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Table of Contents
Abstract
Keywords
Overview
Entrepreneurship Defined

Application
Personality Traits of Entrepreneurs
Entrepreneurial Exemplar

Overview
As a global economic driver, entrepreneurship adds real value
through the creation of new jobs and the production of innovative products and services. In short, entrepreneurship promotes
the generation of wealth. Yet, a review of the literature indicates many definitions of entrepreneurship have been conceived
over the years by researchers in the field. A single, commonly
accepted definition of the term is simply nonexistent though
common elements tend to meet across the spectrum. Given this
conundrum, a functional definition of entrepreneurship is necessary upon which to base our discussion. What follows is a brief
history lesson of entrepreneurship so as to calibrate the proper
perspective, followed by a working definition of the term.

Global Entrepreneurship

Entrepreneurship Defined

Demographics

The origin of the word entrepreneurship is derived from the

French word entreprende which means to undertake, as in
undertaking a particular activity. Likewise, some researchers
give credit for the word entrepreneur (in a business context) to
eighteenth century French businessman Richard Cantillon who,
in his published work Essai Sur la Nature du Commerce en
General, described entrepreneurs as undertakers engaged in
market exchanges at their own risk for the purpose of making a
profit (as cited by Roberts and Woods, 2005, p.46).

Conclusion
Terms & Concepts
Bibliography
Suggested Reading

Abstract
This article focuses on the concept of entrepreneurship from its
nascent beginnings, to the present day period. First, we shall
review the various definitions applied to entrepreneurship, concluding with a fundamental definition of the term. Next, well
consider entrepreneurial trait characteristics associated with successful entrepreneurship, highlighting a real-life entrepreneur
as a prime example. Also, well explore entrepreneurship in its
global context examining the latest findings of a global survey
involving 42 countries, relating to entrepreneurship traits, motivations, demographics, and types of ventures undertaken.

Definitions of entrepreneurship are generally situated within

three broad categories: the occupational notion of entrepreneurship, the behavioral notion, and entrepreneurship on the basis
of new venture creation. The occupational notion of entrepreneurship refers to owning and managing ones own business
enterprise. Its practitioners are called entrepreneurs, selfemployed or business owners (Sternberg & Wennekers, 2005
p.193). An early nineteenth century pioneer of the occupational
notion (and behavioral notion) is French economist Jean Baptiste
Say. According to Say, the entrepreneur is a business owner who
creates value by transforming economic resources from areas of
low productivity into areas of higher productivity, which in turn
provide greater yields (Say, 1855). In essence, the entrepreneur
is a creator of value.

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Entrepreneurship

Keywords
Economic Development
Entrepreneur
Entrepreneurship
Innovation
Small Business
The behavioral notion on the other hand, emphasizes the act of
entrepreneurs recognizing and seizing economic opportunity,
engaging in innovative practices, or assuming entrepreneurial
risk i.e. pursuing new untapped markets, developing product
innovations, etc. In fact, according to this behavioral notion,
entrepreneurs need not be business owners - they may be what
are referred to as intrapreneurs (Sterner and Wennekers, 2005).
Contextually situated in ongoing businesses, intrapreneurship (also known as corporate entrepreneurship) encourages
organizations employees to engage in innovative entrepreneurial behavior. According to Pinchot (1985) - originator of the
intrapreneurship concept - the intrapreneurial employee is an
opportunistic innovator, engaging in creative business practices
within their respective organization - introducing new products
and services, production processes, methods of distribution, etc.;
all of which are pursued in the hope of achieving greater organizational growth and profits. However, in our present context,
entrepreneurship should not to be substituted for or confused
with the term intrapreneurship.
Referring back to Cantillon, his work provided the intellectual
foundation for three prominent twentieth century economic theorists, falling under this behavioral notion of entrepreneurship, i.e.
Joseph Schumpeters emphasis on the role of the entrepreneur
as an innovator, Frank Knight stressing entrepreneurs willingness to assume risk, and Israel Kirzner highlighting the pursuit of
entrepreneurial opportunity (Roberts and Woods, 2005).
Joseph Schumpeter, a noted University of Chicago economist,
identifies entrepreneurial innovation as a key driver in economic
development. His definition of entrepreneurship focuses on new
combinations of innovative behaviors felt to embody entrepreneurial behavior:
1) Developing new and innovative products;
2) Proposing new forms of organization;
3) Exploring new markets;
4) Introducing new production methods;
5) Searching for new sources of supplies and materials
(Schumpeter, 1975).
Frank H. Knight, another notable University of Chicago economist, offers that it is the willingness to assume risks in the face
of uncertainty that distinguishes entrepreneurship. For example,

