Who is an entrepreneur?

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It should be relatively easy to answer the question: “Who is an entrepreneur?” The French origin of the word gives a clue: one who undertakes (a new activity). Today, we use the term entrepreneur to refer to a person who starts a new company. But there is much more to being an entrepreneur than starting and owning a company.

For instance, did you know that about 80% of all companies do not employ a single person after the founder establishes the company * ? That means, most businesses never scale up their activities beyond the founder’s personal efforts. The common view among entrepreneurship scholars is that if a founder is not looking to grow the business, then it’s more appropriate to characterize him/her as a self-employed person rather than an entrepreneur.

How about the founder / owner of a restaurant in the street corner? Is he / she an entrepreneur? Yes – if the goal is to grow the business in some way; whether it is adding capacity, opening another restaurant, or adding more value through better service. If the owner is not interested in growing the business, that is “business administration” – not entrepreneurship.

You may also be surprised that you don’t have to own a company – not even one percent of it – to be considered an entrepreneur. That is what corporate entrepreneurship is all about: employees of established businesses who start new business units to grow the corporation. A corporate entrepreneur normally does not own any shares in the new business unit. Instead, the typical rewards include visibility (inside and outside the corporation), rapid career progression and the satisfaction that comes from scaling up a new business rapidly thanks to financial support from the corporate level.

In fact, the managers who were the idea champions for Apple’s iPod, iTunes, iPhone and iPad business units are probably much more entrepreneurial than most independent business owners, despite having a very small number of shares in Apple. The same can not be said about the managers at Sony who failed to rally the company to rival the iPod, or the managers at Nokia who watched Apple develop the iPhone – instead of trying to be the first in the smartphone market.

In summary, an entrepreneur is a person who aims to grow a business, regardless of their ownership stake in it. In other words, it is the result of a business decision that a person makes – not an inherent genetic trait.

* Data source (from the United States): http://www.census.gov/econ/smallbus.html


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About Hakan Ener

Hakan Ener is assistant professor in the Department of Entrepreneurship. He does research on top management teams in entrepreneurial firms. One of his main interests is the "management experience pitfall," a theme emerging from his dissertation, which showed that entrepreneurial firms led by the most experienced top executives in their industry do not typically achieve the highest performance. This work has won a worldwide doctoral research award from the Center for Creative Leadership in the US, and was nominated for the Strategic Management Society's Best Implications for Practice award. He holds a Ph.D. in management (with a specialization in strategy), which he completed at INSEAD's two campuses in France and Singapore.