When Sonia Strobel married into a fishing family in 2001, she was surprised to see what it was like to be in the fishing community on the British Columbia coast and struggle to make a living in this traditional way of life. She decided there had to be a better way and soon started Skipper Otto, a direct-to-consumer, community-supported fishery. “I was a high school teacher, I had just given birth and thought, ‘How hard can it be to start a business?’, so I naïvely went ahead. I wasn’t even thinking it was business; it was just a thing that needed to be done. It was stupid that it didn’t exist.”
Nothing in particular indicated that Sonia was born to be an entrepreneur, nor was she somehow “turned into one” by outside forces. Yet, thirteen years after its founding, Skipper Otto supports 40 fishing families in coastal BC and the Arctic, and counts over 7,500 members across Canada.
What makes an entrepreneur?
In the past 15 years, the celebration of entrepreneurs as members of the creative class has opened doors to new ways for individuals to rely on themselves to improve their own circumstances and, by extension, to contribute to society as a whole. Entrepreneurship plays an enormous role in national economies through job creation, productivity, and long-term economic growth and, as it soars in desirability globally, supporting its development has become a priority. But who to support and how to decide? Why do entrepreneurs emerge? To what extent does government policy and other institutional support play a role in promoting entrepreneurial talent?
The Global Entrepreneurship Monitor (GEM) 2021/2022 Global Report recently flagged a notable rise in the number of new ventures whose expectation for growth is low. In twenty-five percent of the economies studied, over half of those starting or running a new business expected to employ no one but themselves in five years.
In tandem, as of September 2021, after a pandemic-fueled 2020 surge that accelerated the demise of companies with weaker value propositions and supercharged the development of new technologies and ventures, 800 unicorns (private companies with a valuation of more than US$1 billion) emerged globally.
With so much at stake in this context of extremes, we’ve witnessed a push to gain reliable insights into factors that influence new venture creation and performance, starting with the entrepreneurs themselves. Who are the “real” value creators? The elusive transformational entrepreneurs driven by opportunity and the potential for high-growth, or the numerous small business owners — which, for our purposes we’ll define as sole proprietorships or enterprises with less than $2 million in annual revenue — seeking an alternative, or better, source of employment? One is a driver of disruption and job creation, the other an engine of social mobility and greater community strength and resilience. Both are needed. Each evolves differently.
Accounting for difference
General understanding of entrepreneurship is often influenced by Schumpeter’s 1965 definition that focusses on the creation of new, innovative, market-shaping ventures and gave rise to the lore of lone geniuses braving disruptive waters, “exploiting market opportunity through technical and/or organizational innovation”.
Since then, academic inquiries into entrepreneurial personality and its link to venture creation and venture performance have remained largely incomplete or inconclusive. As a result, our collective understanding of entrepreneurs, as humans with particular needs, fears, and behaviors, is imprecise, offering few reliable predictors of reactions to economic climate, policies, and support systems.
As it stands, many Entrepreneur Support Organizations (ESO) focus exclusively on transformational entrepreneurship, while development policies — often more so in emerging economies driven by international donor programs — set their sights on subsistence entrepreneurship or Small and Medium Businesses in the hope of fostering more transformational entrepreneurs. Though this expected progression of the pursuit of growth might seem logical, evidence suggests that, even in mature ecosystems, Main Street entrepreneurship is rarely a stepping stone to transformational entrepreneurship.
So what do we know about the various dimensions that might impact entrepreneurial pursuits?
Intrinsic motivation as a primary driver
To go beyond the limitations of the Big-5 framework (which is used to outline personality traits in general), researchers added new dimensions to try to paint a more accurate portrait of transformational founders that might shed light on entrepreneurial attitudes and decisions. Namely: self-efficacy (the ability to complete a specific process or steps and achieve a desired outcome), innovativeness, locus of control (the belief that our decisions, rather than external forces, control our lives), need for achievement, and a propensity for risk-taking.
By contrast, solopreneurs or Main Street entrepreneurs’ motivation to take the plunge is thought to be that no other suitable option is present to support themselves or their families. The choice to act to launch a new venture, however, is still a common trait even when comfort with risk-taking, locus of control, and innovativeness are not present to the same degree.
Socio-cultural climate & economic policy
Intrinsic motivation and self-efficacy are not the only triggers of new venture creation and development. External factors such as policy and economic climate are, obviously, key influencers. Rigid labor markets, for example, restrict the creation of new and larger businesses and overall uncertainty might discourage potential founders who are employed from moving forward for fear of failure.
For self-employed entrepreneurs, engaging in a path of growth might not even be a consideration if right-sized funding, training, and support are inaccessible or inadequate.
On a more social level, recent studies show that “culture may impact on important individual beliefs, which in turn determine whether or not nascent entrepreneurs succeed in creating operational ventures”. Performance-based cultures will fuel entrepreneurial motivation and a perception of robust institutional support — such as access to vibrant, diverse, and connected entrepreneurial ecosystems — will contribute to entrepreneurs’ self-efficacy and skill development. In other words, thinking you can become an entrepreneur plays a role in making it more likely that you’ll make it so.
Meeting entrepreneurs where they are
We know the why and the how individuals embark on their entrepreneurial journey matters, but so does where they do it. Many entrepreneurs, regardless of their motivation, start businesses where they live or work, making local support systems and community-level cultural beliefs and practices particularly influential in taking that risk and getting a venture off the ground.
“I can remember that very first year”, Sonia explains, “I made a website — this is 2008 — and it said: ‘Hi! We’re a fishing family. Mail us a check for $250, we’ll get you some fish. Thanks!’ And 40 people mailed us a check for $250. They didn’t know us and they trusted us. But they wanted to invest in it, share that risk.”
All entrepreneurship can be valued and lauded for driving vibrant economies and fueling innovation and social mobility. Improving our understanding of the key differences between individuals who embark on the entrepreneurial adventure is an opportunity to design visible, accessible onramps, support systems and policies that respond more effectively and holistically to their unique abilities, aspirations, and needs, whilst providing a more inclusive definition of entrepreneurship.
The global fascination with the entrepreneur persona will continue to fuel research into the correlation between character traits and venture performance. We’ll keep hoping to find the key to breeding unicorns. And folks like Sonia will keep showing the world that sometimes you don’t need a mythical creature to conjure transformation and have a lasting impact on people, planet, and profit.
