What is Innovative Entrepreneurship in My Own Words

Introduction

Innovation is the main driver of growth and the entrepreneur is the outstanding actor in the commercialization of knowledge in the modern economy. The entrepreneur is an individual who bears the organization, the liquidation and the risk of starting a business and is innovative in his activities (Schumpeter, 1934). In the process of my academic career and personal life, I have honed certain entrepreneurial skills while neglecting others. Having taken an entrepreneurial potential self-assessment survey, I have gained a deeper understanding of my personal strengths and weaknesses in comparison to the average entrepreneur. To examine and evaluate in detail the entrepreneurial potential of myself, I will be using a plethora of entrepreneurship theories, ranging from established psychological entrepreneurship theories to sociological entrepreneurship theories.

Survey

In order to understand which entrepreneurial theories to apply to improve my entrepreneurial tendencies, I will summarize the entrepreneurial potential self-assessment. The self-assessment report found me to be a below-average entrepreneur. The key weaknesses the report found are in my motivation, and attitude while the key strength was my aptitudes. My motivation is a weakness in terms of my low need for achievement and my lack of strong ambition. Furthermore, my behavioral tendency to sit back and be satisfied is an attitude problem I have. The survey found that I am not action-oriented enough compared to other entrepreneurs. However, the survey also found my aptitudes to be strong in comparison to the average, especially regarding characteristics like stress resistance, self-confidence or determination.

Psychological Entrepreneurship Theories

This chapter will be investigating all psychological entrepreneurship theories. As many of my weaknesses were behavioral and psychological problems, I could use this to improve my entrepreneurial tendencies. Certain traits or personality types are more likely to have entrepreneurial success. Entrepreneurs are assigned different roles which they must successfully fulfill: Innovator, risk-taker, and tolerance for ambiguity (source theory paper). These character traits act as qualifications and should be inherent in the entrepreneur. The entrepreneurial potential self-assessment survey touched on each aspect through different questions.

Risk Willingness

Risk willingness can be defined as trading under uncertainty and the degree of willingness to bear this risk. According to some studies, this characteristic is attributed to entrepreneurs. They accept moderate or higher risks than non-entrepreneurs do. Begley and Boyd (1987) confirm in their study that entrepreneurs have a higher risk appetite than employees. However, other studies cannot find out what kind of risk entrepreneurs prefer to take or whether there is a difference between entrepreneurs and managers (Babb and Babb, 1992). Only the study by Begley (1995) finds a difference in the motivation of entrepreneurs and managers.

One reason may be that company founders are more willing to take risks, but do not consider their activities to be risky. This different perception, based on their own self-confidence, can confuse the results (Shane, 2003). Baron (1989) speaks of entrepreneurs who tend to underestimate risks and overestimate the probability of success. This is a propensity I know that I have based on prior experience and I need to improve on. My survey results that showed me that I am risk tolerant. The survey results that indicate this to me are my high scores on self-sufficiency and resistance to stress. Furthermore, my knowledge about my own characteristics confirmed the findings of the report. I see this as both a strength and a weakness. As seen in the conflicting perspectives above, risk-taking can be seen as a positive as well as a negative for entrepreneurs. Therefore, each individual case must be separated and seen individually. My risk-taking decisions are both from the ‘gut’ as well as based on calculations, which is why I see it as both a strength as well as a weakness. Keeping my chances more realistic and based on calculations will make my decisions more informed.

Tolerance to Ambiguity

This describes the tolerance of ambiguity or uncertainty. Uncertainties are perceived when individuals do not have sufficient information about a situation (Begley and Boyd, 1987). Since entrepreneurs are exposed to more uncertain situations than managers of established companies on a daily basis, they can be expected to be highly tolerant of ambiguity if they remain in their job. Again, conflicting studies on whether entrepreneurs and managers have a significant difference in ambiguity tolerance exist. While Mohar, Singh and Kishore (2007) stated that there was a positive correlation between ambiguity tolerance and influence on entrepreneurial activity, Babb and Babb (1992) could not see any difference between managers and entrepreneurs regarding this trait. Nevertheless, tolerance to ambiguity is a trait that is undeniably a strength for an entrepreneur to have. The survey results had its own criteria for tolerance to ambiguity, in which I scored the maximum score. I believe this is because it is so closely tied together with being a risk taker, as risk usually comes with some ambiguity.

