Searching for the Essence of Entrepreneurship — A Misguided Quest
Peter Prevos |
3016 words | 15 minutes
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Public figures such as Henry Ford, Richard Branson, Dick Smith and Donald Trump influence the conventional notion of the entrepreneur as a unique individual. Entrepreneurs have achieved celebrity status and have given rise to many myths about entrepreneurship. One of these myths is the idea that the essence of entrepreneurship is an innate ability that can not be acquired and that business instinct is more important than business skill.1
Because of their prominent status in society, entrepreneurs have become the heroes of contemporary society, admired as heroes for their ability to accumulate wealth and create economic prosperity.2
Entrepreneurs are the heroes of society
Academic discourse about entrepreneurship is divided and sometimes even confusing.3 Are entrepreneurs guided by a Protestant ethic, as proclaimed by Max Weber or are they, following Schumpeter, unique individuals exercising mental freedom? Do entrepreneurs have a high need to achieve (n-Ach), following McClelland's theory of motivation, or are they, as argued by de Vries, victims of a traumatic childhood? Who are these heroes of contemporary capitalism?
In this essay, entrepreneurs from four continents are discussed and contrasted, guided by the literature on entrepreneurship. Entrepreneurs from different continents are chosen to provide a cross-cultural perspective on the phenomenon. Freddy Heineken is included because of his controversial place in Dutch society. Michael Dell is often touted as the quintessential entrepreneur. Australian Peter Terret provides a contrast to Heineken and Dell because of the modest size of his venture. Lastly, Vietnamese entrepreneur Le Khac Hiep represents a non-Western perspective.
The available information about these people is used to deconstruct the mythology of the entrepreneur, in search of the essence of entrepreneurship. The essay finds that the essentialist approach to entrepreneurial studies can only provide limited insight and that narrative analysis of entrepreneurial biographies should be the preferred method to study this phenomenon. The managerial impact of this conclusion is that the most effective way to become more entrepreneurial is to explore the biographies of successful entrepreneurs.
Biographies of Entrepreneurs
Freddy Heineken
Freddy (Alfred) Heineken (1923–2002) is one of the most well known Dutch entrepreneurs of the twentieth century. He joined the Heineken brewery in Amsterdam during the Second World War, which was founded in 1863 by his grandfather. After the war, Freddy worked several years in the sales department of Heineken's American importer, where he developed his marketing skills. Some years later, Freddy decided to buy the majority of shares, creating the starting point of more than four decades of successful entrepreneurship. Under his leadership, which ended in 1989, Heineken grew to become one of the major breweries in the world and one of the most recognisable beer brands. In the Netherlands, Freddy Heineken was a celebrity entrepreneur, especially after his kidnapping and subsequent release in 1983.4
Shortly after his death, several facts about Heineken's activities outside his business have been revealed. Providing an insight into his personality and motivational drives. These revelations show him to be an influential power broker in Dutch politics, using his marketing skills to assist political friends in the liberal party (VVD). These aspects of his biography reveal him to be a strong Machiavellian type, which was most likely a personality trait that assisted him in growing the business. The Machiavellian personality type is generally considered to be pragmatic, emotionally distanced and prioritising the goals over the means.5
I don't sell beer, I sell good times.
Above all, the entrepreneurial essence of Freddy Heineken is that he was a gifted marketer. He is reputed to have said: “I don't sell beer, I sell good times”, illustrating that Heineken did not suffer from Marketing Myopia, as defined by Levitt.6
He understood the need to focus on the perceived benefits of his product, rather than marketing the product itself. This vision enabled him to position Heineken beer and differentiate it from other brands. Heineken used his marketing skills as a vehicle for his high need for achievement and drive to accumulate power. It is the combination of his strong personality and his marketing skills that made him the successful entrepreneur he became to be.
Michael Dell
Michael Dell was interested in technology from a young age and started to sell computers while still attending university. Selling computers was not something new in 1984, but Dell sold computers directly to consumers, bypassing traditional distribution channels.
