DEFINING ENTREPRENEURSHIP

by J. Barton Cunningham and Joe Lischeron

We continue to know very little about
entrepreneurs, even though there is
much interest and many publications
on the subject. Much ofthe material is
fragmented and highly controversial.
For example, self-employed individuals
and business proprietors may be surprised to learn tbat some academics
and researchers would suggest they
are not really "entrepreneurs" but
"small business owners." Indeed, many
people who have long perceived themselves to be successful entrepreneurs
would not fit some of the definitions
which are now being proposed.
Selection oftheappropriate basis for
defining and understanding the entrepreneurial person creates a challenging
problem for academic researchers and
writers. The field of research has been
described as young, at a formative
stage, and still in its infancy (Paulin et
al. 1982, Perryman 1982, Peterson and
Horvath 1982, Sexton 1982). There is
generally no accepted definition or
model of what the entrepreneur is or
does (Churchill and Lewis 1986). In the
past decade, a number of trends have
emerged which distinguish between
individual entrepreneurship and corporate entrepreneurship (Wortman
Dr, Cunningham is an associaW professor in the
School of Public AdminiBtration al the University of
Victoria, He is currently working on projects concerned
with crifliB management, entrepreneurship. management
skills, and action research.
Dr, Liecheron is an associate professor on the Faculty
of Management at the University of Calgary, His current
research interests are in the areas of organization ai and
personal stress, entrepreneurship, and organizational
change.

1987), and entrepreneurs and small

business owners (Carland et al. 1984).
The literature abounds with criteria
ranging from creativity and innovation
to personal traits such as appearance
and style. Models ofthe entrepreneurial
leader are almost as plentiful as the
number of authors who write about
them.
A large literature has developed
ranging from academic studies to prescriptive blueprints for setting up new
ventures. Tbe term "entrepreneur" has
often been applied to the founder of a
new business, or a person "wbo started
a new business where there was none
before" (Gartner 1985). In this view,
anyone who inherits (Henry Ford II),
or buys an existing enterprise (George
Steinbrenner's purchase of the Yankees), or manages a turnaround as an
employee {Lee Iacocca) is by definition
not an entrepreneur. Others reserve the
term to apply only to the creative
activity of the innovator (Schumpeter
1934). With this last definition, the
majority of those pursuing entrepreneurial and business activities would
be excluded. Yet, others refer to the
identification and exploitation of an
opportunity as entrepreneurial (Peterson 1985). Those who develop a niehe
in the market or develop a strategy to
satisfy some need are also, by some,
called entrepreneurs (Garfield 1986).
There exist a number of schools of
thought which view the notion of
entrepreneurship from fundamentally

January 1991

45

different perspectives. The term has

been used to define a wide range of
activities such as creation, founding,
adapting, and managing a venture. No
single discipline provides the tools for
managing an entrepreneurial venture
(Stevenson 1988). With such a variation
in viewpoints, it is not surprising that a
consensus has not been reached ahout
what entrepreneurship is.
This article descrihes six schools of
thought and attempts to show how
they may he useful for understanding
the entrepreneurial process. These
schools offer unique viewpoints to
illustrate what the entrepreneur does
and what functions and processes are
key.
SCHOOLS OF THOUGHT
ON ENTREPRENEURSHIP

Although an agreed-upon definition

may serve to unite the field, research
activity seems to fall within six schools
of thought, each with its own underlying set of beliefs. Each of these
schools can he categorized according to
its interest in studying personal characteristics, opportunities, management,
or the need for adapting an existing
venture.
Assessing Personal Qualities
1. The "Great Person" School of
Entrepreneurship
2. The Psychological Characteristics
School of Entrepreneurship
Recognizing Opportunities
3. The Classical School of Entrepreneurship
Acting and Managing
4. TheManagementSchoolofEntrepreneurship
5. The Leadership School of Entrepreneurship
Reassessing and Adapting
6. The Intrapreneurship School of
Entrepreneurship
Different entrepreneurial situations of
start-up, growth, and maturity of a
venture may require different hehaviors
46

or skills. The hehaviors and skills of

different schools of thought are presented in tahle 1 and described in the
following paragraphs.
The "Great Person"
School of Entrepreneurship

Are entrepreneurs (like leaders) horn,

or are they made? Can one teach
another or learn to be a manager,
leader, or entrepreneur, or does the
individual come into this world carrying the genes or the inborn natural
capacity to perform these activities? As
there is (or was) a school that helieves
in the charismatic leader, so there is (or
was) a school that might he called the
"great person" school of entrepreneurship.
Newspaper columnists of the day
provide snippets of current "great
people" ranging from the Fords or the
Kennedys to a Lee Iacocca, an Enzo
Ferrari, a Rockefeller, a Trump, or a
Bronfman. Television stories depict
fictional characters and biographies of
this genre. Writers of magazines such
as Fortune and Business Week offer
documentaries, not on the daily lives of
the hard-working, persevering entrepreneur, but on the exceptional flashy
story ofthe successful "great people."
The picture presented is usually one
of power, success, and wealth, the
image of our husiness elite. To be
inspirational, these individuals must
he ahle to present ideas, concepts, and
heliefs that others find interesting,
intriguing, or stimulating. This suggests that they are endowed with
certain traits or qualities that differentiate them from others (Garfield 1986,
Hughes 1986, Silver 1985).
Biographies frequently identify the
intuitive ahiiity of the "great people" to
recognize an opportunity and make the
appropriate decision. They imply that,
without this "inborn" faculty for intuition, the individual would be like the
rest of us mortals who lack the instinct

Journal of Small Business Management

il

o.
(0

r .>
ra c
LU

CO

E
0)

- m
>< Q)

IS

U)

0)

Q- c

UI

o
S o
O

ro" -

OJ "
w
!-

Q_

E
<a

2
o c
o

CO

E
o

<

Z
J

to
~

o c 2; .^

(A

0)

en

o
,c

0)

ro
x:
0}

3>

ro
c
ra

,^ E

O C

o o

O | ^

c c

a o c

~ 0)
Hi O

< ra

CO

2
Q)
a j c , 2 '

1 - a "o

E ^,E E

eg

at

s
s
3

o
a
3

a.
o
M

3
O

g8

is

,E
c

a
c
_

o
OT

o
... o

W
0)
y

a)

ro
LU "o

o Q. a
t-a o

ra "5. ^ c
^ o "-2
C
- c ~ 5) - '"
Q

*-*

rtv

Q..Z ^

g ^'

o 3 i; Q) -S J?

