Dominik is currently pursuing the CEMS MIM degree at the University of Cologne and spending his term abroad at the Copenhagen Business School. Being born and raised in Cologne, he was Cologne’s CEMS Club President in 2021.
Recently, the term entrepreneurship has gained momentum. Associated with entirely positive connotations, it seems everyone is striving to be an entrepreneur or at least act a little more entrepreneurial these days. Firms pride themselves with their entrepreneurial corporate culture while successful founders’ hands on experience is more than ever in demand and valued. All this seems reason enough to cast a deeper look on the academic discourse in this area: What are the foundations of entrepreneurship?
Entrepreneurship is “the discovery, evaluation and exploitation of opportunities to introduce new goods and services, ways of organizing, markets, processes, and raw materials through organizing efforts that previously had not existed”. But what makes some people discover opportunities that remain invisible to others? Are entrepreneurs essentially born, raised or shaped by their environment? I believe the truth lies in a combination of these propositions: Firstly, entrepreneurship benefits from certain personality traits, such as openness to new experience, need for achievement or extraversion. Secondly, societal factors such as tolerance for failure and risk-taking encourage entrepreneurial activity. And lastly, even broader factors such as the country’s economic situation have an influence: Research showed an inverted U-shaped relation between entrepreneurship and GDP. Probably, in rich countries people enjoy enough financial freedom to pursue a business idea, whereas in poor countries people engage in entrepreneurship out of necessity.
While it might be impossible to explain why exactly some people decide to become entrepreneurs while others don’t, I deem it just as important to differentiate the term from its uncontested popularity in public discourse. Putting it back in perspective, what we notice under the term entrepreneurship are these few self-made businesses that actually succeeded and stick out of the crowd. What we don’t see are the nine business ideas that fail and disappear without further ado, for every one that survives. Keeping this fundamental survivorship bias in mind can help us to achieve a more balanced assessment on entrepreneurship in future discourse while fostering our awareness for entrepreneurial thinking.
The article represents the personal opinion of Dominik. We thank him for the permission to reproduce it here!
The text is a takeover from the CEMS News Review, launched by CEMS Club Vienna. The CEMS News Review is an international initiative to share students' opinion pieces.
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