar, successful entrepreneur' - Copyrighted: BBC
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