Defining Entrepreneurship: From Dataset to Mindset

What is entrepreneurship?

The Kauffman Foundation strives to be the leading foundation in entrepreneurship. Yet, we struggle to answer this question.

This question is deeper than a dictionary search. This question has become a philosophical debate among my friends, and among the ecosphere of researchers, policymakers, practitioners, and entrepreneurs themselves.

Is an entrepreneur anyone who is self-employed? A consultant? An Uber driver? Do they need to have employees? Is an entrepreneur any business owner, or does it require a new innovation or creation? At what point in that firm’s life does the founder lose the title of “entrepreneur” to simply become “CEO” or “business owner”?

For researchers, it might depend on the dataset.

For starters, survey data and administrative data lead researchers to study entrepreneurship in different ways.

Survey data can often offer more detail, allowing for more answers to questions about how an entrepreneur spends their time, what their business does, and whether it’s innovative. Administrative-based data, such as the U.S. Census Bureau’s Business Dynamics Survey (BDS), cannot track the traits of a founder as well as survey data, but provides coded characteristics like firm age, firm size, or MSA by following their tax information. While survey data allows researchers to look at the founder characteristics, administrative data gives researchers a better picture of firm characteristics.

For business-owners, it might depend on the mindset.

The demographics of entrepreneurs cannot be ignored. Gender, race, immigration, and age play into the definition of entrepreneurship in several ways.

I spend a lot of time talking about how unhelpful it is that the glorified image of an entrepreneur is a young, white man. Besides the fact that the data shows that entrepreneurs are typically white men in their forties and fifties, there are many barriers preventing women and people of color from even entering into entrepreneurship. From the definitional standpoint, however, women are less likely to consider themselves “entrepreneurs,” but rather, “business owners.”

The boomer population is nuanced in their approach to entrepreneurship. Some boomers start businesses as a way to say active and pursue a passion after retirement, while others start businesses to add to build wealth. For some, it is simply harder to find a job compared to younger workers. The State of the Field website explains that the field of research around boomer entrepreneurship remains widely under-studied. 

Demographics and motivations affect how a person perceives themselves in the context of entrepreneurship. 

Let’s have the conversation.

Dan Isenberg, professor of entrepreneurship practice at Babson College has said that entrepreneurship needs to be surprising and unpredictable, and “entrepreneurship is extraordinary value creation and capture, which almost always entails a few people taking a scary personal risk on some assets (ideas, reputation, cash, or whatever) which the market undervalues. The entrepreneur is almost always swimming against the current.”

Tech entrepreneur, Jeff Hoffman’s view is that entrepreneurs are simply problem solvers.

Harvard Business School’s Howard Stevenson says “Entrepreneurship is the pursuit of opportunity without regard to resources currently controlled.”

Brad Feld, one of the founders of Techstars says, “An entrepreneur is someone who creates a new company from scratch,” and explains that the word itself has become used too loosely.  

This topic is top of mind for many right now. Recently, John Hagel III wrote in the Harvard Business Review that it’s time for an expanded definition of entrepreneurship. “[S]omeone who sees an opportunity to create value and is willing to take a risk to capitalize on that opportunity; some elements of this are opportunity spotting, risk taking, and value creation.”

How do you define an entrepreneur? Send your definition in a Tweet to @AlexKrause and let’s see what happens!

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