Personality Approach to Entrepreneurship - Essay Example

Personality Approach to Entrepreneurship In assessing the personality approach to entrepreneurship it’s important to contextualize it within the broader range of human resource literature. While there are undeniably features of the personality approach that are distinct to entrepreneurship, in great part the aims of such psychological assessment criteria are best situated as an element of broader investigations into international/organizational (i/o) behavior. It seems that in great part the distinguishing features of the personality approach to entrepreneurship are the types of personality traits that have been identified as specifically characteristic of entrepreneurs. In many instances the question of personality assessment on entrepreneurships is defined in dichotomous terms: one strand seeks to determine the type of person that is drawn towards entrepreneurship and the other identifies the specific personality characteristics that contribute to that person’s success of failure. Furthermore, the changing definitions of what actually constitutes entrepreneurship are oftentimes attempted to be retrospectively established by the examining the specific personality traits of the entrepreneurs. While recent times have seen a renewed acceptance among the academic establishment of the relevancy of personality entrepreneurial approaches, this has been a recent change in perspective, as for many decades they had been derided as largely frivolous. In assessing the major literature related to the personality approach to entrepreneurship, this essay situates it within a historical context, critical analyzes contemporary approaches to the issue, and offers suggestions for future research. Historical Perspective Even as it wasn’t officially recognized as the ‘personality approach to entrepreneurship’, psychological investigations into the nature of the entrepreneur have been in existence throughout the majority of the 20th century. Indeed, when formulating theories on entrepreneurial economic development renowned economist Joseph Schumpeter (1935) references personality traits such as innovativeness, dominance, and achievement orientation. On a larger scale, economists have attributed the economic success of nations to the personality characteristics of their inhabitants (McClelland 1961). A contemporary interpretation of such formulations -- considering national moves towards globalization in the 21st century -- might deem such a theory racially biased, and it seems that indeed in the later part of the 20th century the personality approach to entrepreneurship took on a more specialized mode of inquiry. Other prominent personality approaches to entrepreneurship includes Smith (1967) as cited in Miner (1997, p.6) who developed a fusion between psychological and sociological distinctions in dividing, Entrepreneurs into craftsmen and opportunistic types and their firms into rigid and adaptive types…Opportunistic entrepreneurs are expected to head adaptive firms which grow more rapidly. Craftsmen entrepreneurs head rigid firms which exhibit less growth. Perhaps the most referenced, and groundbreaking investigation into personality assessment within the business environment was Walter Mischel’s 1965 work Personality and Assessment. In this work Mischel argued that previous investigations into personality psychology had been misguided, and in order to achieve a functional methodology an entirely new paradigmatic shift in approach needed to be conducted. The book showed that previous investigations had been inconsistent because in large part they approached personality analysis with naïve assumptions, attempting to link a personality trait to an individual in all situations. If psychological assessment were to become functionally relevant it needed to understand that specific personality traits were situationally contingent; that is, individuals’ personality traits needed be studied in relation to their environment. Even as Mischel’s work clearly pointed towards a new functional paradigm that could be adopted, rather than resulting into a new-found abundance of entrepreneurial personality research, it influenced academics by discrediting the field of entrepreneurial personality assessment as a whole. Indeed, as late as the 1989 prominent researchers were seen to express sentiments such as, I believe that…a focus on the traits and personality characteristics of entrepreneurs will never lead us to a definition of the entrepreneur nor help us to understand the phenomenon of entrepreneurship. (Gartner, p.48) While academic research progressively developed a skeptical approach towards the functional relevance of personality approaches to entrepreneurship, a number of forays in classification were developed in the 1980s, specifically Vesper (1980) who distinguished between eleven sets of typologies that use personality assessment to explore different definitions of the entrepreneur. These include, but are not limited to: solo-self employed individuals, team builders, independent innovators, capital aggregators, conglomerators, and speculators. The overwhelming perspective of apprehension continued well into the 1990s, but due to the pioneer