Evaluating the ‘E’ in E-scan

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Evaluating the ‘E’ in E-scan

Final Version

Bart Sternsdorff

March 2011

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Evaluating the ‘E’ in E-scan

Title:

Evaluating the „E‟ in E-scan

Author:

Bart Sternsdorff

Studentnr: 1486977

University Rijksuniversiteit Groningen

Faculty:

Economics and Business

Master:

Business Administration

course:

Small Business & Entrepreneurship

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Evaluating the ‘E’ in E-scan

Summary: Entrepreneur Consultancy developed the entrepreneur scan to test an individual‟s

talent for entrepreneurship. This thesis reviews the theoretical foundation on which the E-scan is built and compares it with current insights and developments in the entrepreneurship literature. The review concludes that improvements can be made to the theoretical foundation of the E-scan, benefitting Entrepreneur Consultancy. This thesis supports the approach to successful entrepreneurship through competence theory and its components: motivation, characteristics, capabilities and knowledge. However, it provides new insights and additional aspects to the components of an entrepreneur‟s competence.

Scholars emphasize the distinction in entrepreneurial motivation between literature that views pull factors as dominant character and literature that separates the choice for self-employment in either push or pull factors. The former explains that there is always an internal desire to start a business while the latter also acknowledges the fact that people are merely pushed into entrepreneurship. This literature type provides a separation between motivation that stems from a pull or push perspective by defining the opportunity and necessity entrepreneur. The chance of success is according to this second perspective influenced by being either pushed or pulled into entrepreneurship. Scholars provide proof that personality traits, besides influencing entrepreneurial success, explain the choice to start a business. The traits influencing business creation are a need for achievement, a need for autonomy, a need for power and self-efficacy.

The criticized personality traits have gained a renewed interest in the academic community as a result of meta-analytic research. This renewed proof for using personality traits to define the entrepreneur gives justification for testing traits as part of the E-scan. Moreover, it provides support for additional traits like self-efficacy, stress tolerance and innovativeness as contributors to success. Besides meta-analysis, research on the mediating effects of self-efficacy and goal-setting also provide support for linking personality traits to entrepreneurial success. Leading to traits that indirectly influence success.

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Finally, research about the competence knowledge focuses on the training methods for the entrepreneur and the manner in which he can gain experience. The academic community mentions the importance of adjusting the training methods to the individual needs of the entrepreneur as an experiential learner. Resulting in training methods like individual coaching, mentoring and peer groups. In which the entrepreneur can obtain knowledge and develop his entrepreneurial and management skills and even improve several personality traits.

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Preface

This thesis is the is the final step in order to get my Master of Science degree in Business Administration with the specialty Small Business and Entrepreneurship. The subject in this thesis in the E-scan, a test developed by Entrepreneur Consultancy to test an individual‟s talent for entrepeneurship. This thesis shows the recent developments in entrepreneurship literature about the measured competences in the E-scan. I hope that the results provide Entrepreneur Consultancy with the information to improve the E-scan even further.

I would like to thank Martijn Driessen for giving me the opportunity to write my master

thesis about the E-scan. In addition, I would like to thank my supervisor Peter Zwart for his assistance during the entire process of writing. His suggestions and critics were very valuable to me and a true addition to this thesis. Finally, I would like to thank my family for their support during the writing of thesis.

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Table of Contents

Introduction ... 8

1.1 Defining entrepreneurship ... 8

1.2 Defining the entrepreneur ... 9

1.4 Research design ... 11

Competence Theory ... 13

2.1 Competence theory as the foundation of the E-scan ... 13

2.2 Developments in competence theory ... 13

2.3 The importance of cognitions: how entrepreneurs think ... 14

2.4 Implications for the E-scan ... 16

Motivation ... 18

3.1 Motivation as measured by the E-scan ... 18

3.2 Other insights in entrepreneurial motivation ... 18

3.3 Push and Pull factors ... 19

3.4 Economics ... 21

3.5 Psychological ... 22

3.5.1 Motivational traits ... 22

3.5.2 Expectancy theory ... 23

3.6 Entrepreneurial intentions ... 24

3.7 Implications for the E-scan ... 25

Characteristics... 28

4.1 Characteristics as measured by the E-scan ... 28

4.2 Criticism on trait theory ... 28

4.3 Meta-analysis ... 29

4.4 The mediating effect of self-efficacy and goal-setting ... 30

4.5 Entrepreneurial traits that can be added to the E-scan ... 31

4.5.1 Self-efficacy ... 31

4.5.2 Goal-setting ... 32

4.5.3 Tenacity and passion for work ... 33

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4.5.5 Stress tolerance and proactive personality ... 34

4.5.6 Innovativeness ... 34

4.7 Implications for the E-scan ... 36

Capabilities ... 38

5.1 Capabilities as measured by the E-scan ... 38

5.2 Developments in capabilities ... 38

5.2.1 Literature regarding entrepreneurial skills ... 39

5.3 Skills from the behavioral approach ... 41

5.4 Adding new skills ... 43

5.4.1 Cognition ability and decision making ... 43

5.4.2 Social skills ... 44

5.5 Implications for the E-scan ... 45

Knowledge ... 47

6.1 Knowledge as measured by the E-scan ... 47

6.2 Developing entrepreneurial knowledge ... 47

6.3 Entrepreneurial learning ... 48

6.3.1 Academic programs ... 49

6.3.2 Entrepreneurial training ... 49

6.3.3 Peer coaching ... 50

6.3.4 Counseling ... 51

6.4 Implications for the E-scan ... 52

Conclusion ... 53

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Introduction

1.1 Defining entrepreneurship

In the academic community there is difficulty in defining entrepreneurship (Bruyat and Julien 2001; Carsrud and Br

ä

nnback. 2007). Research about it can according to Stevenson and Jarrilo (1990) be divided into three main fields: „what happens when entrepreneurs act, why they act, and how they act‟ (p. 18). Firstly, research about what happens when an entrepreneur acts studies entrepreneurship from an economic perspective. The focus lies on how the economy can benefit from entrepreneurship. In this perspective lies according to Baum, Frese and Baron (2007) the foundation of entrepreneurship. Baum, Frese and Baron (2007) state that economic growth derived from technological change is a result of individuals who see opportunities. This individual is already identified by Schumpeter (1934) as an entrepreneur, who he defines as: “an extraordinary person who promotes new combinations”. Scholars try to find an answer to who this person is in the second research type. They define an entrepreneur on a psychological basis and try to explain why he recognizes opportunities where others do not (Stevenson and Jarrilo, 1990). Finally, there is research on how an entrepreneur acts. This research type focuses according to Stevenson and Jarrilo (1990) on the causes of a company‟s failure or success.

