Culture Norms and Personality Traits Influence on Entrepreneurship
Culture Norms and Personality Traits Influence on Entrepreneurship
Entrepreneurs are considered a rare breed in that they would take risk more than the returns they earn, accept lower than median earnings when compared to similarly skilled wage-earners and hold poorly diversified portfolio (Puri & Robinson, 2005)
During the start up stages, founding members are usually more passionate as they were the ones who nurtured the firm to its present status and would remain so on all activities concerning the firm. They tend to worry about future prospects and have a high locus of control believing that their life’s event could be controlled (Ang and Hong, 2000). Thus, when failures occur it would attribute it to their own actions. In studies comparing Hong Kong and Singapore Chinese entrepreneurs and SMEs, Singapore Chinese were found to be more risk adverse. It is a given that a Singapore Chinese entrepreneur and a Chinese from elsewhere display many similar traits.
The idea that entrepreneur thrive on ambiguity and act on incomplete information suggests that entrepreneur’s outlook is one primarily based on optimism rather than on proper study and information gathering (Puri et. al. (2005). Possession of personality characteristics alone does not imply that any individual has what it takes to be an entrepreneur. Motivation also is needed to drive an individual to have the entrepreneurial spirit. Therefore, there are two components to an entrepreneurial spirit – the ability or personality component as well as the motivational component. (Ang and Hong, 2000)
Given that Singapore’ population is seventy five percent Chinese, it has strong links with Confucianism, therefore it is not uncommon for this cultural element to be used to guide societal norms of which risk-taking propensity is not a common characteristic. The emphasis would be on risk avoidance and assurance seeking (Redding, 1993), thus giving rise to the pursuant of formal education for a corporate job. Typical characteristics of a Chinese family run business was it was inherited, coupled with paternalism, hierarchy, responsibility, mutual obligation, family atmosphere, personalism, and protection exists (ibid, 1993). These characteristics discourage change and impede entrepreneurial growth as it encourages conformity to social norms. The wider effect was government policies being biased to these values and the overbearance nature of government on society at large.
Compliance is also a pervasive feature in Confucianism, thus creating a socio-economical paradox that needs to be undone in order to encourage more entrepreneurs. Intervention is then necessary by the Government to move from the mentality of one of compliance for efficiency and productivity (factory concept) to one of innovation and creativity (Low, 2001). Due to societal lack of tolerance to failures the inculcation of risk taking and sense of internal control would be challenging for Singapore Government. The review of bankruptcy laws and risk sharing by providing equal amount of funding for equivalent capital raised (Spring, 2007) are small positives steps towards being more being self-reliant. (Ang, Hong 2000).
Due to the high levels of internalities of an entrepreneur, problem resolution would be of the quick nature so that externalities are controlled for. For such entrepreneurs, this may spell dire consequences, as wrong decisions may be committed before sufficient analyses have been made. Coupled with the risk-taking nature of entrepreneurs, such a scenario is highly possible. Whilst risk taking is typical of entrepreneurial spirit, potential entrepreneurs should realise that the element of risk needs to be migrated from one of risk bearing to one of risk management when the firm obtains a certain maturity.
Entrepreneurs should realize that trying to hold everything in one’s own hands may jeopardize the business. The patriarchs of many local Chinese family businesses are unwilling to relinquish control, thus resulting in poor management. Therefore, proper delegation of authority and empowerment are tools that entrepreneurs need to master in light of their tendency to control. As the nature of entrepreneurship is of risk taking, Chinese’s tendency to entrepreneurship would be on the general reliance on externalities rather than on internalities, therefore individuals who processes more internal locus of control are more likely to be entrepreneurial (Ang and Hong, 2000).
For the Chinese entrepreneur, there is a saying that the fortune would be dissipated in the third generation. However this may not be the case if strong cognitive skills based on experience for future generation and a central figure is still in charge and adapting to the competitive environment. An entrepreneur who holds a steadfast belief that has brought him success would likely to continue holding on to the same views to eternity, such persistence could be detriment to the future of the firm (Lok, 2007); even as entrepreneurship is about being perseverance. The problem then is of change and the management of the usual resistance to it. Craftsman entrepreneurs may be at most risk of being in this demise category if he is not able to adapt to market changes and needs should he remain steadfast to his ideals. Taking the portable music devices that work with cassette tapes as an example; whilst it is possible to develop a better player, newer technologies would have cast the older technologies into obsolescence. But then when is it a good time to change and know that it is for the better? Perhaps a lot of it depends on intuition which draws it strength from experience and even the random generation element. In Hertzmark (2001) empirical study of commodity traders, it was observed that consistently a group of traders were able to obtain returns inspite the lack of abilities. The returns are devoid of logic and predictability.