" 0) c J;
c CO , Q) 2
UJ U N , Q. E

x:

c
0)

Ol

o oro o

ra O
o o

io

.c

CO .a

uiS

<
I
1J
(DC c
O (D .C , Q)

raS-S ro
- o 3 *. -D

sz

ical

fC 3 > "D O

6 SE^ES
0)
n

U.

< E

I- > O

T- tn
woe

OC
3.
D.

5o ro
o
5 a

ID

z
m
a
u

V)
UJ

OC

u.

:tions

UJ

Q. O

eneur
r traini

DC
0.

J5 ro"
ra u

g rathi

z
UJ

ro o

tical a ject
rship i

ij

% *

cIB
2

needs

flvin

.2

January 1991

47

that an Estee Lauder has for which

fragrances will sell and which will not.
The editors oi MAD Magazine reported
that they respond more to their instinct,
feel, and intuition while other magazine editors respond to market forecasts
and analyses. Iacocca described this as
a feel for the problem and a decisive
ability to make decisions when others
are still looking for facts (Iacocca
1984).
The successful entrepreneur is also
described as having strong drives for
independence and success, with high
levels of vigor, persistence, and selfesteem. This individual has, if nothing
else, an exceptional belief in himself
(herself) and his (her) abilities. The
individual "is what he/she is" and
significant change may not be possible
(Roscoe 1973). Attention is paid to such
traits as energy, perseverance, vision,
and single-mindedness, or such abilities as being inspirational or motivational- Other traits frequently mentioned include physical attractiveness
(including height, weight, and physique), popularity and sociability, intelligence, knowledge, judgment and fluency of speech; also tact, diplomacy,
and decisiveness.
Which of these traits is most important? Are some important all of the
time, or are all of them important some
of the time? There is little evidence to
suggest that certain traits are associated with successful entrepreneurs.
Early leadership research, attempting
to describe the "great people" by
identifying inborn traits, came to a
similar conclusion. Researchers did,
however, conclude that traits will not
totally describe the elements of leadership and that many situational elements influence who will be a successful leader and who will not (Yukl
1981).
The stories of many "great people"
are widely read for several reasons; (1)
the theory is simple and does not
48

depend upon elaborate concepts and

jargonistic definitions; (2) the theory
defines an entrepreneur by the concepts
and traits most valued; and (3) the
theory is commonly understood by
others and contains common sense
truths about people.
The Psychological Characteristics
School of Entrepreneurship

It is widely thought that one's needs,

drives, attitudes, beliefs, and values
are primary determinants of behavior
(i.e., what one does). People behave in
accordance with their values far more
often than not, despite variations in
situations. Similarily, one's behavior
results from attempts to satisfy needs,
be they for power, recognition, achievement, or acceptance and love.
This psychological school, wbich
focuses on personality factors, believes
that entrepreneurs have unique values
and attitudes toward work and life.
These, along with certain dominant
needs, propel the individual to behave
in certain ways. Entrepreneurs can be
differentiated from non-entrepreneurs
by personality characteristics.
People who possess the same characteristics as entrepreneurs do, will have
a higher tendency (or potential) to
perform entrepreneurial acts, than do
people who do not possess such characteristics (Lachman 1980).

Three personality characteristics

have received considerable attention
in the research: (1) the personal values
such as honesty, duty, responsibility,
and ethical behavior; (2) risk-taking
propensity; and (3) the need for achievement.
Personal value system. Is it merely
socially desirable for entrepreneurs to
be honest and upright, have a sense of
responsibility and duty to other people,
be ethical, incorruptible, scrupulous,
dependable, and conscientious? Are
these values necessary for success?
There are numerous portrayalsboth

Journal of Small Business Management

fictional and real-lifewhich present

the entrepreneurs as unethical, unscrupulous, dishonest, and totally self-oriented. However, studies of entrepreneurs indicate that many are highly
ethical and socially responsible, compared to the general population {Cunningham and Lischeron, forthcoming).
This school generally believes that
entrepreneurs cannot he developed or
trained in classroom situations. Much
ofthe entrepreneur's ahiiity relates to a
personality or style of hehavior which
develops over time, primarily through
relationships with parents and teachers
early in life. Values and ideals, fostered
in one's family, school, church, community, and even culture, stay with the
individual and guide him or her for a
lifetime. These values are learned and
internalized, and reflect the process of
socialization into a culture. Personal
values are hasic to the way an individual behaves and will be expressed
regardless ofthe situation.
Risk-taking propensity. John
Stuart Mill, in introducing the term
"entrepreneurship" to the field of
economics, suggested that risk-bearing
is the key factor in distinguishing
entrepreneurs from managers (Mill
1984). Some writers suggest that the
entrepreneurial function primarily involves risk measurement and risktaking (Palmer 1971). The risks involve
not only financial success, hut career
opportunities, family relations, and
psychic well-being (Liles 1974, Sarachek 1978). Schumpeter (1934) disagreed, avowing that risk-taking is
inherent in ownership and that entrepreneurs, the combiners, are not necessarily owners. Nevertheless, three
recent dictionary definitions of entrepreneurship {Random House 1967,
Webster's 1966, Funk and Wagnalls
1968) all include the notion of assuming
the risk of husiness.
As this school defines it, risk-taking
is not a desire to try one's gambling