Innovativeness

Already in 1934 Schumpeter named this characteristic as one of the core characteristics, since the spirit of invention distinguishes a dynamic entrepreneur from other actors (Grichnik, 2006). The ability to innovate, driven by the curiosity inherent in the entrepreneur, is a potential to get an idea and turn it into a business model. An entrepreneur has a high capacity for innovation and is thus in a position to create new products, develop new solutions, new paths and generate new technologies. For this reason, the ability to innovate is also linked to the entrepreneur's success. The self-assessment report has graded my creativity/imagination to be average. According to https://www.researchgate.net/profile/Fiona_Patterson/publication/242102530_Characteristics_Behaviours_of_Innovative_People_in_Organisations/links/0deec528a0be64f809000000/Characteristics-Behaviours-of-Innovative-People-in-Organisations.pdf, other characteristics that are important to be innovative and were measured in the survey are determination, self-confidence and ambition. I am close to average in all three measures. Based on what I know about myself, my creativity is a weakness of mine as an entrepreneur. Having a weakness in such a core characteristic of entrepreneurship is an obstacle. However, this characteristic can be learned and independently controlled (Jacobsen, 2003). Applying myself to learn and improve on my innovativeness will be key to improve my entrepreneurial aptitudes.

In the following, the most common traits are defined and evaluated:

Need for Achievement

McClelland was the first to associate Need for Achievement with entrepreneurs in 1961 (source theory paper) and found a positive relationship between it and success as an entrepreneur. Begley and Boyd (1987) confirmed that entrepreneurs have a stronger Need for Achievment than non-entrepreneurs. The individuals compete with their own standards of performance and continually try to improve their performance (Begley & Boyd, 1987). I believe that as an entrepreneur I have my strengths and weaknesses when it comes to my Need for Achievement. This is underlined by my maximum determination score and my above average perception to act upon one’s destiny score, yet extremely low action orientation score and low ambition score. Overall the survey evaluated me as a below average entrepreneur regarding my Need for Achievement. Tasks with a high degree of personal responsibility, individual abilities and efforts and moderate risk are more likely to be chosen by people with a high Need for Achievement than by people with a low Need for Achievement (Shane, 2003). Those type of tasks, however, are in line with what the survey results say I excel at. My aptitude results are considerably above average, yet not considered as much in the survey report as in Shane’s description. In my opinion, my Need for Achievement is relatively strong in areas of interest and when I have a strong eagerness to take action yet weak when I have no passion for the topic. This supposition meshes well with both the conflicting survey results (when taking Shane’s description into account) as well as my personal knowledge when it comes to my strengths and weaknesses. To improve as an entrepreneur, I must show a stronger Need for Achievement in more aspects of my life.

Locus of Control

Rotter developed the Locus of Control theory in 1966. Rotter awards entrepreneurs a high internal Locus of Control. Rotter justifies this by saying that people with a high Locus of Control like to be in a position where they can determine and influence their own results and are therefore more likely to act as entrepreneurs (Shane, 2003). Locus of Control refers to feasibility thinking and distinguishes between internal and external. People with internal feasibility thinking believe in the effectiveness of their own behaviour and, on the other hand, believe little in external forces such as fate. They think that results depend on their own actions and characteristics. Their success as entrepreneurs cannot be influenced by the economic situation or the competition, but only by their own behaviour. On the other hand, people with external feasibility thinking do not believe that their own efforts can primarily determine success. They think that results are results of happiness, fate and chance (Begley & Boyd, 1987). Based on the survey results, I have an internal Locus of Control, scoring above average results in my perception to act upon one’s destiny. I believe in the quote by Roman philosopher Seneca “Luck is what happens when preparation meets opportunity”. Some research shows a positive correlation between internal Locus of Control and the entry into self-employment as an entrepreneur (Rauch and Frese, 2000). This theory has shown me that I have an internal Locus of Control which is a strength, not only because of the correlation to becoming an entrepreneur, but because it impacts many facets of how you act as an entrepreneur. An internal locus of control impacts my determination, stress resistance, and even need for achievement. Rotter also suspected a positive relationship between Need for Achievement and Locus of Control (Begley & Boyd, 1987), which supports my opinion that my Need for Achievement is stronger than the survey results imply.