This strategy allowed him to minimise distribution costs and thus generate above-average profits. He decided to quit university and corporatise his business, which has since then grown into one of the largest computer manufacturers in the world. His dissatisfaction with existing computer suppliers enabled him to recognise an opportunity in this market.7
The success of his business is also founded on an understanding of consumer needs. Dell regularly reads Usenet forums, chat rooms and Web sites to find out what customers think about his products: “I learn about things we are doing well. I learn when we screw up”.8
Michael is reluctant to provide information about his private life, making it difficult to tap into the psychology of this entrepreneur. Dell, who used to compete in triathlons, is described by Ralph Szygenda, CIO of General Motors, as a “violent competitor who doesn't like to lose”, illustrating Dell's competitive drive. According to a long time friend, Michael Dell is very determined and has “never deviated from his early business vision and almost enjoyed being doubted by others”, Illustrating his high need for achievement.
Michael Dell's entrepreneurial essence could be his insight in supply chain management and customer focus, revolutionising marketing logistics, not only in the computer industry but across industries, Dell has continued to innovate their supply chain, being one of the first businesses (in 1996) to utilise the Internet to market computers directly to consumers.
Peter Terret
Australian entrepreneur Peter Terret has a background in geodetic and topographic survey and developed an interest in Global Positioning Systems (GPS) in 1986. He is the Managing Director of RapidMap, a medium-sized company established in 1994, that specialises in geospatial equipment and services. RapidMap has since grown into an international provider delivering geospatial products and services.
Compared to the previously discussed entrepreneurial heavyweights Heineken and Dell, RapidMap is a modest business. Although RapidMap is a global player in the geospatial services market, compared to Heineken and Dell, it is a small business. The entrepreneurial principles that determine the destiny of all businesses are, however, independent of size.
Just like Dell, Terret has been able to recognise an imperfection in the market. While Dell developed a marketing strategy, based on his dissatisfaction with the computer market, Terret's insight was that he tapped into the need for some organisations, such as water corporations, to manage various physical assets over a large geographical area. Their ability to recognise opportunity is based on knowledge of the markets in which they operate and being able to think from the consumer's perspective. Parallel with Heineken, Terret based the success of his venture also on his marketing skills. By augmenting his product with the field-kit, RapidMap was able to differentiate itself from the competition, enabling Terret to capture the emerging market for mobile GPS solutions.
Le Khac Hiep
Le Khac Hiep is one of the many entrepreneurs that benefit from Vietnam's Doi Moi (restoration) policy and transition from a centrally controlled economy to a market economy. He is the chairman of VinCom Joint Stock Company, specialising in property development. VinCom has two major holdings: VinCom City Towers in Hanoi and the Sofitel VinPearl Resort and Spa in Hha Trang province.
Compared to Michael Dell and Terret, Hiep was not the primum movens of VinCom, but just like Heineken, hired by the company. This contrary to the common notion of the entrepreneur as the person starting a venture, which shows that the fortunes of an organisation can be turned by hiring people with an entrepreneurial mindset.
Le Khac Hiep states that one of the most important aspects of his achievement is a “hunger for success and aggressiveness and … the desire to do something meaningful for family friends and people”. Suzanne Young, who interviewed Hiep, portrays him as a person with “graciousness and modesty with a respectful disposition and hunger for achievement”. He shares a high desire for achievement with Heineken and Dell, but Hiep's definition of success is grounded in family, friends and people in general. In a Western cultural context, achievement is usually directed at personal success.
Discussion
Two common themes can be extracted from the case studies. All four described entrepreneurs show a high need for achievement (n-Ach) as defined by McClelland. The direction of the need to achieve is determined by culture, biography and personality.
Le Khac Hiep illustrates this link with culture. His need to achieve is more focused at the collective, rather than his personal achievement, illustrating the individualism-collectivism spectrum identified by Hofstede.9 South-East Asian cultures, such as Vietnam, are classified as collectivist cultures, while the Netherlands, Australia and the USA are classified as individualistic.
The Philosopher's Stone of entrepreneurialism
Characteristic of entrepreneurs described in business literature is that their need for achievement is expressed through commercial activities. A need for achievement can, however, also be internally directed, such as is the case with most artists, or the need to achieve can be aimed at changing the behaviour of others, such as is the case with, for example, political activists.
Although artists, activists and other people also exhibit entrepreneurial behaviour, the extant literature on entrepreneurs focuses on business ventures, with the aim the extract the Philosopher's Stone of entrepreneurialism so that others can duplicate their achievements. A high need to achieve is a sine qua non for any entrepreneur. It is a necessary condition that to be entrepreneurial one needs a high drive to succeed.