skills in Las Vegas. Instead, ent-repreneurs prefer to take moderate risks in

situations where they have some degree
of control or skill in realizing a profit.
They do not prefer situations which
involve either extremes of risk or
certainty {McClelland 1961, McClelland and Winter 1969).
Much ofthe entrepreneurial literature
has included risk taking as a major
characteristic of the entrepreneur.
Practicing entrepreneurs and business
managers have also felt it to be important. The current chairman of the
Ford Motor Company provided the
following statement on risk-taking in
entrepreneurship;
We are allowing our managers to act
more like entrepreneurs, like the owners
of their own businessto let them know
there are rewards for sensible risk-taking.
Whenlsay"risk-takmg," I'm not talking
about "seat-of-the-pants" adventurism.
I'm not talking ahout a Las Vegas roll of
the dice. I'm talking ahout a seasoned
judgement that allows decisions to be
made in a timely wayjudgement that
doesn't require every issue to he studied
tothe point of exhaustion (Gordon 1985).

Some writers (the Classical School)

pointedly distinguish entrepreneurial
activity from management activity by
insisting that one is no longer an
entrepreneur once the innovative/creative activity is completed. Yet, as early
as the late seventeenth century, Cantillion described the entrepreneur as a
rational decision-maker "who assumed
the risk and provided the management
ofthe firm" {Kilhy 1971).
Need for Achievement. Industriousness and the need for achievement are
specific values broadly held by many
individuals in certain cultures. The
individual who has learned the value
of industriousness in the process of
growing up is most likely to have a
high need to work hard and achieve
something meaningful. Weber's classic
text on The Protestant Ethic and the

January 1991

49

Theory of Capitalism concluded that

aome cultures achieve more than others
because of the values of their people.
The development of capitalism and
entrepreneurial drive are largely due to
the cultural values whieh are dominant
in certain countries. Protestant values
encourage the need for achievement
since a person's life is to be judged by
his or her aecomplishments (Hagen
1962; MeClelland 1961; McClelland and
Winter 1969; McClelland, Atkinson,
Clark, and Lowell 1976; Weber 1905,
1958).
The belief that entrepreneurs might
have a distinctly higher need for
achievement is widely held (McClelland
1965), However, the need for achievement, isolated from other variables,
may be a weak predictor of an individual's tendency to start a business
(Hull, Bosley, and Udell 1980). Having
such a need and finding oneself blocked
and frustrated by the bureaucracy of
large organizations provides the conditions, according to this school, to
propel the individual into an entrepreneurial venture.
In summary, the psychological school
of entrepreneurship believes that certain individual values and needs are
the necessary preconditions for entrepreneurship. Since these values are
learned early in life and are wellestablished prior to adulthood, entrepreneurial characteristics are hard to
inculcate in universities and schools.
Characteristics whieh have received a
great deal of attention include: need for
achievement, locus of control, risktaking, tolerance of ambiguity, and
type A behavior (Begley and Boyd
1987; Brockhaus, Sr. and Horwitz 1986).
The Classical School
of Entrepreneurship

An examination of the etiology ofthe

term "entrepreneur" provides insight
into the classical viewpoint which dis50

tinguishes between a "manager" and

an "entrepreneur." The word derives
from the French verb "entreprendre,"
meaning "to undertake" and was translated from the German verb "unternehmen" which also means "to undertake." In the early sixteenth century,
entrepreneurs were thought of as
Frenchmen who undertook to lead
military expeditions. The term was
broadened by 1700 to include contractors who undertook to build for the
military: roads, bridges, harbors, fortifications, and the like. At that time,
French economists also used the word
to describe people who bore risk and
uncertainty in order to make innovations (de Farcy 1973, Berthold 1951).
These definitions encompass the notion
of undertaking (or founding) a venture
(or adventure) which has an element of
risk and requires some creativity or
innovativeness.
One might argue that the dilution of
the term, and hence today's confusion,
began around the turn of the century.
In 1885, the Oxford University Dictionary used the term to describe "the
director or manager of a public musical
institution: one who gets up entertainments . . . . A contractor acting as
intermediary between capital and
labour." This definition reinforces the
notion of innovation and organization
of talent or people, but excludes the
element of risk by an owner (i.e., a
public institution is not owned by a
single individual). Hence, the critical
aspect of entrepreneurship appears to
be the process of "doing" rather than
"owning" a venture or business(Hebert
and Link 1982).
Indeed, according to Schumpeter
(1934), the key ingredient of entrepreneurship lies in the innovativeness of
the individual and may not involve
ownership at all. If the principal
function ofthe entrepreneur is to carry
out new combinations of means of pro-

Journal of Small Business Management

duction, then, these "comhiners" need

not necessarily be owners.
Innovation, creativity, or discovery
are the key faetors underlying the
classical hody of thought and research.
Entrepreneurship, in this view, refers
to the process of creating an opportunity or, as a current writer suggests,
"the opportunity-seeking style of
management that sparks innovation"
{Peterson 1985). As an entrepreneur
explains it, "You have to he a creative
dreamer, be able to visualize where you
will be in x years from now . . . ."
(Peterson 1985).
Frequently, creativity is associated
with fervent individualism or independence bordering on nonconformity.
It is sometimes perceived as antisocial
behavior having an impact on established ways of thinking or behaving.
The discoveries of Galileo, Newton,
and Darwin, for instance, initially
encountered more resistance than
enthusiastic support.
Because every creative act overpasses
the established order in some way and in
some degree, it is likely atfirstto appear
eccentric to most men. An inventor
ordinarily must begin in isolation and
draw the group to himself only as it is
discovered, sometimes very slowly, that
he has invented some part of what they
are in need of (Ghiselin 1952).
Many innovative people, in describing their creative process, have emphasized its subjectivity and individualistic
nature. The innovator is often motivated to satisfy personal needs, and
sometimes has little regard for the
interests of society or organizations.
There is little concern for the reactions
of others, as a statement from Picasso
suggests:
How would you have a spectator live my
picture as I have lived it? A picture comes
to me from far off, I divined it, I saw it, I
made it, and yet next day I myself don't
see what I have done. How can one
penetrate my dreams, my instincts, my

