Frauke schorr mindsets of successful entrepreneurs - aom publication 2010


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Frauke schorr mindsets of successful entrepreneurs - aom publication 2010

  2. 2. Frauke Schorr, Ph.D. MINDSETS OF SUCCESSFUL ENTREPRENEURS – AN EXPLORATORY STUDY ABSTRACT Learning from the experience of accomplished entrepreneurs helps aspiring entrepreneursand researchers alike to gain new insights into successful entrepreneurship factors. In a two-foldresearch process we first explored the experience of becoming successful in entrepreneurship,interviewing accomplished entrepreneurs on their journey of becoming successful. “What is theexperience of becoming a successful entrepreneur?” was the leading question of the first portionof this study. This led to a second step, in which new insights emerged about how successfulentrepreneurs perceive, interpret, and make sense of situations and experiences. The mainquestion here was “What are some essential thinking and behavior patterns that accompaniedthese entrepreneurs in becoming successful?” We categorized the mindsets of the researchparticipants into four distinct different groups: The Satisfied and Dissatisfied Grower mindsetsand the Satisfied and Dissatisfied Maintainer mindsets. In this paper, we introduce theseresearch-based mindset categories and suggest ways these can be used by the entrepreneurialcommunity. 2
  3. 3. Frauke Schorr, Ph.D. If one lives in Silicon Valley, Boston, Hong Kong, or Tel Aviv, one is surrounded bypeople whose lives are implicitly or explicitly touched by entrepreneurs. Many have started acompany, been part of a start-up, or are thinking about pursuing an entrepreneurial career in thefuture. Researchers agree that entrepreneurship plays a significant role in economicdevelopment both locally and globally (Dobrev & Barnett, 2005; Farrell, 2001; Gakiya, 2004). Itis often viewed as the driver of the Unites States economy since “our economy is actually basedupon entrepreneurship, and history has proven that with each economic downturn, it is theentrepreneurial drive and persistence that brings us back” (Kuratko, 2006: 483). This is in largepart the case because “entrepreneurs continue to spur new innovation and create employment”(Small Business Administration, 2009: 8). However, most entrepreneurs do not succeed in building businesses that createsustainable growth. In 2008, the Small Business Administration estimated that while 627,200new firms were established, 585,600 firms closed down their business the same year (SmallBusiness Administration, 2009). Considering the significant impact entrepreneurship has on the well-being of theeconomy, the need to understand entrepreneurial success factors is vital. It is particularlyvaluable to study the entrepreneurial journey, including the development and growth ofentrepreneurs, because “studying a successful entrepreneurial process as such allows for a betterunderstanding of actual successful venturing processes” (Bouchikhi, 1993: 567). Thepsychological make-up of entrepreneurs often takes center stage in such research since“individuals are, after all, the energizers of the entrepreneurial process” (Johnson, 1990: 48).Thus, understanding the mindsets of successful entrepreneurs, including the “distinctive 3
  4. 4. Frauke Schorr, Ph.D.viewpoints, needs, and agendas that determine how an individual views and engages categoriesof events at work” (Culbert, 1996: 330) is a key to supporting entrepreneurs on their path so theycan create sustainable success. Previous research exploring such aspects included the evolution of entrepreneurs fromnovice to expert entrepreneurs (Ericsson & Charness, 1994; Krueger, 2007), noting that whilesome individuals move from novice to expert, others do not. Those who evolved were able to“connect the dots” in a more effective manner (Baron, 2006; Baron & Ensley, 2006) as theirexperience increased. Other researchers investigated the influence of values, beliefs, attitudes,and leadership during the entrepreneurial journey (Bann, 2007), or focused on how entrepreneursrecognize opportunities, the role passion and obsession plays, how they use intuition andimprovisational behavior, and how they address inner development (Herriott, 2000; Hmieleski &Corbett, 2008; Lander, 1999; Langenfeld, 1999; Taylor, 1999). As Wadhwa, Aggarwal, Holly, and Salkever (2009: 4) wrote: “By understanding whatentrepreneurs think and believe, we hope to provide more insights into how to better supportentrepreneurs and create societal, political, and economic conditions that can more efficientlyfoster entrepreneurship.” Focusing on the developmental and growth aspects of entrepreneursand investigating entrepreneurs’ essential mindset, including their attitude, beliefs, andperceptions, is still a relatively new approach for research. To contribute to the understanding of the process of successful entrepreneurship, weexplored entrepreneurial development in a two-fold research process. In the following section,we provide an overview to the first part of the process, a phenomenological investigation of theexperience of becoming a successful entrepreneur, using as a core question: “What is theexperience of becoming a successful entrepreneur?” The main focus of this paper is the second 4
  5. 5. Frauke Schorr, Ph.D.portion of our research effort, which involved developing a new entrepreneurial mindset matrixbased on a heuristic research methodology that used as its core question: “What are someessential thinking and behavior patterns that accompanied these entrepreneurs in becomingsuccessful?” THE RESEARCH METHODOLOGIES In this section we discuss the participant sample, selection criteria, age range, industriesthe entrepreneurs worked in, and interview participation. We continue with an overview of thetranscendental phenomenological research process used for the first part of the research andintroduce the research findings. We then move to the second part of the research process todiscuss the heuristic research methodology we used and present the new entrepreneurial mindsetmatrix that emerged as a result of the study. Participant Selection and Sample Our interest lay in interviewing individuals who had founded multiple businesses, ofwhich at least one survived the startup stage. Thus, our research focuses only on successfulentrepreneurs. Successful entrepreneurship was defined as being owner or co-owner of at leastone business at the time of the interview. Ownership was demonstrated by owning a significantpercentage of the business. Furthermore, several of the participants had businesses which hadshown consistent growth for at least 3 years, either in terms of revenue, profit, and/or in thenumber of employees. Participants were selected via convenience and snowball sampling. Ten successfulentrepreneurs (according to our definition of “success”) agreed to spend at least one hourparticipating in semi-structured interviews. They also agreed to review and approve the verbatimtranscriptions of the interviews, as well as to participate in possible follow-up interviews. The 5
  6. 6. Frauke Schorr, Ph.D.interviews lasted between one and four hours. Most participants were interviewed face-to-face.One was interviewed by phone. Nine male and one female entrepreneur participated in this study. The age range wasdiverse, as the youngest participant was 23 years old, and the oldest was 67. All participantswere serial entrepreneurs and founders of their entrepreneurial ventures. The number ofbusinesses owned by the 10 participants over the course of their professional lives ranged from 2to 42. Participants pointed to an increase in employees and revenues during ownership of theircompanies as the measurement of their entrepreneurial success. The types of businesses represented were quite diverse, including business consulting,communication training and seminar businesses, a capital investment company, a webtechnology appliances venture, a technology appliances company, a photography business, atelecommunications company, a biometric services company, a boutique hotel chain, and abiotechnology company. Transcendental Phenomenological Process We selected Moustakes (1994) transcendental phenomenological approach, whichallowed us to investigate the experience of becoming a successful entrepreneur through thesubjective lenses of the participants. We assumed that the unique perspectives of theentrepreneurs would shed new light on the evolution of successful entrepreneurship. Moustakas’approach was compelling, because of the way it established conditions for “disciplined andsystematic efforts to set aside prejudgments regarding the phenomenon being investigated… tolaunch the study as far as possible free of preconception, beliefs and knowledge of thephenomenon from prior experience and professional studies” (Moustakas, 1994: 22). Using thetranscendental frame helped us uncover the meaning and essence of the lived experience of 6
  7. 7. Frauke Schorr, Ph.D.becoming a successful entrepreneur. Moustakas’ modified version of van Kaams (1966) seven-step analysis process provided the guiding frame for conducting the data collection and analysis.The final themes that emerged from the participant group as a whole provided new perspectivesfor understanding the experience and meaning of becoming a successful entrepreneur. Table 1provides a visual representation of these final themes. -------------------------------- Insert Table 1 about here -------------------------------- The research process began with self-search, self-dialogue, and self-discovery, focusedon consciously receiving, accepting, and supporting what comes to the researcher as“fundamental awareness” at this stage of reflection. The second phase of immersion draws fromexperiences surrounding the core question of the phenomenological research: “What is theexperience of becoming a successful entrepreneur?” Based on the insights drawn from the firstcore question, we wanted to explore the question: “What are some essential thinking andbehavior patterns that accompanied these entrepreneurs in becoming successful?” During the initial portion of the research process, Author1 (who conducted theinterviews) noticed that the entrepreneurs seemed to employ several distinctly different thinkingand behavior patterns – an insight that did not fit neatly into the phenomenological researchparadigm. The notion that there might be distinctly different mindsets among the successfulentrepreneurs of this group presented a perspective on entrepreneurial success that was not foundin previous studies. In order to capture these new insights, the original phenomenologicalresearch method was enriched with an additional frame that provided the methodologicalfoundation for the second part of the study: a heuristic research analysis as suggested by 7
  8. 8. Frauke Schorr, Ph.D.Moustakas (1990, 2001) in order to explore and describe the mindset patterns perceived amongthe participants. Heuristic research process Moustakas’ heuristic analysis process is comprised of the following seven phases thatunfold in an informal, intuitive manner: 1) Initial engagement; 2) Immersion; 3) Incubation; 4)Illumination; 5) Explication; 6) Creative synthesis; and 7) Validation of heuristic research. In alignment with Moustakas (1990), this second step should include interactions withpeople, hunches, dreams, intuition, and a self-dialogue. Following this phase, when no furthersignificant new information emerges, the third phase of incubation takes place. In this phase,Author1 utilized intuition and tacit knowledge, defined as “the deep structure that contains theunique perceptions, feelings, intuitions, beliefs, and judgments housed in the internal frame ofreference of a person that governs behavior and determines how we interpret experience”(Moustakas, 1990: 32) to make connections between the data derived from thephenomenological analysis process and the main research question of “What is the experience ofbecoming a successful entrepreneur?” This led to the next stage: illumination. In this stage, new understandings of thephenomenon emerged, which were then envisioned as holistically as possible in the explicationstage. The final portion involved expressing insights in a creative synthesis of the data, whichled to the distinctions that we labeled the Grower and Maintainer mindsets. We approached thedata using Moustakas (1990: 24) notion of indwelling, described as “conscious and deliberate,yet it is not lineal or logical. It follows clues wherever they appear; one dwells inside them andexpands their meanings and associations until a fundamental insight is achieved.” 8
  9. 9. Frauke Schorr, Ph.D. In the next section, we introduce a matrix that characterizes four distinct mindsets thatemerged from the patterns we observed. We conclude with suggestions for future research. FOUR MINDSETS OF SUCCESSFUL ENTREPRENEURS As we analyzed the interview data, we began to perceive distinct patterns among theentrepreneurs’ reflections on their paths. The best term for describing what we saw is that of amindset, defined as “distinctive viewpoints, needs, and agendas that determine how an individualviews and engages categories of events at work” (Culbert, 1996: 330). We found that thereseemed to be common mindset themes according to which the entrepreneurs perceived,interpreted, and responded to situations and experiences. We coined the term Growers for those entrepreneurs who perceived their path as an ever-evolving, continuous process. In their reflections on their entrepreneurial path, theseentrepreneurs described how they utilized achievements as stepping stones for new endeavors.As they explained it, reaching certain success “plateaus” allowed them to access “more possibleresources” and “more foundation” from which they could “widen the bandwidth” and grow andinvolve to the next level. They accepted and actively sought new roles, most often in leadership,and evolved in their current roles, always seeking a new level. On the other hand, Maintainers described their achievements as plateaus that they soughtto preserve. Through their reflections of their entrepreneurial journey it became apparent thatthey were mainly concerned with sustaining a certain level of success. Their businesses mighthave shown growth comparable to those of the Growers, but the concern of these entrepreneurswas to maintain the already achieved success rather than to expand their business. For example,one entrepreneur in the Maintainer mindset recalled a situation where the current success levelwas threatened by someone trying to steal intellectual property. This entrepreneur put 9
  10. 10. Frauke Schorr, Ph.D.considerable energy into preserving and protecting the existing achievements to maintain thecurrent level of success. Many entrepreneurs in the Maintainer mindset refrained from taking on new roles orconsidering other people’s opinions for business advice. One entrepreneur with this mindsetstated: “I do not take the expert opinion” in order to remain “in charge of what I do with nobodytelling me what to do.” Another added that being in the role of an industry expert allowed him tostay in complete control of interaction with clients, ensuring that business was conducted exactlyhow he envisioned it. Instead of seeking new challenges, entrepreneurs in the Maintainermindset preserved their original roles of industry expert and entrepreneur. Table 2 highlights the insights of these Grower and Maintainer mindset categories. -------------------------------- Insert Table 2 about here -------------------------------- We perceived sub-categories within the Grower and Maintainer mindsets as well. Anattitude of satisfaction versus dissatisfaction appeared to impact how these entrepreneursexperienced becoming successful, especially regarding their own role, perception of control ontheir business, and motivation. Some entrepreneurs felt satisfied and content with theirentrepreneurial journey. The satisfied Growers and Maintainers seemed somewhat detachedfrom success, per se, not experiencing the achievement of success as a main focus of theiractions or part of their identity. While acknowledging previous achievements, entrepreneurswith this attitude seemed either to enjoy challenging themselves continuously with furthergrowth, focused mainly on the present moment (Growers), or they enjoyed maintaining theircurrent level of achievement (Maintainers). As they reflected on their journey, their focus waspredominantly on the present time. For example, one entrepreneur in the satisfied mindset 10
  11. 11. Frauke Schorr, Ph.D.recalled that he was driven by “being challenged and finding solutions to challenges and beingpassionate and happy and satisfied.” Another said that his achievements made him feel like hedid “something useful.” The dissatisfied Growers and Maintainers on the other hand seemed more attached toachieving success. They often had difficulty acknowledging their existing achievements assuccesses and pointed out things they still needed to achieve. Dissatisfied Growers talked aboutneeding to challenge themselves towards further success by continuously staying “on the edge”and focusing on future steps, outlining the urgency of continuous self-challenge: “I think that if Istop taking risks then I start to die.” Dissatisfied Maintainers focused on past achievements witha desire to either gain back such success levels or maintain the level of achievement. In neithercase did they focus on the present in the same way as the satisfied Growers and Maintainers. The process of intuitive heuristic analysis enabled us to develop these distinctions whichin turn helped us to perceive key differences among the participants with regard to how theyattributed meaning to success. The Entrepreneurial Mindset Matrix highlights how entrepreneurswith a Grower and a Maintainer mindset were split into subgroups of satisfied and dissatisfiedattitudes, based on the focus of their attention and appreciation of their achievements. Table 3provides a visual representation of this phenomenon. -------------------------------- Insert Table 3 about here -------------------------------- The most successful entrepreneurs tended to be Satisfied Growers. A distinct “in-the-moment” focus became apparent as they reflected on different situations, learnings, andexperiences of their entrepreneurial path. This seemed to be paired with general contentmentwith their entrepreneurial past and present, combined with continuous curiosity and drive to find 11
  12. 12. Frauke Schorr, Ph.D.positive challenges to grow and develop themselves and their companies in new and meaningfulways in the future. Satisfied Growers generally had the most successful entrepreneurial careersin terms of business growth and number of businesses owned out of the entire participant group. It is interesting to note that age did not seem to be an indicator for any of the mindsetcategories. For instance, some younger as well as older participants displayed Maintainercharacteristics (satisfied as well as dissatisfied), while others were found in the Growercategories. IMPLICATIONS AND FUTURE RESEARCH More research is needed to understand the journey of successful entrepreneurs and inparticular their mindset – how they perceive, interpret, and make sense of situations andexperiences as they grow and expand their businesses. We are interested in further developingthe initial insights presented in this paper on the Grower and Maintainer mindsets and their sub-categories of satisfied and dissatisfied attitudes. Further exploration using a larger group is anatural first step. Exploring the mindset themes in more depth could help both scholars andentrepreneurs to better understand what is involved in becoming successful in entrepreneurship. It would be useful to explore the level of success entrepreneurs reached within thedifferent mindsets, since there was a tendency for the most successful in terms of asset growth tobe Satisfied Growers. This would provide valuable knowledge for researchers and aspiringentrepreneurs alike. Utilizing research methodologies such as grounded theory, portraiture, casestudies, or ethnography could bring different perspectives to the topic, focusing on alternateaspects of the entrepreneurial experience. A further study of thinking and behavioral patterns of successful entrepreneurs with aSatisfied Grower mindset could provide new insights to questions that are valuable in 12
  13. 13. Frauke Schorr, Ph.D.understanding the journey of successful entrepreneurs better: With what kind of attitude didthese entrepreneurs start their journey? How did the attitude shift over time? Did someentrepreneurs always have a Satisfied Grower mindset? If they adopted it over time – how didthey experience the shift? What are entrepreneurs’ beliefs about their mindset and attitudetowards their entrepreneurial success? Do entrepreneurs themselves perceive their mindset as acrucial support to becoming successful? A research study that focuses on the thinking and behavioral patterns of successfulentrepreneurs in a Satisfied Grower mindset could help to develop a modeling process based onpeople who possess such a mindset. Such insights could support aspiring entrepreneurs totransfer distinct elements into their own situation, adopting a Satisfied Grower mindsetthemselves. Investors may also find it useful to learn more about the Satisfied Grower mindsetgiven that the Satisfied Grower entrepreneurs in this study were financially more successful thanentrepreneurs with other mindsets. This might contribute to decisions as to which entrepreneursto support financially. CONCLUDING REMARKS Previous researchers have provided considerable information about the behavioralaspects of successful entrepreneurs: skill sets that matched specific market needs (Slaughter,1996); a need for achievement (McClelland, 1987; Stewart, Carland, Carland, Watson, & Sweo,2003); a desire to take risks (McClelland, 1987; Stewart, Carland, Carland, Watson, & Sweo,2003) for establishing, sustaining, and growing a business based on opportunistic (Baron, 2006;Berglund, 2006; Slaughter, 1996; Timmons, 1994), innovative ideas (Stewart, Carland, Carland,Watson, & Sweo, 2003; Monaughan, 2000); and the goal of striving for maximum profit 13
  14. 14. Frauke Schorr, Ph.D.(Schutjens & Wever, 2000). As a result we have gained an understanding of what behavioralpatterns comprise a successful entrepreneur. We suggest that an exploration of the mindset patterns of entrepreneurs on the journey ofbecoming successful provides additional insights that can be linked with such behavioralinformation. When we learn about the internal processing of successful entrepreneurs, how theyview and think about behavioral aspects such as decision-making or risk-taking, we gain newknowledge about what precedes the actions that lead to success in entrepreneurship. In otherwords, by investigating the mindset of successful entrepreneurs we are eventually able to get tothe source of what translates into the measurable and observable aspects that are identified assuccessful entrepreneurs’ behavioral patterns. When we began to distinguish what we call the Grower and Maintainer mindsets, wewere able to identify what made some entrepreneurs in this study more successful than others.Additional research applying these concepts may help to further decipher the complex process ofbecoming a successful entrepreneur. 14
  15. 15. Frauke Schorr, Ph.D. TABLE 1 Main Themes among All 10 Successful EntrepreneursItem Description1 Gaining direction and purpose through emotional connections with supporters2 Creating commonly shared visions and values to align self, business, and stakeholders3 Embracing and fostering new roles, skills, and resources to develop the business4 Active self-development through self-challenge and self-reflection5 Making unique contributions by continuously linking entrepreneurial actions to own values, beliefs, and interest areas6 Achieving long-term goals by continuously identifying, reflecting, and adjusting short-term goals 15
  16. 16. Frauke Schorr, Ph.D. TABLE 2 Grower and Maintainer Mindsets Growers MaintainersSuccess is perceived as a continuum Success is attributed to specific moments in timeBecoming continues Becoming ends, being startsSuccess evolves Success is attainedAchievements serve as stepping stone for Achievements are perceived as plateausnew endeavors that need to be preservedEvolve with new roles, grow into roles Stay within original roles, refrain from new roles 16