Research on locus of control focused mostly on the notion of internality (of having a sense of control over one’s life) versus externality (Waddell, 1983; Mescon and Stevens, 1982). The findings were mixed about entrepreneurs in general, but the thrust was that entrepreneurs tend to exhibit more internality than the general populace but not more than other managers; and all three studies that examined the correlation between need for achievement and internality found none. (Aspray, William and Cohoon, J. McGrath, 2007)
Entrepreneurs are considered a rare breed in that they would take risk more than the returns they earn, accept lower than median earnings when compared to similarly skilled wage-earners and hold poorly diversified portfolio (Puri & Robinson, 2005)
During the start up stages, founding members are usually more passionate as they were the ones who nurtured the firm to its present status and would remain so on all activities concerning the firm. They tend to worry about future prospects and have a high locus of control believing that their life’s event could be controlled (Ang and Hong, 2000). Thus, when failures occur it would attribute it to their own actions. In studies comparing Hong Kong and Singapore Chinese entrepreneurs and SMEs, Singapore Chinese were found to be more risk adverse. It is a given that a Singapore Chinese entrepreneur and a Chinese from elsewhere display many similar traits.
The idea that entrepreneur thrive on ambiguity and act on incomplete information suggests that entrepreneur’s outlook is one primarily based on optimism rather than on proper study and information gathering (Puri et. al. (2005). Possession of personality characteristics alone does not imply that any individual has what it takes to be an entrepreneur. Motivation also is needed to drive an individual to have the entrepreneurial spirit. Therefore, there are two components to an entrepreneurial spirit – the ability or personality component as well as the motivational component. (Ang and Hong, 2000)
Given that Singapore’ population is seventy five percent Chinese, it has strong links with Confucianism, therefore it is not uncommon for this cultural element to be used to guide societal norms of which risk-taking propensity is not a common characteristic. The emphasis would be on risk avoidance and assurance seeking (Redding, 1993), thus giving rise to the pursuant of formal education for a corporate job. Typical characteristics of a Chinese family run business was it was inherited, coupled with paternalism, hierarchy, responsibility, mutual obligation, family atmosphere, personalism, and protection exists (ibid, 1993). These characteristics discourage change and impede entrepreneurial growth as it encourages conformity to social norms. The wider effect was government policies being biased to these values and the overbearance nature of government on society at large.
Compliance is also a pervasive feature in Confucianism, thus creating a socio-economical paradox that needs to be undone in order to encourage more entrepreneurs. Intervention is then necessary by the Government to move from the mentality of one of compliance for efficiency and productivity (factory concept) to one of innovation and creativity (Low, 2001). Due to societal lack of tolerance to failures the inculcation of risk taking and sense of internal control would be challenging for Singapore Government. The review of bankruptcy laws and risk sharing by providing equal amount of funding for equivalent capital raised (Spring, 2007) are small positives steps towards being more being self-reliant. (Ang, Hong 2000).
Due to the high levels of internalities of an entrepreneur, problem resolution would be of the quick nature so that externalities are controlled for. For such entrepreneurs, this may spell dire consequences, as wrong decisions may be committed before sufficient analyses have been made. Coupled with the risk-taking nature of entrepreneurs, such a scenario is highly possible. Whilst risk taking is typical of entrepreneurial spirit, potential entrepreneurs should realise that the element of risk needs to be migrated from one of risk bearing to one of risk management when the firm obtains a certain maturity.
Entrepreneurs should realize that trying to hold everything in one’s own hands may jeopardize the business. The patriarchs of many local Chinese family businesses are unwilling to relinquish control, thus resulting in poor management. Therefore, proper delegation of authority and empowerment are tools that entrepreneurs need to master in light of their tendency to control. As the nature of entrepreneurship is of risk taking, Chinese’s tendency to entrepreneurship would be on the general reliance on externalities rather than on internalities, therefore individuals who processes more internal locus of control are more likely to be entrepreneurial (Ang and Hong, 2000).
For the Chinese entrepreneur, there is a saying that the fortune would be dissipated in the third generation. However this may not be the case if strong cognitive skills based on experience for future generation and a central figure is still in charge and adapting to the competitive environment. An entrepreneur who holds a steadfast belief that has brought him success would likely to continue holding on to the same views to eternity, such persistence could be detriment to the future of the firm (Lok, 2007); even as entrepreneurship is about being perseverance. The problem then is of change and the management of the usual resistance to it. Craftsman entrepreneurs may be at most risk of being in this demise category if he is not able to adapt to market changes and needs should he remain steadfast to his ideals. Taking the portable music devices that work with cassette tapes as an example; whilst it is possible to develop a better player, newer technologies would have cast the older technologies into obsolescence. But then when is it a good time to change and know that it is for the better? Perhaps a lot of it depends on intuition which draws it strength from experience and even the random generation element. In Hertzmark (2001) empirical study of commodity traders, it was observed that consistently a group of traders were able to obtain returns inspite the lack of abilities. The returns are devoid of logic and predictability.
Research on locus of control focused mostly on the notion of internality (of having a sense of control over one’s life) versus externality (Waddell, 1983; Mescon and Stevens, 1982). The findings were mixed about entrepreneurs in general, but the thrust was that entrepreneurs tend to exhibit more internality than the general populace but not more than other managers; and all three studies that examined the correlation between need for achievement and internality found none. (Aspray, William and Cohoon, J. McGrath, 2007)
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