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INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads | | JULY 15, 2003 GROWING CONCERNS By David E. Gumpert Inside the Mind of an Entrepreneur Researchers have long tried to identify why certain people trade security for a startup's risks. Now, we may be closer to an answer
For a time in the late 1970s and early 1980s, researchers were convinced that if you first-born, liked to sky dive, and your father owned a business, among other traits, you were a great candidate to start your own business. Books were written that offered "tests" to determine if you were, indeed, entrepreneurial material. THE SAME, JUST DIFFERENT. As time went on, and many dozens of studies were conducted, researchers soured on the notion that small-business success can be predicted by assessing the personal characteristics of founders. The researchers were frustrated by the fact that entrepreneurs are such a heterogeneous group of people. They ran up against difficulties in coming to agreement on what it means to be entrepreneurial and innovative. Studies by psychologists sometimes measured personal characteristics that couldn't be tied to entrepreneurial activity. Probably the biggest problem was that studies tended to contradict each other. Some suggested a positive correlation between certain characteristics and entrepreneurial success while others showed no tie-ins. More recently, researchers have avoided the topic altogether. Now comes a German researcher who contends that there really is something to the idea that certain personality types are likelier to succeed than others. The researcher, Andreas Rauch of the University of Giessen, makes his claim based on a review that previous research on the subject -- more than 150 studies assessing the personality characteristics of business owners, "and either comparing business owners with other populations or dealing with indices of performance." He presented his findings at the Babson Kauffman Entrepreneurship Research Conference in Wellesley, MA,in June, 2003. "I coded 39 different personality characteristics," he writes. "The personality characteristics were further coded depending on whether they were specifically related to entrepreneurship (e.g. need for achievement, risk-taking propensity, tolerance for ambiguity) or not related to entrepreneurship (e.g. extraversion, rule conformity)." These characteristics were assessed against such factors as business performance and personal satisfaction of entrepreneurs. His conclusion? That "personality characteristics do have a significant and positive effect on entrepreneurship and business success." EGO ERGO YOU GO. He makes an important distinction, though, about the role of personality in starting a business and actually succeeding in business. The role appears to be strongest in determining who starts a business. He observes that "business owners differ from other people in personality characteristics, such as need for achievement, internal locus of control, and risk-taking propensity." In other words, would-be entrepreneurs tend to have strong egos. While "relationships between personality characteristics and business success were less precise," they were important nonetheless. They were the same characteristics that encouraged entrepreneurs to go into business—desire to achieve, need to be in control, and aggressiveness. So what do we have here? Most important, we have confirmation of what most entrepreneurs have sensed all along: they differ in important psychological respects from people who can't give up the security of a job to go on their own. What we don't have are the deeper insights that could help us determine which personality characteristics enable some entrepreneurs to go on to create the "gazelles" of our economy, the fast-growing businesses that become the Yahoo!s (YHOO ) and eBays (EBAY ) of the future. But perhaps Rauch's research will stimulate a resumption of studies that more deeply assess the personality characteristics of the most successful entrepreneurs.  David E. Gumpert is author of Burn Your Business Plan: What Investors Really Want from Entrepreneurs and How to Really Start Your Own Business. Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | JULY |
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