Entrepreneurial Capability

Introduction

A number of entrepreneurship texts speak of ‘The Entrepreneurial Revolution’ which will impact the 21^st century as powerfully as the Industrial Revolution did the 19th and 20th centuries (Kuratko and Hodgetts, 2001, Timmons, 1999). As Wennekers and Thurik (1999) highlight;

‘Many economists and politicians now have an intuition that there is a positive impact of entrepreneurship on the growth of GDP and employment. Furthermore, many stress the role of the entrepreneur in implementing innovations.’ Successive UK governments have invested heavily in trying to encourage a greater level of entrepreneurial activity. Whilst there have been gains the UK still falls behind other nations on a number of entrepreneurship measures. Entrepreneurship education is seen as one of the key interventions available to increase a nation’s level of entrepreneurial activity. However, recent surveys seeking to map the provision of entrepreneurship education across the UK have found a discernable degree of variation in the content and delivery of these courses (Hannon et al., 2006). A lack of agreement about what entrepreneurship is (Pittaway and Cope, 2007) also undermines the likelihood of achieving consistency.

This paper seeks to move the debate forward on what entrepreneurship educators should, and are, trying to achieve. The assumption is that only through understanding what makes an individual more suitable or adapted for an entrepreneurial career path will there be greater understanding of how to educate more successfully to this end.

Within the literature, the related concept of Entrepreneurial Capital has previously been put forward by Erikson (2002) basing it on Ulrich’s (1998) Intellectual Capital model for organizations and individuals and by Firkin (2003) who looked at the capital required to undertake the entrepreneurial process. However, by basing his model on that of Ulrich’s, Erikson focuses on the intellectual aspects only that create potential for future entrepreneurial behaviour, providing no depth to what in particular contributes to entrepreneurial capital. On the other hand Firkin’s model brings together the various forms of tangible and intangible capital that an individual will need in order to start a new venture: - financial capital, physical capital, human capital, social capital and cultural capital but does not relate these to what will motivate an individual to apply this capital to embark on an entrepreneurial journey.

This paper takes a holistic perspective to the effect that only by acknowledging all that is accepted of entrepreneurs can a useful model be proposed, a model that is beneficial to those seeking to learn to become more entrepreneurial and a model that can help shape a dynamic and connected entrepreneurship education system from primary through to the highest level. This paper proposes a model of Entrepreneurial Capability based on an analysis of the literature from the economic, political and sociological domains. Each domain has contributed to the concept of the entrepreneur and our understanding of the phenomenon of entrepreneurship.

The shear diversity of these contributions has had the effect of creating opaqueness within the domain. This has arisen from the overlap between concepts that are similar but – importantly - not quite the same. The concept of entrepreneurial capability attempts to create clarity from within the opaqueness.

A model of Entrepreneurial Capability

The word capability means ‘suitableness or adaptation for a purpose: fitness, aptitude’ (Oxford English Dictionary, 1989). Entrepreneurship educators are aiming to move their students towards a greater degree of suitability and to become more adapted to the purpose and pursuit of entrepreneurship. To draw out definitions of entrepreneurship and the attributes of those considered entrepreneurs, the literature from three interested parties, the domains of economics, politics and sociology was analysed. This approach was taken in order to gain the benefit of a triangulation of perspective and to derive a holistic understanding of the concepts involved. The descriptors drawn out of the literature could be grouped into two categories.

Firstly Intelligences, where the term is used in the spirit of Howard Gardner’s (1983) multiple intelligences, that is that the concept of intelligence stretches beyond how well we can add up or spot patterns. In this way intelligence is defined in its fullest form as knowledge and understanding with both ‘know what’; e.g. facts and figures and ‘know how’; e.g. practical knowledge i.e. the skills of applying any acquired know what. Thus several descriptors would be classified as know how or know what.

Secondly, a category of descriptors which has been termed ‘Mindsets’ (Gibb, 2002) – the way of thinking entrepreneurs have or their outlook on the world. Entrepreneurial Capability therefore relates to both as illustrated in figure 1.

