Now, let's take a fresh look at entrepreneurship through different lenses
Namely, biological, psychological and economic perspective
Let's begin with a short interview clip from Jeff Bezos,
the founder of the world-top e-commerce company, which is Amazon
Everybody knows that
Let's take a look at it
Okay, what about it?
Interesting, isn't it?
From this video, he mentioned his friend, namely Yasantha
So, what does Yasantha do right now?
I was very curious
Did he also become an entrepreneur like Jeff Bezos?
We don't know
This guy is Dr. Yasantha
Again, he is Jeff Bezos' classmate, at Princeton University
Actually, Dr. Yasantha was born and raised in Sri Lanka in Asia
and then later studied at Princeton
He is kind of a genius
Not just a simple genius, he's a national genius in Sri Lanka
Then later, he earned his PhD degree
and now participated in several scientific projects
and holds many patents
But he is not an entrepreneur
He is a scientist
Okay, take Jeff Bezos
Did Jeff Bezos become an entrepreneur right after graduating?
No
He worked in Manhattan in an investment firm first,
but he was rapidly promoted and earned a high salary
But in 1994, he quit everything and moved to Seattle
to pursue his internet businesses, which is Amazon
So, he became an entrepreneur
Why two people chose different career paths?
Maybe they are different,
biologically, psychologically and kind of economically
So far, we have discussed that
people are fundamentally the same
But only the social system and who you know
can influence whether you become an entrepreneur or not
But in the case of Dr. Yasantha and Jeff Bezos,
we can think that, probably people are different
So, from now on, our viewpoint will be different
This perspective starts with the assumption that
the people are fundamentally different
Especially at the genetic level
Genetic and neurological factors can influence entrepreneurial behavior
Look at this man
He is a professor, Scott Shane,
a famous scholar in entrepreneurship field
He studied 870 identical twins
and 857 fraternal twins in UK
His findings,
biological genetics explained about how much?
Yes, 40
About 40% of variance of explanation
It means that,
genetic factors matter
That is significant
This professor is Johan Wiklund at Syracuse University
He had ADHD when he was young
and later, studied the entrepreneurial tendencies
of MBA student with ADHD
Surprisingly, students with ADHD trait
were more likely to become entrepreneurs
Why?
Genetic factors like, sensation seeking in the ADHD
lead them down the path of entrepreneurship
This is a biological perspective
Again, our genetic traits matter
But, we cannot explain everything with genetic alone
What about our kind of personalities
or motivations and cognitive styles?
These are the domain of psychology
Let's talk about Steve Jobs, founder of Apple
According to his biography, people said that,
he believed it was natural for everyone to accommodate him, right?
And he was very sensitive and emotional
And he didn't regret not giving early influence stock options
What does this tell us?
Steve Jobs had very unique personality,
which shaped his path as an entrepreneur
For decades, scholars have explored
whether entrepreneurs are driven by
some kind of unique personality or traits or motivations
Look at the picture
People believe that entrepreneurs have
high level of achievement of motivation
They want to achieve more
Or entrepreneurs have high level of risk tolerance
It means they are risk takers
Or entrepreneurs really want to control for others,
which is a high level of locus of control
And they are kind of extrovert
So, rather than introvert person,
extrovert are more likely to be an entrepreneur
Autonomy
It means that they want to be their own boss all the time
Conscientiousness
It means, they work very hard
What do you think?
Do you agree with these personalities, traits or motivation
matter for the entrepreneurs?
I think, in my opinion,
extrovert person are more likely to be an entrepreneur
rather than introvert person
What about locus of control?
I remember that many entrepreneurs desire for control
So, I think it makes sense
So, these two major studies reviews
the previous findings and revealed that,
interestingly, while some traits do correlate it,
others like, risk taking and extroverts
are not necessarily linked to entrepreneurship
So, achievement motivation is good,
but not risk taking
Entrepreneurs are not risk takers
It is totally different from our expectation
What about locus of control?
It's not
And extrovert?
It's not, right?
But they want to be their own boss
and they work very hard
So, that is the personality
But now, let's talk about
kind of a cognitive psychology,
which is the way how we think
Let's take Jung Jooyoung,
the founder of Hyundai Group in Korea
He was a kind of farmer and not educated
But he started construction businesses
right before the Korean War
But later in the 1960s,
when the Korean president suggested construction companies
to explore opportunities in the Middle East countries,
many did not accept the suggestion
due to the hot weather
and sand and the lack of rain
But, Jung Jooyoung, the founder of the Hyundai Group,
had a different idea
He said that
the Middle East is the best place to do construction
Why?
Lack of the rain?
Yes great
We can walk every day
Because we don't have rain
Sand and gravel?
Sand and gravel, perfect
These are building materials
Too hot?
Yes, we can walk at night
and sleep during the day
He simply thought differently than anybody else
Look at another example
This guy is Sam Walton
The founder of Walmart
He also thought differently
He was in an airplane
He piloted his own airplane
to scout store locations
so he could observe
the traffic condition and geography from the sky
Think about it
From this, he tried to understand unknown patterns
He said that
When you look down from the sky,
you can see traffic
and you can grasp
what kind of cities and towns you are dealing with,
and you can easily figure out
how the competition is going to unfold
This is a powerful example of cognitive differences
How entrepreneurs perceive the thing differently and uniquely
Now let's move to the economic perspective
Economic perspective is all about
incentive and the people's choice
Economic perspective suggests that
people are kind of different in terms of
their incentive and their choice
due to their ability, skills and educations
According to economist,
entrepreneurship is kind of optimal choice
driven by these incentives
This man is Robert Lucas
He is a Nobel winner in 1995
He argued that people have different abilities
and therefore, people have different incentives
Specifically those with higher abilities
can choose entrepreneurship
Others remain wage workers
Why is this happening?
Let's look at the graph
This y-axis represents your income
x-axis represents people's abilities
If you are a wage worker
and your income is fixed regardless of your abilities,
but your contribution to the company will differ
If you are highly capable,
for example, if you are on the right side of the abilities,
then the profit you generate for your company
exceeds your wage
Then in this case,
you are better off starting your own businesses
Because in this case, if you start your businesses,
your return is much better than your wage
But if you don't have abilities,
then you don't contribute to the company
In this case, however,
you get the same salary no matter how much you contribute
So, if your ability is low,
which is, you are on the right side,
then wage worker make more sense for you
On the other hand, if you are on the right side,
then you'd better start your own businesses
Which is interesting
What do you think?
So, Lucas concluded that
people with high abilities
are more likely to become entrepreneurs
because of their incentive
This man is, Lazear
He's a labor economist
and he emphasized the skills
These skills are not deep specialization,
but broad skills
He argued that the learning business
requires a bunch of different tasks
It requires many tasks
Such as accounting, marketing, and management
And you name it
Some people are really good at many tasks, others don't
Because people are different in terms of their skills
The broader your skill set,
the more likely you are to be an entrepreneur
This is called
"Jack of All Trade" hypothesis
So, let me summarize
Many people agree that people are different in terms of
biological factors, traits, motivation,
cognitive style, ability and skills
Specifically, biological perspective argues that
your genetic factor
or your DNA
determines your entrepreneurial potential
On the other hand,
psychological perspective argues that
your mind and your way of thinking
is also different, which shapes entrepreneurship
And lastly,
the economic perspective says that
entrepreneurship results from incentive-driven choice
based on your ability and skills
What about the biological,
psychological, and economic perspective?
Those perspectives are kind of different from
previous institutional perspective and sociological perspective
Now, we are going to talk about
a new perspective,
which is a behavioral perspective
for next class