Organizations and Markets

Entrepreneurs are Both Born and Made, in the Interactional Sense

17 June 2007 at 5:22 pm hsiehc 2 comments

| Chihmao Hsieh |

Well, I’ve coddled this paper long enough, perhaps I should begin to set it free amidst that bit of shameless self-promotion. In a manuscript entitled “Cognition and the interaction between traits and training: the entrepreneur is both born and made,” I argue and provide evidence that an individual’s intelligence and the mode by which they train in multiple domains interact to determine the probability of self-employment. Not yet inclined to throw this up on SSRN just yet, but certainly happy to forward along a copy to interested parties (in hopes of receiving comments!). Just email me at hsiehc at umr dot edu… Below is the long abstract.

ABSTRACT: Some research studies have argued that entrepreneurs are ‘born.’ Specifically entrepreneurs differ from non-entrepreneurs in terms of enduring human traits. Other past research argues that entrepreneurs are strictly ‘made.’ Here entrepreneurs are those individuals who simply have acquired knowledge either in-depth in a domain or broadly across domains. Yet, both of these general views are questionable. Not only have empirical studies shown that entrepreneurs do not seem to differ from non-entrepreneurs with respect to personality or other enduring human traits, but the knowledge-based research typically does not account for cognitive abilities that differ across the population.

In response, this paper argues that each entrepreneur is both born and made. Specifically, individuals become self-employed after acquiring and developing enough knowledge to create or otherwise identify valuable opportunities on their own. They can acquire and develop this knowledge in either of two ways: via separated learning or concomitant learning. Concomitantly learning domains is generally more likely to lead to entrepreneurship than separated learning because ‘connections’ detected across domains during concomitant learning are particularly valuable to help in the discovery of opportunities in later periods. Yet, the positive effects of separated learning on the likelihood of entrepreneurship are more strongly amplified when individuals are particularly intelligent: simpler, better-developed knowledge structures corresponding to separated learning can be juggled and managed to effectively solve problems when intelligence (or the ability to reason) is high. Intelligence and mode of training interact to determine not only who can create or otherwise discover opportunities but also who chooses to become self-employed in order to appropriate opportunity value.

The empirical analysis broadly supports the hypotheses. Data from the SESTAT database created by the National Science Foundation is examined via binary logit regressions. Indeed I find that concomitantly learning a number of domains is more likely to lead to self-employment than learning those domains separately. Furthermore, proxying for intelligence via level of education attained (e.g. Bachelor’s, Master’s or Doctoral degree), I find that those who are more intelligent are more likely to benefit from additional separated learning than additional concomitant learning, in the context of future self-employment.

Entry filed under: Entrepreneurship, Former Guest Bloggers, Management Theory, Strategic Management.