Entrepreneurial Characteristics And Ideas in Turbulent Times
By Dr. Manoj Joshi (Principal Author) and Prof Ashok Kumar
As of today, we comprehend the critical importance for economic development is centred on entrepreneurial behaviour. Entrepreneurship is surely an outcome of this entrepreneurial behaviour, where this behaviour means identifying a problem, finding solutions and getting success by executing these solutions. Economists believe that this incumbent, the entrepreneur, had vanished for a while, but with time it emerged in the economic theory.
Initially, economists like Cantillon built an economic theory nearby the entrepreneur. The money-making agents were hence classified into three groups such as; landowners, entrepreneurs and hirelings. While the first and the group three were passive, the second one was classified with a central role of coordinating amongst producers and consumers, while being the central decision-making authority. With this classical connection the entrepreneur kept on engaging in assorted markets making profits and steering through risk and uncertainties. While risk was calculable, uncertainties posited a harsh impact. With these economists like Knight, Cantillon and Quesnay followed by leading thinkers took forward the economic functions of the entrepreneur, thus moving ahead from an agent perspective to a one significantly adding capital towards economic growth.
Baudeau was the first to have suggested the function of the entrepreneur, as an innovator. He brought invention and innovation into a common platform for discussion, thus emphasising the innate ability to process knowledge and information. This is further proved in the current pandemic situation, where innovation emerged as a key entrepreneurial characteristic. This stealth permutation prepared the entrepreneur as a lively and an active economic agent. According to Turgot, the entrepreneur thus became an outcome of a capitalist investment decision. The owner of capital would simply lend the currency and just be a capitalist. He could decide to buy land for lease and, hence, become a landowner, or decide to risk his money in an innovative business venture and thus become an entrepreneur. Jean-Baptiste elevated the entrepreneur as a significant figure in the economic lifecycle. He commented upon the sharp distinction between the entrepreneur and the capitalist, thereby giving an entrepreneur the required strength to give capital to a firm. This would reduce the risk and uncertainty, when considering the entrepreneurial element clearly. The entrepreneur was looked upon from a diverse perspective as in his entrepreneurial behaviour. Thus, the function of the so-called entrepreneur was to welcome technology and hence be in a position to transfer that acquaintance into a tradable product, while meeting the customers’ needs. This paved the highway to Schumpeter’s theory on entrepreneurship. Schumpeter’s entrepreneurial concept has to be seen as the central point in this field of research.
The Characteristics of Entrepreneurs
There have been several studies related to discovering the characteristics of entrepreneurs, pioneered by McClelland, a behavioural psychologist in motivation theory. In his pioneering work on The Achievement Motive, McClelland briefed in his research that people who with high need of achievement performed under challenging tasks/environment than in the routine activities/schedule. They favoured tasks that were challenging without being too difficult and took the personal responsibility for their performance. They even liked getting quantitative feedback on their performance and were perhaps extremely innovative in seizing for better ways to improvise upon. He did a study of entrepreneurs in India and did find compelling characteristics.
Nine of these entrepreneurial characteristics were predominantly found for the entrepreneurs in the ‘very successful’ zone than the ‘average’, such as initiative, assertiveness, sees and act on opportunities, efficiency orientation, concern for high quality work, systematic planning, monitoring, commitment and recognising the importance of business relationship. The other six characteristics such as self-confidence, persistence, persuasion, use of influence, expertise and information seeking had no significant difference in strength between the groups.
Most scholars have expressed a high need for achievement, autonomy, endurance and independence (Achievement, Competitiveness); a usually low support for consistency (Resilience); Internal locus of control (Self-reliance); Tolerance of ambiguity (Versatility); High energy level (Good physical health); Creativity (Versatility, Innovation); Self-confidence and self-esteem (Self-reliance, Confidence); Perseverance (Perseverance) and the most common understood one i.e. Risk-Taking propensity (Initiative).
Hence, this leads to the question of why one should want to study the characteristics of entrepreneurs. It could be moreover to be able to distinguish entrepreneurial behaviour; or/and be able to impart the required characteristics to non-entrepreneurs to become entrepreneurs or to help entrepreneurs to become better entrepreneurs.
The debate is still valid, whether entrepreneurship can be learnt - are entrepreneurs born or made?
The Schumpeter’s entrepreneur
Schumpeter’s work was enormously influenced while reviewing equilibrium theory. To reach equilibrium, Schumpeter suggested that these economic actors’ have to keep deciding repeatedly on strategies till the equilibrium is established. His aim was to scrutinise the dynamics in the rear of the observable economic changes, introducing the term as innovations. This became a trigger to the intellectual discussion and foundations of his research study.
Kirzner, the Austrian school
Generally, it has been discussed, on what is the significant difference between Schumpeter and Kirzner entrepreneur. Both of them had a clear focus on the entrepreneur, while Schumpeter stressed on economic change, Kirzner did on market process. In an equilibrium process, it is anticipated to accelerate the continuous change in the thinking process, appreciating the market opportunities by the entrepreneur. Kirzner differentiated the Schumpeterian entrepreneur from an innovator to a one that was a creative destructor to an equilibrium entrepreneur, always alert on market opportunities. Thus, the distinguishing factor between the one that is equilibrium-disturbing to an equilibrium-creating entrepreneur is a choice.
There will be many skills required by start-ups to mitigate challenges posed by the pandemic and to grab the opportunities to survive. There will be the survival of the fittest and the Indian start-ups must be fit in all respects. The authors successfully conducted a study on nine (9) Indian start-ups which suggested ten (10) entrepreneurial characteristics needed in the present pandemic situation. These are:
- A disciplined pursuit of ambition
- Honing credible and differentiated capabilities
- Fostering an ecosystem that can withstand economic shocks
- Taking calculated risk
- Seizing the opportunities
- Innovation and creativity
If we incline to relate between the process of action or alertness towards responding to the market, it shall be the innovativeness that shall tend to establish the market equilibrium, which in any case shall be highly volatile and short lived.
We are living in context to a volatile, uncertain, complex and ambiguous (VUCA) world with unlimited opportunities, thereby demanding an equilibrium for optimal behaviour, demanding a perfect rationality mandating a clear foresight. Then we shall have to rethink, navigate and vacillate between establishing equilibrium and then de-establishing it. Nothing exemplifies VUCA more than the current Covid-19 pandemic. Every person, company, institution and country on this earth has been adversely affected by this virus and the loss on account of health, human lives, livelihood, economy and international relations is beyond estimation. According to most economists, the recovery may take up to two years or some more time to reach pre-pandemic state