Figure 1 A model of Entrepreneurial Capability

What becomes apparent however when you consider these two aspects of entrepreneurial ‘being’ is that one without the other will not be sufficient to facilitate entrepreneurship. To have entrepreneurial intelligence but no entrepreneurial mindset to direct it only produces latent entrepreneurs who might emerge from dormancy, if forced, through a trigger event such as, for example redundancy. Likewise, to have an entrepreneurial mindset but no entrepreneurial intelligence may produce ‘wannabe’ entrepreneurs who lack the knowledge and skills to make it happen, see figure 2.

Figure 2 A populated model of Entrepreneurial Capability

Therefore entrepreneurial intelligences and entrepreneurial mindsets have a multiplier effect on each other because if one equates to zero then there is no effective capability. Entrepreneurial Capability is therefore a function of the relationship between entrepreneurial intelligences and an entrepreneurial mindset as shown in figure 3.

Entrepreneurial = Entrepreneurial Entrepreneurial Capability Intelligences Mindsets

Figure 3 The Entrepreneurial Capability Equation

However, to be a useful tool to educators and nascent entrepreneurs, a deeper understanding of the components of entrepreneurial intelligence and entrepreneurial mindset is needed. The literature review below builds a set of components for each, as identified from within each domain, and provides a deeper understanding of the relationship between both mindset and intelligence that allows the model and equation to be further expanded later in the paper.

Dormant entrepreneurs

‘Wannabe’ entrepreneurs

Capable entrepreneurs

Nonentrepreneurs

Entrepreneurial Intelligences

Entrepreneurial Mindsets

Other Intelligences

Other Mindsets

Entrepreneurial Intelligences

Entrepreneurial Mindsets

Other Intelligences

Other Mindsets

Entrepreneurial Capability

The perspective from Economists

Pre-classical economists

The first use of the term entrepreneur is widely attributed to Richard Cantillon (Bolton and Thompson,  2004, Kirby, 2002, Lambing and Kuehl, 2003), a pre-classical economist, whose work ‘Essai Sur la Nature du Commerce en Général’ was published in England in 1755. ‘Entrepreneur’ is a word compiled from two French verbs – ‘entre’ – meaning to enter, or in between, and ‘prendere’ meaning to take or seize hold of.

‘The entrepreneur is one who penetrates the spaces in between established boundaries and seizes opportunities that are otherwise overlooked by others’ (Maskrey, 2002). As well as introducing the term Entrepreneur, Cantillon (1755) provided some degree of meaning to it. They had a similar but separate identity from those who only sold, they were a separate ‘class’ of the population, the other classes being royalty; proprietors of land; and those who were hired and they provided themselves with an independent living with various levels of success.

Neo-classical economists

From the neo-classical school, Knight (1921) included special knowledge and foresight as characteristics of the entrepreneur and the role they played as bearing the uncertainty within the market. Knight also argued against Cantillon’s marker of self-employment, so that the best entrepreneurs within large corporations get to the top, thereby maximising their income (Glancey and McQuaid, 2000).

However, it is a contemporary of Knight, Schumpeter who theorised that the capitalist economy could be viewed as an evolutionary process and similar to the biological models that these terms were derived from would mutate away from old structures to be replaced by new structures via a process he termed ‘Creative Destruction’. It was the capitalist economy’s impulse to create new goods, markets, methods and forms of organization that led to the process of creative destruction (Schumpeter, 1942, pg 82-83).

The new structures of Schumpeter’s model came about by the ‘doing of new things or the doing of things in a new way’ (Schumpeter, 1949, pg 266, Schumpeter, 1947, pg 224) and was described by Schumpeter as innovation brought about by entrepreneurs and as such was a ‘creative response’ from within the economy.

