Entrepreneurship – Nature or nurture?
“Research in entrepreneurship has come a long way past trait psychology popular in the 1960’s that suggested entrepreneurs were risk-taking, achievement-oriented heroic individuals. Instead, more than 30 years of research shows that it is behavioral and cognitive psychology that predicts success, not traits.
For example, the Panel Study of Entrepreneurial Dynamics (PSED), a longitudinal study of nascent entrepreneurs showed that those individuals who carried out activities, engaged with customers and acted were more likely to successfully launch. Further, the vast majority of businesses are started by teams not individuals. Research from cognitive psychology shows there are different approaches to framing opportunities, and acting on these (see for instance, the proceedings of the Babson College Conference on Entrepreneurship Research, the oldest research conference in the U.S. (http://www3.babson.edu/ESHIP/outreach-events/bcerc.cfm). In addition, Babson College has led and sponsored multi-country research study, the Global Entrepreneurship Monitor (GEM) http://www3.babson.edu/ESHIP/research-publications/gem.cfm, a 53 country collaborative study that examines the process by which individuals launch ventures. This 10-year-long research shows that entrepreneurs are socially embedded and that country context, resource access, demographics, policies and a host of other dimensions have strong influences on the entrepreneurial process. Importantly, entrepreneurs are motivated by both necessity and opportunity.
One needs to avoid definitions that are somewhat narrow – one who starts a business and achieves mega financial success. The fact is that success is relative to business objectives and goals. For some entrepreneurs, success means survival; for others, it means managing a small- to medium-sized firm that can be managed, controlled or handed down to a family member. For some entrepreneurs, it means selling the business; for some it means growing a wildly successful venture, like Microsoft. I should add that less than 1% of all U.S. businesses receive venture capital and an even smaller percent grow into Microsoft.
This being said, entrepreneurship is not just teaching business and management skills. It involves teaching techniques and approaches for identifying, creating, and evaluating opportunities; approaches to acquire, and transform resources (money, people, social, organizational, technological, and physical) and processes for building a capable team to do so. Of course this process can take place inside a large corporation, in family, non-profit or other organizational structure. But, for de novo start-ups, there is the challenge of building a resource base, building the team and creating a unique advantage without the benefit of having a large corporate structure, policies, funding support, existing customer base and of course, market legitimacy (Academy of Management Executive, Candida Brush, Patricia Greene, & Myra Hart 15:1, 2001).
If anything, it is about the entrepreneurial mindset and approach. We believe that traditional disciplines (marketing, finance, operations) can be strongly enhanced by the inclusion of entrepreneurial thought and action. In other words, how do you segment a market that doesn’t exist? How do you craft strategy for an industry that has no standard? How do you line up suppliers in an emerging new value chain? Standard business skills, and current management approaches are based on the assumption the organization exists. What happens if it doesn’t? This is where entrepreneurial thinking is required. It is these skills and capabilities that we teach at Babson College.”
Dr. Candida Brush, Professor of Entrepreneurship
Paul T. Babson Chair in Entrepreneurship
Chair, Division of Entrepreneurship