work of researchers in the late 1990’s and into the 2000’s, the personality approach to entrepreneurship was revisited and experienced a corresponding rebirth of acceptance among the academic establishment. Contemporary Approaches In formulating a contemporary approach to personality assessment researchers had to first align previous theoretical methodology with Mischel’s insights. This was accomplished as researchers began to consider investigations within the necessary situational framework. Another key distinction was made by ceasing to try and link personality traits to specific outcomes; as such an intention was now understood to be unrealistic considering the multitude of variables involved. While such changes convincingly advance the theoretical relevancy of psychological models of entrepreneurship, one might argue that although their research is logically sound, it has scarified the specific aims of earlier personality assessment models for an approach too broad to adequately be applied in functional ways. In response to such claims a number of theorists have pointed out that the inclusion of the situation variable has made ability of psychological assessment of entrepreneurs more accurate in predicting outcomes of success or failure (Vinchur, Schippmann, Switzer, & Roth, 1998). Where past investigations may have attempted to link the trait of extraversion directly to entrepreneurial success, contemporary critical assessments would ask questions about the environment the entrepreneur is functioning in and then consider the confluence of the environment and personality trait when making qualitative and quantitative conclusions. For example, one might consider the different functional importance of such a trait extraversion in a sales climate, versus the trait’s relevancy in the information technology field. Another key factor that contributed to the revival of personality entrepreneurial assessment theory came as a result of shifting the types of personality traits that were assessed. This new approach has come to be defined as the proximal/ distal distinction, for the binary opposition that has been engendered between traditional personality assessment traits (proximal) versus the new traits (distal). It seems that much of the contemporary literature focused on the personality traits that entrepreneurs brought to their enterprises, without identifying the ways that these belief patterns changed as the business progressed. While the common conception of the entrepreneurial enterprise is taking the road less traveled, theorists noted that entrepreneurs were still following a road, their progress of which was contingent on reaching and assimilating objective guide-posts. This view of entrepreneur psychology assessment focuses less on analyzing the individual traits of entrepreneurs, instead determining how individual’s assessment of these traits evolves over time; while specific personality traits are still be assessed, as in classical models, there is a distinct paradigmatic shift from traits such as – locus of control, self-efficacy, and autonomy – to traits more focused on entrepreneur acquisition – persistence, ability to critically assess ideas, etc. Ultimately this is a theoretical approach that doesn’t attempt to answer for the many varied motivations people become entrepreneurs, but argues that a new paradigmatic approach more focused on the process of entrepreneurial success must be developed in order to arrive at an academic model that can be functionally utilized within the institution of business. Even as the proximal/distal distinction was a clear advancement in the understanding of personality and entrepreneurship, researchers, notably Mischel and Shoda (1998) in another landmark study ‘Reconciling Process Dynamics and Personality Dispositions’ urged theorists to go beyond traditional characterizations of personality. This view of entrepreneurial personality assessment has been adopted by many researchers, and incorporates proximal/ distal distinctions and situational contexts, along with a newly established emphasis on the dynamics of personality. Bandura (1999, p.200) notes that this, “requires an integrated conceptual scheme that classifies not only behaviors, but specifies their determinants and key mechanisms through which they operate.” While the exact definition of personality dynamics differs with researcher applications, it seems that Mischel is ultimately attempting to define personality characteristics as more highly malleable, and incorporate the moral and value assumptions of the assessed. A notable application of this paradigm occurs in Shane’s A General Theory of Entrepreneurship (2003). In the chapter, ‘Psychological Factors and the decision to exploit,’ Shane investigates proximal/distal variables, in specific situations, as they relate to the individual entrepreneur’s tendency to exploit people and business opportunities. Shane is incorporating Mishel’s dynamic personality factor by specifying the value assumption variable of exploitation, when past studies opted for a more broad approach to research possibilities. Shane (2003, p. 112) even defines such dynamic characteristics as ‘cognitive characteristics’ and list them