For Schumpeter it was a form of “Economic leadership” (Schumpeter, 1949, pg. 261) focused on pushing the means of production into new channels. Schumpeter also put forward the ideas of entrepreneurial function and activity; a capability possessed to a greater or lesser extent by individuals, and which could be fulfilled cooperatively by aptitudes of many individuals within large corporations (Schumpeter, 1949, pg 261). Schumpeter, like Knight believed entrepreneurs could be self-employed and employed but that the main issue should be focused on their ability to innovate. Schumpeter also made the point that entrepreneurs were likely to arise from ‘all corners of the social universe’ (Schumpeter, 1949, 268).

Modern Economists

However in contrast to Schumpeter, Kirzner (1973) a modern economist put forward the view that ‘pure entrepreneurs’ were individuals who possessed greater perception and alertness to opportunities than others and it was these abilities that gave them the superior knowledge needed to be entrepreneurial (Glancey and McQuaid, 2000). Casson (1982), added to the discussion the idea that the entrepreneur rejects a waged employment having positively estimated their own abilities to become active in the market. This implied a process of choice based on self-awareness and self belief. For Casson the concept of entrepreneurial function was based on decision making and therefore related to the entrepreneur as an individual (Casson, 1982). Casson also asserted that the key entrepreneurial quality of imagination is innate whilst other qualities and abilities cannot be acquired but they can be enhanced with training.

To summarise, through the history of economic writings a number of ways of viewing entrepreneurs has emerged as shown in figure 4. Firstly, they are individuals with certain characteristics, and particular skills.

Secondly, they fulfil significant roles at a macroeconomic level but can also be seen to have important roles at a micro organizational level. And finally, the function of entrepreneurship has been separated from the entrepreneur such that it is seen as an activity that anyone can perform either on their own or through collaboration with others.

The perspective from Politicians

Politicians began to take note of entrepreneurs and the enterprises they created when their role in the economy became seen as much greater than previously thought. In the US “The Job Generation Process”, a working paper from MIT (Birch, 1979) showed that, contrary to the perceptions at the time, the job creating establishments tended to be less than four years old and employing less than 20. This continued to be the case and of the 8 million jobs created in the USA between 1993-96 over 7.5 million of them were created by just 15% of the youngest and fastest growing companies (Timmons 1999). Alongside this research the number of the workforce employed by the Fortune 500 began to reduce. As recently as the 1980’s these large corporations employed 1 in 5 (20%) members of the workforce but by the late 1990’s this had reduced to 1 in 14 (7%) (Timmons, 1999).

However, whilst large firms provided greater job durability (Davis et al., 1996) and despite some researchers disputing the rigour of Birch’s study, the findings made a significant impact (Blanchflower, 2000).

Autonomous

Risk Undertaker

Uncertainty manager

Seeking a living

Scale of fortunes

Independent market agent

Skilled craftsmen

Producer

Greater Perception

Alertness to opportunity

Imagination

Self Awareness & Self Belief

An Individual’s

Activities

Leadership

Successful in large organizations

Scale of ability possession

Can be achieved through collaboration

Anyone capable of it (employed and self employed, any walk of life)

Can be acquired and lost

A Function / Activity

Ability to experiment

A Characteristic

Special Knowledge, Foresight

Doers

Decision-Making

Market Innovators

Central to Economic System, uncertainty bearer

A Macro Role

A Micro Role

Technical Skill

A Skill

‘Pure’ Entrepreneurs

Rejecting Wages

It became understood that successful economic policy efforts to increase employment had to begin with an understanding of the job creation process, the job creators and the appropriate policies to assist them (Greeene, 1982). Within the UK the focus on small business had begun earlier from a concern about post war domination of large firms. The 1971 Bolton Report concluded there was a worrying decline in small firms (Bolton, 1971) which were identified as having a ‘seedbed’ function, vital to the growth of a healthy economy (Beesley and Hamilton, 1984 ). It also pointed out that this decline was more ‘acute and rapid’ in Britain than any other industrially developed country (Matlay, 1997, pg 576). Kirby (2002) also highlights the period of the 1980’s in the UK where large firm job losses were experienced while simultaneously more than 1 million jobs were created by firms with less than 20 employee’s (Carree and Thurik, 1998 ). The large majority of these small businesses had no intention of growing with only a small percentage of ‘flyers’ seriously contributing to job creation (Kirby, 2002). Additionally, the growth in selfemployment that took place between 1978 and 1989 from 7.5% to 12.2% of the employed workforce (Meager, 1992) was accompanied by a high desire by those in employment to be self-employed with 43% of employees indicating this to be their preference (Blanchflower, 2000). The percentage of self-employed continued to rise reaching 13.8% in 2007. With the underlying desire of employees to be more autonomous and with advances in technology making global communication possible and cost effective from even remote locations it is likely self-employment will become more common place (Bridge et al., 2003).

