In this section, we review the literature of the entrepreneurial
school. We then discuss some of our own research before summarizing
the key premises of this school. We close with consideration of the
contribution, limitations, and context of the entrepreneurial school.
THE GREAT LEADER IN THE POPULAR PRESS. Of all the writings about entrepreneurship,
the vast majority has been popular—in the spirit of the
"great leader" view of management—and can be found in the popular
press or in the biographies and autobiographies of famous tycoons of
industry and other notable leaders. Entrepreneurship can, for example,
be followed biweekly in Fortune, a magazine that tends to attribute
business success to the vision and personal behavior of the heroic
leader. "CEO Jack Smith didn't just stop the bleeding," reported a Fortune
headline on October 17, 1994. "With a boost from rising auto
sales, he made GM healthy again" (54). All by himself!
THE ENTREPRENEURIAL PERSONALITY. A second body of literature on entrepreneurship,
probably the largest in terms of empirical content, focuses
on the entrepreneurial personality. If entrepreneurship is really about
the decisions, visions, and intuitions of the single individual, then
short of researching individual cognition from a psychological point of
view (the subject of the next school), it stands to reason that the most
obvious thing to study is the traits of the successful entrepreneurs.
Unfortunately, much of this research is rather negative. Manfred
Kets de Vries, for example, referred to the entrepreneur as "the last
lone ranger" in a 1977 article (34), and published another in 1985 on
"The Dark Side of Entrepreneurship."
In a book called The Organization Makers, Collins and Moore
132 STRATEGY SAFARI
(1970) presented a fascinating picture of the independent entrepreneur,
based on a study of 150 of them. The authors traced their lives
from childhood through formal and informal education to the steps
they took to create their enterprises. Data from psychological tests reinforced
their analysis. What emerged is a picture of tough, pragmatic
people driven from early childhood by powerful needs for achievement
and independence. At some point in their lives, each entrepreneur
faced disruption ("role deterioration"), and it was here that they set
out on their own:
What sets them apart is that during this time of role deterioration they interwove
their dilemmas into the projection of a business. In moments of
crisis, they did not seek a situation of security. They went on into deeper
insecurity.... (134)
Among the various characteristics attributed to the entrepreneurial
personality have been strong needs for control, for independence, and
for achievement, a resentment of authority, and a tendency to accept
moderate risks. As Baumol summarized McClelland's (1961) wellknown
study, the entrepreneur is not a "gambler" or a "speculator,"
"not essentially a man who chooses to bear risks," but a "calculator"
(1968:70). (As we shall soon see, however, not all observers have accepted
this point.)
In looking into the "entrepreneurial" personality, a number of writers
have contrasted it with the "administrative" one. Stevenson and
Gumpert have suggested, for example, that "in making decisions, administrators
and entrepreneurs often proceed with a very different
order of questions."
The typical administrator asks: What resources do I control? What structure
determines our organization's relationship to its market? How can I
minimize the impact of others on my ability to perform? What opportunity
is appropriate?
The entrepreneur . . . tends to ask: Where is the opportunity? How do I
capitalize on it? What resources do I need? How do I gain control over
them? What structure is best? (1985:86, 87)
With respect to "strategic orientation," Stevenson and Gumpert deTHE
ENTREPRENEURIAL SCHOOL 133
scribe the entrepreneur as "constantly attuned to environmental
changes that may suggest a favorable chance, while the [administrator]
. . . wants to preserve resources and reacts defensively to possible
threats to deplete them" (87). Moreover, entrepreneurs "move quickly
past the identification of opportunity to its pursuit. They are the hawkers
with umbrellas who materialize from nowhere on Manhattan street
corners at the first rumbles of thunder overhead" (88). Hence their actions
tend to be "revolutionary, with short direction," in contrast to
the administrators' "evolutionary" actions, "with long duration" (89).
More recently, other writers in search of the entrepreneurial personality
have turned to the findings of the cognitive school. Busenitz and
Barney (1997), for example, concluded that entrepreneurs may exhibit
strong biases in decision making: they are prone to "overconfidence,"
also to "over generalize from a few characteristics or observations."