desires, my thoughts, which have taken

a long time to elaborate themselves and
bring themselves to the light, ahove all
seize in them what I have brought about,
perhaps, against my will? (Zervos 1952).
A more current example of creative
and innovative bebavior can be seen in
the story of Apple Computer. Steve
Jobs, one of the co-founders, is characterized as an innovative, energetic
individual who was able to excite others
and stimulate their creativity in order
to launch what is essentially a new
industry. One wonders if Schumpter
would have predicted Jobs' demise once
the venture was up and running. The
same energy which drives an entrepreneur might sow the seeds for the destruction of effective management and
administration, if the case of Steve
Jobs is a representative example.
The Management School
of Entrepreneurship
As in most fields of organizational
study, entrepreneurship draws heavily
from management theory. The initial
definitions of management gained
acceptance because they seemed intuitively logical and were thus acceptable.
Thesedefinitions, many of which might
parallel the initial tradition of Henri
Fayol, suggest that managers perform
a number of functions such as planning, organizing, staffing, budgeting,
coordinating, and controlling (Fayol
1916, 1950; Follett 1942; Gulick 1937;
Mooney and Reiley 1931; Taylor 1911;
Urwick 1933).
The management school suggests
that an entrepreneur is "a person who
organizes or manages a business undertaking, assuming the risk for the sake
ofprofit"(We6s(er's 1966). John Stuart
Mill, in describing the entrepreneur,
noted that in addition to risk-taking,
the functions of an entrepreneur include
supervision, control, and providing
direction to a firm (Mill 1984).
Some of the textbooks on entrepreneurship deal with functions which

January 1991

51

relate to start-up: strategizing, developing the business plan, getting started,

and managing development and
growth (Good 1989, Kao 1989). Other
writers define the transition of moving
from entrepreneurial to professional
management as a strategy of coordination which includes the manner in
which responsibilities are delegated
and the degree of formality with which
those tasks are controlled (Roberts
1987). Certain functions might include
developing formal business plans,
analyzing opportunities, acquiring
resources, and working toward goals
(Bird 1988). Many university and
eollege courses offered to entrepreneurs
use the material gleaned from textbooks written for managers of large
organizations. There may not be substantial differences between entrepreneurial marketing and other marketing
courses, or between venture capital and
other finance courses, or at least not
enough to warrant separate courses
(Vesper 1985).
This management school deals with
the technical aspects of management
and seems to be based on the belief that
entrepreneurs can be developed or
trained in the classroom. Since many
entrepreneurial ventures fail each year,
a significant proportion of these failures might be traced to poor managing
and decision making, as well as to
financing and marketing weaknesses.
According to this school, entrepreneurship is a series of learned activities
which focus on the central functions of
managing a firm. The management
school is directed at improving a person's management capability through
developing his or her rational, analytic,
and eause-and-effect orientation. Since,
according to this sehool, entrepreneurship can be taught, a central aim is to
identify the specific functions involved
and provide training to existing and
hopeful entrepreneurs. Courses such as
new venture marketing and new ven52

ture finance are quite appropriate

(Boberg 1988). Training in these
management functions can, it is hoped,
help reduce the number of business
failures.
The Leadership School
of Entrepreneurship

An entrepreneur is often a leader

who relies on people to accomplish
purposes and objectives. The leadership
school of entrepreneurship is a nontechnical side of the management
school, which suggests that entrepreneurs need to be skilled in appealing to
others to "join the cause." A successful
entrepreneur must also be a "people
manager" or an effective leader/mentor
who plays a major role in motivating,
directing, and leading people. "Thus,
the entrepreneur must be a leader, able
to define a vision of what is possible,
and attract people to rally around that
vision and transform it into reality"
(Kao 1989).
There are two "streams" of writings
concerning entrepreneurial leadership.
The first stream of development has
been grouped within the "great person"
school, and describes the writings
which suggest that certain traits and
personal characteristics are important
for success. The "great person" sehool
follows early leadership research which
suggests that traits such as adaptability to situations, eooperativeness, energy, and willingness to take responsibility are important aspects of success
(Stogdill and Suttell 1948, Stogdill 1974,
Bass 1981).
The most pervasive stream of the
leadership school is concerned with
how a leader gets tasks accomplished
and responds to the needs of people
(Hemphill 1959). Two dimensions are
important for the management of an
enterprisea concern for getting the
task accomplished and a concern for
the people doing the work. These two
dimensions grow out of previous |re-

Journal of Small Business Management

seareh which tried to descrihe the

essential aspects of leadership (Hemphill 1959).
More recently, there have been suggestions that leaders should adjust
their leadership style hased on the
situations facing them (Fiedler 1966).
Entrepreneurial leadership involves
more than personal traits or style in
relating to others. The role can be a
focal point for change and inculcating
values, and it can involve the skills of
setting clear goals and creating opportunities. These include the skills of
empowering people, preserving organizational intimacy, and developing a
human resource system (Kao 1989).
This school describes a leader as the
"social architect" (Bennis and Nanus
1985), or as one that is "primarily an
expert in the promotion and protection
of values" (Peters and Waterman, Jr.
1982). These values might he like those
of IBM's Watson, who emphasized
"respect for the individual," and
Tiffany's Walter Hoving, who suggested that we should "be true to our own
aesthetic."
Certain writers make the distinction
between leading and exerting managerial control over people. The entrepreneur is embedded in a complex social
network that can inhihit or enhance
venture development. The network can
provide ideas, access to needed resources, the commitment and assistance to carry out a task, and the skills
of involved employees. It has been
proposed that more effective leaders
are those who can create a vision,
develop commitment to that vision,
and institutionalize it (Bennis and
Nanus 1985).
This school implies that leaders must
be effective in developing and mentoring people (Levinson et al. 1978). The
leader is an experienced mentor by
whom the protege is taught the "critical
trade secrets." Because of the importance of the mentoring process, the

entrepreneur is more than a manager,

but also a leader of people (Carstud et
al. 1986).
The Intrapreneurship School
of Entrepreneurship

