‘Entrepreneurs behave and think differently to conventional managers in larger businesses’. Critically evaluate the statement using relevant models/ theories and case examples to support your argument. Introduction
There are a vast amount of theorists that try and define an ‘Entrepreneur’; however there is still no clear definition today of what an Entrepreneur possesses that others do not. There is a predisposition to attribute successful entrepreneurs to a person’s characteristics rather than environmental factors. Entrepreneurs are perceived to have ‘special traits’ that allow them to have particular insights not possessed by others. However, the core traits that are proposed to be the key competencies of successful entrepreneurs can also be applied to most successful managers, so what is the difference between the two? Due to the complexity of personalities it is very difficult to separate out specific characteristics. The socio-behavioural approach recognizes the importance of some of these factors but also involves the effect of culture. The role of social capital and the ability to learn are suggested to be major influences upon potential entrepreneurs. This essay will firstly review what makes an entrepreneur; looking at the influences of personality and socio-behavioural approaches. An insight into the identity and approaches held by managers in larger businesses also needs to be discussed, as well as the development of entrepreneurship in SME’s and its effect on the economy, and finally a brief description of how entrepreneurship affects the economy. The Entrepreneurial Personality
An individual’s personality will ultimately define how they behave and conduct themselves. Personality is defined as ‘regularities in action, feelings and thoughts that are characteristics of the individual’ (Snyder & Cantor, 1998). If this were true then there would be a set of characteristics that defined somebody as an entrepreneur. There are many traits listed by different theorists that make up an entrepreneur which makes it more difficult to define. However, there are certain traits which continuously appear. McClelland (1961) claims ‘entrepreneurs are individuals who have a high need for achievement and that characteristic makes them especially suitable to create ventures’. Further evidence is brought forward by Begley & Boyd (1987) suggesting there is a strong link between the need for achievement being a personality trait for an entrepreneur. However, there is also evidence to suggest that this need for achievement does not directly link to entrepreneurs as such. Hull et al (1980) found ‘need for achievement’ was classed differently from person to person. For example, one person might find achievement in getting a job for a large firm whereas someone else might class achievement as starting their own business. ‘The perceived probability of receiving rewards associated with the success of a proposed situation’, Brockhaus (1980) forwards another reoccurring trait associated with entrepreneurs. Mill (1848) described that this economic ‘risk taker’ was the distinguishable factor between managers and entrepreneurs. However this conflicts with Heath and Tversky’s (1991) ‘Prospect Theory’ which adopts the view that any risk taken is dependent upon the situation they are in rather than a perceived personality trait; which suggests anybody can be a risk taker given the right situation. Further highlighted by Brockhaus (1980) who found that, ‘the distribution of risk-taking propensity held by entrepreneurs is the same as the distribution of risk taking in the general public.’ What seems to be the most fundamental personality trait that affects the way entrepreneurs behave and think is the idea of an ‘internal locus of control’. Individuals that take charge of their environments and their own destiny . This links in with the need for achievement and a perceived risk taker. However, Delmar (2000) comments that ‘results have...
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