  17. 17. Frauke Schorr, Ph.D. TABLE 3 Entrepreneurial Mindset Matrix: Experiencing Satisfaction or Dissatisfaction as Growers and Maintainers Satisfied DissatisfiedGrowers Focus on present Focus on the future Somewhat detached from success, Attached to success, part of identity not part of identity Motivated by internal drive Motivated by internal pressureMaintainers Focus on present Focus on the past Somewhat detached from success, Attached to success, part of identity not part of identity Motivated by internal drive Motivated by internal need 17
  18. 18. Frauke Schorr, Ph.D. REFERENCESBann, C. L. 2007. Entrepreneurial lives: A phenomenological study of the lived experience of the entrepreneur, including the influence of values, beliefs, attitudes, and leadership in the entrepreneurial journey. Doctoral dissertation, Capella University, 2007, Dissertation Abstracts International, 67, 12.Baron, R. A., & Ensley, M. D. 2006. Opportunity recognition as detection of meaningful patterns: Evidence from comparisons of novice and experienced entrepreneurs. Management Science, 52(9): 1331-1344.Baron, R. A., & Markman, G. D. 2000. Beyond social capital: How social skills can enhance entrepreneurs’ success. Academy of Management Executive, 14: 106 - 116.Berglund, H. 2006. Researching entrepreneurship as lived experience. In H. Neergaard & J. Ulhoi, (Eds.), Handbook of qualitative research methods in entrepreneurship: 75-93. Cheltenham, UK: Edward Elgar.Bouchikhi, H. 1993. A constructivist framework for understanding entrepreneurship performance. Organization Studies, 14: 549-570.Culbert, S. 1996. Mindset management. Oxford University Press, New York.Dobrev, S. D., & Barnett, W. P. 2005. Organizational roles and transition to entrepreneurship. Academy of Management Journal, 48: 433-449.Ericsson, K.A. & Charness, N. 1994. Expert performance. American Psychologist, 49: 745-747Farrell, L. C. 2001. The entrepreneurial age. New York: Allworth Press.Gakiya, M. 2004. Japanese women’s entrepreneurship: Poignancy and power of passion. Doctoral dissertation, Harvard University, 2004, Dissertation Abstracts International, 65, 05.Herriott, E. A. 2000. Elements of entrepreneurial success: The links among inner competencies, inner development and success. Doctoral dissertation, Maharishi University of Management,. Dissertation Abstracts International, 60, 12.Hmieleski, K. M. & Corbett, A. C. 2008. The contrasting interaction effects of improvisational behavior with entrepreneurial self-efficacy on new venture performance and entrepreneur work satisfaction. Journal of Business Venturing, 23:482-496Krueger, N.F. 2007. What lies beneath? The experiential essence of entrepreneurial thinking. Entrepreneurship Theory and Practice, 31:123-138 18
  19. 19. Frauke Schorr, Ph.D.Kuratko, D. F., Hornsby, J. S., & Naffziger, D. W. 1997. An examination of owners goals in sustaining entrepreneurship. Journal of Small Business Management, 35: 24-34.Langenfeld, M. L. S. 1999. Female entrepreneurs and their perceptions of the start-up experience. Doctoral dissertation, The Fielding Institute. Dissertation Abstracts International (60) 08, 3170.McClelland, D. C. 1987. Characteristics of successful entrepreneurs. Journal of Creative Behavior, 21: 219-233.Monaughan, S. E. 2000. Capturing the entrepreneurial spirit: A study to identify characteristics of entrepreneurs (Doctoral dissertation, California School of Professional Psychology, Los Angeles, 2000). Dissertation Abstracts International, 61 (03), 1683.Schutjens, V. A. J. M., & Wever, E. 2000. Determinants of new small firm success. Papers in Regional Science, 79: 135-159.Slaughter, M. P. 1996. Entrepreneurship - economic impact and public policy implications – an overview of the field. Retrieved February 7, 2006, from Kauffman Center for Entrepreneurial Leadership Web site: Business Administration 2009. Economy: A Report to the President, 2009. Retrieved January 9, 2010 from Small Business Administration, Website:, W. H., Carland, J. C., Carland, J. W., Watson, W. E., & Sweo, R. 2003. Entrepreneurial dispositions and goal orientations: A comparative exploration of United States and Russian entrepreneurs. Journal of Small Business Management, 41: 27-46.Taylor, K. B. 1999. From employee to employer: The process and experience of becoming an entrepreneur. Doctoral dissertation, The Union Institute, 1999. Dissertation Abstracts International 60 (10), 3722.Wadhwa, V., Aggarwal, R., Holly, K.Z., Salkever, A. (2009). The Anatomy of an Entrepreneur: Making of a Successful Entrepreneur. Retrieved on January 9, 2010 Kauffman, The Foundation of Entrepreneurship Website: entrepreneur.pdf+The+Anatomy+of+an+Entrepreneur: +Making+of+a+Successful+Entrepreneur.&cd=1&hl=en&ct=clnk&gl=us&client=firefox -a 19
  20. 20. Frauke Schorr, Ph.D. 20