The intrapreneurship school evolved

in response to the lack of innovativeness and competitiveness within organizations. Intrapreneurs, to the limited
extent that they possess discretionary
freedom of action, are able to act as
entrepreneurs and implement their
ideas without themselves becoming
owners. Alertness to opportunities is
one dimension of intrapreneurial activity. Such strategic behavior provides
the means for extending the organization's activities and discovering
opportunities (Ellis and Taylor 1987).
This allows existing organizations to
develop and diversify their activities in
other areas (Burgelman 1983). Intrapreneurship involves the development
of independent units designed to create, market, and expand innovative
services, technologies, or methods
within the organization (Nielsen et al.
1985).
Some question arises as to why the
intrapreneurship school should be
considered a school of entrepreneurship. Entrepreneurial and administered
(bureaucratic) activity have long been
considered as polar opposites, although
Schumpeter noted that successful entrepreneurial activity often leads to
organization building and to entrepreneurs becoming managers (Schumpeter
1934).
The intrapreneurial school generally
assumes tbat innovation can be
achieved in existing organizations by
encouraging people to work as entrepreneurs in semi-autonomous units.
However, there are indications that
large corporations have been unsuccessful in creating intrapreneurs or an
entrepreneurial climate. Many managers involved in intrapreneurial ven-

January 1991

53

tures often leave the company, sometimeL-wn frustration, to start their own
entrepreneurial venture (Knight 1988).
Their departure may indicate that
entrepreneurial forces might he at odds
with normal managerial activity, or
that conventional organizations have
not been able to use the intrapreneurship model to their best advantage. The
success of the intrapreneurial model
seems to depend on the abilities of
operational level participants to exploit
entrepreneurial opportunities. It also
depends on whether or not managers
in the overall corporate structure see
the need to exploit these opportunities.
The intrapreneurial school does not
just provide a model for encouraging
bureaucratic creativity. As a school, it
is not merely an attempt to give freedom
to a group of people so that they can be
entrepreneurial. It also requires individuals to work with others in teams,
much more than entrepreneurs do.
When individuals work together in
groups, they are better ahle to recognize
the importance of political needs and
understand how to implement their
ideas. In this sense, intrapreneurship
is a "team" model whereby individuals
are asked to work together in solving
problems and creating opportunities.
Building a balanced "team" (Echert et
al. 1987) requires the ahiiity to use
people effectively in groups, where
tasks require different input from team
members. For some tasks, intrapreneurial activities may require the input
of professionals, while in others the
support and assistance of operational
workers may be needed.
Intrapreneurial activities can focus
on strategic redirection, organizational
duplication, product development, and
operational efficiency, as illustrated in
figure 1. Strategic intrapreneurship
may require the involvement of key
professionals and managers who have
an understanding of market conditions.
The goal is to develop new markets hy
54

adding to the existing corporate facilities. Organizational intrapreneurship

may require the commitment of a cross
section of people as they take responsihility for duplicating the organization's tasks in other regions or divisions. Product intrapreneurship might
involve people who are familiar with
product development and market conditions. The goal is to develop new
products hy capitalizing on existing
corporate facilities. Operational strategies focus on improving the quality
and efficiency of the services offered.
SELECTING AN APPROPRIATE
ENTREPRENEURIAL MODEL

There is a need to reconcile these

various schools of entrepreneurship by
recognizing the importance of all of
them. Each school provides different
insights about the many facets of
entrepreneurial behavior (Woo et al.
1988) (see table 2).
One facet of entrepreneurial behavior
has been described by personal qualities or values while another indicates
that anticipating the future and finding
and recognizing opportunities are key
attributes. A third facet suggests that
the success of an entrepreneur might
be improved hy technical and nontechnical managerial skills. A fourth
facet recognizes the need to change the
direction ofa venture.
Each ofthe models is hased on certain
assumptions ahout hehavior. Each set
of criteria, including past events, perceptions, traits, or personal principles
and characteristics, provides different
types of insight. For example, success
in the future might be better understood
hy understanding the past history and
principles of successful entrepreneurs.
Success might he explained hy understanding entrepreneurs' ways of managing people or knowing how they set
out plans and management procedures.
Trying to suggest that one school of
thought or set of criteria is more

Journal of Small Business Management

Figure 1
FOCUS ON INTRAPRENEURIAL AOTIVITIES

Strategic
Redirection

Organizational
Duplication

important than anotber is like trying

to say that one religion is more godly
than another. The definitions and
criteria of each school in table 2 are
based on their own traditions and have
their own assumptions and implications for research, training, and education. Definitions of entrepreneurship
vary widely and involve creating,
finding opportunities, managing, controlling, and changing. They are based
on criteria ranging from decision
making, creativity, technical expertise/
knowledge, experiences, and values to
the way in which entrepreneurs lead
and develop groups of employees to
work for them.
The criteria of each school provide an
example of the type of research and
training emphasized by that school.
The classical school emphasizes criteria
such as creativity and decision making
and focuses on seeing opportunities
and getting the venture started. The
histories, principles, and life stories of
successful people offer valuable examples and may, in some cases, provide
valuable personal guidance. The research and training provided by the
psychological school suggests that
certain values and behaviors are important, such as risk-taking, the need
for achievement, and others. The technical knowledge of the management
school provides tools for managing,
ranging from planning to accounting;
the leadership school offers suggestions for leading and motivating
people. Finally, the intrapreneurship
school encourages entrepreneurial
activity within established organiza-