This interest in entrepreneurship comes from the understanding that scholars view it as a significant contributor to economic development in countries and, therefore, an important part of governments public policy. However, Shane (2009) criticizes this and argues that policies which encourage entrepreneurship suffer from an economic growth and job creation myth. Shane (2009) explains that when the government supports each individual to start a business, the results in economic growth and job creation are limited. Instead, public policy should only encourage the entrepreneur who recognizes and exploits an opportunity with growth potential.

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balance these three aspects. The opportunity should have potential, and be more than just a good idea, a team with supplemental knowledge has to be formed and additional resources have to be acquired. It are an individual‟s traits an skills what makes him initiate such a process and what defines him as an entrepreneur (Wenneker and Thurik, 1999).

The viewpoint of Shane (2009) and Timmons and Spinnely (2009) offers a debate about whether someone can be called an entrepreneur or a small business owner. The question than is if it matters what he is. There are certain differences between them (Stewart, Watson, Carland and Carland, 1998). Is a person who owns a small business in designing websites an entrepreneur or in the same matter, the barber at the corner of the street? Or is he a small business owner, who according to Shane (2009) possess: “wage-substitution businesses that have more in common with self-employment than with the creation of high growth companies” (p. 142). Which suffer from high failure rates and result in an economic growth and job creation myth (Shane 2009). In light of Shane (2009), the lesson here is that if an individual wants to start a business, he should possess certain entrepreneurial qualities. If this is not the case, he should develop them to increase his chance of being successful (Baum, Frese and Baron, 2007).

A focus on the person as the driving force of entrepreneurship research and defining it in the terms of Schumpeter, what makes this person extraordinary, will therefore explain his success and the benefits for the economy as a whole. The question now is which qualities make an entrepreneur successful.

1.2 Defining the entrepreneur

There are three approaches to define the successful entrepreneur. They are divided in the search for who the entrepreneur is in the personality approach, on what he does in the behavioral approach and the opportunities he recognizes in the opportunity recognition approach (Kobia and Sikalieh, 2010).

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Another approach which defines the entrepreneur is the behavioral approach. This approach emphasizes the creation of a firm as the focus point of entrepreneurship (Gartner, 1988). The entrepreneur takes actions that result in venture creation (Gartner, 1988). A successful entrepreneur is observed to see how a venture emerges and to determine the necessary skills for successful entrepreneurship.

The opportunity identification approach stresses the importance of the opportunities the entrepreneur recognizes. The focus point of this approach is the objectivity of the existence of opportunities and the subjectivity in which the entrepreneur recognizes opportunities. This subjectivity in recognizing entrepreneurial opportunities explains why some people discover opportunities while others do not. An entrepreneur recognizes opportunities because he differs according Shane and Venkataraman (2000) in the information he possesses and the cognitive properties to interpret that information. The entrepreneur eventually exploits the opportunity because he has specific traits and skills

In conclusion, there are different approaches to define the entrepreneur. All approaches define the entrepreneur as an individual with specific traits and skills but differ in their way of determining what these are. This thesis defines an entrepreneur as a person who recognizes opportunities and is able to exploit those opportunities by possessing specific personal characteristics and skills.

1.3 To be, or not to be, that is the question: The E-scan

The entrepreneurial scan (E-scan) offers an individual insight in his or her entrepreneurial characteristics and capabilities. The E-scan includes an online test of 111 questions about an entrepreneur‟s competence. This results in a personal report that describes the strength of an individual‟s entrepreneurial traits and skills. By analyzing the strength of the entrepreneurial traits and skills, the E-scan offers the possibility for (nascent) entrepreneurs to self-reflect on their competences of being a successful entrepreneur (Driessen 2005). Moreover, the results provide a complete picture for banks to judge applications for granting credit to starting ventures. In a sense that besides receiving information about the company in the form of a business plan, results of the E-scan provide objective information about the entrepreneur running it.

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assesses the strength of an individual‟s entrepreneurial competence by comparing the scores of characteristics and capabilities to the norm required in the specific industries in which they want to start a business (Driessen, 2005).

Driessen (2005) defines characteristics as traits that are common among successful entrepreneurs. This means that an individual with entrepreneurial aspirations should posses them to increase his chance of being successful. The E-scan measures the traits: need for achievement, need for autonomy, need for power, need for affiliation, internal locus of control, endurance and risk taking. An entrepreneur that has these traits is likely to be successful during the start-up phase (Driessen 2005).

Driessen and Zwart (2006) define a capability as: “an ability to do something ” (p. 4). An ability differs from a trait because it can be learned. Driessen (2005) links the necessary abilities to a company‟s life-cycle. This means that an entrepreneur needs to possess different skills at different stages of a company‟s life-cycle. Driessen (2005) argues that an entrepreneur should posses creativity, a market orientation and flexibility during the start-up phase and management skills, motivational skills, organizing and planning skills and financial administration capabilities during the mature phase of a company.

1.4 Research design

Martijn Driessen, founder of the E-scan, explained the importance of following theoretical developments in entrepreneurship literature. He mentioned that there is not always time to keep up with the latest research on entrepreneurship, but Entrepreneur Consultancy B.V. is always searching for new ways to improve the E-scan. Especially, since he based his initial research about the competences, which resulted in the development of the E-scan, on literature from the period 1990 until 2002. The question arises whether the scientific community still agrees or if other insights are found that can be beneficial for Entrepreneurial Consultancy B.V. These new insights can improve the E-scan even further. This leads to the main research question in this thesis. This research question will be:

Which changes can be made to the theoretical foundation of the E-scan?

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- Is the competence theory the best way to define successful entrepreneurship?

This thesis will primarily focus on the evaluation of the four competences. The evaluation compares each competence to the latest literature to see how the theory develops. Thereby, answering the following sub-questions:

- Are there new insights in the literature about its components? - Which dimensions can be added or altered to improve the E-scan?

As mentioned earlier, capabilities differ in their learning ability from characteristics. However, Entrepreneur Consultancy B.V is also interested in the learning possibilities of traits and the most effective methods to teach entrepreneurship . Which results in the last two sub-questions:

- Besides capabilities which other competences can be learned? - Which teaching methods are the most effective?

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Competence Theory

2.1 Competence theory as the foundation of the E-scan

The E-scan bases its theoretical foundation on the competence theory. Driessen (2005) describes a person‟s competence as: “a talent, which enables them to do their job well” (p .17). This talent is according to Driessen (2005) a combination of knowledge, wanting, being, and being capable to. Resulting, in the four competence components: knowledge and experience, motivation, characteristics, and capabilities.

