The psychology of entrepreneurship

Entrepreneurs are often stereotyped in media and the society has numerous misconceptions. According to the stereotypes prevalent in the society, the media and the culture have been largely misunderstood. Entrepreneurs have an important role to play in accelerating the economic growth and job creation, it is substantial to understand what drives these entrepreneurs. There is a need for understanding the mind of an entrepreneur and what motivates them. We also need to understand what frustrates them or what stops an individual from becoming an entrepreneur. The economy largely relies on entrepreneurs due to their huge contribution to the growth and development. The perception of entrepreneurs influenced by media depends on rhetoric habits and not statistical data. The motive behind becoming an entrepreneur can be multi dimensional, contrary to the popular belief that it’s only for money. Money is not always the driving force. All entrepreneurs are individuals and have diverse personality traits. It’s very naive to treat them as a similar group and must not be done. Therefore there is a greater need to understand the psychology of entrepreneurs through statistical data and by carrying out extensive research.

Entrepreneurs are not identical to the popular stereotypes but they are different from employees. They have an intrinsic need for autonomy and want to take charge. They want to achieve their own goals and are highly motivated individuals. Between the sexes, female entrepreneurs are slightly more organised and ambitious while male entrepreneurs are more likely to take financial risks and slightly less emotionally stable. While male entrepreneurs focus on quick growth, female entrepreneurs plan for a steady rise. Entrepreneurs aged 50+ score the same on risk propensity, skills, innovation and initiative. They are in fact more artistic and liberal compared to their younger counterparts. As they are more experienced, they bring is greater knowledge and skills. Their fearless attitude towards financial needs and better understanding of the industries is another factor. Migrant entrepreneurs are generally more conserved and more liberal. They have a lesser need for autonomy and take quick decisions. They create 14% of all SME jobs and have a similar profile to national entrepreneurs but are slightly more conservative. They perceive financial stability and income as greater barriers than national entrepreneurs. Their strong belief in fate makes their decisions spontaneous. There are studies that prove that US entrepreneurs are the most innovative and most highly motivated by the idea of personal achievement. They score higher than other entrepreneurs in terms of many other traits. German entrepreneurs are the most competitive and emotionally stable while entrepreneurs in the UK are most extroverted. Entrepreneurs in Singapore are more agreeable and work better with a team than alone. Also they are more spontaneous than entrepreneurs from other countries.

The traditional belief system spread by media and the culture is that entrepreneurs are extroverted, organised and spontaneous. Ironically, entrepreneurs on an average scored slightly lower than employees in the tests for extroversion. Similarly, entrepreneurs are not necessarily organised or spontaneous individuals. The basic traits that differentiate an entrepreneur from the employees are the need for autonomy, motivation to achieve goals and self efficacy. The profiles of entrepreneurs differs amongst the various sectors too. Retail entrepreneurs are more extroverted compared to technological entrepreneurs. At the same time, technological entrepreneurs are more spontaneous. Not surprisingly, finance entrepreneurs score high on emotional stability and the ability to take risks.

The entrepreneur profile can be largely classified in two categories. For instance, Entrepreneur A is an ambivert, well organised, highly competitive, artistic and emotionally stable. This type of entrepreneurs are very similar to each other and share several character traits. On the other hand, Entrepreneur B is more traditional, focuses on teamwork, spontaneous and is in touch with emotions. This type of entrepreneurs can be further broken down into different categories to study their characteristics. Females usually fall in the Entrepreneur A category while men fall in the latter. This categorisation is not definite and is only a way of understanding basic character traits of entrepreneurs. While both men and women entrepreneurs show similar profiles, women are overall more ambitious and emotionally stable than men. They are also slightly more organised and extroverted. This can be due to the differences that culturally existed in the gender roles as women are also more careful when it comes to financial decisions while men focus on high growth and take risks more easily. The older entrepreneurs, let’s say aged 50+ score the same as young entrepreneurs in tests for risk propensity, innovation, initiative and need for autonomy. They are rather more experienced and can bring in years of polished skills to lead ventures of their own. They are rather more liberal and realistic and can give training to young entrepreneurs. They generally fall in the category of type A entrepreneurs. They are less affected by financial fears and have a greater sense of judgement and greater motivation to take their own decisions.

It’s fair to say that all entrepreneurs cannot be treated as a homogenous group and all of them exhibit different characteristics. Certain characteristics are similar to the stereotypes and some of them are absolutely opposite. There is another interesting thing for readers to note. To become an entrepreneur, only motivation is necessary, it can arise from the need for autonomy or the undying thirst for achievement. Entrepreneurs need to find what motivates them and once they do it, there is no turning back from there. They might not have the same characteristics as each other but one thing that each one of them has in common is the need to excel or high levels of motivation. There are multiple ways through which entrepreneurs can be encouraged and the level of entrepreneurial activity can be increased. To create a well balanced entrepreneurial ecosystem the support of policymakers, government and the entire society is important. In order to work towards creating an environment more suitable for entrepreneurs, understanding them is the first step and that is why the psychology of entrepreneurs becomes an imperative study.

Many studies have been carried out by institutions all over the world to study and understand the minds of entrepreneurs while some characteristics were similar to the ones stereotyped by the media, not all entrepreneurs exhibited those characteristics. It is not possible to treat them a group of people with identical personalities. They do have characteristics in common that differentiates them from the employees but those characteristics are not enough to put them in a homogenous group. They are significantly different from each other and the only thing that binds them together in this group called entrepreneurs is their limitless motivation.

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