as, “overconfidence, representativeness, and intuition.” This is an appropriate instance to note that while proximal/distal variables can be envisioned as almost diametrically conflicting, there are differing interpretations of the exact specificity of personality characteristics. For instance, Baum, Frese, and Baron (2007) distinguish between broad personality traits – extraversion, agreeableness, emotional stability, openness to experience – and specific personality traits – locus of control, risk-taking, innovativeness, autonomy, self-efficacy, need for achievement. However, researchers such as Shane (2003) situate such variables more as an extension of the proximal/distal distinction. Baum, Frese, and Baron (2007) note that past conceptions of entrepreneurial personality research has always attempted identified a positive correlative connection between the personality trait and success. That is, Many personality advocates assume that there are linear relationships between a personality variable and success (or performance). However, it is necessary to test in all cases whether there are non-linear relationships (Pg. 43). When considering the practical application this has for personality approaches to entrepreneurial research one need only consider that specific traits, in abundance may actually be deleterious. In such instances, it’s necessary for researchers to test for these characteristics. In developing a solution to this problem, one might consider the development of psychological assessment traits from a linguistic perspective. Finally, the promulgation of analysis of analysis, such as this one, has contributed a great deal towards a shift in perspectives concerning the nature of specific variables that may alter the research. Suggestions for Further Research In determining avenues for future research, it seems that there needs to be less emphasis on the drastic paradigm shifts that Mischel foregrounded in the 20th century, and more research focused on establishing more clearly defined research principals. One obvious area is the types of personality traits researched, as well as the means of defining these traits. Researchers may be failing by attributing too much emphasis to terminology and subsequently need to incorporate more highly definable and scientific formulations of personality. For instance, while extraversion is a suitable descriptive adjective in colloquial speech, in developing valid research standards, academics might consider developing more highly defined terminology – there could be a number of different types of extraversion, the ultimate dichotomy of which would need to be determined not by their corresponding definition in contemporary psychology, but by their efficacy within the entrepreneurial environment. The shifting nature of the entrepreneur must also be explored. While past identified reasons the entrepreneur was drawn to such undertakings, it’s clear that in the globalized market, with the shifting structural nature of business, many professions and innovations have been co-opted by establishment business. While this shouldn’t signal the death of the small business man, it’s important to note that the impulses which may inspired past individuals to pursue the entrepreneurial path may be now satiated by the remaining in the institutional framework. One only need consider the pioneering work of Florida (2002) who identified a newly emergent ‘creative class’ of individuals who have functioned to beneficially shape and transform market economies. In this sense, it is necessary to move beyond distinctions of ‘entrepreneurial’ personality approaches, and continually reassess and incorporate a wider spectrum of business activity. While researchers have noted the issue of defining entrepreneurial personality in regards to either the individual or collective entity (Baum, Frese, and Baron 2007), it seems that in the 21st century globalized world, research must devise a methodology that examines the corporate personality of entrepreneurship. References Baum, R., Frese, M., Baron, R. (2007) The Psychology of Entrepreneurship. Lawrence Erlbaum Associates. Bandura, A. (1999). Social-cognitive theory of personality. New York Guilford Press. Florida, R. (2002). The Rise of the Creative Class: And How it’s transforming work, leisure, community and everyday life. New York: Perseus Book Group Gartner, W.B. (1989). ‘”Who is an Entrepreneur?” is the wrong question.’ Entrepreneurship Theory and Practice, 12(2). McClelland, D.C. (1961) The Achieving Society. New York: Free Press. Miner, John (2003). A Psychological Typology of Successful Entrepreneurs. CT: Quorum Books. Mischel, W. (1968). Personality and Assessment. New York: Wiley. Mischel, W. and Shoda (1998) ‘Reconciling Process Dynamics and Personality Dispositions’ Psychological Review, 94. Schumpeter, Joseph (1935). Theory of Economic Growth. Munchen: Von Duncker Und Humbolt. Shane, Scott (2003) A General Theory of Entrepreneurship. Mass: Edward Elgar Publishing. Vesper, Carl (1980). New Venture Strategies. Englewood Cliffs, NJ: Prentince-Hall. Vinchur, Schippmann, Switzer, & Roth, (1998) ‘A meta-analytic review of predictions of job performance for salespeople’. Journal of Applied Psychology, 83. Read More