2.2 Developments in competence theory

There are different approaches about competence. It depends on whether scholars use competence as an independent or dependent variable (Grzeda, 2005). Van Gelderen (2007) explains that when they use competence as an independent variable, or as the input that affects behavior, they determine which competencies (personal characteristics, skills, abilities and knowledge) ensure an individual‟s success. Which leads to the possibility to learn to be successful. When they use competence as a dependent variable, or as the output of behavior, van Gelderen (2007) explains that the focus, then, is on performing above a certain standard. This means that only behavior shown, leads them to describe and individual as competent. Therefore, much of the literature about the entrepreneurial competence focuses on using competence as an independent variable.

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Markman (2007) argues that personal characteristics, skills, abilities and knowledge are not separate entities but interact with each other. Meaning that there should not be a focus on just skills or knowledge. Instead, competence has to be seen as an integrative construct (Lans, Hulsink, Baert and Mulder, 2008). For example, Markman (2007) mentions that having knowledge is useless without the necessary skills and abilities to use it and vice versa. Furthermore, Markman (2007) emphasizes the distinction between skills and abilities as separate competencies. He argues that skills and abilities overlap because they are both seen as forms of: ”expertness acquired through or developed through training and practice” (p. 17). So, an entrepreneur already needs to have certain abilities in order to develop skills. Although there is a difference between the two concepts, much literature uses skills and abilities interchangeably.

The competence theory combines different fields of entrepreneurship research that define the entrepreneur (Lans, Hulsink, Baert and Mulder, 2008). The entrepreneurial competence consists of traits, skills and knowledge from the trait approach (e.g. Rauch and Frese, 2007). But can be combined with the ability to discover and exploit opportunities (e.g. Shane and Venkataraman 2000), and the skills resulting from the behavior approach (e.g. Gartner 1988)

In conclusion, the constructs that describe a competence consists of elements that are necessary for being successful (Du Chatenier, Verstegen, Biemans, Mulder and Omta, 2010). The literature review shows that the entrepreneurial competence consists of four elements: motivation, traits, abilities and knowledge.

2.3 The importance of cognitions: how entrepreneurs think

Although the four elements define the competence of entrepreneurship, Markman (2007) emphasizes the importance of cognitions as part of entrepreneurship research. The competences motivation, traits, skill and knowledge that define the entrepreneur are connected through cognitions (Markman 2007). Which Markman (2007) describes as: ”the mental process of knowing including aspects such as awareness, perception, reasoning and judgment” (p .81). Meaning that it influences what a person says, thinks or does (Baron, 2004).

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competence. They argue that studying entrepreneurship from a cognitive perspective leads to the detection of new traits like optimism, explain the thinking process in opportunity recognition and influence the ability to make good decisions. As a result, Baron (2004) argues that this cognitive perspective can together with traits, motives, skills and abilities explain why certain people choose an entrepreneurial career, are better able to spot opportunities and are more successful.

From a motivation perspective, Baron (2004) mentions that entrepreneurs are not more risk loving individuals compared to others but through cognitions underestimate the risks involved when starting a venture. Simon, Houghton and Aquino (2000) argue that through this bias in cognitions they have a lower perception of risk which influences their decision to become an entrepreneur. The cognitions illusion of control and the belief in the law of small numbers are factors that influence this perception. The former explains that entrepreneurs overestimate the quality of their skills in situations where not skills but chance define the outcome, and the latter describes that they make decisions on limited information. Baron (2004) acknowledges this and mentions that a trait like optimism and a bias like the planning fallacy might explain why entrepreneurs start a business. In which the former explains a high expectation on a positive outcome, while the latter describes a believe that someone can accomplish more than is possible in a specific time frame (Baron, 2004).

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leads, in combination with the signal detection theory, to opportunity recognition behavior that searches for hits and tries to avoid misses..

Baron (2004) argues that cognitive factors can also explain successful entrepreneurship. One of such cognitive factors is counterfactual thinking, which is thinking about “what could have been” when something has already taken place. Baron (2004) mentions this kind of thinking can either result in feelings of regret or the development of more effective strategies. He explains that although entrepreneurs are not counterfactual thinkers, it can be beneficial for them to be because it provides them with an opportunity to learn from mistakes made in the past. Entrepreneurs are in general heuristics thinkers in that they make decisions quickly and not endlessly dwell about it (Hmieleski and Corbett, 2006). Baron (2004) mentions that entrepreneurs should, besides this heuristic thinking, also obtain a systematic thinking process. Through which they can analyze information more critically and obtain a more long-term thinking style in the form of strategic plans. The heuristics logic is a important aspect of understanding how entrepreneurs think and make decisions (Mitchell, Busenitz, Bird, Gaglio, Mcmucllen, Morse and Smith, 2007). In a sense that they decide to start their own business because they are sensitive cognitive biases like optimism, illusion of control or planning fallacy but are also successful because they are less sensitive to other biases like sunk cost. Meaning that successful entrepreneurs know when to maintain or change a certain strategy (Baron, 2004).

In conclusion, although some scholars view cognitions as a separate competence, most view it only as a way of describing additional traits and skills that influence the entrepreneur‟ chance of success. Leading to the trait optimism and the skills opportunity recognition and decision-making as important contributors for success.

2.4 Implications for the E-scan

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entrepreneur. This means that the E-scan is still in line with present literature by using the competence theory as its theoretical foundation to analyze successful entrepreneurship.

There are different viewpoints about the position of cognitions in entrepreneurship research. Markman (2007) and Lans, Hulsink, Baert and Mulder, (2008) propose the use of cognitions as part of the entrepreneurial competence when competence is used as an integrative construct. However, most scholars do not find enough evidence to treat cognitions as a separate competence besides the four mentioned earlier. They argue that studying entrepreneurship from a cognitive perspective leads to an explanation of the trait optimism and the skills opportunity recognition and decision-making as indicators for success. Driessen (2005) acknowledges the use of cognitions and also does not view it as separate competence. However, cognitions stays a popular field in entrepreneurship research. This means that Entrepreneur Consultancy should keep track on its developments, but for now is in line with present literature.

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Motivation

3.1 Motivation as measured by the E-scan

Driessen (2005) explains that the motivation of an entrepreneur can be internal driven, external driven or be a combination of the two. The internal driven motives to start a business can, for example, come from a desire to be independent, dissatisfaction with a current job or looking for a new challenge. These pull factors stem from three different needs: the need for autonomy, the need for achievement and the need for power (Driessen, 2005).

External driven factors ensure that an individual starts thinking about an entrepreneurial career (Driessen, 2005). These drives which include unemployment or having a superior business idea are external factors that can influence an individual‟s behavior and trigger his internal desire to start a business

3.2 Other insights in entrepreneurial motivation

Driessen (2005) focuses on starting-and psychological motives to explain the desire to become self-employed. He argues that starting motives stem from a need for achievement, a need for power or the need for autonomy. Which the E-scan tests as personality traits as part of an entrepreneur‟s character. The literature agrees with this perspective about the close link between motivation and traits. Meaning that a lot of traits that reveal an entrepreneur‟s character also influence his motivation to become self-employed. However, scholars also emphasize that motivation influences the strength of entrepreneurial traits.

Scholars view motivation as an important part of entrepreneurial research (Mitchell et. al 2007). They see motivation as a factor that influences decision making (Shane, Locke and Collins 2003), influences behavior overtime and is inherent to management in small firms. For example, Beaver (2003) argues that motivation is: ”the fundamental component in understanding the fashioning of relationship between ownership and decision making, managerial styles organizational structures and cultures and patterns of business development” (p. 1).

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psychological basis. Finally, research about entrepreneurial intentions and the relationship between the nascent and experienced entrepreneur.

3.3 Push and Pull factors

The literature separates research about push and pull factors in research that emphasizes the dominant character of the pull factors and research that clearly separates push and pull factors. The former explains, that there is always an internal desire to start a business (Segal, Borgia and Schoenfeld, 2005; Kirkwood, 2009) and where the push factors only makes an entrepreneur act on that desire. While the latter focuses on the consequences for an entrepreneur when he is either pushed or pulled into entrepreneurship (Verheul, Thurik, Hessels and van der Zwan, 2010).

Both research types agree on which factors are pull and push factors. They view a need for independence, income, a need for achievement and recognizing an opportunity as the most important pull factors (Verheul et. al 2010; Kirkwood, 2009). Push factors come from negative sources like unemployment or dissatisfaction with a current job, which forces an individual into entrepreneurship (Alstete, 2002; Giacomin, Guyot, Janssen and Lohest, 2007). What separates the second research type is that they mention the consequences for the entrepreneurial traits as a result of motivation. In which they define a different entrepreneur type on the basis of his original motivation to become self-employed.

Verheul, et. al. (2010) mention that there should be a focus on whether an individual is „pushed‟ or „pulled‟ into entrepreneurship. Reynolds, Camp, Bygrave, Autio, Cox and Hay (2002) describe this as a distinction between the opportunity and necessity entrepreneur. The difference between them is that an opportunity entrepreneur starts a business solely on the basis of pull factors while the necessity entrepreneur is only motivated by push factors. Verheul et. al. argue that this initial motivation has negative consequences for the strength of specific entrepreneurial traits of necessity entrepreneurs. Leading to different consulting methods for both entrepreneur types.

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and Spiegel (2009), who researched the difference in risk tolerance amongst entrepreneurs, acknowledge this result. They found that necessity entrepreneurs are more risk averse because they experience a higher fear of failure than opportunity entrepreneurs, which prevents them to start a business. Their dissatisfaction is another reason why necessity entrepreneurs are more risk averse (Block, Sandner and Spiegel 2009). People have an optimistic attitude towards risk if they are happy (Lerner and Keltner, 2001). Which according to Block, Sandner and Spiegel (2009) explains why necessity entrepreneurs are found to be risk averse. By applying the same logic, it would explain why opportunity entrepreneurs are more tolerant towards risk. They are happy because they satisfy a need for independence or autonomy. Which increases their risk taking propensity.

Scholars have also found other differences in character between opportunity and necessity entrepreneurs. Reynolds et. al (2002) argue that opportunity entrepreneurs have higher growth aspirations than necessity entrepreneurs. Bhola, Verheul, Thuril and Grilo (2006) mention that opportunity entrepreneurs experience a higher locus of control. Opportunity entrepreneurs are less risk averse which enables them to be more self-confident in achieving their goals. Lee, Wong, Chen and Chua (2005) experienced similar results. They found significant differences in self-efficacy between opportunity and necessity entrepreneurs. In addition, Block and Koellinger (2009) mention that necessity entrepreneurs are found to be dissatisfied with their start-up. Which is a result of their need for security and disinterest in independence.

The differences lead to a change in consulting measures for necessity entrepreneurs. In which they should be helped to develop their ability to recognize opportunities (Block and Wagner, 2007). Block and Wagner (2007) explain that the educational level and the ability to be successful of necessity entrepreneurs does not differ from opportunity entrepreneurs. However, it is their inability to recognize opportunities what makes them less successful. This means that necessity entrepreneurs should be advised to start a business in a field in which they already have accumulated some experience.

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3.4 Economics

Besides a pull and push perspective, the entrepreneur‟s intentions to start a business can also be seen from an economical point of view. In which an individual bases his decision to become self- employed on utility maximization behavior (Douglas and Shepherd, 2002). The explanation of utility maximization as a theory goes beyond the scope of this thesis. However, this research type demonstrates some helpful insights into entrepreneurial motivation.

Douglas and Shepherd (2002) argue that an individual bases his career decision on which job offers the most satisfaction or provides the most individual‟s utility. The factors that might influence a career decision or from which an individual derives utility are considered to be: income, work effort, risk bearing and independence (Doulas and Shepherd 2000). Douglas and Shepherd (2002) mention that someone perceives either utility or disutility from the four factors. Risk bearing and work effort are factors that causes disutility. Which means that the lesser an individual perceives disutility the more likely the choice for an entrepreneurial career. In other words, in the case of risk bearing, an individual‟s tolerance for risk influences his career choice. The same argument goes for independence. However, an individual gains utility from independence. This means that the higher perceived utility from independence positively influences the choice for an entrepreneurial career.

Douglas and Shepherd (2002) showed that independence and risk bearing were the most significant factors that influenced an individual to start his own company. Although found as a factor that influences someone‟s career choice, income did not influence start-up intentions. Individuals did not expect to earn more money when self-employed. Which contradicts the findings from research about push and pull factors. In addition, work effort did not seem to influence start-up intentions. The general feeling was that working hard and working long hours is always required whether in employment or when self-employed. Therefore, work effort did not influence their career choice.

Douglas and Fitzsimmons (2005) also researched the entrepreneurial intentions of individuals by using maximization theory. They found that a higher preference for income, independence, and ownership increased the intentions of starting a company. However, contradicting to the findings of Douglas and Shepherd (2002), they mention that no such a relationship could be found between risk tolerance and entrepreneurial intentions. Which lead them to dismiss the characteristic of risk tolerance as a distinguishing feature of entrepreneurs.

