The development and interpretation of entrepreneurial typologies

Abstract

The impact of the entrepreneur on the development and subsequent success of a new venture has been demonstrated in many studies. Indeed one of the most important judgement calls of professionals assisting entrepreneurs is to evaluate their strengths, limitations, management practices, and likelihood of success. Research has responded to the need for such evaluation with different attempts to identify the relevant characteristics of the entrepreneur that may bear upon the management practices and subsequent success of new ventures. One direction of this research has led to the identification of different types of entrepreneurs. Entrepreneurs within each typology share common traits but differ significantly from those of other types. Such attempts are useful in that they identify key differences within the larger population of entrepreneurs and do so in a way that yields holistic and meaningful portrayals. More importantly, classifications allow us to make better predictions, based on membership in a specific typology, about the likely behavior, responses, and success of the entrepreneur. These offer a powerful conceptual tool for the evaluation of entrepreneurs during the start-up or early stages of a venture before the track record of the individual involved can be established and observed. Research studies over the last decade appear to converge on two types of entrepreneurs, craftsmen and opportunists. Craftsmen usually come from a blue collar background with limited education and managerial experience. They prefer technical work to administrative tasks and are generally motivated by needs for personal autonomy rather than the desire for organizational or financial success. In contrast, opportunists are characterized by broader experiences and higher levels of education. They are more likely to be motivated by financial gains and the opportunity for building a successful organization. These two types have been widely accepted and have been found to differ in regard to an array of characteristics and behavior. For example, the two types appear to engage in different levels of explicit planning and information gathering in preparation for the start-up of business. The ventures shared by the two types can also be contrasted along such dimensions as size, capital, the presence of partners, and relatedness to prior experience. The two types also manage differently as exhibited in the formality of administrative procedures, allocation of time to different functions, spans of control, and levels of authority. Some evidence suggests that the typology even appears to distinguish entrepreneurs in terms of attitudes toward risk, adaptiveness to change, and cognitive processing of opportunities. Most important, the classification seems to suggest that typologies differ in regard to growth potential and the likelihood that ventures will proceed to the next life cycle stage. The classification consisting of these two types of entrepreneurs represents a critical contribution to the extent that it possesses strong predictive power regarding a range of entrepreneurial behavior and performance. This study focuses upon the conceptual frameworks used and specific methods applied in developing entrepreneurial typologies. It examines the extent to which different entrepreneurial typologies are consistent. It seeks to alert us to how the methods used in developing typologies affect the results. It suggests that typologies developed to date lack comparability and predictive power. A close examination of previous studies disclosed major differences in the criteria used to classify entrepreneurs. Thus, craftsmen in one study might have been identified on the basis of two characteristics, whereas another study employed as many as 50 criteria. In some studies, all entrepreneurs are classified into typologies, whereas in others, many entrepreneurs are "in-betweens" and left unclassified. The same labels have often been applied to types derived through divergent methodologies, suggesting a degree of commonality that may be misleading. There is the appearance of a body of consistent and additive knowledge about craftsmen and opportunist entrepreneurs that does not rest upon a careful consideration of the methodologies employed. Yet, how likely are we to obtain the same groupings of entrepreneurs from different classification schemes as implicitly assumed in the cross-references we have accepted? This study explicitly evaluated the impact of such differences by contrasting the groupings of entrepreneurs obtained through three different classifications. It is, we think, the first empirical examination of the extent to which traditionally defined entrepreneurial typologies are sensitive to the classification criteria used. Patterned after demonstrated practices in the literature, this study grouped entrepreneurs using: (1) goals; (2) goals and background (education and experience); and (3) goals, background, and management style. Within each classification, entrepreneurs were divided into two groups using cluster analysis. The results showed that different classification criteria did result in different groupings. In particular, classification based solely on goal orientation demonstrated the most pronounced differences from the results of the other classifications. Second, we found that none of the three pairs of groups patterned closely the craftsman/opportunist delineation as described in the literature. The primary conclusion that different groupings result from different classification frameworks should not be surprising, at least from a methodological standpoint. Yet the problem has been totally overlooked in the analysis and interpretation of entrepreneurial types. Very likely, the same labels may have been applied to rather different entities. What then are the implications for the use of this typology as an evaluative tool? First, we note that the definitions of craftsman and opportunist have not been resolved and take on as many variations as the number of studies on the topic. Second, the findings of each study have not really been corroborated by findings in other analyses. As such, the level of generalizability and confidence attached to each must be checked. Third, the cumulative evidence in the body of literature on entrepreneurial typologies cannot be taken as additive knowledge about the wide range of characteristics associated with each type. Hence, the predictive power of the craftsman-opportunist typology cannot be taken for granted. Fourth, it remains to be demonstrated what percentage of the population of entrepreneurs can be represented by the two types. How universal are craftsman and opportunist entrepreneurs or can only some entrepreneurs be classified in this way? Do other types, though yet unidentified, exist? The above reservations lead us to conclude that while the craftsman-opportunist classification appears to serve as a useful yardstick for measuring the potential behavior and likely success of entrepreneurs, its applicability and scope may have been exaggerated to this point. This is not to say that typologies have little value, but rather to demonstrate the need for consistency and careful consideration of the definition of types before integrated and validated portrayals of entrepreneurs can be developed. Without these, the validity of our yardstick remains questionable.