Whilst there is debate on the true entrepreneurial nature of the self-employed/salaried the benefit of each is recognized. Not only do the self-employed represent the spirit of an entrepreneur, true to the term Cantillon’s introduced but they also contribute economically through their financial independence. Within larger firms entrepreneurial activity is seen as a driver of firm renewal. Entrepreneurial behaviour within firms, intrapreneurship1, is significant for their continued success as without it innovation of products, services, processes and structures would not occur, leading to the firm’s slow decline (Kirby, 2002, Antoncic and Hisrich, 2003). The concept of intrapreneurship emerged during the 1980’s and as Antoncic and Hisrich (2003) stated: ‘Firms that nurture organizational structures and values conducive to intrapreneurial activities and have intrapreneurial orientations are more likely to grow than organizations that are low in such characteristics.’ Conservative influence 1979 - 1997

The incoming conservative government of 1979 held the view that the nation suffered from an anti-enterprise culture and stated that their aim was to move away from the perceived dependency culture towards a culture of enterprise (Raven, 1989, Bridge et al., 2003, Morris, 1991). However, it became acknowledged by the government that policy changes alone were not enough. Support of the ‘populace’ was essential to truly bring about an ‘enterprise culture’ (Morris, 1991, pg 34). A concept which Nigel Lawson, the then Chancellor of the Exchequer, stated required ‘changing the culture and psychology of two generations’ (Heelas, 1991).

From the mid 1980’s conservative literature began to associate enterprise with the individual, independence, flexibility, responsibility, initiative, creativity and wealth creation (Fairclough, 1991, Burrows, 1991). Burrows (1991) also notes that the term ‘enterprise’ was now being used in non-market based activities such as education, policing, health and social services and rural development amongst others. The meaning of the term enterprise therefore began to get stretched through its attachment to broader concepts.

In 1988 the Department of Trade and Industry launched the £60 Million project Enterprise Initiative in Higher Education which had the aim of developing ‘qualities of enterprise amongst those seeking higher education qualifications’ (Kirby, 2002, pg 85). These were set out as ‘generating and taking ideas and putting them to work; taking decisions and taking responsibility; taking considered risks; welcoming change and helping to shape it; and creating wealth…[all should acquire] key managerial and business competencies’ (Heelas, 1991).

The term enterprise was beginning to take on elements of some of the expressions used to describe entrepreneurship (Bridge et al., 2003). This stretching of definition and meaning whilst useful in the rhetoric of government policy led to problematic issues for the research community.

In all, the contribution from the domain of politics led to a broadening out of the terminology so that enterprise and entrepreneurship would often be used interchangeably. Furthermore, the terminology became associated with driving innovation through from within an organization as well as external to it and its application was encouraged not just in commercial contexts but within community and social contexts as illustrated in figure 5.

Figure 5 Development of the entrepreneurship concept from the perspective of politics

To summarise, politicians were keen to see entrepreneurial behaviours in the form of innovations within existing firms, sustainable job creation amongst the growing numbers of self-employed, an increasing stock of more stable new ventures that became profitable and grew quickly. In this way the government has outlined how it hopes to improve the competitiveness. There is thus a specific element of the entrepreneurial mindset that relates to the scale and location of entrepreneurial engagement that an entrepreneur may direct their energy towards.