Nonetheless, "overconfidence may be particularly beneficial in implementing
a specific decision and persuading others to be enthusiastic
about it." Indeed "the window of opportunity would often be gone by
the time all the necessary information became available for more rational
decision making" (10). Palich and Bagby (1995) also found that
"entrepreneurs categorized scenarios significantly more positively than
did [their] other subjects . . . i.e., entrepreneurs perceived more
strengths versus weaknesses, opportunities versus threats, and potential
for performance improvement versus deterioration" (426). Bird
has taken this further, associating the entrepreneurial personality with
the Roman god Mercury, for better and for worse, as can be seen in the
accompanying box.
What then become the chief characteristics of the approach of such
personalities to strategy making? Some years ago, Mintzberg (1973)
suggested four:
1. In the entrepreneurial mode, strategy making is dominated by the
active search for new opportunities. The entrepreneurial organization focuses
on opportunities; problems are secondary. As Drucker wrote:
Entrepreneurship requires that the few available good people be deployed
on opportunities rather than frittered away on 'solving problems'"
(1970:10).
134 STRATEGY SAFARI
ARE ENTREPRENEURS MERCURIAL?
(from Bird, 1992:207)
Mercury's essence is transition . . . one of "floating freely . . . associative
wandering . . . apercu .. . backtracking and rhetorical repetition [and] .. .
stealth and thievery. Brainstorms, insights, lucky finds, intuitions, the play of
dreams .. . [are Mercury's domain]" (Stein, 1983:52). His style is simultaneous
or instantaneous linkage of places, people, and ideas. Through his activity,
conflicting parties reach agreement, resources are exchanged,
transitions occur.
Mercury also has the attributes of being crafty, deceiving, ingenious, and
suddenly and magically present. He is known for his resourcefulness, nimbleness,
subtle cunning, and in his role as messenger or herald is articulate
and important to the conduct of affairs. His attitude is ironic and unsentimental
We attribute many of these qualities to entrepreneurs. We see them as
creative, opportunistic, persuasive, and freer spirits than the "organizational"
man or woman. Empirical studies have found that many entrepreneurs
conform to the characteristics of Mercury, being socially adroit,
autonomous individuals with lower than average needs for affiliation, conformity,
succorance, and interpersonal affect
2. In the entrepreneurial organization, power is centralized in the
hands of the chief executive. Collins and Moore wrote of the founder-entrepreneur
as "characterized by an unwillingness to 'submit' to authority,
an inability to work with it, and a consequential need to escape
from it" (1970:45). Power here is believed to rest with one person capable
of committing the organization to bold courses of action. He or
she can rule by fiat, relying on personal power and sometimes on
charisma. In one Egyptian firm described years ago, but characteristic
of today's entrepreneurial firms nonetheless: "There is no charted plan
of organization, no formalized procedures for selection and development
of managerial personnel, no publicized system of wage and salary
THE ENTREPRENEURIAL SCHOOL 135
ENTREPRENEURSHIP AND PLANNING
(fromAmarBhide, 1994:152)
Interviews with the founders of 100 companies on the 1989 Inc. "500" list
of the fastest growing companies in the United States revealed that entrepreneurs
spent little effort on their initial business plan:
• 41 % had no business plan at all
• 26% had just a rudimentary, back-of-the-envelope type of plan
• 5% worked up financial projections for investors
• 28% wrote up a full-blown plan
Many entrepreneurs, the interview suggested, don't bother with wellformulated
plans for good reasons. They thrive in rapidly changing industries
and niches that tend to deter established companies. And under these
fluid conditions, an ability to roll with the punches is much more important
than careful planning....
Peter [Zacharkiw] did not conduct any research.... He placed an ad in
the Washington Post to sell his computer. He got over 50 responses and
sold his machine for a profit. Peter figured that if he had had 50 machines,
he could have sold them all and decided to begin selling computers from his
home "First, we sold to individuals responding to ads. But these people
were working for companies, and they would tell their purchasing agents,
'Hey, I know where you can get these.' It was an all-referral business. I gave
better service than anyone else. . . . After customers started asking for
Compaq machines, [his firm] became a Compaq dealer, and the business
really took off. "We're very reactive, not proactive," Peter observes. "Business
comes to us, and we react. I've never had a business plan."
classifications... . Authority is associated exclusively with an individual.
. . ." (Harbison and Myers, 1959:40-41). Vision replaces that
"charted plan." (See the box on entrepreneurs' reluctance to develop
formal plans.) As Drucker noted: