Responding to Readers About New Research on Entrepreneurs

This is a guest post by BusinessWeek contributor Vivek Wadhwa.

One thing I’ve learned after joining academia is that with every research project, you create more questions than you answer. My team’s new research on the backgrounds and motivations of company founders in high-growth industries uncovered some very interesting facts which I highlighted in this slide show. (It will go live later this afternoon.) We shattered many myths and gained a much better understanding of what makes entrepreneurs tick. But readers have asked some provocative questions which I would welcome your input on. For example, Stephen Duke wrote:

There are lots of “independent business owners,” but few are actually “entrepreneurs.” Most are skilled technicians or managers in their fields and they work IN their own business, but fewer still work ON their business. There is a difference.

Self-employment is on one end of the continuum and Entrepreneurship is on the opposite. The difference is what the individual actually does for the business: Are they simply doing what they were doing for the “Man” before they started working for themselves? Or, are they working at building a “world class company” that does the things they once did for a living?

Don’t be delusional about self-employment, even if you are not working by yourself - it is still not entrepreneurial. One must really be working on building a company that is less egoistic and more centered around its stakeholders i.e. what’s in it for them, instead of what’s in it for me. When you understand this, you understand the difference between the self-employed business owner and the entrepreneur.

We surveyed 549 founders of successful companies in high-growth industries which were listed in the OneSource Information Services Companies database. This didn’t include many independent business owners. But Stephen asks an intriguing question: what is the difference between an independent business owner and an entrepreneur?

Domenick Celentano, who is an Adjunct Professor at Fairleigh Dickinson University, says the difference is in scalability and replicability — small business people don’t address these issues. He calls small business people “Artisan Entrepreneurs.”

But I don’t think it’s that simple. After all, don’t independent business owners bet their life savings and risk it all with the dream of making it big? To me, that’s what defines an entrepreneur, regardless of the size of business.

Alison Steele Mandadi, owner of Steele Environmental Services of Houston, Texas sent me an email with another great observation — that we didn’t differentiate between male entrepreneurs and female. Here is what she wrote:

I wonder if you might be mixing apples and bananas if you’ve lumped females and males into a statistical analysis that attempts to assess motivation. I fit your average entrepreneur profile in coming from an upper-lower-class background, having an advanced degree, and in having graduated at the very top of my class. But I depart significantly in being a first-generation immigrant single mother who is not in it for the cash. I was motivated to start a company in large part because I wanted more control over my time so that I could be more responsive to my daughter’s educational and extracurricular schedule, given that I had next to no logistical support from a spouse or extended family. The math was simple; I knew I could make the same money in less time if I worked for myself, thereby freeing up time for her.

She makes a good point and we do plan to analyze our data to see if we can determine any differences in motivation and background between the sexes. But what do you folks think? I would welcome your insights and more questions.

Vivek Wadhwa is a Senior Research Associate at the Labor and Worklife Program at Harvard Law School and Executive in Residence at Pratt School of Engineering at Duke University. Before joining academia in 2005, he was an entrepreneur who founded two technology companies.