Are Entrepreneurs Born or Made?

by Cornelia Butler Flora

Are entrepreneurs born or made? Is entrepreneurship simply a matter of personal traits and ambitions, or does entrepreneurship depend in part on context? And if context is important, is rural too much of a disadvantage for entrepreneurship to take root and thrive? The North Central Regional Center for Rural Development has been involved in listening sessions throughout the region on support for rural entrepreneurship. The dialogue indicates that both personal traits and context can be cultivated in rural America.

Literature suggests that the following individual characteristics of entrepreneurs contribute to their innovation, determination and success.

• Nonconformity—Low conformity to rules enhances original innovation (Kirton 1976, Mudd 1996, Rosenfeld et al. 1993). Such individuals are likely to recognize opportunities not visible to others and to ignore the messages that say following those opportunities is folly.
• Self-efficacy—Individuals with a high level of self-efficacy believe they are capable of attaining a goal (Goel and Karri 2006). Individuals with high levels of self-efficacy are more likely to have high self-esteem, emotional stability, optimism, and an internal locus of control (Judge et al. 2003, Watson, Clark and Tellegen 1988, Krueger and Dickson 1994). This characteristic is a good predictor of entrepreneurial behavior and success (Chen, Green and Crick 1998, Erickson 2002, March and Shapira 1992).
• Achievement Motivation—Entrepreneurs have higher achievement motivation than the rest of the population (Hornaday 1982). People with high needs for achievement value achievement more than they value power or affiliation (McClelland and Winter 1969). They set goals they can reach with their experience and ability; they are not gamblers, but realistic high goal setters.
• Preference for Innovation—Entrepreneurs seek to do new things or familiar things in new ways (Drucker 1985, Schumpeter 1934, Carland and Carland 1991, Timmons 1990). Most people seek to do the same thing the way they have always done it.
• Low Uncertainty Avoidance—Entrepreneurs are more likely than others to accept uncertainty (Hofstede 1980, Doney, Cannon and Mullen 1998). They assume that they cannot predict the future, but instead can act to make a future that is different than that of the past.

Perhaps the most persuasive arguments for the importance of context for entrepreneurial creativity are those of Jane Jacobs (1984) and Richard Florida (2002, 2005) who argue that certain cities support innovation and entrepreneurship. Both see the diversity of urban areas as a necessary condition for creativity, implicitly classifying rural areas as places where people and ideas are homogeneous. Richard Florida identifies galleries, theaters, cafés, and places to hang out at night with music and a chance to meet others who work strange hours doing creative things as important elements for attracting the creative class—those knowledge workers who create new products, new services and new firms.

Yet we have evidence that rural communities can generate entrepreneurship and form supportive clusters. Entrepreneurial Social Infrastructure is associated with communities that stimulate entrepreneurial behavior (Flora and Flora 1993, Flora et al. 1997). McGranahan and Wojan (2007) found that, while not all rural areas are likely to benefit from a strategy to attract creative workers, rural areas most attractive to creative workers tend to have sufficient density to provide a reasonable level of services, appealing landscapes and other natural amenities, and growth in surrounding areas. Adjacency to a metropolitan area does not appear to be a prerequisite, and analysis provides intriguing evidence that attracting creative workers may be influenced by local development strategies.

There is also documentation that entrepreneurial behavior can be increased by positive interventions in rural communities (Sirolli 1999, Emery and Flora 2006). This work suggests that: 1) the networks critical for entrepreneurship can be created in rural areas, and 2) these networks can then support the personal characteristics shown by the research on individual entrepreneurs to be important. A number of community-based enterprise activities with positive results are reported in the case studies analyzed.

In analyzing approaches to enterprise development and entrepreneurial communities, Lichtenstein, Lyons and Kutzhanova (2004, p. 17) found that community-based strategies can be effective—but only if they follow five critical strategies:

1. Take a systems approach to enterprise and community development.
2. Customize the enterprise development system for each community.
3. Focus on developing entrepreneurs.
4. Develop new roles, skills and tools within the community.
5. Operate as a transformational business.

The Regional Rural Development Centers and our partners in the entrepreneurship listening sessions around the country found that building the systems approach by linking the pieces of education, technical assistance and financing is just beginning in many parts of rural America. Communities and businesses need to approach enterprise development in a holistic fashion.

Locality-based entrepreneurship strategies that provide community-based entrepreneurship education and mobilize the leadership and resources of the community have been successful in Nebraska. Enhancing, Developing, and Growing Entrepreneurs (EDGE), a community-based entrepreneurship development program, provides entrepreneurial training and builds community capacity for entrepreneurship by facilitating new structural arrangements through development of a broad-based coalition (Korsching and Allen 2004). Energizing Entrepreneurship (E2) shares these same two strategies, but also includes strategic leadership development for transformational change (Emery, Wall and Macke 2004). These holistic, community-based approaches are transformational for the community, the firm and the individual entrepreneur.

