Popular and academic writings on entrepreneurship have been especially prone to romanticizing individual founders and CEOs when new firms are successful, and vilifying them when such firms fail. Academic researchers, along with authors who write for broader audiences, like journalists, venture capitalists, and entrepreneurs, have expended much time and text in a quest to predict who will succeed as an entrepreneur and who will fail. These diverse writings emphasize that personality, along with other individual characteristics like demographic and cultural background, will predict who will become an entrepreneur, and which entrepreneurs will succeed. On the face of it, there are good reasons to give founders and CEOs the lion’s share of credit and blame in young, small organizations. When the organization is small, the leader can devote more time to influencing each member, and when it is young, the force of a leader’s personality is dampened less by organizational history and accepted procedures. And some evidence implies that leader personality has a stronger impact on structure in small and young organizations than in old and big organizations (Miller and Dorge, 1986).

Traditional Views on the Characteristics of Entrepreneurs

Although this myth is propagated and accepted in many corners of America and other western nations, it is supported by weak evidence. After three decades of scholarly research, many studies have found little if any effect of founder or leader personality, or the demographic and social background of the founder, on start-up success. Although the personality and socio-cultural variables proposed to distinguish successful from unsuccessful entrepreneurs seem logical and often are gleaned from legends about successful start-ups, at best, these variables explain only a small part of who will be a successful entrepreneur and which ventures will succeed.

Entrepreneurship as a Social Activity

We propose that a more accurate picture of entrepreneurship 

Freeman (1996) emphasizes that, as a result, successful entrepreneurs are especially skilled at using their time to develop relationships with people who are crucial to the success of their new venture. A new venture may start as the brainchild of one or very few people, but it takes many more people to put together the pieces of the puzzle that constitute a successful firm. The first few pieces of the puzzle usually come from and through the existing network of the entrepreneur or "insiders": friends, family and co-founders. As the creation of the venture progresses, however, entrepreneurs need to reach beyond their individual social network and involve "outsiders" such as banks, venture capitalists, lawyers, accountants, strategic partners, customers, and industry analysts and influencers.

Key Characteristics of Entrepreneurs as Social Creatures

Once an entrepreneur has determined which relationships are crucial to the success of his or her new venture, most of his or her time is spent building, negotiating, and maintaining these relationships. This implies that successful entrepreneurs are able to persuade others to enter relationships and to take actions that will help the new venture. A key part of any leader’s role is persuading people to do things that they are unsure about or don’t want to do at all. It is no accident that many of the most famous entrepreneurs are renowned for their interpersonal influence skills. Herb Kelleher is co-founder and CEO of Southwest Airlines, which provided shareholders with a yearly average return of 22% between 1972 and 1992, the single best performing stock during this 20-year period. Kelleher, who some consider unconventional and eccentric, has also been called the America’s best CEO by Fortune

Most people are not born with Kelleher’s flair, but there are proven means of influence that people can learn to use. The fundamentals of interpersonal influence are studied and taught in many corners of academia, especially in psychology and management departments. Robert Cialdini’s (1992) book Influence

In addition to influence, entrepreneurs often influence others through negotiations. They may negotiate with venture capitalists over the terms of an investment in the firm, with employees over their salary and stock options and with potential acquirers over a purchase price for the entire company. More research is needed on the prevalence and importance of negotiation skills as a characteristic of entrepreneurs. In addition to teaching interpersonal influence skills, perhaps entrepreneurship courses and programs should include the theory and practice of negotiation. Bazerman and Neale’s (1992) Negotiating Rationally

Finally, the social nature of entrepreneurship means that entrepreneurs spend a great deal of their time in groups. There is already compelling evidence that the characteristics of top management teams are important to the success of a new venture (Eisenhardt and Schoonhoven, 1990). The myth that any given entrepreneur is a rugged individualist, who toils alone, can often be demolished by just asking to look at his or her calendar. Nearly always, the majority of his or her time will be spent as part of a group, at meetings with the management team, board meetings, project team meetings, and so on. As such, knowledge about leading a group, being a constructive group member, dynamics of healthy versus destructive groups, and designing – or repairing – groups so that they function well should be a central component of entrepreneurship research and education. Robert Reich (1987), former U.S. Secretary of Labor, echoes this view in his article "Entrepreneurship Reconsidered: The Team as Hero." There are useful materials available about teams and how to manage them, like the edited collections by Paul Goodman (1986) and Richard Hackman (1990). Materials of this kind can help aspiring (and perhaps struggling) entrepreneurs learn a great deal about groups: how roles emerge, how their members jockey for influence, the functions and dysfunction’s of group conflict, how to inspire creativity, and how to enhance group decision-making, all of which can help them become more effective.

Conclusion

We began by asserting that individual entrepreneurs get too much credit and blame for the fate of new ventures. We also emphasized that successful entrepreneurs are those who can develop the right kinds of relationships with others inside and outside their firm. Our perspective suggests that, in trying to predict which entrepreneurs will succeed or fail, instead of turning attention to the characteristics of individual founders and CEOs, researchers and teachers would be wiser to turn attention to the other

Defining Terms

Entrepreneurship: Although there is no official definition of entrepreneurship, the following one has evolved from work done at Harvard Business School and is now generally accepted by authors: "Entrepreneurship is the process of creating or seizing an opportunity and pursuing it regardless of the resources currently controlled" (Timmons, 1994: 7).

References

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Eisenhardt, K.M. and Schoonhoven, C.B. 1990. Organizational growth: Linking founding team, strategy, environment, and growth among U.S. semiconductor ventures, 1978-1988. Administrative Science Quarterly, 35:504-29.

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Timmons, J.A. 1994. New Venture Creation: Entrepreneurship for the 21st Century