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and entrepreneurial intentions, Douglas and Fitzsimmons (2005) stated they also found some contradicting relationships, which included ownership as a important factor. They argue that if individuals have a low preference for ownership, they can still have strong intentions to start their own company due to a high level of self-efficacy. Moreover, if individuals showed a strong preference for ownership but were uncertain about their capabilities as an entrepreneur they still have high intentions to become self-employed. Douglas and Fitzsimmons (2005) argue that this might be the result of overconfidence which can have significant impact on company performance.

In conclusion, this means that independence and ownership function as a motivational factor to start a business. Risk tolerance and income provide mixed results. The E-scan views ownership and income as stemming from a need for autonomy and a need for achievement (Driessen 2005) Therefore, includes the motivational aspects resulting from an economic perspective.

3.5 Psychological

Literature that studies entrepreneurial motivation from a psychological point of view provides a close link between motivation and personality traits (Shane, Locke and Collins, 2003; Rauch and Frese, 2007). In a sense that traits influence the entrepreneurial motivation, but are also directly linked to success. In addition, the literature also applies expectancy theory, originating from human motivation research, to indentify motivational factors.

3.5.1 Motivational traits

Locke and Baum (2007) distinguish between general and situational specific motivators to explain entrepreneurial motivation. General motivators are motivational factors on a more general level. In contrast, situational specific motivators focus more on motivational factors to complete a specific task. Locke and Baum (2007) list six general motivation factors: independence, general self-confidence, achievement motivation, entrepreneurial drive, egoistic passion and tenacity. In addition, Locke and Baum (2007) argue that the specific motivators include: self-efficacy, vision and goal-setting.

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setting and self-efficacy) influence the entrepreneurial process and vary in their presence during this process.

Furthermore, Rauch and Frese, (2007) directly link several entrepreneurial traits to business creation. They found that need for achievement, innovativeness, proactive personality, self-efficacy, stress tolerance, need for autonomy, internal locus of control and risk taking are all motivational traits that influence the decision to start a business.

3.5.2 Expectancy theory

Expectancy theory is another approach which describes the intentions to start a business. Scholars view expectancy theory as an important theory to explain human behavior in relation to motivation (Edelman, Brush, Manolova and Green, 2010). It originated from research conducted by Vroom (1964) to explain motivation based on three dimensions: valence, instrumentality and expectancy (Gatewood, 2004).

Gatewood (2004) defines valence as: “the individual‟s preference for a particular outcome” (p. 154). These outcomes are either first or second level outcomes. In which the former explains an individual‟s perception when the outcome is the final objective. While the latter explains, the perception about an outcome which is necessary to reach further objectives. Instrumentality is than defined as the relationship between the two outcomes (Gatewood, 2004). Gatewood (2004) than describes expectancy as “a belief concerning the likelihood that a particular act will be followed by a particular outcome” (p. 154).

The theory describes that behavior will lead to effort when an individual has confidence in his abilities to perform a certain task, and the task leads to a positively perceived outcome. Gatewood (2004) exemplifies that by arguing that starting a business might be perceived as positive by an individual, which leads him to achieve other personal goals like income or status. However, he might not choose an entrepreneurial career because of his perception of his own abilities. Likewise, someone else might positively value his own abilities and therefore start a business, or chooses not to for other reasons. This means that an individual‟s ideas about the results and efforts inherent to entrepreneurship, and whether he perceives them as positive will influence the decision to become self-employed.

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the expectancy theory as an indicator for entrepreneurial intentions, is viewed as important. The traits that are mentioned contain a motivational element. Since they are also part of describing the entrepreneurial character and are linked to entrepreneurial success they will be further explained in chapter four.

3.6 Entrepreneurial intentions

Research about the entrepreneurial intentions can according to Krueger, Reilly and Carsrud (2000) be explained by two theories: the planned behavior theory (Ajzen, 1991) and the model of entrepreneurial event (Shapero, 1982).

The basic assumption of Ajzen (1991) planned behavior theory is that entrepreneurship can be seen as planned behavior. That no matter what exogenous factors may occur there is always an internal desire to start a business (Krueger et. al. 2000). In Shapero‟s model of entrepreneurial event, the exogenous factors also seem to have no impact on behavior. In which according to Krueger et. al. (2000) individuals show certain behavior, if that behavior is the most credible. This credibility depends on whether it is desirable and feasible. In which the former explains the attractiveness of being an entrepreneur, while the latter explains an individual‟s belief in his own entrepreneurial abilities. Desirability and feasibility combined with actually doing it forms an individual intention and hence motivation to start a company.

Krueger et al. (2000) argue that desirability and feasibility in both models explain an individual‟s entrepreneurial intention but that it is best explained in the model of entrepreneurial event. Segal, Borgia and Schoenfeld (2005) propose a model that describes and entrepreneur‟s motivation of becoming self employed, based on the model of entrepreneurial event. This model focuses on three different foundations: net desirability, feasibility and risk tolerance and found to influence entrepreneurial motivation.

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Carter, Gartner, Shaver and Gatewood (2003) also describe the reasons for starting a business, which corresponds with the reasons found by Segal, Borgia and Schoenfeld (2005). In their study, they argue that the motivation to start a business stems from six different factors: innovation, independence, recognition, roles, financial success and self-realization.

Roles and recognition are two starting motives that were not mentioned by Segal, Borgia and Schoenfeld (2005). The former explains the search for status from a social environment and the latter describes pursuing a family tradition. Carter, Gartner, Shaver and Gatewood (2003) argue that, although the literature describes these factors as motivational, nascent entrepreneurs do not mention them as starting motives. In light of their results, they explain that what should be kept in mind that this study was based on interviewing nascent entrepreneur who had not yet experienced any success or failure.

In conclusion, both intention based models provide insights in the importance of an entrepreneur‟s desirability and feasibility as part of explaining entrepreneurial motivation. The desirability comes from pull factors like income, financial security, escape for bureaucracy, recognition, roles and the traits need for autonomy and need for achievement. The pull factors can be seen as stemming from the needs for autonomy, achievement and power. However, it is the self-efficacy that eventually influences the propensity to act. In other words taking the risk to become an entrepreneur. Therefore, also an important aspect of entrepreneurial motivation.

3.7 Implications for the E-scan

Although the focus lies on the characteristics and capabilities, the E-scan measures motivation through the traits need for autonomy, need for power and need for achievement. The literature review concurs with Driessen (2005) about viewing traits as motivational triggers for an entrepreneurial career. This means that the defining line is thin whether a trait results in entrepreneurial intentions or a requirement for entrepreneurial success.