The perspective from Sociologists

Where economists had first identified and developed the economic protagonist of the entrepreneur and politics had sought to encourage their influence in non-commercial arenas, sociologists have sought to add detail to the concept by researching the traits and behaviours of a variety of entrepreneurs. Swedberg (2000) defends the social sciences from those critical of what they can offer claiming they provide practical as well as theoretical insight to the why, what and how of entrepreneurship. Additionally, the theories offered by social science are more ‘directly shaped by empirical research’ (Swedberg, 2000, pg 24). Supporting this argument is the economist Mark Casson who proposed that the ‘functional’ (what an entrepreneur does) approach to entrepreneurship definition put forward by economists needs to be converged with the ‘indicative’ (how an entrepreneur may be recognized) approach. This was because ‘Trade is not a purely economic activity it is a social one as well’ (Casson, 1982, pg 224).

So how can an entrepreneur be recognized? Even a cursory overview of the traits and behaviours theories and studies that abound illustrate the very many contributions, yet few points of absolute concurrence. Yet there are enough similarities amongst the theories that can be drawn together to give us ways of recognizing entrepreneurial attributes.

The Master of their own Destiny rather than lucky

A well cited entrepreneurial attribute is termed internal locus of control (Kirby, 2002, Timmons, 1999, Hisrich et al., 2005). An individual with this characteristic believes that a goal is achieved through their actions alone and is not dependant on external factors such as luck or other people’s actions. Perhaps a refinement of this idea is the more recently cited quality of self-efficacy, a belief in one’s ability to perform a task which produces the motivation to undertake it (Lambing and Kuehl, 2003, Fayolle et al., 2006, Good, 2005). Another interpretation of this attribute is that it is one of autonomy – a desire to be in control of one’s actions (Davidsson, 1995, Lambing and Kuehl, 2003). Whether it is autonomy or internal locus of control, both require a sense of direction to guide them. Thus, closely linked to this quality is the attribute of foresight (Hornaday 1982), vision (Barringer and Ireland, 2008) and focus (Bolton and Thompson, 2004).

This level of confidence is why entrepreneurs can sometimes be perceived as being arrogant or overconfident at least (Vecchio, 2003). Research on entrepreneurs excessive self-confidence led Hayward, Shepherd, & Griffin (2006) to put forward a ‘Hubris Theory’ of entrepreneurship based on three contributors to entrepreneurs hubris; 1) overconfidence in knowledge, 2) overconfidence in prediction, and 3) overconfidence in personal abilities. They proposed that overconfident actors are more likely to have the bravado to overcome the challenges of initiating a start-up but that this attribute was also more likely to be the cause of their firm failing through bad judgement and poorly informed decision making.

Risk Shaper rather than Risk Taker

This propensity for overconfidence can also explain why entrepreneurs are often described as risk takers. Risk taking was an initial candidate as one of the key attributes of an entrepreneur (Stevenson, 2004, Kirby, 2002) yet as the research community has looked at more and more case studies of entrepreneurs a different picture emerges. Vecchio (2003) points out the entrepreneurs propensity for framing risk more positively than non-entrepreneurs and Brockhaus’s (1980) study of new entrepreneurs found that the majority (64%) had a propensity for moderate levels of risk which was similar to that found in the general population. Stevenson’s (2004) case studies of 85 entrepreneurs identified very few of them as risk takers. Their approach was more as a risk minimizer / avoider by only sequentially committing to a perceived opportunity. Entrepreneurs deal with risk differently.

Strivers and Drivers rather than world watchers

From a motivational perspective McClelland (1987) had long purported the presence of a high need for achievement in entrepreneurs. Kuratko & Hodgetts (2001) highlight total dedication to success and high energy levels, Timmons (1999) talks of commitment and determination and motivation to excel and Barringer and Ireland (2008) list energetic, strong work ethic and tenacious as characteristics. Entrepreneurs want to make things happen, what Bolton and Thompson (2004) call an Activator talent theme. Perseverance and determination may explain why several studies of entrepreneurs point to challenges in childhood that they have been compelled to overcome (Drennan et al., 2005). Logan’s (2008) study of the connection between dyslexia and entrepreneurs in the US found a marked difference between the population of corporate managers of which 1% had the condition and the population of entrepreneurs of which 35% had the condition. This was compared to a figure of 15% for the general population.

