The Essence of Entrepreneurship

There are, of course, many different types of entrepreneurs in the world and in South Africa specifically. It is helpful to think of a continuum with “Necessity Entrepreneurs” on the one side and “Grow to Scale Entrepreneurs” on the other.

Necessity Entrepreneurs are people who have been forced into entrepreneurship out of necessity i.e. they have not been able to secure jobs in the formal sector of the economy. Most Necessity Entrepreneurs work for themselves, live very close to the poverty line and would generally prefer to be in a paid job with a fixed salary.

“Grow to Scale Entrepreneurs”, at the other extreme, will typically have chosen the route of entrepreneurship for themselves – they will have developed a business idea, built a clear business plan, have secured funding and will often be looking to sell or offer shares in their start-up venture in order to take it to scale.

Somewhere in the middle of the continuum are formal, small businesses, which are typically registered and employ a small number of employees. These entrepreneurs will be found across a range of sectors and will generally work closely with bigger businesses, supplying them with inputs, products or services. The owners of these small businesses will often have chosen entrepreneurship because they prefer to work for themselves and thereby have greater control over their working and personal lives.

So, who will make a successful entrepreneur?

There is a great deal of debate about whether people are born entrepreneurs or whether they can develop the knowledge and skills to become successful entrepreneurs.

One prominent approach to understanding entrepreneurship is represented by the Personality Trait School, which contends that certain personality traits are associated with entrepreneurial behaviour and success. Researchers from the school, such as Zhao et al., 2005, have identified certain personality traits that govern both entry into entrepreneurship as well as success as an entrepreneur – these are:

• Self-efficacy (‘belief in my own ability to perform tasks and hence achieve goals’)
• Innovativeness (‘how, as an individual, I respond to new things’)
• Locus of control (‘my own decisions control my life through ability, effort, skills’)
• Need for achievement (‘my desire for accomplishment, mastering skills and attaining challenging goals’)

Another approach to the study of entrepreneurship is provided by the Behaviourist School. Researchers from this school, like William Gartner (1988), argue that asking what makes up an entrepreneur is the wrong question and that a more productive way of identifying successful entrepreneurs is to understand and define what an entrepreneur does.

Gartner argues that entrepreneurship can be rendered as a science comprising a specific set of behaviours. Drawing on the work by Mintzberg (1973), he contends that the identification of these behaviours involves asking the following questions:

• What type of activities do they perform?
• What kinds of information do they process?
• With whom must they work – how frequently?
• What are the distinguishing characteristics of this work?
• What basic roles can be inferred?

While there is a great deal of complexity to the debate between these (and other) schools, it is probably fair to conclude that there is merit to both approaches. There are certain personality traits which will indicate a greater likelihood of becoming a successful entrepreneur, and equally, what one does in going about their work will also play a major role in determining whether or not the entrepreneurial endeavour will be successful.

This suggests that the best combination for the budding entrepreneur is both having the traits that contribute to successful entrepreneurialism as well as having the knowledge and skills to implement best work practices.

Geoff Schreiner

Head of Business Studies – Cornerstone Institute