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motivational traits found in the psychological perspective and the entrepreneurial intention models.

Research on the push and pull factors provide a new classification in defining necessity and opportunity entrepreneurs. The E-scan recognizes both push and pull factors as motivational factors but sees the pull factors as most dominant. As mentioned before, different authors have stressed the importance of distinguishing necessity (push) from opportunity (pull) entrepreneurs. Unfortunately, this distinction and their difference in characteristics is based on limited research (Giocamin 2007). However, Verheul et. al. (2010) provide a first insight. Results show that necessity entrepreneurs differ from opportunity entrepreneurs on at least their risk taking propensity, internal locus of control need for autonomy and self-efficacy. Scoring lower on traits that are necessary to be successful is a consequence of their motivation. Meaning that their motivation explains their chance of being successful. Through their motivation they will score lower on traits that are required by entrepreneurs when tested by the E-scan. However, separating necessity entrepreneurs from opportunity entrepreneurs can clarify the possible lower scores on these traits. In addition, distinguishing opportunity entrepreneurs from the necessity entrepreneurs helps Entrepreneur Consultancy with determining the assistance an entrepreneur requires. Like assisting necessity entrepreneurs in recognizing opportunities or advising them to at least start in a business field of which they have prior experience. It can shine a light on the entrepreneur and provide a better understanding of how he manages his business and makes decisions.

The motivational factors from an economic perspective are independence, ownership and income. As Driessen (2005) already explained, these factors stem from a need for autonomy and a need for achievement. Since these two traits are already measured, the E-scan includes the motivational factors from an economic perspective.

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(2003) mention the importance of self-efficacy as a motivational trait. The next chapter shows that these traits are also part of an entrepreneur‟s character, which again shows the thin line between motivation and characteristics. In a sense that personality traits influence the decision to start a business but also determine an entrepreneur‟s success. However, research shows that it is important for the E-scan to recognize that entrepreneurial motivation also stems from other personality traits than three measured at this moment.

The intentional models also explain that feasibility, which can be compared to self-efficacy, is an important aspect of entrepreneurial intentions. Self-efficacy is a concept that is not measured in the E-scan. Driessen (2005) mentions self-efficacy as part of internal locus of control,

but the two concepts differ (see chapter four). From a motivation perspective, it is important to

include self-efficacy in the E-scan in order to explain entrepreneurial intentions. In a sense that people start a business because they experience certain needs, but act upon them, because they are confident about their own competencies in being successful. This makes self-efficacy an important part of the construct motivation. However, just as the other motivational traits, self-efficacy is a personality trait also influences an entrepreneur‟s success.

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Characteristics

4.1 Characteristics as measured by the E-scan

An individual‟s characteristic is one of the two competences which is measured in the E-scan. Based on personality traits, which indentify the suitability for entrepreneurship, it explains whether an individual has the right character to be a successful entrepreneur. In which success is defined as a company‟s ability to survive for several years.

The E-scan tests the traits: need for achievement, need for autonomy, need for affiliation, effectiveness, endurance and risk taking. Driessen (2005) argues that these characteristics are common among successful entrepreneurs.

4.2 Criticism on trait theory

Although mostly criticized in the end nineties, several authors still question the personality trait approach as a way of distinguishing successful entrepreneurship (Hisrich, Langan-Fox, and Grant, 2007). For example, Mitchell, Busenitz, Lant, Mcdougall, Morse and Smith (2002) argue that personality traits have not been able to distinguish entrepreneurial characteristics found among all entrepreneurs due to contradicting findings. A problem which arises because of methodological problems and inequalities in defining constructs among trait studies (Athayde, 2009; Kobia and Sikalieh, 2010). The definition of constructs like entrepreneurship have diverse meanings and are differently measured by researchers (Llewellyn and Wilson, 2003). Additionally, Llewellyn and Wilson, (2003) argue that personality traits offer a too narrow approach due to their focus solely on personal differences.

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Moreover, Locke and Baum (2007) mention that the mediating effects of the motivational constructs self-efficacy and goal-setting are also part of explaining the contradicting findings in trait research. Mediating effects of self-efficacy and goal setting provide an explanation for indirect effects on company performance for several traits that showed mixed results in explaining entrepreneurial success (Baum and Locke, 2004). These two recent developments in traits theory offers a revival for distinguishing successful entrepreneurs on the basis of personality traits

4.3 Meta-analysis

There is according to Rauch and Frese (2007) a debate about the broadness of personality traits in which to research successful entrepreneurship. Broad personality tests like the big five factor model are assumed to provide a weaker relation than specific traits (Baum, Frese and Baron, 2007)

Rauch and Frese (2007) therefore researched specific personality traits and their relation to start-up behavior and business success. In their study, they tested whether the traits need for achievement, stress tolerance, innovativeness, proactive personality, self efficacy, need for autonomy, risk taking and internal locus of control were predictors of distinguishing the successful entrepreneur. Rauch and Frese (2007) divided their research into traits founded through meta-analysis and traits found by entrepreneurship experts. Results showed that although all eight personality traits predict successful entrepreneurial behavior, internal locus of control and risk taking propensity were the least significant. This confirmed the opinion of the experts, who excluded a locus of control and risk taking as distinguishing entrepreneurial traits (Rauch and Frese, 2007).

The traits found are acknowledged by Baum, Frese and Baron (2007). On the basis of reviewing several studies, they define five personality traits that are associated with successful entrepreneurship namely: need for achievement, risk taking, innovativeness, locus of control and self-efficacy. Again, the smallest differences in comparison with non-entrepreneurs were found to exist among risk taking propensity and locus of control. Rauch and Frese (2007).

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motivation, is a distinguishing entrepreneurial trait that influences success. However, the level of risk taking also differs between entrepreneurs. Meaning that if entrepreneurs set growth goals they are in general less risk averse than other entrepreneurs. Bausch and Rosenbusch (2005) study the effects of being innovative on company performance. Their results show a positive relationship between the trait innovativeness and successful entrepreneurship. All traits that are directly linked to performance are summarized in table 1.

Table 1: Traits distinguished through meta-analysis

Traits directly linked with success Rauch and Frese (2007) Baum, Frese and Baron (2007) Stewart and Roth (2007) Bausch and Rosenbusch (2005)

Need for achievement X X X

Stress tolerance X

Innovativeness X X X

Proactive personality X

Self-efficacy X X

Need for autonomy X X

Risk taking X X

Internal locus of control X X

In conclusion, meta-analyses has provided a new support for entrepreneurial traits as a distinguishing feature and helpful in explaining the success of an entrepreneur. This type of research revealed that need for achievement, stress tolerance, innovativeness, proactive personality, self efficacy, need for autonomy, risk taking and internal locus of control are the personality traits that define a successful entrepreneur.