Product
Development

Operational
Efficiency

tions and emphasizes the development

of teams for creative problem solving.
These schools of entrepreneurship
address a range of entrepreneurial
perspectives such as evaluating one's
personal values, identifying opportunities, planning and acting, and reassessing. Figure 2 suggests that
entrepreneurship might be viewed as a
reiterative process and that each ofthe
schools might provide insights into
different aspects ofthe phenomenon.
The psychological and great person
schools might be very helpful in a
personal assessment of one's entrepreneurial values and a questioning of
which values are most useful for
success. This should not imply that
there is a need to search for personal
psychological "laws" of entrepreneurial effectiveness. Conceivably, one can
learn a great deal about oneself by
understanding one's values and drives,
in addition to those that describe
successful entrepreneurs. Rather, what
are one's values, behaviors, and attitudes toward work? How do they compare with those held by successful
entrepreneurs? Judging from this comparison, what are one's strengths and
weaknesses?
Other schools provide important insights about the process of recognizing
and creating an opportunity. The
classical school has described the
process for identifying opportunities
and taking action. The management
and leadership schools might be very
helpful for understanding the range of
technical and interpersonal skills
necessary for making an operation

January 1991

55

'P
o
re

D
V>

;ipl

_c
a
re

(0

3 C

a)

c o

93

o
>

0) O 3

CO

CO

a.
03

ai

3
O
V 0) U
CO re ra

T3

re re re
^ .c ^

re
c
ra

(0

"ro

3
O

ft-, c-

change

manage

re
c

men

le?

a
re
D

Q..5

is

- to tn

25*-0)

t:
o
a

11

V)

Ol

oil

<D O

.fcro!>
'-'
o
0) rat
O c O

.2 <

II
(0 "C

re re
t c c
aX o u

C. <" O)

0)

0)

n>

O)

T ) O)
3 ra

c
ra

t: c

o 9

lU

a
Ik
o

0] O
o>,s
o>
O re

e E S '^ I " s .*:a> c"o

^ ^ -p. ra P c ^

> 33
O T3

oS

.c re
o c
re o

.5 >

n ra (0

o oB
0

OC

S
S
3

<n

O)

_o
o

.c
o
>

56

o
*(/
o

- S 2 : 'E
o) ^ ra 3 E ;
3 F D) c a> .

i; o

Journal of Small Business Management

Figure 2
THE ENTREPRENEURIAL PROCESS

RECOGNIZING
OPPORTUNITIES

EVALUATING
SELF

ACTING AND
MANAGING

REASSESSING NEED
FOR CHANGE

efficient and for motivating people.

These skills involve technical tasks
such as planning and financing and
the human relations know-how necessary for dealing with employees.
Every entrepreneurial venture, at
some stage, must question its present
operation and future direction. In this
regard, the intrapreneurship school can
assist in redirecting present operations.
The foregoing conception of the entrepreneurial process does not attempt to
mix the assumptions and philosophies
of the different schools. Rather, entrepreneurship is seen as a reiterative
process of personal evaluating, planning, acting, and reassessing which
encourages people to take on responsibility for creation and innovation. This
process involves creating the idea,
assessing one's personal abilities, and
taking actions now and in the future. It
assumes that entrepreneurs have the
responsibility for the venture, or share
some of the risks and rewards of it.
CONCLUSION

This article has presented six different schools of thought important in

descrihing entrepreneurial activity. It

has sought to avoid the debate over

which school or set of criteria is most
useful. The judgment concerning each
model's appropriateness depends upon
the researcher's assessment of its facility for explaining and improving
certain aspects of the entrepreneurial
process. The selection of an entrepreneurial model depends on the information the researcher or educator wishes
to emphasize in focusing on different
aspects of the entrepreneurial process.
The psychological and great person
schools might be helpful in a personal
assessment of an entrepreneur's values, while the classical sehool might
provide insights about the process of
creating an opportunity. The management and leadership schools might be
helpful for understanding the range of
technical and interpersonal skills
necessary for making an operation
efficient and for motivating people.
The intrapreneurship school might
assist in redirecting the present
operations.
The entrepreneurial process is reiterative and emphasizes personal evaluating, planning, acting, and reassess-

January 1991

57

ing. It assumes people have the

respbnsibility for the venture, or that
they assume some of the risk and
rewards of it. The various schools of
thought provide different insights for
recognizing underlying values, responding to the future, improving management, and changing and adapting.
Selectively utilizing the insights of the
different schools of thought depends
upon one's research agenda or practical
goals. However, it may not be prudent
to suggest that our knowledge of entrepreneurs can he ohtained hy focusing
on the criteria of only one school of
thought. An understanding of entrepreneurs and their ventures requires
criteria from each facet of the overall
process: entrepreneurs' personal perspective, their ways of identifying
opportunities, their methods of acting
and managing, and their mechanisms
for adapting and reassessing.
REFERENCES

Bass,BM.{l^8l), Stogdill's Handbook

of Leadership. New York; Free Press.
Bennis, Warren, and BurtNanus (1985),
Leaders: The Strategies for Taking
Charge, New York; Harper and Row,
UO-151.
Begley, M. W., and D. P. Boyd (1987)
"Psychological Characteristics Associated with Performance in Entrepreneurial Firms and Small
Businesses," Journal of Business
Venturing 2,79-93.
Berthold, H. F. (1951), "The Early
History of Entrepreneurial Theory,"
Explorations in Entrepreneurial
History 3, 193-220.
Bird, Barbara (1988), "Implementing
Entrepreneurial Ideas: The Case for
Intention," Academy of Management Review 13, 442-453.
Boherg, A. L. (1988), "Changing Patterns of Demand: Entrepreneurship
Education for Entrepreneurs," in
Frontiers of Entrepreneurship Research, ed. Bruce A. Kirchhoff,
58

