As Roger Donway notes in “Entrepreneurship: Is Life Like That?” the distinguishing economic role of an entrepreneur is to make decisions for an enterprise and bear the primary risk for the outcome of those decisions. Entrepreneurs may introduce new products and services, new methods of production, or new ways to cross the boundaries between markets through arbitrage. The essence is the attempt to do something new, and that necessarily carries a heightened degree of uncertainty, with the double-edged potential for large gains and large losses. Not everyone has the creative ability to innovate, or tolerance for risk, that are required for entrepreneurial success.
There is also a growing literature on the traits of entrepreneurs, the result of research by business analysts and psychologists. The most frequently mentioned traits fall naturally into the categories I highlighted in my own analysis: the pursuit of goals, self-ownership and self-esteem, and reliance on one’s own judgment.
Some of the traits in each category (see above chart) are matters of personality, preference, or skill rather than character; and to that extent are not moral virtues that can be expected of everyone. People differ in risk tolerance, patience, and intensity of focus on a single goal. They differ in skills of creativity and judgment. Yet all of these are specific forms and embodiments of traits that are virtues: productiveness and responsibility, pride, and rationality. Risk, for example, is a fact of life from which no one is exempt. Accepting that fact and dealing with it rationally—including, as Donway notes, the exercise of caution and prudence—is a universal requirement of life. Indeed, if entrepreneurs tend to have an unusually high tolerance for risk, they also tend to be skilled in estimating the odds, putting safeguards in place, and other forms of caution.
Competitiveness is perhaps an exception to the general rule. Entrepreneurs do tend to be fiercely competitive, and for some, no doubt, beating a competitor is more important than creating value. That is not a virtue. Defining one’s ultimate goal in terms of others bespeaks a lack of independence. Yet competition, like risk, is a fact of life. Indeed, it is a particular type of risk arising from the freedom of others to pursue their own goals, and it arises in all areas of life, from rivals for the affections of a romantic partner, to theories competing for mind-share in the marketplace of ideas, to the long-running battle of Coke vs. Pepsi. In this respect, I question Donway’s objection that “life is not inherently competitive, as entrepreneurship is.” As Donway himself has observed elsewhere, competition and cooperation are normally two sides of the same coin:
… we can see how intensely sociable [freedom] is. The idea that liberty is based on a competition for survival becomes ludicrous. Liberty is based on cooperation for survival.
Even the specific economic phenomenon of competition exhibits this cooperativeness. For economic competition is essentially the struggle to be chosen as a trading partner. And, as trade is mutually beneficial, economic competition is thus essentially a competition to cooperate. It is a struggle to reach what is mutually beneficial. (Roger Donway, “Living Together,” The Freeman
, April 1978)
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