Research reveals that entrepreneurs don't all carry the same psychological make-up, with gender and age having a marked impact on their approach and attitude to business
Entrepreneurs are often regarded as a different breed of human being – one that's seemingly programmed with a higher level of confidence and risk appetite than the mere mortals among us. However, new research from Barclays and the University of Cambridge suggests such preconceptions may have been somewhat misguided.
The Psychology of Entrepreneurship study examined the views and psychometric profiles of more than 2,000 entrepreneurs and employees in the UK, Germany, Singapore and the US. It found that entrepreneurs scored higher than employees on 10 of 13 key character traits identified as being prevalent in business creators, including achievement, motivation and the need for autonomy. However, it was when the study delved deeper into the entrepreneurial pool that some differences began to emerge. The study distinguished between two distinct types of entrepreneur: the Type As, who are artistic, well-organised, highly competitive and emotionally stable; and the Type Bs, who tend to be traditional, conservative, disorganised, spontaneous and focused on team-working.
The study also broke down the entrepreneurs into three specific subsets – females, seniors and migrants – and there were again distinct traits that characterised each group.
Female entrepreneurs were found to be more modest than men, with just 42% saying their business is prospering compared to 62% of males. This despite the fact that female-run businesses were shown on average to report higher pre-tax profits. Nevertheless, women were revealed to show greater entrepreneurial ambitions, with 47% claiming they are very or extremely interested in starting another business in the next three years compared to 18% of men. Finally, female entrepreneurs are generally more risk-averse than their male counterparts, tending to favour steady, profitable expansion and the reinvestment of profits over equity investment, fast growth and a quick exit.
As for the senior entrepreneurs – those above the age of 50 who have started their own business – 70% cited the 'freedom to make decisions' as the main incentive for setting up an enterprise; while less than half of those aged under 50 regarded it as an influencing factor. And whereas the older generation may exhibit the same propensity for risk, innovation, initiative, self-efficacy and autonomy as younger entrepreneurs, they were revealed to be more motivated by the prospect of personal success. They are also more liberal, artistic and well-organised and score above average for extroversion. This, according to the study, paints a picture of open, outgoing and conscientious leaders.
Meanwhile, migrant entrepreneurs, who are behind one in seven UK companies and create 14% of all SME jobs, have a similar psychological profile to native entrepreneurs but tend to be more conservative with less need for personal autonomy. In addition, migrants are more likely to believe in luck or fate – leading to spontaneous behaviour – and perceive income and financial stability as more significant barriers to business creation than natives.
“Entrepreneurs have an important role in supporting economic growth and social progress. Yet they are often incorrectly viewed as one homogeneous group," said Dr Greg B Davies, head of behavioural and quantitative finance at Barclays. "This study directly challenges that misperception with a much more varied picture of success. Indeed, some of the characteristics we found, such as introspection, actively counter society’s popular stereotypes.”
Therefore, when it comes to entrepreneurs, it's probably better not to judge a book by its cover.