Module 1 Essay: An Op-Ed “Who Is an Entrepreneur?” Is the Wrong Question, In Search of the Meaning of Entrepreneurship, & What makes Entrepreneurs Entrepreneurial.

Module 1 Essay: An Op-Ed “Who Is an Entrepreneur?” Is the Wrong Question, In Search of the Meaning of Entrepreneurship, & What makes Entrepreneurs Entrepreneurial.

This is my opinion piece relating to the three articles assigned to us. Those being “Who Is an Entrepreneur?” Is the wrong question, In Search of the Meaning of Entrepreneurship, & What makes Entrepreneurs Entrepreneurial. Beginning with the first and follow sequentially afterwards, giving a short summary of the sections within the papers with my opinions placed throughout.

On: “Who Is an Entrepreneur?” is the Wrong Question By William D. Gartner

William opens up with expressing the nebulousness of the word and definition of Entrepreneur. He establishes that the vast majority of approaches can be distilled down to two. The trait approach and the behavioral approach. The trait approach focuses on what sort of components (in this case characteristics and, well, traits) are within an entrepreneur that makes an entrepreneur. The behavioral approach on the other hand focuses on what are the habits and moment-to-moment behavior (in other words activities) that makes an entrepreneur.

The problem with this approach is that definitions hardly align amongst groups, let alone a singular group within itself. In trying to define entrepreneurship William realizes this, expressing “Each of us had some notion of it—what we thought was, for his purposes, a useful definition. (William, 1988, pg.11 [Cole, 1969, p.17])” This creates an inherent cloud as to the trait approach, which the quotes reinforce.

Going further into the trait approach, William states that since this makes entrepreneurship into a personality trait and that it becomes a tenacious a point of view. As this creates a sense of once an entrepreneur always an entrepreneur. I agree, in particular William makes a great point here. He says, “Is the owner/manager of an ongoing firm two or ten or even fifteen years after startup an entrepreneur? (William, 1988, pg. 12)” This is a great question to ask, specifically when looking at someone’s traits that may influence what makes entrepreneurs, well, entrepreneurs. Ignoring the definitional problems, It helps establish the bigger picture, if I was successful in business development far in the past, am I still successful years later?

In general, I would argue no, a lot of times as we climb and begin to develop our business our challenges, tasks, requirements and even personality may, and most likely will, change. This creates a conflict to the trait approach, a crack in the foundation, what does it imply to the data if we are using success stories from ten or more years ago. Age old lessons exist, yes, but so do dated lessons that have rightfully been thrown out.

Let alone the definitional problems that the trait approach has to contend with. At the risk of being too philosophical, what even is an entrepreneur? When even within William’s own entrepreneurial research group that definition is incongruous or had a “lack of homogeneity (William, 1988, pg. 11)”. I find that this definitional problem only serves to prevent us going past the surface level, which becomes a fault in the trait approach.

Attempts at further defining “entrepreneur” only seems to worsen the delineation between what is or is not an entrepreneur. Carland found this out when trying to separate the owner that has not engaged in entrepreneurship within the past ten to fifteen years from the entrepreneur who is a business person establishing and managing businesses for growth and profit. Is that not exactly what the small owner is doing already? Williams goes on to question it all the same. This definition only further serves to separate what is intrinsically tied together, thus creating further fogginess as to what is an entrepreneur; the traits, behavior, current state, past knowledge, or something else entirely?

In closing, I think I agree with Williams, behavioral approach will serve us better in the future as it takes into consideration the context and organizational creation that he states as potential definition to entrepreneurship. I think traits are a best a quick and dirty way of analyzing a person's entrepreneurial aptitude, while behavior let’s look at the contextual actions that lead to this position. At the very least, a behavioral approach allows us to not get bogged down nitty gritty of semantics and get into what it is that actively creates an “entrepreneurial” success and an “entrepreneur.” Especially when considering entrepreneur from the definitional lens of creation of an organization as suggested by Williams (1988, pg. 260).

On: In Search of the Meaning of Entrepreneurship by Robert F. Herbet & Albert N. Link

The entrepreneur: catchword or crucial concept, an overview of economists’ views, towards a synthesis. These are three primary talking points within Herbet & Link’s paper. The paper opens up with context of what they think of entrepreneur and entrepreneurship, locating at form the context within academia, popular entrepreneurial figures, and contemporary writers’ definition. The following point is an overview of what economist believe to be an entrepreneur. The last tries to find a way to synthesize a point in all this. Individual point of views placed between the second and third primary points help round out the perspectives.

In the context of The entrepreneur: catchword or crucial concept, “it [Entrepreneurship] pertains to the actions of a risk taker, a creative venturer in a new business or the ones or revives an existing business. (Herbet & Link, 1988, pg. 39)” This definition is typically associated with [speaking from a western globalized perspective] people such as Steve Jobs, Donald Burrs and, I will add, Elon Musk. Typically first-born, males, college-educated in their thirties at the time of the first significant venture. As the paper put it (1988, pg. 39), “highly motivated, creative, energetic, and willing to accept risk.” This view coming from the back of a perceived entrepreneurial “decline” at the onset of the 80s (1979). Creating an air of popularity and fandom amongst those mentioned.

