The nature of entrepreneurship

Citation

Jones, O. (2006), "The nature of entrepreneurship", International Journal of Entrepreneurial Behavior & Research, Vol. 12 No. 4. https://doi.org/10.1108/ijebr.2006.16012daa.001

The nature of entrepreneurship

The nature of entrepreneurship is probably the longest-running debate in the literature. This is closely followed by discussions related to differences between success and failure in starting new businesses. One encouraging trend as the field of entrepreneurship matures has been the shift of focus from a narrow concern with individual psychological attributes to broader structural influences on entrepreneurs. For example, Westhead et al. (2005) compare the roles of experience and cognition on novice, serial and portfolio entrepreneurs. In particular, the authors stress the importance of prior experience and human capital in helping novice entrepreneurs create successful new businesses. These broader influences certainly seem to be reflected in many of the recent papers published in IJEBR (see, for example, issue Vol. 12 No. 1 on rural entrepreneurship). Clearly, in understanding the success of entrepreneurs and owner-manager it is impossible to ignore their psychological attitudes particularly with regards to their motivation (Segal et al., 2005). However, there is now general acceptance that focusing on psychological attributes alone can only provide a partial explanation of why individual become entrepreneurs. The papers that appear in this issue reflect the importance of acknowledging a range of influences on those engaged in starting and managing small firms.

Alison Morrison develops a conceptualisation of the entrepreneurial process, which links strongly to the family as well as to wider cultural and social context. Morrison argues that there are three “filters” which influence the perceptions and behaviours of nascent entrepreneurs about the value of engaging in the creation of new business ventures. These three filters, the entrepreneurial process, the industry setting and the organizational context, directly influence the socio-economic outcomes of entrepreneurial activity. The value of Morrison’s paper lies in the insight she provides to the complex range of factors that impinge on entrepreneurship. Whereas Morrison concentrates on entrepreneurship in the tourism industry, Hui et al. focus on entrepreneurs in the Hong Kong construction and property sector. The study is based on interviews with six successful entrepreneurs/intrapreneurs. The interviews revealed two key themes: “commonly held values” and “distinctive strategies”. With regards to their distinctive strategies, the entrepreneurs emphasised the importance of high levels of creativity and “conservative” risk-taking. As the authors point out, this study reinforces the necessity of examining links between an individual’s moral values, their personal traits and strategies for business success.

In his paper, Philip Wickham adopts an econometric approach to examine the “overconfidence” effect on investor attitude towards the valuation of new ventures. The study is based on the hypothesis that decision-makers tend to judge their decisional quality “in excess of that statistical inference suggests is appropriate”. The experimental study was based on 24 subjects undertaking a Master’s degree in Poland. The results indicated that decision-makers do tend to be overconfident when generating the probability of a venture’s likely success. Wickham notes that care must be taken when extrapolating the results of experimental studies to ecological conditions. Nevertheless, there are clear implications for policy-makers, entrepreneurs and investors. Not least, the importance of developing communication strategies which benefit all parties. For example, Wickham suggests that entrepreneurs may gain more if they facilitate the investor’s risk judgement rather than trying to convince the investor that the venture faces a particular level of risk (as viewed by the entrepreneur).

Ossie Jones