4.4 The mediating effect of self-efficacy and goal-setting

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confidence in their ability to be a successful entrepreneur. It is the increased self-efficacy of an entrepreneur that is eventually directly linked with increased performance. The same argument goes in the case of goal-setting. In a sense that a need for autonomy ensures that an entrepreneur sets higher goals. Thereby, positively influencing entrepreneurial success.

4.5 Entrepreneurial traits that can be added to the E-scan

Rauch and Frese (2007) and Baum, Frese and Baron (2007) prove with their meta-analysis that there is a general agreement about which factors define the personal characteristics necessary for successful entrepreneurship. However, they list several traits that are not part of the E-scan. In addition, Locke and Baum (2007) argue that several entrepreneurial traits only indirectly influence performance due to the mediating effect of motivational factors self-efficacy and goal-setting. Moreover, research about motivation revealed traits that, besides explaining entrepreneurial motivation, are part of an entrepreneur‟s characteristics and contribute to entrepreneurial success. Earlier research about the E-scan by Oosterling (2009) and Slangenberg (2009) already revealed several traits that might be added. However, both studies do not explicitly mention the importance of the different entrepreneurial traits found.

All these traits which include: self-efficacy, goal-setting, tenacity, passion for work, optimism, stress tolerance, proactive personality and innovativeness will be discussed in more detail in the next paragraphs.

4.5.1 Self-efficacy

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The proposition of defining self-efficacy in a specific context (Bandura, 1997; Baum, Frese and Baron, 2007) has lead scholars to define entrepreneurial self-efficacy as a construct that describes the confidence an individual has in his ability to be an entrepreneur (Hmliesiki and Baron, 2008). It is mostly influenced by experience and achievements in the past and requires feedback to prevent overconfidence. This entrepreneurial self-efficacy can, according to Baum, Frese and Baron (2007), even be further specified into situationally specific self-efficacy. In which situationally specific self-efficacy describes an entrepreneur‟s believe in reaching a more specific performance goal than just his believe in being successful.

4.5.2 Goal-setting

Situationally specific goal-setting is another important factor in explaining entrepreneurial motivation and success (Baum et. al, 2007; Shane et. al 2003). It can influence behavior and ensures that motivation shifts when different goals are set (Carsrud, Br

ä

nnback, Elfving and Brandt, 2009). The focus of goal-setting theory is the positive relationship between setting difficult goals and performance (Latham and Locke 2007). Goal-setting appears to be closely related to need for achievement. However, Locke and Latham (2002) argue that the two concepts can be viewed as separate entities. The basic difference between them is that a need for achievement occurs on a subconscious level while goal-setting occurs at a conscious level, which leads to achievement on a more specific task than on a more general level (Locke and Baum, 2007).

Setting goals helps (nascent) entrepreneurs to be motivated in their search for the best strategies to accomplish them, even if it means setting goals that go beyond their current level of knowledge (Locke and Baum 2007). Besides the search for suitable strategies, there are according to Locke and Latham (2002) three other ways in which goal-setting influences performance. Firstly, goals keep the entrepreneur‟s focus on the most pertinent activities. Secondly, it leads to higher effort and more energy in order to accomplish the goals set. Finally, it positively influences persistence.

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4.5.3 Tenacity and passion for work

As mentioned earlier, self-efficacy and goal-setting are motivational constructs that influence other entrepreneurial traits (Rauch and Frese, 2007; Locke and Baum, 2007). It offers the possibility for other entrepreneurial traits to be mediated and thereby explain successful entrepreneurship. Baum and Locke (2004) introduce the concepts of passion for work and tenacity as two entrepreneurial traits founded to be mediated by the two motivational constructs. Tenacity and passion for work are personality traits which are also discussed as motivating factors for pursuing an entrepreneurial career. However, the defining line between is thin between motivation and traits. Meaning that they both characterize the entrepreneur beyond just a motivational aspect. Tenacity is a trait that explains that when entrepreneurs face obstacles, setback or even failure, they will never give up and even worker harder the next time (Locke and Baum, 2007). Passion for work is according to Baum and Locke (2004) a type of enthusiasm and love for a job as found among successful entrepreneurs. Tenacity and passion for work are not found to have a direct effect on success but to have a indirect effect. It is an entrepreneur‟s tenacity and passion for his work that influences their self-efficacy and therefore positively influences company performance.

4.5.4 Optimism

Optimism is an entrepreneurial trait found by Oosterling (2009) and distinguished by cognitive research as an important contributor to success. Being optimistic is important because it enacts

entrepreneurs to cope with stress and influences their ability to build social networks (

Hmieleski

and Baron

, 2009; Lowe and Ziedonis, 2006). Both important factors in achieving entrepreneurial success. However, the relationship between optimism and performance is complex and

curvilinear (

Hmieleski and Baron

, 2009). From a cognitive perspective this thesis already

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4.5.5 Stress tolerance and proactive personality

Already mentioned by Rauch and Frese (2007) as distinguishing characteristics resulting from meta-analyses, stress tolerance (Frese, 2009) and proactive personality (Fuller and Marler, 2009) are found to influence performance. Rauch and Frese (2007) emphasis the importance of stress tolerance because when confronted with enormous workloads and taking risks, the entrepreneur has to keep going and continue to work in dynamic environments. It is part of his tolerance of ambiguity already found by Oosterling (2009) and Slangenberg (2009). In addition, having a proactive personality is also associated with successful entrepreneurs. Meaning that they take initiatives and if they have ideas also act upon them (Fuller and Marler, 2009). They take an active role and initiate change (Fritz and Sonnentag, 2009). Being proactive also influences an individual‟s social behavior (Fuller and Marler, 2009). Which means that a proactive person knows that in order to be successful he has to engage in social networks.

4.5.6 Innovativeness

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4.6 Learning aspects of entrepreneurial traits and motivation

Driessen (2005) defines the ability to learn in the case of the capabilities, as the basic difference between characteristics and capabilities. Since knowledge, skills and abilities already posses a learning component (see next chapters) and are the focus of entrepreneurial education, it is interesting to see how scholars nowadays think about the learning aspects of the motivational and characterizing traits of entrepreneurs. Driessen (2007) already discusses the learning ability of the traits measured in the E-scan. However, the literature review found some additional characteristics from which three it also provided evidence for development opportunities. These three traits are: self-efficacy, stress tolerance and innovativeness.