References

Nonconformity:

• Kirton, M.J. 1976. Adaptors and innovators: A description and measure. Journal of Applied Psychology, 61: 622-629.
• Mudd, S. 1996. Kirton’s A-I theory: Evidence bearing on the style/level and factor composition issues. Australian Journal of Psychology, 26(3), 217-222.
• Rosenfeld, R.B., M. Winger-Bearskin, D. Marcie, and C.L. Braun. 1993. Delineating entrepreneurs’ styles: Application of adaptation-innovation subscales. Psychological Reports, 72(1), 287-298.

Self-efficacy:

• Chen, C., R. Green, and A. Crick. 1998. The self-efficacy expectations and occupational preferences of females and males. Journal of Business Venturing, 13(4), 295-316.
• Erickson, T. 2002. Entrepreneurial capital: the emerging venture’s most important asset and competitive advantage. Journal of Business Venturing, 17(3), 275-290.
• Goel, S. and R. Karri. 2006. Entrepreneurs, effectual logic, and over-trust. Entrepreneurship Theory and Practice. 30: 477-493.
• Judge, T.A., A. Erez, J.E. Bono, and C.J. Thoresen. 2003. The core-evaluation scale: Development of a measure. Personnel Psychology, 56(2), 303-332.
• Krueger, Jr., N. and P.R. Dickson. 1994. How believing in ourselves increases risk taking: Perceived self-efficacy and opportunity recognition. Decision Sciences, 25(3), 385-400.
• March, J. and Z. Shapira. 1992. Variable risk preferences and the focus of attention. Psychological Review, 99(1), 172-183.
• Watson, D., L.A. Clark, and A. Tellegen. 1988. Development of coordination modes within organizations. Journal of Personality and Social Psychology, 54, 1063-1070.

Achievement Motivation:

• Hornaday, R.H. 1982. Research about living entrepreneurs. In C.A. Kent, D.L. Sexton, and K.H Vesper (Eds), Encyclopedia of Entrepreneurship (pp. 20-34). Englewood Cliffs, NJ: Prentice Hall.
• McClelland, D.C. and D.G. Winter. 1969. Motivating Economic Achievement. New York: The Free Press.

Preference for Innovation:

• Carland, J.W. and J.A. Carland. 1991. An empirical investigation into the distinctions between male and female entrepreneurs and managers. International Small Business Journal, 9(3), 62-72.
• Drucker, P. 1985. Innovation and Entrepreneurship. New York: Harper and Row.
• Schumpeter, J. 1934. The Theory of Economic Development. Cambridge, MA: Harvard University Press.
• Timmons, J. 1990. Entrepreneurship in the 1990s (3rd ed.). Boston: Irwin.

Low Uncertainty Avoidance:

• Doney, P.M, J.P. Cannon, and M.R. Mullen. 1998. Understanding the influence of national culture on the development of trust. Academy of Management Review, 23(3), 601-620.
• Hofstede, G. 1980. Cultures’ Consequences: International Differences in Work-related Values. Beverly Hills, CA: Sage Publications.

Other references:

• Emery, M., M. Wall and D. Macke. 2004. From theory to action: Energizing entrepreneurship (E2), strategies to aid distressed communities grow their own. Journal of the Community Development Society. 45: 82-96.
• Emery, M. and C.B. Flora. 2006. Spiraling-up: Mapping community transformation with community capitals framework. Community Development: Journal of the Community Development Society 37: 19-35. http://www.ncrcrd.iastate.edu/pubs/flora/spiralingup.htm
• Flora, C. and J. Flora. 1993. Entrepreneurial social infrastructure: A necessary ingredient. The Annals of the American Academy of Political and Social Science, 529: 48 58. Reprinted in N. Kreuger (ed.) Entrepreneurship: Critical Perspectives on Business and Management. London: Routledge. http://www.ag.iastate.edu/centers/rdev/pubs/flora/entreinfrastructure.htm
• Flora, J.L., J.S. Sharp, C.B. Flora, and B. Newlon. 1997. Entrepreneurial social infrastructure and locally-initiated economic development. Sociological Quarterly. 38 (4): 623-645. http://www.ag.iastate.edu/centers/rdev/pubs/flora/entresocialinfrastructure.htm
• Florida, Richard L. 2005. Cities and the Creative Class. New York: Routledge.
• Florida, Richard L. 2002. The Rise of the Creative Class: And How It is Transforming Work, Leisure, Community and Everyday Life. New York: Basic Books.
• Jacobs, Jane. 1984. Cities and the Wealth of Nations. New York: Random House.
• Korsching, P.F. and J.C. Allen. 2004. Local entrepreneurship: A development model based on community interaction field theory. Journal of the Community Development Society, 35: 25-43.
• Lichtenstein, G.A., T.S. Lyons, and N. Kutzhanova. 2004. Building entrepreneurial communities: The appropriate role of enterprise development activities. Journal of the Community Development Society. 35: 5-24.
• McGranahan, D.A. and T. R. Wojan. 2007. Recasting the creative class to examine growth processes in rural and urban counties. Regional Studies 41 (forthcoming).
• Sirollo, Ernesto. 1999. Ripples from the Zambezi: Passion, Entrepreneurship and the Rebirth of Local Economies. Stony Creek, CT: New Society Publishers.

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Last updated September 3, 2004.