Essay by Edwin D. Davison, M.B.A., J.D.

risks such as a possible loss of business capital or the personal

financial security risk associated with the uncertain outcome
of an entrepreneurial undertaking (Knight, 1921). On the other
hand, leading economist Israel Kirzners theory of entrepreneurship focuses on the detection of entrepreneurial opportunities for
profit, which requires an alertness of opportunity. It is this alertness which allows the entrepreneur to exploit market arbitrage
opportunities that have been overlooked or gone undiscovered
by others; arbitrage being the identification of undervalued factors of production and then selling them for an amount higher
than the purchase price (Kirzner, 1973).
Similarly, acclaimed management theorist Peter Drucker, states:
Entrepreneurs see change as the norm and as healthy. Usually,
they do not bring about the change themselves. But, and this
defines the entrepreneur and entrepreneurship - the entrepreneur
always searches for change, responds to it and exploits it as an
opportunity (Drucker, 1985, p.28). In defining entrepreneurship, the general public most often associates entrepreneurship
with small business ownership. According to Drucker, the act of
starting or owning a small business does not in itself make one
an entrepreneur, so much as the ability to innovate and exploit
opportunity.
Carland (1984) follows a similar track, pointing out that one
may be a small business owner but not necessarily engaged in
entrepreneurship. He posits that while an entrepreneur and small
business owner may establish and manage a business for profit,
what sets the entrepreneur apart is the ability and willingness to
employ innovative techniques and ways of thinking, as well as
strategic management practices in the enterprise.
A more recent conception of entrepreneurship focuses on a more
direct approach, defining entrepreneurship as new venture creation. Gartner (1988) believes entrepreneurship to be the act of
creating organizations. What differentiates entrepreneurs from
non-entrepreneurs is that entrepreneurs create organizations,
while non-entrepreneurs do not (Gartner, 1988, p.11). In simple
terms, this concept of entrepreneurship focuses on the establishment of new business enterprises which create value.
Clearly, definitions for entrepreneurship are far from uniform
and each has its own merits. However, for the present dialogue,
the most appropriate definition is that devised by The Global
Entrepreneurship Monitor (sometimes referred to as GEM).
Similar to Gartner (1988), GEM defines entrepreneurship as
Any attempt at new business or new venture creation, such as
self-employment, a new business organisation, or the expansion
of an existing business by an individual, teams of individuals, or
established business (Harding, 2004, p.9). Later in this article,
the purpose of GEM will be discussed, including a review of the
latest research findings concerning global entrepreneurship.

Application
Personality Traits of Entrepreneurs
A great deal of empirical research on the traits of successful
entrepreneurs was conducted in the 1980s and 1990s. An early

