15/05/2016
There are four key personal traits that have attracted the attention of the psychologist, as outlined by Amit, Glostein and Muller (1993). These traits are the first four ones that follow and are linked to the entrepreneur in a way that entrepreneurial activity can be explained, along with the choice to bear risk. Since the list of personal characteristics that have been looked into by academics is much longer; further elements of the psychological approach to entrepreneurship are listed below.
1.2.1 The need for achievement
In 1961 David McClelland presented one of the first systematic approaches towards understanding the entrepreneurial personality. In his work he attempted to provide an entrepreneurial profile; the same thing that most psychologists tried to produce. So, in his seminal work McClelland introduced the ‘business heroes’, entrepreneurs that inspire younger generations and promote the essentiality of entrepreneurial activity. In this direction, he identified the key characteristic of the entrepreneur to be the ‘need for achievement’, rather than the desire to make money. He labelled this need for achievement as “n-Ach” and derived a tool with which one can measure it. He argued that societies with a higher measure of n-Ach on the average produce more active entrepreneurs – and, thus, faster economic growth – than societies with lower n-Ach on the average. People with high scores of n-Ach will seek independence and will pursuit more difficult tasks to undertake. Sources of higher n-Ach include:
Parents who encouraged independence in childhood.
Praise and rewards for success.
Association of achievement with positive feelings.
So, according to McClelland, the most satisfying thing for the entrepreneur is the recognition of the success, and not the success parse. He also introduced two other measures, n-Aff (for ‘Need for Affiliation’) and n-Pow (for ‘Need for Power’), which have further contributed to the understanding of human action and interaction. In general, apart from being high achievers, McClelland described entrepreneurs as individuals that are inclined to:
be proactive and committed to others,
take personal responsibility for their decisions,
prefer decisions with moderate amount of risk,
crave feedback on their performance, and
dislike repetition and routine.
1.2.2 Internal Locus of Control
Another psychological view of the entrepreneur suggests that individuals that choose entrepreneurship over paid work have the innate belief that their performance is a result of their own actions, rather than other peoples’ activities or external factors. This is called in psychology ‘internal locus of control’ – meaning that the centre of control lies inside the person, rather in someone else’s or fates hands. Therefore, it has been argued that people with an internal locus of control will choose self-employment over
dependent employment. Rotter in 1982 derived a tool to determine the location of an individual’s locus of control. This metric scale helped in the direction of empirical tests regarding this theory. However, different studies using the Rotter Scale give us differentiated results, and the internal locus of control theory is therefore considered to be controversial.
1.2.3 Risk Taking Propensity
Entrepreneurs are considered to be individuals with less risk aversion than the ones that choose employment. The key element of this entrepreneurial trait is the difference between the attitude towards risk and the actual or perceived level of risk. So, entrepreneurial behavior is directed by both the individual’s attitude towards risk taking and his or her understanding of the complex business environment.
1.2.4 Tolerance of Ambiguity
Furthermore, Entrepreneurs are described by scholars – such as Timmons in 1976 – as individuals that, compared to others, can better handle complex and unstable working environments. This means, that people who chose self-employment over paid employment, are comfortable in venturing within unstable and dynamic business circumstances.
