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known product, new production methods, the opening-up of new sales markets, new
organizational forms or new forms of procurement. These concepts of innovation and
novelty form an integral component of his definition.
On the basis of Schumpeters works, a multitude of different entrepreneurship
definitions have been subsequently generated. In this context, we limit ourselves to
consider
only
selected
exemplary
definitions
and
thereby
dispense
with
Source
Definition of entrepreneurship
Cantillon (1755)
Knight (1921)
Schumpeter (1934)
production methods,
new markets, new forms of organization
Casson (1982)
Hisrich/Brush (1985)
original version]
[modified version in
Hisrich/Peters (2002)]
Entrepreneurship is the process of creating
something of value
by devoting the necessary time and effort,
assuming the accompanying
financial, psychic, and social risks, and receiving
the
resulting rewards of monetary and personal
satisfaction and
independence
Hart,
Stevenson
& Entrepreneurship
entails
Dial
(1995)
to
resources
the
currently
pursuit
controlled,
of
but
constrained by the
founders previous choices and industry-related
experience
Timmons (1999)
Entrepreneurship
is
way
of
thinking,
understanding
of
this
concept.
As
in
the
case
of
the
concept
his/her close connection with innovations, the pioneer entrepreneur appears on the
economic scene only intermittently. This characteristic is also part of Peter F. Druckers
succinct definition of the entrepreneur: [] the entrepreneur always searches for
change, responds to it, and exploits it as an opportunity. [Drucker (2004), p. 25]
In practice, a distinct type of entrepreneur can be found, who indeed appears to search
frequently for levers for change and novel business opportunities to exploit the
socalled serial entrepreneur. A serial entrepreneur is an entrepreneur who repeatedly
founds enterprises, i.e. a series of enterprises. The serial entrepreneur is above all
interested in the start-up, organization and (partially) also in the growth of enterprises
within a usually short period of time. Various motives may be involved, e.g., the
enjoyment of putting ideas into practice, being creative, possessing self-sufficiency at
the beginning of the enterprise development as well as correspondingly low enterprise
complexity and staff numbers. The latter is because with the growth of an enterprise,
business complexity will increase and a change occurs from an entrepreneurial to a
managerial perspective, with management activities (as well as administrative tasks)
moving into the foreground. These are also possible reasons for a serial entrepreneur to
sell the enterprise and to start again. In addition, financial interests can also play a role
with a serial entrepreneur, e.g., as in the situation of fielding a lucrative takeover offer
from a potential buyer. In this case, the decisive factor for success is the recognition
and quick realization of entrepreneurial chances or opportunities [see also chapter 2.2].
An example of a successful serial entrepreneur is the Dutch entrepreneur Bert
Twaalfhoven. By 2006, he had founded 54 enterprises in eleven countries over a period
of 40 years. Although he failed with 17 enterprises, he never gave up, but consistently
exploited the entrepreneurial chances available to him. The brothers Oliver, Alexander
and Marc Samwer can likewise be seen as being on their way towards becoming serial
entrepreneurs. The three men from Germany founded the internet auction platform
alando.de,which in 1999 was sold to eBay. Subsequently the brothers founded Jamba!,
offering ring-tones, pictures and videos for mobile telephones. In 2004, Jamba! was sold
to the North-American company VeriSign. The three brothers have then recognized and
exploited other entrepreneurial opportunities. Clearly, they are more interested in
theenterprising idea itself than in exercising control over enterprises. A craving for
managerial power within the enterprise was not their priority, as the founders handed
over the management of Jamba! in 2005 and withdrew from the enterprise
[Neubauer/Hogan (2006)].
These examples suggest that there may be differences between entrepreneurs and
(traditional) managers [Stevenson/Gumbert (1985); see Busenitz/Barney (1997) for
elaboration of these empirical differences; see also the discussion of the behavioural
approach to entrepreneurship below]. In particular, entrepreneurship research has
addressed the characteristics of entrepreneurs and the essence of entrepreneurship in
terms of differentiating it from other activities like management or business
administration, trying to understand the distinct role of entrepreneurs in the economy.
This is reflected in three genuine approaches towards entrepreneurship to be discussed
at the end of this section. All three approaches relate to the idea that being an
entrepreneur has to do with the recognition and exploitation of new venture
opportunities. This results in perspectives which (1) attribute distinct personality traits
typical for opportunity discovery and exploitation (traits approach), (2) consider the
entrepreneur to take on a specific role in society (i.e. entrepreneurs are the people who
see opportunities and allocate societal resources to their exploitation; functional
approach), and (3) distil out typical forms of behaviour relevant to capitalise on new
venture opportunities rather than administering or managing existing business
operations (behavioural approach).
