Entrepreneurship

2: The Entrepreneurial Mind-

set: Cognition and Career

Dr. Jaap van Baars

Spring 2022
 1. To profile demographic features of entrepreneurs from around the globe
2. To identify and discuss the most commonly cited characteristics found in successful
entrepreneurs
3. To examine entrepreneurial psychology
4. To discuss the ‘dark side’ of entrepreneurship
5. To identify and describe the different types of risk entrepreneurs face
6. To identify the major causes of stress for entrepreneurs and the ways they can handle
stress
7. To discuss important aspects with respect to the entrepreneurial ego and an
entrepreneurial career

Objectives
 1. The entrepreneurial mind, behavior and
career
2. Who are entrepreneurs?
3. The dark side of entrepreneurship
4. The entrepreneur's confrontation with
risk
5. Stress and the entrepreneur
6. The entrepreneurial ego
7. Pathways to your entrepreneurial career

Outline
 • This chapter has a more personal
look at entrepreneurs; it describes
the most common characteristics
associated with successful
entrepreneurs (and the potential
dark side…)
• This may not be exact science
with regard to the entrepreneurial
mind

1. The entrepreneurial
mind, behavior and career
 Why do people become entrepreneurs?
• Strong desire to be independent
• Unfulfilling to work on another person’s
dreams and help them become rich
• Limited opportunities for advancement
• Bored with the same work every day
• Be their own bosses and
• …wealth creation

1. The entrepreneurial
mind, behavior and career
Opportunity-driven entrepreneurs are driven by=
• Job satisfaction, achievement, opportunity and money
----
On the contrary we have
necessity-driven entrepreneurs

1. The entrepreneurial
mind, behavior and career
• Sometimes entrepreneurs emerge from
deprived, minority or marginal classes of
society.
• ‘I’ll show them’, they say – that’s called self-
efficacy , a belief in oneself.
• Most entrepreneurial people tend to be:
• Indigenous people or immigrants; for
example, female Indian immigrants in
London, Chinese people living in Singapore,
gay entrepreneurs in Sydney or San
Francisco, Palestinians in the Arab Gulf or
even enterprising religious minorities, such
as Sikhs in Australia
1. The entrepreneurial
mind, behavior and career
1. The entrepreneurial
mind, behavior and career
• Starting a new business requires more than just an idea; it
requires sound judgement and planning along with an
approach that reduces risk
• Substantial failure rate attests to how difficult it is to be an
entrepreneur.
• But what distinguishes the successful ones?
• Are traits or characteristics different for social and
business entrepreneurs?

2. Who are entrepreneurs?

• Entrepreneurial cognition: entrepreneurs actually think differently
from other people
• Cognition refers to mental processes, including attention, remembering,
producing and understanding language, solving problems and making
decisions
• Entrepreneurs use simplifying mental models to piece together
previously unconnected information that helps them to identify and
invent new products or services, and to assemble the necessary
resources to start and grow businesses.

2. Who are entrepreneurs?

 • Entrepreneurs typically have skills like
inner control, planning and goal
setting, risk taking, innovation, reality
perception, use of feedback, decision
making, human relations and
independence.
• They are also not afraid to come back
from failure.

2. Who are entrepreneurs?

• Sheer determination and a stubborn, unwavering
commitment to succeed often wins out against odds
that many people would consider insurmountable
• Is the entrepreneur willing to mortgage their own
house, take a pay-cut, sacrifice family time and reduce
their standard of living for long-term gain?

2. Who are entrepreneurs?

• Drive to achieve : self-starters who appear to others to
be internally driven by a strong desire to compete, to
excel against self-imposed standards and to pursue and
attain challenging goals
• Opportunity orientation : focus on opportunity
rather than on resources, structure or strategy

2. Who are entrepreneurs?

 • Successful entrepreneurs believe in
themselves. They do not believe the
success or failure of their venture will
be governed by fate, luck or similar
forces.
• They have a high tolerance for
ambiguity. Job security and retirement
generally are of no concern to them.
• They are calculated risk takers – not
gamblers

2. Who are entrepreneurs?

 • They also generally have a high
tolerance for failure, high
energy level;
• Many entrepreneurs fine-tune
their energy levels by carefully
monitoring what they eat and
drink, establishing exercise
routines and knowing when to get
away for relaxation

2. Who are entrepreneurs?

 • Creativity was once regarded as
an exclusively inherited trait -
around the world we see that
cultures differ very much in terms
of creativity and innovation
• It appears likely that creativity is
less a genetic trait than a cultural
characteristic – one that can be
learned

2. Who are entrepreneurs?

 • Vision: Entrepreneurs know where
they want to go.
• However, not all entrepreneurs have
predetermined visions for their
business.
• In many cases, this vision develops
over time as the individual begins to
realize what the business is and what
it can become.