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Entrepreneurship

forerunner of entrepreneurial trait research is Harvard psychologist David McClelland (1961), who found that entrepreneurs are
inclined to have the following characteristics:
1) High need for achievement Entrepreneurs display a
higher need for achievement than the general population, and
hence are motivated by this high achievement need.
2) Moderate risk taking propensity - Entrepreneurs tend to
be moderate risk takers. Unlike the common misconception,
entrepreneurs are not the high rolling speculative gamblers
that some associate with entrepreneurship. In short, entrepreneurs have a decided willingness to take calculated risks with
a reasonable probability of success.
In addition to the characteristics shown above, J.A. Timmons
study of entrepreneurial traits (as cited in Zimmerer and Scarborough, 1996) lists a number of trait characteristics associated with
successful entrepreneurs:
Commitment and determination;
Desire to accept responsibility for their ventures outcome;
Opportunity Obsession constantly seeking out of opportunities;
High self-confidence in themselves;
Creativity and flexibility in problem solving;
Desire immediate performance feedback;
High levels of energy;
Future oriented i.e. possess a long-term perspective;
Willingness to learn from failure they are not unafraid of
failure;
Visionary leadership ability.
It is important to note that successful entrepreneurs may or may
not possess the majority of these characteristics, and in some
cases, they may possess more of one trait and less of another.
History dictates that entrepreneurs come in all shapes and sizes,
yet these personal qualities serve as a general guide on what is
known about the personality traits most associated with entrepreneurs.
Entrepreneurial Exemplar
An excellent example of a highly successful entrepreneurial venture is Federal Express and its founder and CEO Frederick K.
Smith. The following narrative provides ample evidence of the
entrepreneurial prowess of Fred Smith, displaying risk-taking,
opportunity-seeking and innovative behaviors (American Enterprise Online, 2004).
Risk Taker - While a student at Yale University in the mid
1960s, Fred Smith wrote an economics paper on the shortcomings of the delivery system for the air freight industry.
He received a grade of C for his efforts, yet he persisted
with his idea. In 1971, after serving four years of active

Essay by Edwin D. Davison, M.B.A., J.D.

duty as a pilot in the U.S. Marine Corps, (including tours in

Vietnam) he started a company called Federal Express. In
the early stages, Federal Express nearly went bankrupt, and
didnt turn a profit until 1975, but now the company delivers
almost 2 billion packages annually in over 200 countries.
So, in spite of receiving an average grade by his college
professor, and almost going bankrupt in the early years of
FedExs operation, Fred Smith persisted in spite of the risks
and made his company the global standard that it is today.
Opportunity Seeker - The impetus for Federal Express
rested on Smiths identification of an unrecognized opportunity - an air freight transportation system that could deliver
packages faster, cheaper, conveniently, and more reliably
than had ever been done previously. In addition, Smith
recognized that FedEx was selling more than a delivery
service it was also in the business of selling knowledge.
This knowledge asset is predicated on the ability to show
customers the exact location and expected delivery of their
packages - in real-time.
Innovator - A number of Federal Express innovations
include the pioneering use of hand-held computers and
satellite transponders on delivery trucks, to keep track of
packages and accurately estimate expected delivery times.
Also, in order to eliminate the uncertainty of late package
deliveries - FedEx guarantees a full refund for failure to
provide on-time delivery. FedExs just-in-time delivery system is especially important to businesses in that it reduces
costly in-house inventory holding costs. As a result, logistics
expenses (delivery costs, inventory warehousing cost, etc)
have gone from 16% of US gross domestic product (GDP)
to less than 10% GDP - resulting in tremendous savings to
businesses and consumers worldwide.
Obviously, Frederick Smith embodies the spirit of entrepreneurship to the highest degree. With forward thinking, and the
ability to think outside the box, Frederick K. Smith and Federal
Express, created a new paradigm in the air freight industry, spurring economic growth and opportunity via just-in-time delivery
of overnight packages. FedEx is nothing short of revolutionary
in many of its business practices.
Global Entrepreneurship
With the increasing globalization of the worlds economies,
the entrepreneurial mode of thinking must embrace a global
mind-set. In line with this thinking, well proceed with an examination of what is known about global entrepreneurship based
on the Global Entrepreneur Monitor Results 2006 (Bosma and
Harding, 2006), from a survey of respondents in 42 countries
(Argentina, Australia, Belgium, Brazil, Canada, Chile, China,
Colombia, Croatia, Czech Republic, Denmark, Finland, France,
Germany, Greece, Hungary, Iceland, India, Indonesia, Ireland,
Italy, Jamaica, Japan, Latvia, Malaysia, Mexico, Netherlands,
Norway, Peru, Philippines, Russia, Singapore, Slovenia, Spain,
Sweden, Thailand, Turkey, South Africa, United Arab Emirates, United Kingdom, United States, and Uruguay). Initially the

