Many researchers and scholars are fascinated with capturing the essence of the entrepreneur. Successful entrepreneurs are often heralded as heroes in our culture and placed on a pedestal that demonstrates the “gold standard” of business. So then, it makes sense that there is an inherent infatuation with understanding what makes those individuals tick. If there was a foolproof, step-by-step process to becoming a successful entrepreneur, society would be better for it. However, as it turns out, pinpointing the characteristics of the entrepreneur is much easier said than done.
Many economists across centuries have formulated their own definitions of the entrepreneur and entrepreneurship. While a lot of these definitions draw from and build upon one another, there are some that completely contradict and discredit others. For example, Richard Cantillon’s definition marries the entrepreneur to uncertainty which brings an inherent risk. Frank Knight did not fully agree with Cantillon’s work and provided an important distinction between uncertainty and risk that involved using probability to insure certain risky actions. T. W. Schultz enters the picture years later and disagrees with both of the former economists. While he acknowledges that the entrepreneur does assume some risk, he questions how that makes the entrepreneur any different from a multitude of other professionals. These discrepancies make it difficult to construct a concise working definition of an entrepreneur. Robert Hebert and Albert Link attempted to compile a definition of their own in the 1989 paper “In Search of the Meaning of Entrepreneurship”, stating “The entrepreneur is someone who specializes in taking responsibility for and making judgemental decisions that affect the location, form, and the use of goods, resources, or institutions.” (p. 9). While I think the entrepreneur would fall under the umbrella of this definition, I am not convinced that it captures the essence of the entrepreneur. I believe a necessary addition to this “synthetic” definition is the idea of uncertainty. To me, this concept, along with the rest of the proposed definition, captures the entrepreneur while also excluding individuals such as leaders and managers.
The common inclination of those who set out to determine what makes an entrepreneur entrepreneurial is to identify character traits of the entrepreneur; in hopes that if another individual can implement those same traits, then they will be successful in entrepreneurship. Unfortunately, this line of thinking is narrow sighted. An entrepreneur can be many different things; there is not one set of traits that truly distinguishes them from similar groups of people. In his 1988 article “”Who Is an Entrepreneur?” Is the Wrong Question”, William Largent sums up this idea in a concise analogy:
“Based on upbringing and experience we could document a baseball player’s locus of control, need for achievement, tolerance of ambiguity, and other characteristics that we thought must make for good baseball playing. We could then recruit individuals with this set of characteristics and feel confident once again in our competitive edge. Yet, this type of research simply ignores the obvious— that is, the baseball player, in fact, plays baseball. Baseball involves a set of behaviors—running, pitching, throwing, catching, hitting, sliding, etc.—that baseball players exhibit.” (p. 12).
The question should instead be, what does an entrepreneur do? Shifting the focus from a passive view of the entrepreneur to an active one allows you to see the actions of these individuals, which is where the stuff of entrepreneurship becomes tangible.
Creation of business and opportunity is the ultimate goal of the entrepreneur, so it makes sense to view his/her behavior up until the point of business creation as that of an entrepreneur. What are they doing? Who are they calling? What is their motivation? What is their strategy? These are all questions that shift the discussion from immeasurable conjecture to a more tangible method of data collection, with the intention identifying repeatable patterns in behavior of successful entrepreneurs that can be implemented by others.
Effectual reasoning is the ability to take what you have and to turn it into something unknown. Rather than following a rigid, step-by-step process toward a known end, effectual reasoning starts with a given set of means and works to discover what can be made from the resources at hand (Sarasvathy, p. 2). Effectual logic is the way in which entrepreneurs elevate themselves to a plane that seems impossible to the average human. The human brain is wired to think causally, the opposite of effectually, which is why people think they don’t have the ability to think entrepreneurially. Entrepreneurial thinking is an ambiguous term, but it truly boils down to the ability to reason effectually. It sort of flips the normal way of thinking upside down and forces you to use the imagination. This can lead to opportunities across different industries because the end goal is not locked in before the process of business creation begins. Effectual reasoning allows entrepreneurs to hedge their bets by not dumping capital into an idea that may be obsolete soon. It also gives entrepreneurs the opportunity to pivot when the unexpected happens, which is bound to occur. Sarasvathy stated “Effectual reasoning… is based on the logic, to the extent that we can control the future, we do not need to predict it.” (p. 6). This is because while other people concern themselves with attempting to predict the impossible, an effectual entrepreneur is ready to leverage the unknown and use it to his/her advantage when the time comes.
Gartner, W. B. (1988). “Who is an entrepreneur?” is the wrong question. American journal of small business, 12(4), 11-32.
Hébert, R. F., & Link, A. N. (1989). In search of the meaning of entrepreneurship. Small business economics, 1(1), 39-49.
Sarasvathy, S. D. What makes entrepreneurs entrepreneurial?.
