There are two theories about how entrepreneurs develop, often called the “supply” and “demand” theories. In the supply theory, entrepreneurs are born, not made — certain people have the personality traits that make a good entrepreneur. Several research studies have shown that entrepreneurs are convinced that they can command their own destinies, or in the jargon of behaviorial scientists, the “locus of control” of the entrepreneur lies within himself. It is this self-belief which stimulates the entrepreneur, according to supply-side theorists. John G. Burch, writing in the September-October 1986 edition of Business Horizons gave a list of in-born traits that make an entrepreneur:
- A desire to achieve: The push to conquer problems, and give birth to a successful venture.
- Hard work: It is often suggested that many entrepreneurs are workaholics.
- Desire to work for themselves: Entrepreneurs like to work for themselves rather than working for an organization or any other individual. They may work for someone to gain the knowledge of product or service that they may want to produce.
- Nurturing quality: Willing to take charge of, and watch over a venture until it can stand alone.
- Acceptance of responsibility: Are morally, legally, and mentally accountable for their ventures. Some entrepreneurs may be driven more by altruism than by self-interest.
- Reward orientation: Desire to achieve, work hard, and take responsibility, but also with a commensurate desire to be rewarded handsomely for their efforts; rewards can be in forms other than money, such as recognition and respect.
- Optimism: Live by the philosophy that this is the best of times, and that anything is possible.
- Orientation to excellence: Often desire to achieve something outstanding that they can be proud of.
‘* Organization’: Are good at bringing together the components (including people) of a venture.
- Profit orientation: Want to make a profit; but the profit serves primarily as a meter to gauge their success and achievement.
In academic circles, however, the “demand” theory is now generally more prevalent. The demand theory holds that entrepreneurs emerge out of the combination of entrepreneurial opportunities and people who are well-positioned to take advantage of them. Thus, anyone who encounters the right conditions might become an entrepreneur, if they find themselves in a position where they find a valuable problem that they alone can solve. Scholars studying the demand theory try to understand the conditions under which entrepreneurs appear, particularly in understanding how differences in the information various people have (see Austrian School economics) creates entrepreneurial opportunities, and how environmental factors (access to capital, competition, etc.) change the rate of entrepreneurship. Entrepreneurs are an important part of the society.