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Entrepreneurship

GEM research project began in 1999 with 10 member countries

and will include 50 member countries in the year 2007. The project is the largest global study of entrepreneurship in the world,
with a purpose of providing annual assessments of the national
levels of entrepreneurial activity. Specifically, well examine the
types of entrepreneurial activity, entrepreneurial traits and motivations, and demographic profiles.
In order to make proper use of the GEM data, a number of
clarifications are necessary. GEM establishes two categories of
entrepreneurs - early stage and established - defined as:
Early stage entrepreneurs are those involved in owning and
managing, alone or with others, a nascent business or one
that has not been in operation for more than 42 months.
Established entrepreneurs, instead, are those involved in
owning and managing, alone or with others, a business that
has successfully survived in the market for more than 42
months, the approximate critical period within which a business is more likely to fail.
GEM considers early stage entrepreneurship to be a good measure of the predisposition for entrepreneurial activity in a given
country. Likewise, established entrepreneurs are used as a key
indicator of the sustainability of entrepreneurial ventures. In analyzing these global entrepreneurial proclivities, GEM data makes
a distinction between middle and high income countries based
on per capita GDP. Overall, countries with similar per capita GDP
tend to display similar levels of entrepreneurial activity. Earlystage entrepreneurship is generally higher in countries with lower
levels of GDP. Conversely, early-stage entrepreneurial activity is
relatively lower in high income countries. Countries with higher
early-stage entrepreneurial activity also tend to have higher rates
of established business ownership.
Venture Types - In order of preference, most early-stage entrepreneurs and established business owners have businesses in
consumer service activities (retail, restaurants, lodging, health
and social services, education, recreation). Next are transformation businesses (construction, manufacturing, transportation,
and wholesale distribution), followed by business to business
services, and businesses extracting products from the natural
environment (timber, mining, agriculture, etc.).
Traits - In comparing entrepreneurs and non-entrepreneurs
traits, entrepreneurs tend to be more self-confident in their own
skill-set, and they tend to be much like the opportunity-seekers
described earlier by Knight (1927), in that they are more alert
to the existence of unexploited market opportunities. Also, in
line with other empirical research, entrepreneurs tend to be less
apprehensive of failure than non-entrepreneurs.
Motivations - In this global environment, what motivates individuals to engage in entrepreneurial behavior? GEM data reveal
that individuals are motivated to start new business ventures for
two main reasons:
1. They want to exploit a perceived business opportunity (opportunity entrepreneurs). GEM data reveals that most early

Essay by Edwin D. Davison, M.B.A., J.D.

stage entrepreneurs tend to be opportunity entrepreneurs.