I agree with this initial presented definition; I would only argue that there is a bit of narrowing down what could even have the chance to become an entrepreneur. This narrowing down could be detrimental as it creates a murkiness similar to that found in “Who is an Entrepreneur?” Is the Wrong Question. Does it take someone who has had the birth lottery to become an entrepreneur? I would say no, the paper goes onto elaborate.

The next lens applied is from the economists’ point of view. In other words, what does the economists say about entrepreneurship? Herbet and Link (1988, pg. 41) go on to list twelve distinct themes in economic literature as another potential definition establishing entrepreneurship as something dynamic and robust.

I really agree fundamentally, we do not need to look further than the dawn of the internet to see change and dynamisms in entrepreneurial activities and ventures. Since the age of online sales, for many entrepreneurs the middle man has been cut out, the business model has been adapted, marketing tools and approaches have expanded, etc. These are relevant as they are methods and approaches to entrepreneurial endeavors as a whole. If the methodology has completely changed than I would argue that what it means to be an entrepreneur now is not the same as it was 30 years ago. Maybe the spirit is the same, but the contextual actions one does will change with the time. In other words, the dynamic nature of entrepreneurship is something that creates inherent change as to what it means to be an entrepreneur.

The next ones I do not have much to say as it is mostly contextual background as to what are customary habits and definitions within the economic system model of entrepreneurship and I mostly agree. Starting with an individualistic view from Cantillon characterized by the fact anyone can be an entrepreneur as it is a function nor the personality and clear distinction between risk and uncertainty. This is followed by Schumpeter’s concept of entrepreneur, the entrepreneur as a persona causa of economic development. This would create a cyclical relationship between economies and entrepreneurs. As the past entrepreneurs created new products from past combinations, this feeds into future entrepreneurs creating new combinations from those very same new-but-past-combinations. In his words, Schumpeter (1988, pg. 44), "[t]he carrying out of new combinations we call 'enterprise'; the individual whose function it is to carry them out we call entrepreneurs.” Penultimately, we come to Shultz’s perspective. His biggest changes to model are that an entrepreneur is someone with the ability to deal with disequilibria and that entrepreneurial decisions extend outwards onto non-market sectors such as household decisions and allocation of time. Lastly, Kirzner’s theory of entrepreneurship one that is defined as “an alertness to profit opportunities (1988, pg. 46).” More so aligned with the contemporary view of entrepreneurship. Building off Shultz’s equilibrium analysis, Kirzner posits being able to correctly anticipate all other decisions as a logical evolution to dealing with disequilibria. This stresses the importance of perception for an entrepreneur and downplays the uncertainty a future might bring. As I stated at the beginning of this paragraph, I agree with a lot of these theories. I think when viewing them as just that, a theory, they are a sound way of approaching something as an entrepreneur and understanding what that means. In practice, they definitely need a helping pinch of salt attached but it does not prevent me from seeing the value.

The final point is a consolidation of what all this is as a whole, towards a synthesis. It goes over the murkiness of defining it, the double-edged sword of realism brings a lack of precision and vice versa. Ending with the reason an entrepreneur is such an important object of economic concern is because its function and character pen penetrate to the very core of economics and raise fundamental questions of economic method that have never been resolved. Which is a really succulent way of saying we cannot define this, but we can know its importance. Reminds of the United States Supreme Court Justice Potter Stewart quote, “I know it when I see it.”

On: What makes entrepreneurs entrepreneurial? By Saras D. Sarasvathy

Saras paper approaches entrepreneurs from a psychological perspective, quickly establishing the question “is there is such a thing as “entrepreneurial thinking” that can be applied across space, time and technology? (Sarasvathy, N.D., pg. 2)” Saras in order to answer this question, set out and interviewed thirty founders of successful companies worth at least two hundred million. In doing so, found that there was an underlying coherent set of logic based on set of principles these founders had that we could call entrepreneurial. This type of logic is termed “effectual reasoning.” Saras goes on to compare and contrast effectual versus causal reasoning and even touches on
creative casual reasoning.

Sticking to her introduction, I agree with the idea of an underlying way of thinking. If there is a consistent state of mind, or even section of mind, that most successful entrepreneurs have, I do not find it unreasonable to conclude that there must be a way of thinking that we can apply for ourselves. I like this approach because it is not as static as it may seem. Entrepreneurial thinking could simply include being dynamic and willing to change as a part of that logic set. Dynamism being completely baked in creates a safety net when it comes to becoming dated and useless. In fact, she highlights this towards the end, on which I will elaborate.