Firstly, the importance of self-efficacy becomes clear from the literature review. Although it is part of a person‟s personality, self-efficacy can be improved through the means of education or via a role model (Zhao, Seibert and Hills, 2005). Educational methods that stimulate experience, an essential element of efficacy, are found to enhance entrepreneurial self-efficacy. Zhao, Seibert and Hills (2005) argue that when individuals enroll in simulated business exercises or business case competitions it improves their experience and thereby their self-efficacy. The same argument goes for efforts to attract venture capital (Mcgee, Peterson, Mueller and Sequeira, 2009). It creates experience and familiarity with what is required of entrepreneurs which leads to improved self-efficacy. Role models such as coaches or mentors can also be important contributors to the self-efficacy of entrepreneurs. It is through their encouragement, directions and access to important social networks, that entrepreneurial protégés experience an increase in self-efficacy (Brush, De Bruin, Gatewood and Henry, 2010).

Secondly, stress tolerance is also found to be a important indicator for successful entrepreneurship. Akande (1993) argues that entrepreneurs ignore their stress level because they perceive their careers as self-fulfilling and experience it as fun and satisfactory. They view stress factors as a distraction. However, by acknowledging and dealing with their stress symptoms they can improve their stress tolerance and even further enhance company performance. Akande (1993) considers finding support from social networks and exercising to be helpful stress relieve strategies.

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new and more ideas that could be characterized as innovative. Their enhanced interest to think about more innovative ideas proved to be an indicator of increased innovativeness.

4.7 Implications for the E-scan

Scholars emphasize the importance of the mediating effect of motivational traits and the results of meta-analyses when evaluating which traits are important to explain successful entrepreneurial behavior. However, both types of research differ in their conclusion about the direct or indirect effects of entrepreneurial traits. Whether mediated or not, there is a renewed support to use personality traits in explaining successful entrepreneurship.

In the E-scan, motivation and characteristics are both explained in the form of entrepreneurial traits. Meta-analysis provides a justification for the E-scan to measure the traits: a need for achievement, a need for autonomy, internal locus of control and risk taking due to their direct relationship with entrepreneurial success. Moreover, the literature provides proof for self-efficacy, stress tolerance and innovativeness as additional traits to be included in the E-scan. Results of meta-analysis show that, besides from a motivational perspective, self-efficacy should be included in the E-scan as a trait that is necessary in order to be successful. Different meta-analyses also prove the importance of innovativeness and stress tolerance as distinguishing personality traits and important contributors to company performance. The learning possibilities of these three additional traits give, Entrepreneur Consultancy, insights to further assist entrepreneurs.

The literature review found mixed results for proactive personality and goal-setting. One meta-analysis found a direct effect, while other studies found an indirect effect. These mixed results about the relationship with success are the reason why proactive personality should not yet be considered as part of the E-scan. Goal-setting is perhaps due to its close link with need for achievement not yet distinguished by meta-analysis. Therefore, provides not enough support to be included.

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scan. Passion for work is a trait that is not measured by the E-scan, but also only found to explain successful entrepreneurship when mediated through self-efficacy. Therefore, should not be considered to be part of the E-scan.

Cognitive research emphasizes the importance of optimism in distinguishing entrepreneurs. Scholars mention that entrepreneurs should have a moderate level of optimism. However, there is no proof from meta-analysis that optimism influences entrepreneurial success. Optimism should therefore not now but perhaps in the future, be included in the E-scan.

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Capabilities

5.1 Capabilities as measured by the E-scan

Capabilities are the third component of the entrepreneurial competence as part of the E-scan. They differ from characteristics because they can be learned and therefore considered to be less static. Meaning that they can be changed over a short period of time. Driessen (2005) describes capabilities as the entrepreneur‟s abilities to perform and relates them to the different phases of a company‟s life-cycle. Driessen (2005) stresses the importance of market orientation, creativity and flexibility as skills during the early phase and leadership, organizing and planning, motivating and financial controlling during the mature phase of a company.

5.2 Developments in capabilities

As mentioned earlier, the focus of the competence theory lies on the interaction of the different components. Traits have an impact on skills since repeated behavior originating from traits results in observable skills (Baum and Locke (2004). In the same respect are skills the resulted action from the possession of knowledge (Markman, 2007).

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5.2.1 Literature regarding entrepreneurial skills

Several authors list a number of skills that are necessary to be successful as an entrepreneur (see table 2). For example, Bygrave and Zacharakis (2009) separate the necessary skills into entrepreneurial and management skills. During the start-up phase, the focus lies on opportunity recognition (Bygrave and Zacharakis, 2009), while the management skills are required during the later stages. It is at these stages that leadership, planning, and financing are more essential (Bygrave and Zacharakis, 2009). Wickham (2006) divides the required entrepreneurial skills into general management- and people skills. The former includes skills like strategy, planning, marketing, finance, project management, and time management while the latter encompasses skills like leadership, motivation, delegation, communication and negotiation. Hisrich, Peters and Shepherd (2005) divide the entrepreneurial skills into technical skills, business management skills and personal entrepreneurial skills. In which the technical skills encompass the ability to organize and the use of technology. The business management skills entitle the managerial abilities of the entrepreneurs in the areas of decision making, planning, marketing, finance, negotiation and communication. Finally, the personal entrepreneurial skills include skills like creativity, opportunity identification, change orientation and leadership.

Lichtenstein and Lyons (2010) and Smith, Schallenkamp and Eichholz (2007) also mention in their entrepreneurial development system the necessary skills for entrepreneurship and divide them into four different categories: technology, management, entrepreneurial, and personal maturity skills. Firstly, technology skills are the abilities to produce the product or service the entrepreneur wants to provide. The skills encompass the ability to operationalize the business from raw materials to final product (Smith, Schallenkamp and Eichholz, 2007). Secondly, skills regarding the management of the firm include planning, organizing, supervising and networking, and also skills in the areas of marketing, finance, identifying customers and distribution channels, accounting and budgeting. Additionally, Smith, Schallenkamp and Eichholz (2007) argue that administrative and legal skills are also part of the management skills, which include skills in people relations and risk management. Thirdly, Smith, Schallenkamp and Eichholz (2007) mention that the entrepreneurial skills encompass the ability to make a business plan and to have presentation skills. Moreover, it is the ability to find market gaps, to recognize and exploit opportunities and to network for assistance. Finally, the personal skills cover the ability to self-reflect, to be responsible, to cope with entrepreneurship emotionally and to be creative.