Entrepreneur

A definitional review. Citations follow IEEE style; see References.

Abstract

Entrepreneur is among the oldest terms in economics and among the least settled. A review of the definitional literature identifies fifteen elements that recur across two and a half centuries of usage, distils six that a workable definition should contain — and then declines to close the question, on the ground that the definition follows from the definer’s standpoint [1]. The empirical literature reaches a parallel conclusion from the other direction: findings replicate inconsistently because the populations labelled entrepreneur differ so widely that a single portrait is the wrong target [2]. This article sets out the recurring elements, the lineage, the boundaries against adjacent roles, what the trait evidence reports, and what none of it establishes.

I. Definition

The most complete recent attempt at a consolidated definition is a six-element one:

An entrepreneur is an actor who innovates by recognizing opportunities; he or she makes moderately risky decisions that leads into actions requiring the efficient use of resources and contributing an added value [1].

The six — innovation, opportunity recognition, risk management, action, use of resources, added value — are a distillation of fifteen elements found to recur across the definitional literature. The nine dropped are instructive, and include venture creation, leadership, projective and visionary thinking, creativity, control, anxiety and rebellion or delinquency [1].

Two features are easy to misread. Risk is managed, not sought — the wording is moderately risky decisions, and the underlying activity table gives the risk-management characteristics as thriftiness, security, conservatism, moderate risk-taking and tolerance of uncertainty and ambiguity [1]. And venture creation is one element among fifteen, not the definition — the same review applies the term across venture creators, technopreneurs, intrapreneurs, extrapreneurs, social entrepreneurs and the self-employed alike [1]. Shorter forms are offered as legitimate compressions rather than rivals: entrepreneurs are people who are able to translate thoughts into action; dreamers who do [1]. The review is explicit that none of these is authoritative:

In our view, however, there is no single, absolute definition of what an entrepreneur is and does… Everything depends on the standpoint or perspective of the person creating the definition [1].

It closes by endorsing Casson’s judgement — quoted in [1] — that the most difficult part of studying entrepreneurship is to define who and what an entrepreneur is.

II. Origins

Etymology. Entrepreneur is French, from entreprendre, to undertake; split as entre (between) and preneur (taker), it reads literally as a between-taker. It appears in the literature from 1253 in variant forms, reaches its present spelling around 1433, and acquires its modern sense of an enterprise leader only in the early nineteenth century [1].

The economists’ entrepreneur. Three figures are identified as the field’s pioneers, all cited within [1] rather than read directly for this article:

• Cantillon (1755) — a person who buys a raw material at a known price to sell it at an unknown one; an intermediary who bears the risk of the price gap.
• Say (early nineteenth century) — the emphasis shifts to innovation and added value, doing new things and doing more with less; Schumpeter, quoted in [1], credits Say with first separating the role of the entrepreneur from that of the capitalist.
• Schumpeter (1934) — innovation is attached to five combinations: a new good, a new method of production, a new market, a new source of supply, a new organisation of an industry. None of the five is new venture creation. He also used entrepreneur to cover what would later be called intrapreneurs, the term not yet existing [1].

Where the popular picture diverges. In the classical lineage the entrepreneur is a function, not an occupation or a legal status; owning a business is recorded as the lay understanding, against which specialists use a larger set of elements [1]. The founder-of-a-firm reading enters through a later behavioural and management literature [1], and the modern research programme on entrepreneurial personality is dated to Knight’s Risk, Uncertainty and Profit (1921) — cited in [2] — which is where risk-bearing becomes the popular signature of the role. None of the three pioneers worked from a representative sample: their reference point was people they happened to know who had played entrepreneurial roles [1].

III. What distinguishes an entrepreneur

From a manager. This is the boundary the literature works hardest. Entrepreneurial actors routinely perform managerial activities, but those activities complement the entrepreneurial ones rather than constitute them; the essential act, on which a definition should rest, is recognising and developing an entrepreneurial opportunity [1]. The empirical literature uses managers as its standard comparison group for precisely this reason [2].

From an owner, and from a capitalist. Ownership is the lay criterion and the weakest one, and the differentiation of entrepreneurs from small-business owners is a long-standing question in the field [1]; the empirical literature supplies the substantive difference, in that most small-business owners do not intend to innovate or expand (Hurst and Pugsley, reported in [2]). Separation from the capitalist is attributed to Say and reaffirmed by Schumpeter, who held that the risk falls on the investor rather than the entrepreneur [1], [2].

From a businessman, in practitioner material. Practitioner sources draw the line much more loosely. A training handbook defines an entrepreneur as someone who identifies a problem, devises an innovative solution and provides that solution to everybody in the form of a business — separating the entrepreneur from the innovator by that last step alone [4]. A two-page informal note contrasts a businessman working from an existing model with an entrepreneur building one from scratch, and calls entrepreneurs crazy risk takers who sky dive into risks [5].

⚠️ Weighting. [4] and [5] carry no named authors and no year, and [5] closes with a solicitation for financial services. They are cited as evidence of how the term is used in practice, not as evidence about entrepreneurs; on risk, [5] contradicts both moderately risky decisions [1] and the unresolved state of the empirical literature (§IV.C).

IV. What the evidence reports

A. Entrepreneurship is also framed as a competence, not only an occupation

The EU competence definition treats it as an ability: entrepreneurship is an individual’s ability to turn ideas into action. It includes creativity, innovation and risk-taking, as well as the ability to plan and manage projects in order to achieve objectives [3]. Two claims follow. The skills provide benefits regardless of whether a person sees their future as starting a business, encompassing creativity, initiative, tenacity, teamwork, understanding of risk, and a sense of responsibility; and they are not related to a specific occupation, discipline or qualification [3]. The same briefing concedes that there is no established, simple definition of the entrepreneurial skillset, and reproduces an OECD grouping into technical, business-management and personal-entrepreneurial skills [3].

