The image of the high-flying, individualistic entrepreneur is so ingrained in our culture today that it’s hard to believe that this archetype was not always the ultimate American hero in the business world. To understand what’s led us to mythologize this breed of worker so, it’s important to look at where we get our ideas of what makes him who he is; interestingly, the debate over whether being an entrepreneur is a practical distinction or a deeply psychological one goes back a ways.
One of the grandfathers of my field of research was the Austrian economist Joseph Schumpeter (1883–1950). Schumpeter made a clear case that entrepreneurs translated inventions into businesses, and these businesses generated wealth—a line of reasoning so central to our way of thinking now that it seems obvious. Schumpeter referred to the entrepreneur as the “Great Man,” and other scholars and observers quickly built upon that label, suggesting strongly that potential entrepreneurs might be identified and supported as a means for bolstering economic growth.
Schumpeter’s work found an admiring audience in Harvard psychology professor David McClelland. McClelland’s seminal 1961 book, The Achieving Society, showed how people could be trained to behave as those who had a natural psychological need for achievement did, could be taught, in other words, to be achievers.
McClelland’s findings sparked the beginning of an academic movement to cultivate entrepreneurs rather than simply identify them. In 1972 the US Small Business Administration began sponsoring academic programs built on McClelland’s ideas, which set the stage for the growth of entrepreneurship as a business discipline instead of a specialty in psychology. The race was on to uncover the unique formula for the perfect entrepreneur.
Most of this research—conducted from the 1970s until about 1990—was deeply contentious. The equivalent of an academic food fight broke out as researchers first took sides and then began criticizing one another’s work. One source of conflict was the burgeoning assortment of business school–based academic programs on entrepreneurship. Despite the fact that much of the field of management is based on the social sciences, psychologists felt unwelcome in a business-centered venue. Another source of conflict was that, in some important respects, the psychological view of entrepreneurship was muscled out as more practical (i.e., moneymaking) uses for the research emerged. Economists hypothesized over the outcomes of entrepreneurial endeavors, trying to determine the formula for success. Then the strategic planning advocates cut their way into line, arguing for their approach as a prognosticator of entrepreneurial success.
This conflict wasn’t necessarily bad news. Such friction is generally vital to protecting the integrity of any new area of research, ensuring that all of the tough questions and dubious conclusions are laid out on the table to be thoroughly vetted in order to establish a firm foundation for further research.
Unfortunately, no firm foundation was ever established. During this period, the percentage of psychologists based in business schools and studying entrepreneurship declined steadily. Harvard Business School became a center for psychoanalytic organizational theory, and much of this work was focused on the effort of getting inside the heads of entrepreneurs from a Freudian perspective, something that other psychologists avoided. By the 1980s, it was becoming clear that the entrepreneur was a type of manager emotionally and psychologically different from salaried managers, and while maybe not a “Great Man,” he or she was clearly a different one.
But no single discipline seemed able to connect the dots.
By the 1990s, most psychologists studying entrepreneurs had been hammered by the strongly leveled critique of William Gartner, a professor of entrepreneurship at Clemson University. Gartner bristled at what I call the “Garbage Can” approach to understanding the psychological profile of an entrepreneur. By this point in time, a startling number of traits—some of which I’ve discussed—began being attributed to the entrepreneur. To put them all together would be to create a person not only larger than life, but also full of contradictions.
As a result of these issues, multiple formal definitions of “entrepreneur” were being used by different researchers. This obviously creates huge problems. If you and others are measuring something, then everyone needs to be on board with precisely the same understanding of what that “something” is that’s being measured. Without consensus on what an entrepreneur was, the research became an exercise in comparing apples to oranges.
For example, the guy who owns and operates a service station, earning enough take-home pay to provide a comfortable life for his family, is called an entrepreneur. But so is the guy who identifies high-potential and high-risk unmet market needs, gets investors excited about building an organization to meet those needs, scales the organization quickly, and then sells it to go off and start another firm. Are these really two of a kind?
Meanwhile, there was biting criticism of the data emerging from some ambitious research studies on entrepreneurs. Psychometric methodology—the design of the research projects and the processes by which they analyzed data—was being raked over the coals by other scholars. Researchers sprinkled around the United States who were delving into the personality of the entrepreneur were accusing one another of being less than rigorous in reaching conclusions through the highly complex—yet possibly inappropriate—statistical techniques they employed. They were also politely reprimanding each other in research journals for the lousy population samples of “entrepreneurs” being used.
One common example: A management professor would hypothesize that certain personality characteristics were associated with entrepreneurs, and he or she would test their theory by corralling a bunch of students in management courses. The students would be given a questionnaire and asked to check a box if they planned to start a business within the next five years, and—voilà!—the professor potentially had a few hundred “entrepreneurs” to glean data from. The next step was then to run a regression analysis to see if the suspected potential relationships among variables existed. Unfortunately, checking a box to indicate desire to be an entrepreneur and actually being one are quite different.
Entrepreneurs, as it turns out, are not as easy to identify as “people who want to start their own business”; so what, in fact, are they? We’ll dive deeper next week.