2. They pursue entrepreneurship because all other options for
work are either absent or unsatisfactory (necessity entrepreneurs).
Findings indicate the rate of opportunity entrepreneurship is much
higher than necessity entrepreneurship in high GDP countries
than in middle GDP countries. Also, necessity entrepreneurship
is relatively more common in middle GDP countries than in high
GDP countries. This may be due to the fact that higher income
countries tend to also have lower rates of unemployment, indicating more choices for generating a living wage, thus creating
less of a need for entrepreneurship as a survival mechanism.
Demographics
Gender - Men are more likely to start businesses than women.
In both high and middle income countries, the rate of male
opportunity entrepreneurship is higher than that of women. The
greatest gap exists in high income (GDP) countries, where men
are almost twice as likely to be early stage or established business owners than women. Yet, there is no significant difference
in the rate of necessity entrepreneurship by gender.
Education - Entrepreneurial activity is higher amongst individuals with higher levels of education and is a strong predictor of
entrepreneurial activity. Yet, in higher GDP countries, people
lacking formal qualifications are equally as likely to become
entrepreneurs.
Age Overall, younger people (25-34 years old) are more likely
to be early stage entrepreneurs. Yet, older people (45-54 years
old) are more likely to be established business entrepreneurs.
These results are consistent from country to country. Also, the
age distribution of men and women are comparable as well,
regardless of the stage of entrepreneurship or country context.
Income - In both country groups, and for males and females, the
likelihood of being involved in entrepreneurial activity is significantly higher for those who also are employed in a wage job
(whether full or part time) compared to those who are not working, are retired, or are students. Across all countries, regardless
of per capita GDP, individuals with a higher household income
are more likely to be involved in early-stage entrepreneurial
activity. Also, higher income levels are much more common
among established business owners in high income countries
than in middle income countries.
Looking across cultures, one might expect to find vast differences in the venture types, motivations, traits, attitudes, and
demographics of entrepreneurs. With a few exceptions, the
GEM 2006 data indicate otherwise. An interesting point is that
most early-stage entrepreneurs tend to be of the type described
by Kirzner and Drucker i.e. opportunity-seekers. Likewise, as
described by Knight, they perceive themselves as risk takers willing to bare the uncertainty of an entrepreneurial venture. Also,
they view themselves as innovators akin to the Schumpeterian
notion of entrepreneurship. Indeed, entrepreneurial similarities
span across cultures.

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Entrepreneurship

Essay by Edwin D. Davison, M.B.A., J.D.

Conclusion

Bibliography

In theory, entrepreneurship may occur in a corporate environment or under the circumstance of starting and owning ones
own business. In either case, entrepreneurship involves risk
taking, innovative thinking, and an opportunity-seeking mindset.
Likewise, successful entrepreneurship requires perseverance,
determination, a long-term perspective, self-confidence, leadership ability, creativity, and imperviousness to failure. Also, as
the Global Entrepreneurship Monitor results show, entrepreneurship is not a culturally bound phenomenon - entrepreneurship is
a global phenomenon.

American Enterprise Online (2004, June) Frederick Smith. Are

We Being Run Over By Global Capitalism? Retrieved
April 10, 2007, from http://www.taemag.com/issues/articleID.18006/article_detail.asp.

Also, to reiterate, there is no single typology of a successful entrepreneur. The Frederick Smiths of the world are but one example
of successful entrepreneurship. There also exists the unconventional college dropout, who defeats conventional wisdom and
goes on to achieve great entrepreneurial success. History is
replete with examples of individuals who possess more or less of
the identified traits of successful entrepreneurs some fail and
some succeed in spite of perceived shortcomings. Regardless of
the definition of choice for entrepreneurship, one thing is certain:
entrepreneurship creates jobs and likewise produces innovative
products and services, which subsequently add value to society.
This fact is clear.

Terms & Concepts

Arbitrage: The process of identifying undervalued factors of
production and then selling them for an amount higher than the
purchase price.
Corporate Entrepreneurship: Another name for intrapreneurship.
Early Stage Entrepreneurs: Individuals involved in owning
and managing, alone or with others, a nascent business or one
that has not been in operation for more than 42 months.
Entrepreneurship: The act of new business creation, or the
expansion of an existing business.
Established Entrepreneurs: Individuals involved in owning
and managing, alone or with others, a business that has successfully survived in the market for more than 42 months.
Global Entrepreneurship Monitor: A global research project involving 42 nations, with the purpose of providing annual
assessments of the national levels of entrepreneurial activity.
Intrapreneurship: Also known as corporate entrepreneurship,
intrapreneurship encourages organizations employees to engage
in innovative entrepreneurial behavior within their respective
organization.
Necessity Entrepreneurs: Entrepreneurs who pursue entrepreneurship because all other options for employment are lacking
or unavailable.
Opportunity Entrepreneurs: Entrepreneurs exploiting a perceived business opportunity.