Sociological Entrepreneurship Theory

Focusing on Reynolds (1991) four social contexts that help to understand entrepreneurship in a more specific manner. Having a parent that is an entrepreneur has given me the opportunity to see sociological entrepreneurship first hand.

Social network

Knowing the benefit of social relationships and how they can translate into opportunities is key to being successful as an entrepreneur. This approach relates to my entrepreneurial opportunity as children of entrepreneurs are familiar with business methods, have access to capital, equipment and networks and benefits from an already established reputation. Using all the opportunities around one to the fullest of capabilities is key to maximizing productivity. Entrepreneurs are often involved in a wide range of casual contacts (Reynolds, 1991). Lentz/Laband (1990) emphasize that it is management skills, rather than financial or material resources, that promote the entrepreneurial activity and determine its success. Knowing that it is a skill that can be learned and improved on has provided me with an advantage compared to entrepreneurs who don’t believe they have the power to influence events by acting. Improving on my casual contacts and relationships is a simple way I can improve my social network, as I am an outgoing personality.

Life course stage context

Analyzing the life situations and characteristics of entrepreneurs can be a method to get an insight into decision making of entrepreneurs. Life situations that define me and have a large impact on my road to entrepreneurship are my family and my education. Parental independence has a positive influence on second generation entrepreneurship (Drennan, 2005). This applies both to self-employment and to setting up a company. Having grown up extremely independent and in control of my behavior have led to me being more risk taking, proactive and independent. Furthermore, growing up in an international school and being provided excellent education has opened my eyes to entrepreneurship at a very early age. It is argued that individuals with increasing levels of education are more likely to select themselves into occupations typically associated with self-employment and start-up activities (Evans/Leighton,1989). Applying my independent tendencies to my entrepreneurial efforts is a simple method for me to improve.

Ethnic identification

Analyzing my Thai-British background as a “push” factor to understand my entrepreneurial tendencies can be an effective method. Growing up in Bangkok, Thailand, a still developing country, has given me an extremely unique perspective to how a country is supported by entrepreneurs. This ties in with Schumpeter’s Austrian Market Process theory. The importance of entrepreneurs, especially in regard to small and medium sized companies cannot be understated. The rapid growth in Thailand can be explained by Murphy, Liao&Welsch (2006) reasoning that knowledge is communicated through a market system. This entrepreneurial theory has made me aware of the drastic different perspective my ethnic identification has provided me.

Population ecology

Closely related to ethnic identification, growing up in Bangkok and attending university in London has enabled me to see two very different governments, competitive cultures and even environmental factors. The importance of analyzing each location you plan to be an entrepreneur in and adapting your plan is of utmost importance.

Conclusion

Although it is not easy to be an innovative entrepreneur, it is neither impossible nor genetically contingent. Through experience, education, and social learning, one can face the challenges of innovation and entrepreneurship. Analyzing the two encompassing entrepreneurial theories have improved my entrepreneurial tendencies. To use an entrepreneurial potential self-assessment survey to define my personal characteristics as a comparison rating to the average entrepreneur has identified key strengths and weaknesses. My entrepreneurial tendencies that I now consider my strengths are my determination and internal locus of control. I purposefully left out resistance to stress and risk propensity due to the conflicting studies. Criticism of personality traits theory deserves serious attention as most of it is not supported by research-based evidence. The key weaknesses I have identified are my eagerness to take action. The application of the sociological entrepreneurship theory a long with a stronger Need for Achievement will be one method I can use to improve my entrepreneurial tendencies in that department.