There are two types of entrepreneurs. For sharper focus, lets call them entrepreneurs by choice and entrepreneurs by necessity.

Entrepreneurs by choice deploy skills and money to experiment with new ideas. They choose to be entrepreneurs and focus on developing and executing a plan. They may risk everything they have, but don’t expect to starve. They start with computer programming skills and an idea for a search engine. Next thing you know, Google is a household name.

Entrepreneurs by necessity have no money or particular business skills. They act anyway. Why? Fear! They haggle over price, buy a carton of strawberries with their last $20, sell individual fruits on a street corner and make $10 profit so they can feed the kids. Next thing you know, they own a chain of grocery stores. They grow their business in an eternal struggle to survive.

Logically, the first type of entrepreneur would be more likely to succeed than the second type, but we have no empirical evidence to support such a conclusion.

Striving to help entrepreneurs understand their own motivation, Nicholas A. Bibbi identifies six types based on the degree of independence sought.

Determining entrepreneurial type is an integral part of the personal analysis process for anyone planning to succeed in the grueling world of self-employment.

Now, here is a very abbreviated description of differing entrepreneurial types. Think of them as existing on a continuum spanning horizontally left to right with an increasing need for operational and concept independence as the list progresses. No one type is better, stronger, or more capable than another;

they simply have different personalities and styles.

First, is the Intrapreneur. Although tied to the “other owned” organization where they are employed, the intrapreneur enjoys independent responsibilities where risk and reputation are part of the assignment. What kinds of assignments would those be? Heading up a take-over or merger. Implementation of a new business development plan.

The Franchisee is next. The most comfortable person in this role desires full ownership, but needs/wants/sees the benefit of total systems association and support.

The Business Opportunity Buyer desires ownership, but leaves the support fold after learning the business.

The Independent goes in owning the business and knowing the business from day one. And, that which is not known will be hustled, figured out, and dealt with on the fly.

Finally, the Practical Visionary (?) with the question mark following the term grabs for the greatest measure of independence. This person follows their heart and their dream with great gusto, but the question mark is attached because until the vision is proven, its practical value and acceptance by the marketplace remains a question.

Every investor knows that the entrepreneur influences the performance of the new venture, yet all of Bibbi’s types would be equally likely to succeed. The challenge, of course, is to develop an entrepreneur categorization scheme that would provide a predictive model for enterprise success. Wouldn’t it be cool? Just test the entrepreneur, decide which category he falls into, and know the likelihood of success. Venture capitalists would pay a fortune for such a tool.

In January 2004, Madhushree Nanda Agarwal, of the Indian Institute of Management Calcutta, published an interesting paper on the subject, TYPE OF ENTREPRENEUR, NEW VENTURE STRATEGY AND THE PERFORMANCE OF SOFTWARE STARTUPS.

The research adopted a survey method to collect data on the background characteristics, skills, motivations, competitive strategy, and performance of the new venture to test an interactional model of New Venture Performance. The sample for the research consisted of 107 new ventures located in Delhi and Bangalore. The sample was defined as independent start-ups (not part of a business house), that were between 1 and 7 years old, in the software development sector.

The skills and motivations of the entrepreneur were factor analyzed into a smaller number of components. A cluster analysis of the skill and motivation factors yielded a typology of entrepreneurs. Some of the significant findings of the study are given below:

1. The operationalization of the entrepreneur as a combination of his skills and motivations yielded a stable and robust typology of entrepreneurs. The 5-cluster solution was demonstrated to have high internal and external validity.

2. The five types of entrepreneurs identified were: 1) the Opportunistic type, who was driven by expectations of financial gain, 2) the “Push” type, driven by negative “push” reasons for starting a business, 3) the Managerial type, who have high leadership, administration and environmental skills, as well as a desire for financial returns, 4) the New Craftsman type, with a high need for autonomy at work and desire to pursue a product/service idea, and 5) the Idea driven Opportunist type, which emerged as a “mixed” type.

3. The entrepreneurial types identified as above were found to differ significantly in age, background, education and work experience. Idea Driven Opportunists were found to be the youngest to start a business, while “Push” entrepreneurs were the oldest. The New Craftsman entrepreneur was found to be the most highly educated, coming from a professional background, and with highest prior experience with large private firms.

4. The entrepreneurial types were significantly associated with the size and founding capital of the business. Managerial and New Craftsman entrepreneurs were associated with higher number of employees, and higher founding capital than other types of entrepreneurs, while “push” entrepreneurs had the lowest employment size and founding capital.

5. The type of entrepreneur was also found to be differentially associated with competitive strategy orientations. Managerial entrepreneurs were found to have greater marketing orientation and focus than other types. New Craftsman entrepreneurs were associated with the highest focus on large customers, while “Push” entrepreneurs were associated with least differentiation in terms of product and market scope definition, and maximum emphasis on cost control.

6. The sample of new ventures was found to exhibit 4 strategy types: 1)Customer Partnership type, focusing on a few, large customers, 2) Niche strategy, with highly focused product and market scope, 3) Cost leaders, with high emphasis on cost control and capacity utilization, and low focus in terms of product-market scope, and 4) Investment/Promotion strategy, which invest heavily in promotion and brand building, as well as product development.

7. The type of entrepreneur was significantly related to the type of strategy. Managerial entrepreneurs tended to choose Niche strategies, New Craftsmen were associated with Customer Partnership strategies, and “Push” entrepreneurs with Cost Leadership.

8. Moreover, the type of entrepreneur was also found to be significantly associated with employment creation and growth in employment size. Managerial and New Craftsman entrepreneurs were found to generate significantly more jobs than other types, and “Push” entrepreneurs were found to grow at a significantly lower rate in terms of employment growth.

9. The type of strategy was not significantly associated with New Venture Performance.

10. The proposition relating to entrepreneur-strategy alignment was only partially supported. It was found that managerial entrepreneurs outperformed other types within the Cost Leadership. However, the small sample sizes being tested may be in part responsible for the lack of significant results at this stage.

Some of the implications of the research are:

1. A combination of the entrepreneur’s skills and motivations may be a more robust way of operationalizing the entrepreneur as an empirical construct for entrepreneurship research.

2. The findings of this study strongly suggest that for a young venture, the performance is so closely linked to the entrepreneur that little else matters. Hence researchers need to test further the hypothesis that the entrepreneurial skill-motivation set is a more important determinant of the new venture’s success than strategy and other contextual variables.

3. The absence of significant association between new venture strategy and performance also reinforces the fact that there may be more than one route to success, and all successful firms may not grow in the same way.

4. The proposition that the entrepreneur-strategy alignment will be positively associated with performance had limited support, but as the sample size for this study was small, replication with larger sample sizes may produce some support for the proposition.

5. Venture capitalists and policy makers have been forced to use subjective evaluations of the entrepreneur’s ability to succeed in evaluating venture proposals. The identification of a typology of entrepreneurs that is strongly correlated to performance of the new venture can form a basis for the evaluation of the entrepreneurial human capital of the venture.

6. Entrepreneurs can assess their own strengths and weaknesses, and use training or supplement the core team with individuals with complementary skills and motivations.