Wayne A. Long, W. Ed McMullan,

Karl H. Vesper, and William E.
Wetzel,Jr.,WellesIey,Mass.;Bahson
College, 660-661.
Brockhaus, R. H., Sr. and P. S. Horwitz
(1986), "The Psychology of the
Entrepreneur," in The Art and
Science of Entrepreneurship, ed. D.
L. Sexton and R. W. Smilor, Cambridge: Bailinger, 25-48.
Burgelman, R. A. (1983), "Corporate
Entrepreneurship and Strategic
Management; Insights from a ProcesB Study," Management Science
29,1349-1364.
Carsrud, A. L., C. M. GagHo, and K. W.
Olm (1986), "EntrepreneursMentors, Networks, and Successful New
Venture Development An Exploration," in Frontiers of Entrepreneurial Research, ed. Robert Ronstadt,
John A. Hornaday, and Karl H.
Vesper, 229-235.
Carland, James W., F. Hoy, W. R.
Boulton, and J. C. Carland (1984),
"Differentiating Entrepreneurs from
Small Business Owners: A Conceptualization," Academy of Management Revietv 9 (2), 354-359.
Churchill, Neil C, and Virginia Lewis
(1986), "Entrepreneurial Research:
Directions and Methods," in The
Art and Science of Entrepreneurship,
ed. D. L. Sexton and R. W. Smilor,
Cambridge: Bailinger 333-365.
Cunningham, J. B. and J. Lischeron
(fortheoming), Entepreneurial Innovation.
de Farcy, Henri (1973), "Esprit d'enterprise et developpement economique,"
Archives Internationale de Sociologue de la Cooperation et du
Developpement 33, 3-42.
Echert, L. A., J. D. Ryan, R. J. Ray, and
R. J. Brace (1987), Canadian Small
Business: An Entrepreneur's Plan,
Toronto: Harcourt Brace Jovanovich, 211-228. (This is hased on John
Geier, n.d.. Personal Profile System,

Journal of Small Business Management

Minneapolis, Minn.: Perfomax Systems International.)

Fayol, Henri (1950), Administration
Industrielle el Generate, Paris:
Dunod. (First published 1916.)
Fiedler, F. E. (1966), "The Contingency
Model: A Theory of Leadership
Effectiveness," in Basic Studies in
Psychology, ed. H. Proshansky and
B. Seidenherg, New York: Holt,
Rinehart and Winston, 538-551.
Follett, M. P. (1942), "Dynamic Administration," The Collected Papers of
Mary Parker Follett, ed. H. Metcalf
and L. Urwick. New York: Harper
and Row.
Funk and Wagnalls' Standard College
Dictionary (1968). New York: Funk
and Wagnalls.
Garfield, Charles (1986), Pea/fePer/ormers: The New Heroes of American
Business, Now York: Avon Books.
Gartner, W. B. (1985), "A Conceptual
Framework for Describing the Phenomena of New Venture Creation,"
Academy of Management Review
10,696-706.
Ghiselin, Brewster(1952), TheCreative
Process. Berkeley, Calif.: University
of California Press.
Good, W. S. (1989), Building a Dream:
A Comprehensive Guide to Starting
a Business of Your Own. Toronto:
McGraw-Hill.
Gordon, M. M. (1985), The lacocca
Management Technique. New York:
Dodd, Mead, and Company.
Gulick, Luther H. (1937), "Notes on the
Theory of Organization," in Papers
on the Science of Administration,
ed. L. H. Gulick and L. F. Urwick.
New York: Columbia University
Press.
Hagen, Everett Einer (1962), On the
Theory of Social Change. Homewood, 111.: Irwin Press.
Hebert, Robert F. and Albert N. Link
(1982), The Entrepreneur: Mainstream Views and Radical Critiques.
New York: Praeger.

Hemphill, J. K. (1959), "Job Descriptions for Executives," Harvard

Business Review 37 (Sept.), 55-67.
Hughes, Jonathan R. T. (1986), The
Vital Few: American Economic
Progress and Its Protagonists. New
York: Oxford University Press.
Hull, D. L.. J. J. Bosley and G. G. Udell
(1980), "Renewing tbe Hunt for the
Heffalump: Identifying Potential
Entrepreneurs by Personality Characteristics," Journal of Small Business Management 18 (1), 11-18.
lacocca. Lee (1984), lacocca: An Autobiography, New York: Bantam
Books, 53-56.
Kao, R. W. Y. (1989), Entrepreneurship
and Enterprise Development. Toronto: Holt, Rinehart and Winston of
Canada, Limited.
Kilhy, P. (1971), Entrepreneurship and
Economic Development. New York:
Free Press.
Knight, R. M. (1988), "Spinoff Entrepreneurs: How Corporations Really
Create Entrepreneurs," in Frontiers
of Entrepreneurial Research, ed.
Bruee A. Kirchhoff, Wayne A. Long,
W. Ed McMuUan, Karl H. Vesper,
William E. Wetzel, Jr., Wellesley,
Mass.: Babson College, 134-150.
Lachman, R. (1980), 'Toward Measurement of Entrepreneurial Tendencies," Management International
Review 20 (2), 108-116.
Levinson, D. J., with C. N. Darrow, E.
B. Klein, M. H. Levinson, and B.
McKee (1978), The Seasons of a
Man's Life. New York: Ballantine
Books.
Liles, Patrick R. (1974), "Who Are the
Entrepreneurs?" MSU Business
Topics 22(1), 5-14.
McClelland, D. C. (1965), The Achieving
Society. Princeton: D. Van Nostrand.
McClelland, David C. (1965), "Achievement Motivation Can Be Developed," Harvard Business Review 43
(Nov.-Dec.),6-25.
McClelland, David C. and David G.