Bosma, N. & Harding, R. (2006). Global Entrepreneurship

Monitor 2006 Results. Retrieved April 9, 2007, from
http://www.gemconsortium.org/download/1176822646421/
GEM_2006_Final_Results_Amended.pdf
Carland, J.W., Hoy, F., Boulton, W.R., & Carland, J.C. (1984
April). Differentiating entrepreneurs from small business
owners: A conceptualization. The Academy of Management
Review, 9(2), 354-359. Retrieved April 9, 2007, from
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h&AN=4277721&site=ehost-live
Drucker, P. F. (1985). Innovation & Entrepreneurship. New
York: Harper and Row.
Gartner, W.B. (1988, Spring). Who is an entrepreneur? is
the wrong question. American Journal of Small Business,
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Online Database Business Source Complete http://search.
ebscohost.com/login.aspx?direct=true&db=bth&AN=5748
404&site=ehost-live
Harding, R. (2004). Global Entrepreneurship Monitor Report
UK 2004. Retrieved April 9, 2007, from http://www.london.edu/assets/documents/PDF/GEM_UK_Report_2004.
pdf
Kirzner, I. M. (1973). Competition and Entrepreneurship.
Chicago, IL: University of Chicago Press.
Knight, F. H. (1921). Risk, Uncertainty, and Profit. Library of
Economics and Liberty. Retrieved April 9, 2007, from
http://www.econlib.org/library/Knight/knRUP1.html
McClelland, D.A. (1961). The Achieving Society. Princeton,
NJ: Van Nostrand.

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Entrepreneurship

Pinchot, G. (1985). Intrapreneuring: Why You Dont Have to

Leave the Corporation to Become an Entrepreneur. New
York: Harper and Row.
Roberts, D. & Woods, C. (2005, Autumn). Changing the world
on a shoestring: The concept of social entrepreneurship.
University of Auckland Business Review, 7(1), 45-51.
Retrieved March 29, 2007, from EBSCO Online Database
Business Source Complete. http://search.ebscohost.com/
login.aspx?direct=true&db=bth&AN=16575226&site=eh
ost-live
Say, J.B. (1855). A Treatise on Political Economy. Library of
Economics and Liberty. Retrieved April 10, 2007, from
http://www.econlib.org/library/Say/sayT.html

Essay by Edwin D. Davison, M.B.A., J.D.

Timmons, J.A. (1999). New Venture Creation

Entrepreneurship for the 21st Century, (5th ed.), Boston,
MA: Irwin McGraw-Hill.

Zimmerer, T. W. & Scarborough, N.M. (1996).

Entrepreneurship and New Venture Formation. Upper
Saddle River, NJ: Prentice Hall.

Suggested Reading
McGrath, R.G. & MacMillan, I. (2000). The Entrepreneurial
Mindset. Boston, MA: HBS Press.

Schumpeter, J.A. (1975). Capitalism, Socialism, and

Democracy. New York: Harper.

Sternberg, R. & Wennekers, S. (2005, April). Determinants and
effects of new business creation using global entrepreneurship monitor data. Small Business Economics, 24(3),
193-203. Retrieved April 9, 2007, from EBSCO Online
Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=16731575
&site=ehost-live

Spinelli, S., & Timmons, J. (2004). New Venture Creation

for the 21st Century. (6th ed.) New York: McGraw-Hill.

Vesper, K.H. (1980). New venture strategies. Englewood

Cliffs: Prentice Hall.

Essay by Edwin D. Davison, M.B.A., J.D.

Mr. Davison is a licensed attorney from Dayton, OH and holds advanced degrees in law and business administration. Specifically,
he holds a Master of Business Administration anda Doctor of Law degree from the University of Wisconsin-Madison. Also, he has
completed professional management training at the University of Michigan Ross School of Business, UCLA Anderson School of Management, and the University of South Carolina Moore School of Business. He has a wide breadth of over twenty years work experience
as a management consultant, business professor (most recently UCLA Online Extension), entrepreneur, and U.S. Navy JAG attorney. As
well, he has presented and published research on multinational human resource practices. Currently he is employed with the Educational
Testing Service of Princeton, NJ.
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