Business Research

Can't Find Entrepreneurial Gene

By Barbara Elmore

Envision the bold entrepreneur, striding into his penthouse office to make decisions that create palpitations in the faint of heart. He is Hercules in a natty suit. His decisions may rocket the corporation into the next stratum or bring it to thudding demise. He flies by the seat of his pants and prefers that to first-class. He loves the uncertainty.

Although some of those images about the decision-making processes of a business builder might be true, Jeff McMullen shakes his head at the idea that entrepreneurial behavior is the exclusive domain of rugged individualists. McMullen, who studies entrepreneurial decision-making, prefers to focus upon the situational characteristics people find themselves in rather than some defining personality trait as the predictor of such behavior. Despite a seemingly exhaustive search, researchers have not found the entrepreneurial gene, he said. Life is too complex.

"We choose goals that demand a certain type of thinking," he said. "You may be passionate about an idea and realize that creating something new is going to be risky, but that doesn't mean you enjoy risk for its own sake." Pointing to research that suggest that most entrepreneurs don't consider themselves gamblers, McMullen argues that risk, like beauty, is often in the eye of the beholder. "What you or I perceive as incredibly risky may look like a sure bet to someone who is knowledgeable, experienced, and passionate about an idea. For her, continuing in the same dead-end job with no promise of personal fulfillment may seem far more costly than taking a reasonable chance on bringing a dream to life."

The assistant professor of management at Baylor University found opportunities to study the subject of entrepreneurial decision making after getting his bachelor of accountancy at New Mexico State University. Before pursuing his master's and Ph.D. degrees at the Leeds School of Business at the University of Colorado at Boulder, he audited numerous companies for KPMG, Denver's Information, Communications and Entertainment division. His clients ranged from mom-and-pop shops to new ventures.

"I loved that. I liked high-growth firms, people trying to turn (the firm) into something big. They were excited about what they were doing, and it was fun to work with them."

This period of his life helped lead him to his current research on decision-making and to a paper titled "Uncertainty in the Theory of the Entrepreneur," which is due to be published by the Academy of Management Review. It's also led him to research on the subject of opportunity recognition, or how people go about recognizing entrepreneurial opportunities.

Although lots of methods exist, one way is for people to identify needs in their communities, match them up with personal talents and passions, and ask themselves whether they can fill the need profitably. In other words, entrepreneurs think win-win and strive to come up with ways to benefit themselves by benefiting those around them. "It's not altruism, but it is a close cousin," added McMullen. "Entrepreneurship begins with giving of one's time, energy, and resources in the hope that enough value will be created to satisfy customers while leaving enough to make the endeavor worth the entrepreneur's while."

His working title for this theory is "Murder, She Wrote," with a tweak. Where that television series identified murderers with a means, motive and opportunity, his theory deals with a motive (passion, money, influence, etc); the means to do the job (know-how and other resources); and the opportunity (needs in the communities of which the entrepreneur is a part). But where do these opportunities lie? To discover the answer, entrepreneurs must look to their situation or environment.

"I can't predict anything unless I know the context in which you live," said McMullen. "Take a great writer, for example. If Steinbeck had not been from California, would he have written The Grapes of Wrath? He would have been a great writer anywhere, but he drew heavily from the opportunities provided by his environment."

He sees the pattern everywhere -- in programs his 5-year-old watches on television, and even in the Bible, where Jesus tells the rich man he must give away his means to get into heaven. Although some people interpret this to mean Jesus dislikes wealth, McMullen disagrees. "I don't think Jesus has a problem with wealth, per se, but rather with what wealth does to a person -- it can insulate you from realizing your dependency on God," he said. Wealth weakened the ruler's dependence on, and need of, God (motive) and as a result prevented him from seeing the opportunity of grace that Jesus presented.

The lesson for the entrepreneur searching for opportunity is that he must evolve and not forget his dependency on both current and future customers. "If things are going really well, it's hard to continue looking for the next opportunity, but he mustn't get complacent." This means he must keep asking himself what the needs are around him.

For the Baylor professor, finding one area to focus on has been a struggle. He has a passion for both history and literature, and knew auditing wasn't the path he would follow. "It was taxing," he said. "People would dread you coming. You go in on a Monday and you'd even hear them say, 'The auditor is coming.' By Friday you've won them over. But it would start all over again next week."

He got some job offers that almost lured him from his graduate school path, one in particular with a company that was about to go through the roof. "I chose to go to school, and that was really tough," he said. He watched the company's fortunes grow, then shrink, all in the space of a few years. It was proof to McMullen that following your heart can work out right. He followed it into theory and research, where he can look creatively at new ideas and frameworks and try to explain how entrepreneurs and business work.

Seeing the right path has not always been easy. "It's tough for a fox to become a hedgehog," he said, referring to the theory in Isaiah Berlin's essay on Tolstoy, "The Hedgehog and the Fox." (The fox knows many things, but the hedgehog knows one big thing.)

Jim Collins expanded on the fox-hedgehog essay in his book, Good to Great, in which he examines merely good companies as well as great ones. The good ones are foxes, Collins said, organizations that try new tricks and get short-term results. The great ones are the hedgehog organizations that discover good execution of what they do well is the key to greatness.

Scholars often face the dilemma of being foxes instead of hedgehogs, said McMullen. Still, his own experiences help him counsel students who worry they are on the wrong path, believe there is only one path to success, and fear that they won't find it. "The key is to go out and try stuff, and discover what is it you like and don't like."

Baylor University