A proclivity for entrepreneurship

Abstract Despite intensive inquiry, relatively little is known about the entrepreneur, the central figure in entrepreneurship. The question of how an individual who operates his or her own business differs from a corporate manager remains unanswered. In addressing this question, the primary purpose of this study was to investigate the potential of psychological constructs to predict a proclivity for entrepreneurship. The research model includes three classic themes in the literature: achievement motivation, risk-taking propensity, and preference for innovation. A survey of 767 small business owner-managers and corporate managers was assembled from a 20-state region, primarily the southeastern United States. The participants completed a questionnaire composed of the Achievement Scale of the Personality Research Form, the Risk-Taking and Innovation Scales of the Jackson Personality Inventory and questions pertaining to numerous individual and organizational variables. Respondents were first divided into two groups, managers and small business owner-managers. Subsequently, due to the often cited variations in entrepreneurs, the owner-managers were further categorized as either an entrepreneur or small business owner, using the widely cited Carland et al. (1984) theoretical definitions. Entrepreneurs are defined by their goals of profit and growth for their ventures and by their use of strategic planning. Alternatively, small business owners focus on providing family income and view the venture as an extension of their personalities. In this study, both groups of owner-managers were simultaneously compared with managers using hierarchical set multinomial LOGIT regression. The results indicated that the psychological constructs are associated with small business ownership, but with some important caveats. As hypothesized, those labeled entrepreneurs were higher in achievement motivation, risk-taking propensity, and preference for innovation than were both the corporate managers and the small business owners. This profile of the entrepreneur as a driven, creative risk-taker is consistent with much of the classic literature concerning the entrepreneur. Nonetheless, not all of the owner-managers fit this profile. When compared with managers, the small business owners demonstrated only a significantly higher risk-taking propensity. In terms of the constructs studied, the small business owners were more comparable to managers than to entrepreneurs. In addition to theoretical and methodological implications, the results presented here have important implications for small business owner-managers of both types. A major issue is the connection between the owner’s psychological profile and the characteristics of the venture, including performance. It would appear that psychological antecedents are associated with owner goals for the venture. Some owners will be more growth oriented than will others, and performance should be assessed in light of the owner’s aspirations for the venture. Moreover, owners should be aware of their own personality sets, including risk preferences, which may be more or less suited to different venture circumstances, including those with relatively high levels of risk. Planning in small businesses appears to enhance venture performance. Research has demonstrated the connections between psychological factors and planning behaviors in small businesses. Those labeled entrepreneurs in this study have goals of profit and growth, and tend to engage in more planning. An awareness of these psychological preferences and concomitant attention to planning behaviors have the potential to improve the performance of the venture, irrespective of owner aspirations. Venture teaming is becoming more popular among entrepreneurs. Balanced venture teams appear to improve the chances of entrepreneurial success (Timmons 1990) , but a common source of conflict among venture team members is inconsistent or ambiguous motives for the new venture. Awareness of venture partners’ psychological predispositions in areas such as risk-taking could be used to identify and reconcile areas of potential conflict, and enhance the planning process in the small firm. In sum, an individual’s awareness of his or her psychological profile provides a number of advantages, not only to existing entrepreneurs, but also to aspiring entrepreneurs who should assess their perceived entrepreneurial opportunities against the backdrop of their psychological proclivity for entrepreneurship.