January 1991

59

VJinter (1969), Motivating Economic

Achievement. New York: Free Press.
McClelland, David C, J. W. Atkinson,
R. A. Clark, and E. I. Lowell (1976),
The Achievement Motive. New York:
Irvington.
Mill, J. S. (1984), Principles of Political
Economy with Some Applications to
Social Philosophy,London. JohnV^.
Parker. 32.
Mooney, J. D.. and A. C. Reiley (1931),
Onward Industry, New YOTVH Harper
and Row.
Nielsen, R. P., M. P. Peters, and R. D.
Hisrich (1985), "Intrapreneurship
Strategy for Internal MarketsCorporate, Non-profit, and Government Institution Cases," Strategic
Management Journals, 181-189.
The Compact Edition of the Oxford
English Dictionary (1911). London:
Oxford University Press.
Paulin, William L., Robert E. Coffey,
and Mark E. Spaulding (1982),
"Entrepreneurship Research; Methods and Directions," in The Encyclopedia of Entrepreneurship, ed.
Calvin A. Kent, Donald L. Sexton,
and Karl H. Vesper, Englewood
Cliffs, N.J.: Prentice Hall, 352-373.
Palmer, M. (1971), "The Application of
Psychological Testing to Entrepreneurial Potential," California Management Review 13, 32-38.
Peters, T. J. and Robert J. Waterman,
Jr. (1982), In Search of Excellence.
New York: Harper and Row.
Peterson, Rein (1985), "Raising Risktakers," Metropolitan Toronto Business Journal 75 (7), 30-34.
Peterson, Rein, and Deszo Horvath
(1982), "Commentary on Research
in the Field of Entrepreneurship," in
The Encyclopedia of Entrepreneurship, ed. Calvin A. Kent, Donald L.
Sexton, and Karl H. Vesper, Englewood Cliffs, N.J.: Prentice Hall.
Perryman, Ray (1982), "Commentary
on Research Methodology in Entrepreneurship," in The Encyclopedia
60

of Entrepreneurship, ed. Calvin A.

Kent, Donald L. Sexton, and Karl H.
Vesper, Englewood Cliffs, N.J.:
Prentice Hall.
The Random House Dictionary (1967).
New York: Random House.
Roberts, M. (1987), "Making the Transition from Entrepreneurial to Professional Management," in Frontiers
of Entrepreneurship Research, ed.
Neil C. Churchill, John A. Hornaday, Bruce A. Kirchhoff. O. J.
Krasner, Karl H. Vesper, Wellesley,
Mass.: Babson College, 74-86.
Roscoe, James (1973), "Can Entrepreneurship Be Taught?" MBA Magazine (June-Jnly).
Sarachek, Bernard (1978), "American
Entrepreneurs and the Horatio Alger
Myth," Journal of Economic History 38,439-456.
Schumpeter, J. A. (1934), The Theory of
Economic Development. Cambridge,
Mass.: Harvard University Press.
Sexton, Donald L. (1982), "Research
Needs and Issues in Entrepreneurship," in The Encyclopedia of
Entrepreneurship, ed. Calvin A.
Kent, Donald L. Sexton, and Karl H.
Vesper. Englewood Cliffs, N.J.:
Prentice Hall.
Silver, David A. (1985), Entrepreneurial Megabucks: The 100 Greatest
Entrepreneurs of the Last Twentyfive Years. New York: John Wiley
and Sons.
Stevenson, H. H. (1988), "General Management and Entrepreneurship," in
Frontiers of Entrepreneurial Research, ed. Bruce A. Kirchhoff,
Wayne A. Long, W. Ed McMuUan,
Karl H. Vesper, WiUiam E. Wetzel,
Jr., Welleslesy, Mass.: Babson College, 667-668.
Stogdill, R. M. and B. Suttell (1948),
"Personal Factors Associated with
Leadership: A Survey ofthe Literature," Journal of Psychology 25,
35-71.
Stogdill, R. M. (1974), Handbook of

Journal of Small Business Management

Leadership. New York: Free Press,

Taylor, F. W. (1911), The Principles of
Scientific Management. New York:
Harper and Row.
Urwick, L, (1933), Management of
Tomorrow. New York: Nishet.
Vesper, Karl (1985), "New Developments in Entrepreneurship Education," in Frontiers of Entrepreneurship Research, ed. Hornaday et al.,
Wellesley, Mass.: Babson College.
Weher,Max(1905,1908), r/ieProtestant
Ethic and the Spirit of Captialism,
trans. T. Parsons. New York: Scribner's Sons.
Webster's Third New International
Dictionary (1966). Chicago: Rand
McNally and Sons.
Woo, C. Y., A. C. Cooper, and W. C.
Dunkelberg (1988)," Entrepreneurial

Typologies: Definitions and Implications," in Frontiers of Enirepreneurship Research, ed. Bruce A.

Kirchoff, Wayne A. Long. W. Ed
McMullan, Karl H. Vesper, and
William E. Wetzel, Jr., Wellesley,
Mass.: Babson College, 165-176.
Wortman, M. S. (1987), "Entrepreneurship: An Integrating Typology and
Evaluation of the Empirical Research in the Field," Journal of
Management 13, 259-279.
Yukl. G. A. (1981), Leadership in
Organizations. New York: Prentice
Hall.
Zervos, C. (1952), Conversations with
Picasso, Paris: Cahiers d'Art, translated hy Brewster Ghiselin, in The
Creative Process, Berkeley: University of California Press, 60.

Copies of articles from this

publication are now available from
the UMI Article Clearinghouse.
For more information about the Clearinghouse, please fill
out and mail back the coupon below.

Yes! [ would like to kniw more about tfMl Article

Clearinghouse. I am interested m ejfclronic oMerJng
through the follo^^'irg systemls); /

_
Z
Z
Z

DLALOCDialorder
_ JfT Dialcom
\
OnTyme
yOCLC ILL Subsystem
Other (please specify).
1 am interested in sendjrig my order by mail,
Please send me your current catalog and user
instructions for the iystem(sl 1 checked above.

NameTitle
Institution/CompanyDepartment
\

Address-

\city
Vhom i.

-SUte.

.Zip.

Mail to: University Microfilms International

300 North Zeeb Road, Box 91 Ann Arbor. Ml 48106

January 1991

61