She then further defines effectual reasoning and its counterparts. Casual being what students are typically taught; Causal rationality begins with a pre-determined goal and a given set of means, and seeks to identify the optimal – fastest, cheapest, most efficient, etc. – alternative to achieve the given goal. You know, boring and by the book, not a creative bone or idea anywhere to be seen. Whereas Effectual is less rigid, not even beginning with a specific goal. 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. The basic difference being casual looks at what worked, effectual looks what they can do currently. Not much to opine here, I feel I agree but it is mostly establishing definitions for the rest of the paper.

Breaking down the process is the next method Saras uses to get an idea of entrepreneurial thinking. Establishing a common ground between effectual and casual. Using a thought experiment, she explains the ways an effectual process may develop versus how the casual process develops. In particular she hits on something great, the effectual does not discount potential bad outcomes, it leverages them to get in at low-cost and low risk. I will also add I think that the two are a bit more cyclical than it may seems. One could argue that in order to do a proper casual process you need a bit of effectual methodology to get started, and vice versa in order to even break the model it has to be there to begin with. They both start with market definitions, effectual is just more willing to let it go. Likewise, they both end with customer identification, casual process’ positioning is entirely based on customer identification, and creating an established business effectually ends with clear identification of customers.

In breaking down the process, Saras found that there some key principles in the effectual process. Those being affordable loss, strategic partnerships, and leveraging contingencies. Affordable Loss principle is predicated on effectual reasoning, as instead of focusing on minimizing cost and maximizing returns, it focuses on ways to enter the market with as minimal resource expenditure as possible. Flipping the casual reasoning on its head and gets your product out there sooner. This creates an opportunity for the effectual reasoning entrepreneur as it allows failure to be a part of the process. Strategic Partnerships principle is the focus on building partnerships over competitive analysis. In particular finding good partners from the start, creating a good foundation to deal with the initial uncertainty. This dovetails off the Affordable Loss principle as it spreads the investment and lowers the loss. Privatizes gains and socializes the losses. The Leveraging Contingencies principle is exactly as it says, it is looking at the possibilities and using those for your advantage. Josiah was going to do pottery, that is a contingency; Bentley saw the potential and with Josiah created a brand around their pottery, that is leveraging it. Taking what probably will happen and using it for your gain now. Not much to agree or disagree with here. I would say I find all these principles great and coming from a creative standpoint stands to only help you in your endeavors. Creating a sort of safety net before even jumping can only serve to let you try again when, or if, you do fail. Using these principles seems to do just that, it creates an entrepreneurial cushion that allows you to bow out early or push through.

Next there is more talk on the general logic of effectual reasoning. Not much to say general expanding on the logic. I did find the something interesting though. Saras mentions when asked if being in a predictable market was good idea, that several of the expert entrepreneurs explicitly stated that being in such a market is not a good idea. This is because when it is too predictable there will always be someone with bigger pockets, smarter, both, and/or a combination that will potentially seize the market over you. This was really useful to learn, it stems from the fact that if we are effectual reasoning entrepreneurs going into a predictable and established market is a waste of our skills. In a way, predictable simply means casual, casual market for a casual process. I think this is supported by the fact that the suicide quadrant is exactly where effectual reasoning entrepreneurs thrive.

She follows up with U-Haul success story and finishes out with their answer to So, what makes entrepreneurs entrepreneurial? Saras answers,

“Entrepreneurs are entrepreneurial, as differentiated from managerial or strategic, because they think effectually; they believe in a yet-to-be-made future that can substantially be shaped by human action; and they realize that to the extent that this human action can control the future, they need not expend energies trying to predict it. (Sarasvathy, n.d., pg. 9)”

It seems to me that entrepreneurs according to Saras are people who shape their own futures with respect to the fact that cannot control it and to that, I agree whole heartedly. It may be a bit of a non-answer answer, but as the first paper established and the rest reiterate it is really hard to define entrepreneur.

Conclusion

These sets of articles have been really informative and thought provoking. I agreed with a lot of it, and I would have a pretty hard time narrowing down a definitive definition for entrepreneur. Many of the things touched on fit the mold, and few seemed like a product of our educational systems approach. It was nice to learn of different theories and definitions. I would like to say that for me, if I had to distill it down, an entrepreneur is someone who seizes opportunities and creates/reframes value to their advantage.

References

Gartner; W.B. (1988). “Who Is an Entrepreneur?” Is the Wrong Question. American Journal of Small Business, 12 (4), 11-32. https://doi.org/10.1177/1042258788012004

Hebert, Robert F & Link, Albert N. (1989). In Search of the Meaning of Entrepreneurship. Small Business Economics, 1, 39-49.

Sarasvathy, Saras. (2005). What makes entrepreneurs entrepreneurial. Darden Case No. UVA-ENT-0065 SSRN Electric Journal, 1, 1-9. https://doi.org/10.2139/ssrn.909038