Overall, the recognition and exploitation of an entrepreneurial opportunity is a process,
which is considered to be market- rather than enterprise-orientated. [Note though that
current effectuation research in entrepreneurship also addresses the possibility of
entrepreneurial opportunity recognition the other way around, i.e., asking what kind of
opportunities may exist on the basis of existing competences and capabilities of an
entrepreneur; Sarasvathy (2001).] Recognition and exploitation of an entrepreneurial
opportunity have been included in numerous definitions of entrepreneurs as a
characteristic feature since the middle of the 1980s. A rather pragmatic, short and
concise definition by Bygrave/Hofer (1991) shall serve as an example. The entrepreneur
is a person who recognizes an entrepreneurial opportunity and exploits and follows it up
have
concentrated
on
the
characterization
of
ideal
personality
school.]
According
to
the
classical
traits
approach,
the
entrepreneurial personality can be seen as the embodiment of all traits, properties and
qualities of the entrepreneur as a human being. According to McClelland, entrepreneurs
have, for example, a pronounced need to perform well. According to Klandt (1984), the
following personal characteristics can be ascribed to an entrepreneur: striving for
independence (need of independence), performance motive (need of achievement),
readiness to take risks (need of risk), striving for social advancement, wish for
recognition (need of affiliation), general attitude of independence, general and job-
related value-priorities, striving for power (need of power) [also cf. Bhide (2000);
Timmons/ Spinelli (2004)]. Besides the typical characteristics of performance motivation
and the inclination towards calculable risks, the inner conviction to be in control, i.e., I
as the driving force, is a characteristic with good validity [Fueglistaller/Mller/Volery
(2004)]. It is important to note however that the traits approach has been criticized, in
particular as the search for a single psychological profile of the entrepreneur is bound
to fail [Stevenson et al. (1999), p. 5] and other competing approaches have come to the
fore (again), e.g., the functional and behavioural approach [see the summary below and
also cf. Hatten (1997) for a critical discussion of the traits approach].
Often entrepreneurs are also credited with an extraordinary readiness and capacity to
learn [cf. Minniti/Bygrave (2001)]: Effective entrepreneurs are exceptional learners.
They learn from everything. They learn from customers, suppliers, and especially
competitors. They learn from employees and associates. They learn from other
entrepreneurs. They learn from experience. They learn by doing. They learn from what
works, and more importantly, from what doesnt work. [Smilor (1997), p. 344]
A typical initial question for personality research is whether humans are born to be
entrepreneurs, that is, born with the qualities of an entrepreneur that can be developed
(or not). From here follows the important question whether humans can be educated to
be entrepreneurs [Koch (2003)]. The question also arises in how far entrepreneurial
characteristics can be influenced positively through education. In analysing such
research questions (and defining and measuring relevant variables), numerous models
have been developed on the basis of the traits approach, by which to measure
personalities. In this context, the 16-primary-factors-model according to Cattell, the BigFive model of McCrae and Costa and the Myers-Briggs-Type Indicators (MBTI) can be
cited as examples. However, these models are not to be discussed in more detail at this
point. [For more details Cattell (1973); Myers/McCaulley (1985); McCrae/Costa (1989);
Costa/McCrae (1992) etc.] These quoted models for identifying the personality
characteristics of entrepreneurs are, however, not undisputed in the scientific
discussion. A central aspect of the critique is that entrepreneurs are assumed to form a
heterogeneous group of persons. Consequently it is, in principle, not possible to
characterize the typical entrepreneur. [See Gartner (1988) arguing that asking who is an
entrepreneur is the wrong question.]
For this reason, the examination and search for person-related variables, with which to
identify a person as entrepreneur, is not meaningful. It is therefore also impossible to
describe the type of a successful entrepreneur. In essence, the critique aims at
examining not the personality characteristics of entrepreneurs but rather their behaviour
and actions. [For a detailed critique of the methods of studying personality
characteristics, see, for instance, Gartner (1985); Gartner (1989); Drucker (2004).] In
connection with such personality research, the question often arises which typical
characteristics of entrepreneurs determine the success of the enterprise. The aim is to
detect the success-producing, ideal features of an entrepreneur. A basic problem of this
research area is, however, how to prove a causal connection and the influence direction
between personality characteristics and the success of an enterprise. In this context,
diverse difficulties arise. In one view, often divergent approaches are applied when
measuring enterprise success within the success-factor research. One of the problems
is the direct assignment of the enterprise success to individual variables and sectors,
such as, for example, the personality of the entrepreneur. However, it is not always
possible to clarify the direction of effect. Thus, personality factors might well be
responsible for the success of an enterprise, while, on the other hand, it would also be
possible to explain that the success has an effect on the personality of the entrepreneur.
All-in-all, the research results concerning the characterization of an entrepreneur with
the help of individual properties, which have emerged in large numbers, to a degree
clearly contradict each other. For these reasons such research approaches and
research models are often subject to criticism [Stevenson/Roberts/Grousbeck (1994);
Brockhaus/ Horwitz (1986); Fallgatter (2005)].