Intelligent AND practical rather than either / or

Whilst Kirby (2002) highlights self-employment as a route for those with little education he also notes studies linking the highest levels of education with self-employed professional occupations, arguing that in a knowledge economy education is likely to be of increasing value. Furthermore, the review of literature around entrepreneurial failures by Liao (2004) consistently highlights the connections between success and higher levels of education and failure with a lack of managerial and planning knowledge.

It is important at this point to distinguish between formal education and the ability to learn. In Davidsson and Honig’s (2003) study of entrepreneurs they separate explicit knowledge (know-what) from tacit knowledge (know-how). The former referring to information that can be codified in procedures, written documents and through educational institutions (academic intelligence) and the latter is the non-codifiable element of an activity (practical intelligence). They conclude that effective entrepreneurs are likely to require both explicit and tacit forms of knowledge and thus formal education and practical learning that takes place on the job are valuable sources of entrepreneurial development. Furthermore, Shah & Tripsas (2007) stress the entrepreneurs capacity for practical approaches to learning especially by experimentation as an undervalued characteristic of their profile. Many models place this activity as part of the process of venture formation after the decision has been taken to start a business. Shah and Tripsas however point out that many entrepreneurs are experimenting with ideas much earlier in the process, something they will often involve others in as well. They are learning by trying things out, a form of practical and creative problem solving. Lumpkin, Hills, & Schrader (2004) found that over 80% of the entrepreneurs they surveyed experimented with new ideas acknowledging that failures and false starts were a part of opportunity recognition.

Relationship builders and riders rather than just ‘networkers’

For some networking has negative connotations’, conjuring up an excessive exchange of unwanted business cards. Yet relationships are key to how an entrepreneur operates. Social Intelligence, according to Thorndike, is the ability to understand and manage other people and to engage successfully in adaptive social interactions (Cantor and Kihlstrom, 2010). The significance of social intelligence comes from the social capital it generates, the ‘actual and potential resources individuals obtain from knowing others, being part of a social network with them, or merely from being known to them and having a good reputation’ (Baron and Markman, 2000, pg 107). A characteristic often underemphasised is that entrepreneurs are also typically comfortable with asking questions as well as asking for support, surrounding themselves with professionals (Jennings et al., 1994) and in this way maximising the value of their networks. It is their confidence in their relationships that allow them to do this.

Emotionally resilient

Emotional intelligence refers to the abilities that integrate thought and feeling and specifically the ‘ability to recognise and regulate emotion in ourselves and others’ (Goleman, 2001, pg 14). An example of managing emotions that has specific relevance to entrepreneurs is counterfactual thinking (Vecchio, 2003). Counterfactual thinking refers to questions we ask ourselves such as ‘What if?’ If an action of ours does not deliver the desired outcome we might ask ourselves ‘What if I had done something better or different?’ Baron (2000) found that entrepreneurs were less likely to engage in such self-questioning, promoting their confidence and making them less susceptible to regret and dissatisfaction. Lambing & Kuehl (2003) highlight the personal sacrifices of relationships and social life and the sense of loneliness and the burden of responsibility that more often than not accompany starting your own business. Kuratko & Hodgetts (2001) point out the high levels of stress entrepreneurs need to manage and the risks they take financially, socially, with their career and psychically. It does raise the question that if nascent entrepreneurs were fully aware of what potentially lay ahead of them would they continue their journey.

