Businessmen Vs Entrepreneur

For years, professionals, university students, scholars, psychologists, sociologists, and many others have conducted surveys, experiments, and other intellectual studies to examine the psychology of entrepreneurs. Over the years, researchers have taken advantage of primary and secondary research to construct their theories. Some have come to believe these individuals have unique behavioral qualities that differentiate them from their peers in society. While others, such as Brockhuas and Horwitz, have concluded that,

There is no generic definition of the entrepreneur, or if there is, we do not have the psychological instruments to discover it at that time. Most of the attempts to distinguish between entrepreneurs and small business owners or managers have discovered no significant differentiating features. (Gartner, 1988, p. 1).

I tend to venture against Brockhuas and Horwitz’s viewpoints. While I agree small-business owners and entrepreneurs share a great number of similarities, both groups have diverging lines of thinking. A plethora of research suggests entrepreneurs are much more idealistic; they are creative innovators and are always looking to break the mold. On the other hand, businessmen are typically much more pragmatic and will look to primarily innovate in established markets that have proven track records. (Gartner, year pp. 1-2) However, their biggest strength has also been shown to be their Achilles heel. To their detriment, many unsuccessful entrepreneurs have allowed their curiosity and world-conquering mindset to sway their critical thinking. A great deal of scholars has conducted in depth research to fully explore these differences between entrepreneurs and businessmen.

The Correct Approach

In the William B Gartner(1988) article, “Who is an entrepreneur?” is the wrong question, he outlines his varying views on the trait approach towards this common question. Garnet believes finding the answer will not provide us with any concrete definition of being an entrepreneur. However, I would argue that is not the purpose of this. Ultimately, figuring out a definition to simply add to our Google search is not important. Answering these theories and queries will allow us to determine what makes these individuals and their psychology distinctive from others. However, I understand Gartner’s underlying message. Asking ourselves who is an entrepreneur will only provide us with a generalization. While there are many resemblances between all entrepreneurs, similarly to businessmen, everyone has their own unique style and approach. In response, I believe the question we must first ask ourselves; do we believe there are any significant differences between normal minds and that of an entrepreneur? From there we can question one another about Saras D. Sarasvathy’s idea of, what are the characteristics, habits, and behaviors of the specific entrepreneur? By exploring the depths of these individuals, researchers can analyze the similarities and differences between these two groups without giving mass generalizations; One of which involves their philosophical outlook on the business world.

Casual and Predictive Reasoning

Universally, MBA students are educated on the differences in causal and predictive reasoning in every functional area of business. Causal rationality focuses on predetermined goals, while outlining a given set of applicable means, to identify the most efficient way to achieve any given goal. However, effectual rationality operates in a reverse function. Instead,

it begins with a given set of means and allows goals to emerge contingently over time from the varied imagination and diverse aspirations of the founders and the people they interact with. (Sarasvathy, 2006, p. 2)

Sarasvathy (2006, pp. 3-4) believes businessmen subscribe to causal rationality, entrepreneurs subscribe to effective rationality, and the best can utilize both methods to their advantage. While I agree with Sarasvathy’s central idea, the best entrepreneurs can take part in both reasoning methods to take advantage of any present opportunity. I reject the generalization that all entrepreneurs subscribe to being effectual reasoners. Sarasvathy further describes her outlook on the contrasting viewpoints of managers and entrepreneurs, while outlining the affordable loss principle. She states,

While managers are taught to analyze the market and choose target segments with the highest potential return, entrepreneurs tend to find ways to reach the market with minimum expenditure of resources such as time, effort, and money. (Sarasvathy, 2006, p. 5)

Sarasvathy's line of thinking suggests entrepreneurs and businessmen cannot be one in the same. I would argue, why not? Many of the world’s most successful entrepreneurs have conquered the business world because they were able to combine their market analysis skills with their intuition and use of business partnerships to successfully enter the field during its most opportunistic period. They have shown the ability to work towards a predetermined goal, through a given set of means, when instructed to do so. Successful entrepreneurs have demonstrated they are equipped with the proper skills to be innovative, while also being very intelligent businessmen/women.

Comparative Advantage

To this day, there remains great confusion and debate surrounding the true definition of entrepreneurship. Many intellectuals believe,

Entrepreneurship has a place in the world of economic dynamics and not in the world of economic statics forces. (Hébert & Link, 1989, p. 10).

Others have argued entrepreneurship is a key mark in capitalism. Some believe all of these individuals have a comparative advantage in decision making due to their access to go against conventional wisdom and use their unique insight, while a good number agree with Israel Krizner,“not all entrepreneurs are created equal.” (Hébert & Link, year, p. 8) If not all entrepreneurs are created with a matching sense of urgency and competitive edge, how big of advantage do they truly hold? If an entrepreneur is a person, not a team, is their individual distinct advantage equally a drawback in comparison to a team of qualified businessmen? These theories and many others are what have puzzled so many scholars in their quest to discover the true meaning behind being an entrepreneur.