Findings from McClelland, who demonstrated a link between the need to achieve and economic growth, support this idea. It is, however, not a sufficient condition to become more entrepreneurial. Other personal attributes, i.e. abilities, attitudes, skills and knowledge are also important determinants of an entrepreneurial mindset.
The second aspect is the relationship between learnt skills and innate abilities of the entrepreneur. Michael Dell seems to have a natural ability to recognise opportunity and has developed his marketing skills in the process. Freddy Heineken also obtained his marketing skills on the job, while expatriated to the United States. The available data does not indicate whether Peter Terret and Le Khac Hiep have formal qualifications in management.
However, from this, it can not be concluded that entrepreneurs by definition have an innate ability to recognise marketing opportunities rather than being skilled in marketing techniques. First of all, the selected sample is too small to draw a general conclusion. Secondly, the available biographies are incomplete and could hide any formal education undertaken by these entrepreneurs.
Synthesis
The four entrepreneurs discussed in this overview illustrate that entrepreneurship is not an isolated Western cultural phenomenon. All four entrepreneurs show a high need for achievement and an (innate) ability to spot opportunities in the market. The culture-independent nature of entrepreneurial behaviour is confirmed by numerous ethnographic studies of, for example, the Ibos in Nigeria or the in Columbia. But, does the fact that entrepreneurship is a culture-independent phenomenon support the conclusion that there is an essence of entrepreneurship?
Entrepreneurial narratives offer a wide range of characteristics that entrepreneurs are considered to be imbued with. Cunningham and Lischeron identified several schools of thought in entrepreneurship studies.10 The Great Person school assumes that entrepreneurs have an innate intuition and ability to be entrepreneurs. The Psychological Characteristics school focuses on personality traits as enablers of entrepreneurial success.
The Classical School follows the Schumpeterian idea of the entrepreneur as an innovator. The more pragmatic Management School sees entrepreneurs as organisers of economic ventures, trained in the necessary technical skills.
Lastly, the Leadership school focuses on the ability of entrepreneurs to motivate people. All schools of thought have in common that they are essentialist, endeavouring to define those aspects of entrepreneurial behaviour that are characteristic to all entrepreneurs.
Cunningham and Lischeron argue that the current variety of schools of thought is because the academic study of entrepreneurs is a young field of endeavour and propose a pragmatic approach that uses insights from all schools of thought, depending on the stage of development the business is in. This call for paradigmatic pluralism reflects the complex nature of entrepreneurialism, but it also shows a deeper problem in entrepreneurial studies.
Defining dynamic phenomena such as entrepreneurship from an essentialist perspective is an impossible task because the complexity of social reality continuously presents new aspects that do not fit into a previously considered complete definition. No list of characteristics associated with entrepreneurship can ever be considered a sufficient condition for a particular person to become an entrepreneur.
Some characteristics, such as /n-/Achievement, can be considered a necessary condition for entrepreneurship to arise. Environmental obstacles and opportunity factors, such as community acceptance social shifts and resource availability, interact with personal attributes and it is the convergence of the two that enable successful business ventures. Given the unpredictable nature of environmental obstacles and opportunity factors, prospects of establishing a causal model of successful entrepreneurship are minimal.
The myth of the entrepreneur
Entrepreneurial narratives portray the entrepreneur as the hero of contemporary capitalism. This view, influenced by the early work of Schumpeter which emphasises the achievements of the individual, shows many parallels with the role of the hero in mythology. In mythology, a hero is a person from a humble background who needs to leave the group in search of adventure. The hero overcomes adversity and temporary failures but eventually succeeds in achieving his or her goals. Whelan and O'Gorman demonstrated that the typical entrepreneurial biography has many parallels with traditional hero mythology. The entrepreneur is mythological, not in the sense of myth as a fake story, but as an archetypal person in contemporary society.
Following the hero theme, the label 'entrepreneurial' is mostly associated with people who are successful, Excluding those that did not succeed.11 This value-laden use of the category entrepreneurial directs all research effort into those that were successful.12
This approach is analogous with a palaeontologist who only studies species that have survived evolutionary pressures, ignoring those that are extinct. Using this method creates a sanitised and incomplete picture of the entrepreneurial phenomena.