2. Who are entrepreneurs?

• Passion is a fundamental emotional experience for
entrepreneurs
• Desire for recognition and autonomy does not preclude
the entrepreneur’s desire to build a strong
entrepreneurial team
• https://www.youtube.com/watch?v=fW8amMCVAJQ

2. Who are entrepreneurs?

 • Do entrepreneurs suffer more
from mental disorders than
other people?
• We will look at criminal
entrepreneurs in CH4

3. The dark side of

entrepreneurship
• Entrepreneurs face a number of different types of risk.
These can be grouped into four basic areas:
• (1) financial risk,
• (2) career risk,
• (3) family and social risk
• and (4) psychic risk

4. The entrepreneur's
confrontation with risk
 • 1) Financial risk: typically majority
of savings go into the venture; if the
venture fails all that money is gone =
personal bankruptcy
• Would you like to risk your savings,
house, property and salary to start a
new business?

4. The entrepreneur's
confrontation with risk
 • 2) Career risk: An often asked
question is = will they be able to
find a job or go back to their old
job should their venture fail.
• This concerns managers who
might have a secure job with a
high salary and a good benefits
package

4. The entrepreneur's
confrontation with risk
 • 3) Family and social risk:
time spent working is time
away from family – might
lead to an incomplete family
experience
• Or friends may vanish due to
missed get-togethers

4. The entrepreneur's
confrontation with risk
 • 4) Psychic risk: compared to
the previous risks, this one
may be the greatest risk to
wellbeing - since it carries a
lot of intangibility
• Money can be replaced; a
new house can be built,
families can adapt.

4. The entrepreneur's
confrontation with risk
• Common entrepreneurial goals are independence, wealth
and work satisfaction
• Getting there requires a high price – not only in liquidity but
also body ailments such as back problems, indigestion,
insomnia or headaches
• Entrepreneurial stress can be viewed as a function of
discrepancies between a person’s expectations and ability to
meet demands

5. Stress and the entrepreneur

 Entrepreneurs must engage in
constant communication activities
–
• Interacting with relevant external
constituencies including:
• customers,
• suppliers,
• regulators,
• lawyers and accountants – which
can be stressful.

5. Stress and the entrepreneur

 Personality is also linked to stress:
• Type A: people who are impatient, demanding
and over-strung
Some characteristics:
1. Chronic and severe sense of time urgency
2. Constant involvement in multiple projects
subject to deadlines
3. Neglect of all aspects of life except work
4. A tendency to take on excessive responsibility
5. Explosiveness of speech and a tendency to speak
faster than most people

5. Stress and the entrepreneur

• In addition to the challenges of risk and stress, the
entrepreneur may also experience the negative effects of
having an ego
• Four major factors to consider:
1. Strong need to control
2. Sense of distrust
3. Overriding desire for success
4. Unrealistic optimism

6. The entrepreneurial ego

 1. Strong need to control
• An obsession for autonomy and control may
cause entrepreneurs to work in structured
situations only when they have created the
structure on their terms.
Harder for them to network since they think
others are a threat

6. The entrepreneurial ego

 2. Sense of distrust
• To remain alert to competition,
customers and government
regulations, entrepreneurs are
continually scanning the
environment
• This leads to distrust; causing
them to lose sight of reality, to
distort reasoning and logic and to
take destructive actions

6. The entrepreneurial ego

 3. Overriding desire for success
• They are driven to succeed and takes
pride in demonstrating that success;
• That pride can be shown in owning a
large nice office, having a huge office
building, nice car…
• They become more important than
the venture itself

6. The entrepreneurial ego

 4. Unrealistic optimism
Entrepreneurs maintain a high enthusiasm
level that becomes an external optimism ,
which allows others to believe in them during
rough periods. (good…)

When taken to its extreme, this optimistic

attitude can lead to a fantasy approach to the
business. What happens:
• entrepreneurs ignore trends, facts and
reports and
• delude themselves into thinking everything
will turn out fine

6. The entrepreneurial ego

Counters to stress:
• Networking
• Getting away from it all
• Communicating with employees
• Finding satisfaction
• Delegating
• Exercising rigorously

6. The entrepreneurial ego

Creating a sustainable enterprise involves three
parallel things:
1. the opportunity arises out of the shadows;
2. the venture emerges out of your creativity and
diligence;
3. you yourself then emerge as entrepreneur.
None are predetermined or fixed

7. Pathways to your
entrepreneurial career
7. Pathways to your
entrepreneurial career
1. What do we see when we look around the world at entrepreneurs? How
can the differences among entrepreneurs in terms of age and gender be
explained?
2. Explain why entrepreneurs are not gamblers.
3. Entrepreneurship has a dark side. What is meant by this statement?
4. What are the four specific areas of risk that entrepreneurs face? Describe
each.
5. What are four causes of stress among entrepreneurs? How can an
entrepreneur deal with each of them?