B. Traits that replicate, and traits that do not

Openness to experience is the most consistent finding: entrepreneurs score higher than managers and than the general population across a meta-analysis of 23 studies and subsequent work. Higher conscientiousness — driven by its achievement facet rather than dependability — is the largest single reported difference from managers. Extraversion produces no reliable difference; agreeableness and neuroticism differences are small and unstable. On entry, recent work mostly agrees that internal locus of control and need for achievement predict entry, and that entrepreneurial self-efficacy is linked to business founding and to business planning (all reported in [2]).

C. Risk tolerance is contested, not established

A meta-analysis of 14 studies found entrepreneurs more risk-prone than managers; a counter-analysis of 14 other studies, using projective rather than self-report instruments, found them more risk-avoidant than managers. Work on the myth of the risk-tolerant entrepreneur compared 1,261 nascent entrepreneurs with general-population respondents and found the entrepreneurs significantly more risk-averse; and within-group differences are large, opportunity-motivated entrepreneurs being more risk-tolerant than necessity-motivated ones (all reported in [2]). The review’s own summary is that there is no uniform consensus on how risk preferences should be elicited or how they differ.

D. Entry is studied; performance is not

The traits that predict entry are not the traits that govern exit — one longitudinal study reports personality explaining about 30% of the variance in these transitions, led by risk tolerance, locus of control and openness, with agreeableness governing exit and only internal locus of control influencing both; another found need for achievement, locus of control and risk-taking predicting early revenue but not longer-term survival (both reported in [2]). The review states plainly that how firm performance connects to entrepreneurial personality is woefully understudied [2].

V. Scope of adoption

The term is applied across a very wide range: the definitional literature extends it to venture creators, technopreneurs, intrapreneurs, extrapreneurs, social entrepreneurs and the self-employed [1], and academic research applies it to populations ranging from venture-backed founders to Main Street small-business creators to students attending an entrepreneurship class [2].

In policy the competence reading has been formally adopted — entrepreneurship is a key competence for lifelong learning, with a stated expectation that all young people receive at least one practical entrepreneurial experience before leaving compulsory education — and because the competence resists direct measurement, adoption is tracked by proxy through self-employment rates and business-creation density [3]. Provision, pedagogy and effects are a separate literature; see the companion review of entrepreneurship education.

VI. Limitations

The definition is open by argument, not by neglect. The definitional review concludes that no single absolute definition exists and that each discipline could legitimately hold its own, provided it declares the contingencies it rests on [1]. Any statement of the form an entrepreneur is X is a choice of standpoint and should be reported as one.

The populations do not transfer. The trait literature shows common results and many points of disagreement, reflective of the heterogeneous nature of entrepreneurship, and labels studies by the population studied — Main Street versus those backed by venture capital — precisely because some of the heterogeneity is irreducible; there is, the review argues, no reason to expect the personality of a twenty-something technology founder to align with that of a fifty-something immigrant founder opening a family convenience store [2]. The split also runs by economy: entrepreneurship rates are about 14% in low- and middle-income countries against 6.7% in high-income ones, and about two-thirds of entrepreneurs in poorer countries are necessity-driven against 22% in high-income ones [2]. Findings from one population are not evidence about another.

Causality is not established anywhere in the trait literature. It is frequently unclear whether traits selected people into entrepreneurship or were developed after entry; pre-measurement does not rule out omitted variables — family wealth can produce both measured risk tolerance and entry — and many samples are small, single-country and self-reported [2]. Coverage compounds this: the reviewed studies draw on the United States, Canada, Australia, New Zealand and European economies, with subsistence entrepreneurship excluded as too sparse [2], while the competence and adoption figures are EU-specific and rest on proxies that are not related within individual countries [3].

Two of the five sources here carry no author and no year ([4], [5]) and are used only as evidence of usage. A sixth document was an image-only scan yielding no extractable text and is not cited, so the popular who is an entrepreneur genre is under-sampled.

References

[1] L. J. Filion, “Defining the Entrepreneur: Complexity and Multi-Dimensional Systems — Some Reflections,” Rogers–J.A.-Bombardier Chair of Entrepreneurship, HEC Montréal, Working Paper 2008-03, Aug. 2008, ISSN 0840-853X. The document states it is a chapter for L.-P. Dana, Ed., World Encyclopedia of Entrepreneurship, Cheltenham, U.K.: Edward Elgar (published 2011, pp. 41–52). ⚠️ Cantillon, Say, Schumpeter, Knight and Casson are cited as quoted within [1]; not consulted.

[2] S. P. Kerr, W. R. Kerr, and T. Xu, “Personality Traits of Entrepreneurs: A Review of Recent Literature,” Harvard Business School, Working Paper 18-047, Nov. 2017. ⚠️ Individual studies attributed above — Zhao and Seibert, Stewart and Roth, Miner and Raju, Xu and Ruef, Hurst and Pugsley, Caliendo et al. and others — are cited as reported in [2]; the primaries were not consulted.

[3] “What Are Entrepreneurial Skills?” EU Skills Panorama Analytical Highlight, prepared by ICF and Cedefop for the European Commission. The document carries the date April 2015 and asks to be quoted as EU Skills Panorama (2014). No named authors; the bibliographic record carries no year.

[4] Basics of Entrepreneurship Handbook. Practitioner training handbook; no named authors and no year in the record. ⚠️ Low evidentiary weight — cited only as an instance of practitioner usage.

[5] “Difference Between Business and Entrepreneurship.” Two-page informal note; no named authors and no year in the record. ⚠️ Lowest evidentiary weight of the sources here — cited as an example of the popular characterisation of entrepreneurs, never as evidence for it.