French anthropologist Bruno Latour investigated the process of science creation and found that the results of scientific work are an idealised version of the actual process. This process is also active in entrepreneurial studies.
Entrepreneurial biographies are always incomplete and sanitised versions of reality. Entrepreneurs that are researched project their self-image on the information they provide about themselves which can lead to subconscious repression of the role of serendipity or even actively censoring of biographies. Researchers are forced to condense the ambiguity of entrepreneurial reality into the concepts described in research. One such condensed aspect of entrepreneurialism is the focus on individual achievements, mainly ignoring the influence that spouses, colleagues, suppliers and others have on the entrepreneur. This focus on the individual matches the mythological hero aspects of entrepreneurialism and is contrary to the emphasis on teamwork in contemporary business discourse.
In light of the paradigmatic confusion and problematic aspects of essentialism, some researchers have called for and experimented with alternative methods to research entrepreneurs.13 They propose to use interpretive methods to study entrepreneurs. The scholar of entrepreneurship should engage the available information and uncover gender, class and other aspects, looking from a prosopographical perspective that includes the network of people around the entrepreneur. This aspect will lead to a deep Verstehen of entrepreneurial behaviour instead of a catalogue of characteristics and models.
There is no essence of entrepreneurship
The search for the essence of entrepreneurial thinking and behaviour is guided by the desire to be able to duplicate the successes of the studied subjects. It is thought that assuming the essence of entrepreneurship can be found; this knowledge can help others to achieve the same.
The paradigmatic confusion in entrepreneurial studies illustrates, however, that there is no essence of entrepreneurship. The absence of essence is supported by current thinking in the philosophy of science. This idea does not imply that entrepreneurship cannot be successfully studied to assist others in becoming more entrepreneurial.
The most meaningful way to learn how to become more entrepreneurial is to examine the behaviour of entrepreneurs and read their biographies and interpretations of their behaviour. Universities should equip students of entrepreneurialism with skills to analyse and deconstruct narrative to gain a deep understanding of the entrepreneurs that came before them.
Notes
Wellington, D.C. and Zandvakili, S. (2006) 'The entrepreneurial myth, globalisation and American economic dominance'. International Journal of Social Economics 33(9): 615.
Whelan, G. and O'Gorman, C. (2007) 'The Schumpeterian and universal hero myth in stories of Irish entrepreneurs'. Irish Journal of Management 28(2): 79–107.
de Goey, F. (1996) Ondernemersgeschiedenis in Amerika, Nederland en België'. Entrepreneural history in the Netherlands, America and Belgium]. In Jaarboek voor economische, bedrijfs- en techniekgeschiedenis. NEHA; Pech, R., ed. (2009) Entrepreneurial courage, audacity, genius. Sydney: Pearson Education; Steyaert, C. (1998) 'A qualitative methodology for process studies of entrepreneurship'. International Studies of Management & Organisation 27(3): 13–33; Wellington and Zandvakili, 2006.
Heineken (2005) The history of Heineken; Smit, B. (1996) Heineken. Een Leven in de Brouwerij [A life in the brewery]. Nijmegen: SUN.
Robbins, S.P. and Judge, T.A. (2007) Organizational Behavior. 12th ed. New Jersey: Pearson Prentice Hall.
Levitt, T. (1960) 'Marketing Myopia'. Harvard Business Review 38(4): 45–56.
Burke, S. (2003) 'Michael Dell'. CRN 1075: 30;35.
Fishman, C. (2001) Facetime with Michael Dell. Fast Company (44).
Hofstede, G. (1993) Allemaal Andersdenkenden (Cultures and Organisations: Software of the Mind). Amsterdam: Contact.
Cunningham, J. B. and Lischeron, J. (1991) 'Defining entrepreneurship'. Journal of Small Business Management 29(1): 45–61.
Legge, J. and Hindle, K. (1997) Entrepreneurship: How Innovators Create the Future. South Melbourne: MacMillan.
Seymour, R.G. (2006) 'Hermeneutic phenomenology and international entrepreneurship research'. Journal of International Entrepreneurship 4: 137–155.
Jennings, P.L., Perren, L. and Carter, S. (2005) 'Alternative perspectives on entrepreneurship research'. Entrepreneurship theory and practice 29(2): 145–152.; Seymour, 2006; Steyaert, 1998.
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