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Opinions of Thursday, 14 February 2008

Columnist: Oppong, Seth

Are successful entrepreneurs born or made? A psychological Analysis

“Unemployment is high in Ghana” is a common statement that Ghanaians will utter regardless of their political party affiliation. While others blame that on the government policies failing to generate employments (such criticism is justified since the politicians, NPP, NDC or CPP, usually promise Ghanaians job creation leading unreasonably high expectations of them), still others think that individuals should take advantage of de-regulation and liberalization of the economy to create their own jobs. The essence of this article is not to decide which school of thought is right but to assume that analyses from both schools have the potential to offer Ghana enormous recommendations in way of job creation. My own thought on this debate is that there should be public-private sector partnership in the job creation business: whiles government does its part to create jobs or create enabling environment for the private sector, the private sector should perform its part of the “deal” in arresting unemployment. Against this background, I offer to focus on entrepreneurship as a way of creating jobs and arresting unemployment in Ghana. It is important also to note that what I present here is a psychological analysis that will supplement what we already know from economics, business and finance.

Why do our graduates complain of not having jobs instead of creating jobs themselves? Are entrepreneurs born or made? To say that successful entrepreneurs are born is to say that only individuals with certain characteristics or dispositions can become successful entrepreneurs and that all attempts at developing entrepreneurs in Ghana is a wild goose chase. However, to say that entrepreneurs are made presupposes that just anyone given the right environment and resources can be a successful entrepreneur and that entrepreneurial development programmes in Ghana are useful and required. Will I become a successful entrepreneur because of my knowledge of psychology of entrepreneurship? The resolution of this dilemma is not an easy task at all given the enormous evidence supporting both arguments in the psychology of entrepreneurship literature. Interestingly, both perspectives acknowledge that successful entrepreneurs can be differentiated from unsuccessful ones whether in terms of personality (traits approach) or acquirable competencies (behavioral approach). What do we know about both approaches? What we know about personality and behavioral skills of successful entrepreneurs was derived from empirical studies that identified from a list of traits and skills those that differentiated entrepreneurs/founders from managers/non-founders or those that accounted for entrepreneurial emergence or start-ups.

At the moment, industrial/Organizational psychologists* through our research have found that certain personality traits can distinguish successful from unsuccessful entrepreneurs. These traits include the following:

• High need for autonomy: – such individuals crave for independence and opportunity to exercise discretion in their daily lives. It manifests itself as a need to become one’s own boss because they are unwilling to submit to authority in a pre-structured organization.

• High personal control: - also referred to as high internal locus of control describes people who in their daily lives believe that they can control their destiny rather than attributing that to chance or other external forces. The essence of this is that such individuals believe that they can achieve whatever they set their minds on because to them effort and ability are key drivers of performance in any undertaking, even though they may believe in God. Such people will not blame witches for failing exams or will not think that passing exams is due to luck. • High risk-taking propensity – such individuals have high tolerance for risk. “No risk, no gain”, yet some people have less tolerance for risk. • High self-efficacy (belief in one’s ability to successfully execute some given specific tasks) – this is different from self-esteem (our sense of worth) in that the former is very specific whiles the later is more general and across situations. Belief in one’s ability to successfully set up and manage a new venture is vital. Just that belief?

• High achievement motivation (AM) – such individuals have a need to succeed, set moderately difficult goals, desire for feedback, and are self-motivating. The good news is that achievement motivation can be developed by just anybody with the right achievement motivation training (AMT) programme. Indian businessmen have been taught AM leading to business growth, though AM was developed by an American psychologist. In AMT programmes, people are taught to think, talk and act as people with high achievement motivation. They are taught the behavioral patterns that underlie the trait.

What has the behavior perspective to offer? This perspective holds the belief that entrepreneurship has a set of competencies that can be learnt or acquired through appropriate academic programs, entrepreneurship training or coaching. The most important finding is that successful entrepreneurs are multi-skilled. Two sets of competencies can be identified in the literature: general and specific. The lists are not intended to be exhaustive rather illustrative. General competencies:

• Social skills – impression management (management of other’s perceptions of you), social adaptability, social perception and persuasive skills.

• Technical skills – tasks specific skills such knowledge of retailing for someone in retail business; knowledge of the business in which one is operating, i.e. industry-specific knowledge

• Managerial skills – management experience, people management, SWOT and PEST analyses, investment management, etc.

• “New resource skills”- skills in finding needed capital and human resources Specific competencies:

• Assertiveness – telling people what you want without being aggressive and ability to stand for one’s rights.

• Commitment to work

• Initiative

• Systematic planning

So what are the recommendations? Should we adhere to one perspective to the neglect of the other? It seems both perspectives contribute meaningfully to our understanding of entrepreneurship. My take on it is that since there is no conclusive evidence now about the relative contributions of personality and human capital to entrepreneurial emergence and success (there is some evidence that personality contributes more), taking a stance that recognizes “co-determination” is vital at this moment. Though I agree that personality traits are relatively stable and can’t easily be changed, I also believe that the behavioral patterns that underlie them can be modified through appropriate behavior modification strategy – role playing, cognitive restructuring, modeling, etc. Besides, that fact that personality traits discussed in this article are highly related to one another and since AMT programmes are successful in improving entrepreneurship, one will expect that through appropriate behavior-based programmes such traits can also be taught. Conclusions:

• Entrepreneurs can be made; as a result, entrepreneurship education should be encouraged. How many of the graduates take courses in entrepreneurship?

• Available academic programs are inadequate. We must supplement them with programs that teach the competencies and those that aim at changing behaviors. Behavior-based programmes are therefore needed as supplements.

• To maximize the gains of entrepreneurship education, institutions that offer such education may elect to select individuals high on the personality traits discussed – personal control, achievement motivation, self-efficacy, autonomy, and risk-taking propensity. People high on these traits will achieve entrepreneurial growth than those low on them, given the same entrepreneurship education, all other things being equal.

• Executive coaching is needed to assist the owner-managers of the sprouting SMEs in Ghana to develop the set of competencies needed for entrepreneurial success or growth (successful start-up doesn’t translate into growth). In this regard, consulting is very important. Are there professional executive coaches in Ghana? The concept is similar to professional managers or coaches of footballers. It may be a new concept.

Don’t you think we should not blame our graduates so much? Available academic programs alone don’t make successful entrepreneurs let alone those who didn’t have it as part of the education. Those familiar with leadership theories will recognize that the issue of whether entrepreneurs are born or made is similar to whether leaders are born or made. Should we also say that it depends on the situation and develop contingency theories of entrepreneurial success? Which of the two frameworks will be more appropriate: trait-based contingency or behavior-based contingency theory? I believe they both are important to understanding entrepreneurial success in Ghana. Contingency approaches will prevent “squares” from filling “round” holes.

Seth Oppong * Industrial/Organizational (I/O) Psychology is one-third mathematics, one-third business and one-third psychology. In fact, I/O psychology is all about applying psychology to the workplace.

Views expressed by the author(s) do not necessarily reflect those of GhanaHomePage.