Are Entrepreneurs Born or Developed?

Entrepreneurship is now a pretty big deal. Business schools all over the world have courses in this area and some even make it their major focus of teaching and research. Governments are also interested in entrepreneurs and routinely ask themselves how they can develop a more entrepreneurial national culture. Many years ago, an economist called Schumpeter recognized that risk taking and trying new technologies and business ideas was essential for economic growth. However, the current fascination with entrepreneurs would have even surprised Schumpeter.

I mainly spend my time working on innovation and strategy but over the years I’ve seen the rise of the entrepreneurship field and kept notes on some ideas that I have found interesting. One of these is the issue of nature versus nurture. In other words, is there an inherent psychological bias that makes an entrepreneur or is it something that can be learned and developed? This question matters because if entrepreneurship is largely psychological then government and business school efforts to increase the number of new ventures through training might have limited effects.

The left side is busy
Some research does support the psychological theory of entrepreneurship. I’ve seen research findings that show how the psychology of entrepreneurs and children at risk of dropping out of society are similar in many ways. This makes sense because there are many anecdotal stories about school dropouts who become very successful entrepreneurs. Their school reports will often describe them as backward or lacking in attention. I’ve also seen research from Imperial College London using a study of twins which shows that if you are an entrepreneur than your twin is also more likely to be an entrepreneur. Have a think about the entrepreneurs that you know. Are there some common characteristics? The people I know who fit this category are entrepreneurial in many parts of their life. They enjoy risks and get bored very easily. In several cases, this extends to their romantic life too (but that’s not a story for this blog….).

I think that it’s hard to ‘make’ an entrepreneur. A few seminars or a book is not going to change someone’s psychological perceptions of risk. If someone is going to become an entrepreneur without the psychological profile then I think its going to be the result of a very significant life event. Just recently, ABC television ran a documentary on Frank Lowy, the founder of the Westfield shopping mall business. I’ve always been a fan of Lowy and it’s a case that I use a lot in my courses. What started as a delicatessen on the outskirts of Sydney in the 1950s is now the biggest shopping mall company in the world. He is an innovator and is known for taking calculated risks.

I’m not sure what the psyche of Lowy is and I don’t think he is going to let me do a series of tests on him but there is a good case for the notion of Lowy’s life turning him into an entrepreneur. As a Hungarian Jew, he survived the holocaust (click on the link to the documentary to see the amazing story of how he found out what happened to his father) and then became an elite soldier in the war that formed the state of Israel. After surviving these events, many people are compelled to try to start a new life and every day alive is one more day that they didn’t expect to have. It changes the attitude to risk and how opportunities are considered.

My late grandfather was very much in the Lowy mold. He had fought with the Dutch resistance during the second world war and had lost most of his friends. The remnants of his group left Groningen in the early 1950s and were determined to start all over again. They didn’t really have a plan. One was a professional builder so they though they would give that a try. Canada was an option but they came to Australia where there were three families living in a house on the outskirts of a small town. Eventually the business got going and they went on to build schools, offices and radio stations. I got to know my grandfather well over the years and he was a very cautious man. What turned him into an entrepreneur was the seminal experience of war and hardship, not books and courses. I think he could have benefited from formal business training but that’s not what made him move to the other side of the world and risk everything to start a business.

I watched a debate on television last night about immigration. On one side was the view that refugees are a threat to the economic and social future of the nation. On the other side was the idea that there are many good reasons to increase refugee intake. It seems to me that someone who is going to take a punt on making a new life in a new country is more likely to develop a successful business than someone from a comfortable middle class background. I wonder what Frank Lowy makes of all this?

(photo from flickr/evansville under a Creative Commons License)

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7 thoughts on “Are Entrepreneurs Born or Developed?

  1. Your grandfather sounds like a hell of a guy, John. There is honor is serving one’s country, then returning home and continuing to serve the community. We should all be so inclined.

    But are we? You pose an interesting question and one which, until reading this post, I had never asked myself before. The more I think about it, the harder it is to answer!

    I am left-handed. I can’t tell you how long I’ve joked about being “in my right mind,” but it’s been the bulk of my 30-odd years. I enjoy risks, but only so far. I can obsess about the big picture, but get bored easily when the details get mundane. Recently, I’ve gone so far as to say I like to connect the dots, but not all of them, and not in any particular order.

    Are these merely creative/spatial characteristics of the right hemisphere? Does my being left-handed have any bearing on that? If so, what does it mean that I’m left-handed, but only when writing or brushing my teeth? And, if it turns out being a “lefty” is key to it all, was I naturally left-handed, or did my parents just not invest the effort in teaching me the “right” way?

    Thanks for putting this out there. It’s fascinating, as I’ve been “in business” for just over a year, now, haven’t made a dime in the process, and, oddly enough, find myself thrilled being able to state as much!


  2. Hi Brian

    thanks for the great comment. After I uploaded the post yesterday I got thinking that these entrepreneurial characteristics are probably a combination of nature and nurture. Like you, I’m left handed and I have some of the personality traits that you have. But as you say, the world is a complicated place and there are many factors that influence us.

    I read a literature review of the research that had been done on risk and decision making and it turns out that the way risk influences a decision is a combination of personal, social and institutional factors. Depending on the situation, some of these factors might have more influence than others.

    Academics have a really hard time developing theories of new ventures. With so many factors at work, each venture plays out like a chess game with its own unique sequence of moves.

    Good luck with the business!

    PS- thanks for the comment about my grandfather too. He wasn’t perfect by any means but like many of his generation he was always prepared to put the ‘greater good’ before his own interests. It’s a legacy that we shouldn’t forget.

  3. Anytime, John.

    It’s definitely an interesting concept to consider. I completely agree with you on nature *and* nurture working together in the form of personal, societal, and institutional factors. No human survives in a complete vacuum.

    Being right-brained, you probably, as I do, see the need to balance between the need to better understand how innovative entrepreneurship develops so as to advance society with the futility of trying to once-and-for-all define the framework. This situation reminds me of a joke.

    Q: How many kids with ADD does it take to change a light bulb?
    A: Wanna ride bikes?

    Perhaps the answer lies not in cracking the code, rather, better understanding the point at which big picture thinkers disconnect and just go for it.

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