(2) The functional approach reflects an economic perspective on entrepreneurship. As
such it zooms in on the role entrepreneurs take in market economies, namely within the
process of transforming resource inputs into (novel) product and service outputs. In
particular, entrepreneurs are tasked with bearing and furthering innovation in a variety
of forms. Schumpeters concept of the pioneer-entrepreneur belongs to the func tional
category and in terms of creating novelty Schumpeter allowed for many kinds of
wealth
creation
at
the
level
of
the
individual
entrepreneur
and,
and
efforts
of
Howard
Stevenson,
e.g.,
Stevenson/Gumpert
(1985),
traits approach which has been critically addressed above. Rather, within the
behavioural strand, entrepreneurship is demarcated by displaying a specific type of
behaviour as opposed to other forms of, e.g., administrative behaviour. More precisely,
entrepreneurship is viewed in a continuum of managerial behaviour with the two idealtypes of promoter (within the entrepreneurial domain) and trustee (leaning more towards
the administrative domain). In Stevensons view, this conception of a continuum or
spectrum of behavioural dimensions is necessary for defining entrepreneurship because
otherwise it will not be possible to properly describe entrepreneurial action within a
single behavioural pattern (nor in a single function or personality characteristic)
[Stevenson (2006)]. Originally, Stevenson had suggested six dimensions to differentiate
between
managerial-entrepreneurial
and
managerial-administrative
behavior
respectively to discriminate between promoter and trustee roles, with the descriptions of
these dimensions stemming from Stevenson (2006); the typical driving forces and
sources for action of the entrepreneurial promoter and the trustee are depicted in
Illustration 1-1
_ Strategic orientation (driven by perception of opportunity vs. resources currently
controlled)
_ Commitment to opportunity (revolutionary vs. evolutionary)
_ Commitment of resources (multi-staged vs. single-staged complete commitment)
_ Control of resources (episodic use or rent vs. ownership or employment of necessary
resources)
_ Management structure (flat with informal networks vs. formalized hierarchy)
_ Reward philosophy (value-driven and performance-based vs. security-driven and
resource-based)
Promoter
this side
Key business
Trustee
dimension
Pressures toward
this side
Diminishing
opportunity streams
Rapidly changing:
Technology
Consumer
Economics
Social Values
Driven by
perception
of opportunity
Action orientation
Short decisions
windows
Risk management
Limited decision
constituencies
Revolutionary
with
short duration
COMMITMENT TO
OPPORTUNITY
Evolutionary of
long duration
Acknowledgement
of
multiple
constituencies
Negotiation of
strategy
Risk reduction
Management of fit
Lack of predictable
resource needs
Lack of long-term
control
Social need for
more
opportunity per
resource unit
Interpersonal
pressure for
more
efficient
Multi-staged
with
minimal
exposure at
each stage
COMMITMENT TO
RESOURCES
Single-staged
with
complete
commitment
upon
decision
Personal risk
reduction
Incentive
compensation
Managerial
turnover
Capital allocation
systems
Formal planning
systems
Ownership or
employment of
required
STRATEGIC
ORIENTATION
Driven by
resources
currently
controlled
Social contracts
Performance
measurement
criteria
Planning systems
and cycle
resource use
Increased resource
specialization
Long resource life
compared to need
Risk obsolescence
Risk inherent in
any new
venture
Inflexibility of
permanent
commitment to
resources
Episodic use or
CONTROL OF
rent of required
RESOURCES
Coordination
of key non-controlled
resources
Challenge to
legitimacy of owner's
control
Employees desire
for
independence
Flat
resourced
resources
with
multiple informal
networks
MANAGEMENT
STRUCTURE
Formalized
hierarchy
Management
theory
Individual
expectations
Competition
Increased
perception of
personal wealth
creation possibility
Value-based
Team-based
Unlimited
COMPENSATION/
REWARD
POLICY
Resource-based
Driven by
shortterm
data
Promotion
Limited amount
Societal norms
IRS regulations
Impact information
Search for simple
solutions for
complex
problems
Demands of
public
shareholders
This taxonomy of entrepreneurial versus other forms of behaviour has been employed
in a number of contexts, in particular in exploring differences between the behavior of
entrepreneurs and managers. Note also that the behavioural approach is useful for
exploring entrepreneurial efforts in large, established organizations and is not limited to
the start-up context. This is because in this approach, entrepreneurship is anchored in
typical behavioural patterns of management rather than a specific institutional context of
self-employment or business ownership [cf. Samannshausen (2009)]. Overall, the
behavioural approach and its dimensions are not as prominent as the traits approach
and its personality characteristics in the literature. However, the behavioural approach
seems to hold substantial empirical validity as tested in a study by Brown, Davidsson,
and Wiklund (2001). Thus, for studying entrepreneurship at the level of the individual
business the behavioural approach may well hold more future potential than the traits
approach which as has been addressed above has attracted substantial criticism in
the past. In conclusion it should be noted that there are, of course, other definitional
perspectives unveiling the specific features of the entrepreneur and the essence of
entrepreneurial thinking. One example is the view of Fleischmann (2009), who has
developed ten programmatic theses to describe what constitutes entrepreneurial
thinking:.
Entrepreneurial thinking
_ is hopeful thinking
_ is melioristic thinking it wants to make or do something better
_ is holistic thinking in the sense of connective thinking
_ is action-oriented and team-oriented it has a multiplier effect
_ embraces possibility and enables leadership