By Daniel Hunter
What does the modern entrepreneurs look like?
New research from Barclays and the University of Cambridge casts fresh light on the make-up of a modern entrepreneur, dispelling the myth they are all confident, lone wolves with tunnel-vision to success.
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 business creators scored higher on 10 of 13 key character traits identified as being prevalent in business creation, including achievement, motivation and the need for autonomy.
Yet it also revealed striking differences between entrepreneurs themselves, with two distinct types emerging: one set, the Type As, who are artistic, well-organised, highly competitive and emotionally stable; and the other Type Bs, who tend to be traditional, conservative, disorganised, spontaneous and focused on team-working.
This diverse picture is in stark contrast to popular culture’s identikit image of fearless, independent disruptors in the style of Mark Zuckerberg or James Dyson.
Vesselin Popov, Development Strategist at the University of Cambridge’s Psychometrics Centre, led the team overseeing the study on behalf of Barclays. He said: “These psychometric results debunk the myth of the CEO superhero. Entrepreneurs do differ from employees but as a group, they are still incredibly diverse and often misunderstood.”
Greg B Davies PhD, Head of Behavioural and Quantitative Finance at Barclays, added: “Entrepreneurs have an important role in supporting economic growth and social progress. Yet they are often incorrectly viewed as one homogeneous group. 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.”
To better understand the range of cultural and demographic factors influencing entrepreneurs the study delves deeper into three specific subsets: females; seniors (those over the age of 50 who started their own business); and migrants. Again, the distinctive profiles of each group are clear.
• Are more modest than men, with just 42% saying their business is prospering compared to 62% of males. This is despite the fact female-run businesses were shown on average to report higher pre-tax profits.
• Show greater entrepreneurial ambitions, with 47% of them claiming they are very/extremely interested in starting another business in the next three years compared to 18% of men.
• Tend to strive for steady, profitable expansion and prefer to re-invest business profits than take equity investment. Male entrepreneurs are more likely to take risks in order to achieve fast growth and a quick exit.
This mirrors findings in another recent study between Barclays and The Centre for Entrepreneurs, which found female entrepreneurs are more likely to work towards controlled, profitable growth, and avoid 'fool-hardy' risks that may endanger the livelihood of their employees or their own financial situation.
• View ‘freedom to make decisions’ as the main incentive for starting a business, with 70% citing this reason compared to just over half of those aged under 50.
• Exhibit the same propensity for risk, innovation, initiative, self-efficacy and autonomy as younger entrepreneurs, but are more motivated by the prospect of personal success.
• Are more liberal, artistic and well-organised, and score above average for extraversion. This paints a picture of open, outgoing and conscientious leaders.
• Are behind one in seven UK companies and create 14% of all SME jobs.
• Have a similar psychological profile to national entrepreneurs but tend to be more conservative with a lesser need for personal autonomy.
• Are more likely to believe in luck or fate, and act spontaneously as a result.
• Perceive income and financial stability as more significant barriers to business creation than nationals.
Foreign entrepreneur and owner of start-up networking business Intros.at, Jay Patel, agrees. He said: “For many foreign entrepreneurs, starting a business is about taking control of their own destiny, which can bring a bigger fear of failure too. But as a migrant, you’re also more likely to be more spontaneous because it often requires that kind of mind-set to relocate to a new country in the first place.”