Psychological Profile of an Ideal Type of Entrepreneur
This essay will focus on the psychological profile of the ‘ideal’ type of entrepreneur.
Some of the qualities that will be covered include; the need for achievement, risk-taking quality,
tolerance of ambiguity and the internal locus of control. The essay will also attempt to answer
whether personality can shape behavior
Psychological Profile of an Ideal Type of Entrepreneur
The psychological profile of an ideal type of entrepreneur is based on the concept that
personality has the capacity of shaping one’s behavior. According to this profile, an entrepreneur
is characterized by the following skills: high need for achievement, moderate risk taker,
tolerance of ambiguity and internal locus of control. According to McClelland, individuals who
have high need for achievement (nAch) aim at excelling and therefore they normally avoid both
low risk and high risk situations. The achievers avoid low risk situations since they do not
consider the easily attained success as part of a genuine achievement. McClelland continues to
explain that for high risk projects, the achievers view outcomes as opportunities rather than one’s
own effort (McClelland, 1961). Individuals with high need for achievement prefer the work that
is characterized by moderate probability of success, in particular 50 percent chance (McClelland,
1961). The quality of need for high achievement is one of the characters common in ideal
According to the economic theory of entrepreneurship, entrepreneurs are risk-bearers,
risk-takers or calculated risk-takers (Knight, 1921). The idea of risk taking depends on the way a
person perceives the situation and the way the person perceives his/her expertise in the field.
Therefore, risk-taking can averse a risk if it is perceived in a win situation or risk seeking if
perceived in a loss situation. The psychological profile of an ideal entrepreneur suggests that
entrepreneurs are moderate risk takers. According to McClelland, (1961) moderate risk taking
implies avoiding to consider lump sum investments at all.
The tolerance of ambiguity is another aspect that characterize ideal entrepreneurs.
According to (Knight, (1990) an entrepreneur keeps an open mind, responds quickly to change,
needs to only know key facts and possess flexible attitudes. Knight, (1990) continues to explain
that entrepreneurs are faced with uncertainties when running businesses and the ability of solving
such situations depends on their tolerance of ambiguity. Entrepreneurs with high tolerance of
ambiguity can normally solve new and uncertain situations with relative ease. At the other side,
those entrepreneurs who have low tolerance of ambiguity would tackle the same situations with
more angst and difficulties (Knight, 1990).
Locus of control refers to whether an individual believes he/she have the ability of
controlling his/her future or someone else is in control of it. The locus of control can be internal
or external. For instance, in external locus of control, people believe they are victims of external
forces and they could not have controlled such situations. Internal locus of control implies the
person can control the outcomes. Rotter, (1966) suggests that the way a person perceives
situations affects his/her behavior. Rotter, (1966) mentions that the locus of control is one
determinant of the expectancy of success. The locus of control is another quality in the
psychological profile of an ideal entrepreneur. Individuals have the tendency of characterizing
events and situations depending on their underlying shared properties. Therefore, individuals can
perceive outcomes of events as being within the limits of own control or being dominated by
chance events. Rotter, (1966) argues that the internal locus of control and the need for high
achievement are positively correlated. The quality of strong internal locus of control is common
in ideal entrepreneurs (Rotter, 1966). Other traits of an ideal entrepreneur include need for
autonomy, determination, initiative, creativity and self-confidence.
Personality can shape behavior. Consider this example, a person with a shy personality
may not speak much when he/she meets new people. A confident person on the other hand finds
no problem in expressing himself/herself. This example illustrates that personality affects
behavior. The argument of whether entrepreneurs are born and not made has continued to fuel
the question whether personality shapes behavior. Some personalities can be acquired through
learning while others are inmate and cannot be acquired. Personalities such as high energy,
emotional stability, creative and innovative stability are some of personalities that are inmate and
affects the way a person behaves. The difference between a creative and innovative person in
handling situations also suggest that personality shapes behavior. An individual with a creative
personality can handle an emerging new situation with ease. On the other hand, a person who is
less creative and innovative can handle the same situation with difficulty.
We normally see entrepreneurs as people with behaviors of accumulating resources. This
behavior is driven by their need to achieve more and more once the desired outcomes have been
achieved. The behavior of accumulating resources is powered by entrepreneurs’ personality of
need for achievement. With this respect, behavior is shaped by their personality.
This essay covered the psychological profile of an ideal type of entrepreneur. With
qualities such as high need for achievement, moderate risk-taking behaviour, tolerance of
ambiguity and internal locus of control identified being vital for an entrepreneur, every
entrepreneur should seek to improve these skills. Using the provided examples about the
relationship between personality and behaviour, it can be concluded that personality shapes
Knight, F. (1990). Risk, Uncertainty and Profit. Chicago: University of Chicago.
McClelland, D. (1961). The Achieving Society. Princeton: Van Nostrand.
Rotter, J. (1966). Generalised Expectancies for Internal Versus External Control of
Reinforcement. Psychological Monographs, 1-27.