Opportunity sensor and creator

Being awake to opportunities lies at the heart of many definitions of what an entrepreneur is. Two types of opportunity spotting have been identified based on whether the decision to start a venture came first and the opportunity sought after or whether the opportunity was recognized and the decision to capitalise on it through venture creation followed (Lumpkin et al., 2004). Importantly, successful entrepreneurs are discriminating about the opportunities they pursue another manifestation of their drive to minimize risk (Timmons, 1999). Timmons (1999, pg 78) places creative thinking as a key element in the process of opportunity development. Creative ability is consistently listed as a key characteristic of entrepreneurs and connects with Sternberg’s previously mentioned triarchic theory of intelligence that includes analytical intelligence, social intelligence and

Creative intelligence.

Lastly, it is also worth noting that there is limited literature on the role in entrepreneurial success played by naivety, ignorance or luck. Tales from the entrepreneurial frontline will often include sentiments along the lines of ‘if I had known what was involved beforehand I probably would never have started’ such as a similar statement made by Brent Hoberman, co-founder of lastminute.com, in a radio interview in 2010 (Cohen, 2010). The costs to family, friends and personal health and well-being in the early, frantic, long hour work days that form the early stages for most start-ups is not what many narratives of entrepreneurial achievement focus on. Steffens, Davidsson, & Fitzsimmons (2009) acknowledge the overrepresentation of young firms amongst the number of high growth firms, not all of which maintain their position, can be interpreted as luck. It is also acknowledged that pioneering firms carry with them market ignorance that late entrants have overcome, having learnt from the observed experience of the pioneer firm (Lévesque and Shepherd, 2004). In all, sociology has contributed elements to both the type of intelligences entrepreneurs are likely to need; analytical, specialist and creative for opportunity spotting and risk management, social and emotional for creating network resources, practical and emotional for making things happen etc.

The Entrepreneurial Capability Model Expanded

Bringing together the primary entrepreneurial attributes from each domain the equation of entrepreneurial capability can be expanded as shown in figure 6.

Entrepreneurial = Entrepreneurial Entrepreneurial Capability Intelligences Mindsets

Figure 6 Model of Entrepreneurial Capital

This equation applies to both nascent entrepreneurs and experienced serial entrepreneurs. Several forms of intelligence (know what and know how) combine to give an individual a level of entrepreneurial intelligence. This requires acquisition through both theory (academic study) and practice (engaging in entrepreneurial activity). The more individuals invest in generating stocks of these forms of intelligence the greater their entrepreneurial capability / potential. As Gartner (1988) highlights the ‘entrepreneur is not a fixed state of existence’ and the equation clearly provides for development of the intelligences that can deliver entrepreneurial behaviour. However, it also provides for shifts in mindset from self-employment to venture creation which was for Gartner the focus of the role of an entrepreneur.

The work of Gompers, Kovner, Lerner and Scharfstein (2006), comparing the success in new ventures of first time entrepreneurs and serial entrepreneurs, supports the learning capability of entrepreneurs. They found that those who had succeeded in a prior venture had a 30% chance of succeeding in their next where as firsttime entrepreneurs only had an 18% chance of succeeding. Additionally, the chances of success improved to 20% if an entrepreneur had previously failed indicating that some degree of entrepreneurial capital is gained in the process of new venture formation even if the outcome is negative. Of process costs.

The equation also acknowledges the significance of the role played by ignorance of the process costs of entrepreneurial engagement. Ignorance of these negatives to entrepreneurial activity can only be an advantage and when they are eradicated after engagement with the process they are compensated by the increase in entrepreneurial intelligence.

Lastly, the model gives space to the part played by arrogance. Entrepreneurial journeys when recounted are often depicted with arrogance given as the reason for not perceiving barriers that stopped others from embarking on similar paths (Kippenberger and Burns, 1988). As entrepreneurial experience is gained this arrogance will either form into justifiable confidence or become replaced with experiential intelligence.

However, without developing a committed entrepreneurial mindset individuals may never realise their potential. Whilst vision, energy and determination are recognised factors of the entrepreneurial mindset, it is the level at which they commit their energies which is more likely to be suited to exploration and development within an educational context. The model of Entrepreneurial Capability has been expanded to include this aspect of the entrepreneurial mindset and populated with a variety of ‘types’ of entrepreneur.