The impact of the entrepreneur on the development and subsequent success of a new venture has been demonstrated in many studies. Indeed one of the most important judgement calls of professionals assisting entrepreneurs is to evaluate their strengths, limitations, management practices, and likelihood of success. Research has responded to the need for such evaluation with different attempts to identify the relevant characteristics of the entrepreneur that may bear upon the management practices and subsequent success of new ventures. One direction of this research has led to the identification of different types of entrepreneurs. Entrepreneurs within each typology share common traits but differ significantly from those of other types. Such attempts are useful in that they identify key differences within the larger population of entrepreneurs and do so in a way that yields holistic and meaningful portrayals. More importantly, classifications allow us to make better predictions, based on membership in a specific typology, about the likely behavior, responses, and success of the entrepreneur. These offer a powerful conceptual tool for the evaluation of entrepreneurs during the start-up or early stages of a venture before the track record of the individual involved can be established and observed. Research studies over the last decade appear to converge on two types of entrepreneurs, craftsmen and opportunists. Craftsmen usually come from a blue collar background with limited education and managerial experience. They prefer technical work to administrative tasks and are generally motivated by needs for personal autonomy rather than the desire for organizational or financial success. In contrast, opportunists are characterized by broader experiences and higher levels of education. They are more likely to be motivated by financial gains and the opportunity for building a successful organization. These two types have been widely accepted and have been found to differ in regard to an array of characteristics and behavior. For example, the two types appear to engage in different levels of explicit planning and information gathering in preparation for the start-up of business. The ventures shared by the two types can also be contrasted along such dimensions as size, capital, the presence of partners, and relatedness to prior experience. The two types also manage differently as exhibited in the formality of administrative procedures, allocation of time to different functions, spans of control, and levels of authority. Some evidence suggests that the typology even appears to distinguish entrepreneurs in terms of attitudes toward risk, adaptiveness to change, and cognitive processing of opportunities. Most important, the classification seems to suggest that typologies differ in regard to growth potential and the likelihood that ventures will proceed to the next life cycle stage. The classification consisting of these two types of entrepreneurs represents a critical contribution to the extent that it possesses strong predictive power regarding a range of entrepreneurial behavior and performance. This study focuses upon the conceptual frameworks used and specific methods applied in developing entrepreneurial typologies. It examines the extent to which different entrepreneurial typologies are consistent. It seeks to alert us to how the methods used in developing typologies affect the results. It suggests that typologies developed to date lack comparability and predictive power. A close examination of previous studies disclosed major differences in the criteria used to classify entrepreneurs. Thus, craftsmen in one study might have been identified on the basis of two characteristics, whereas another study employed as many as 50 criteria. In some studies, all entrepreneurs are classified into typologies, whereas in others, many entrepreneurs are “in-betweens” and left unclassified. The same labels have often been applied to types derived through divergent methodologies, suggesting a degree of commonality that may be misleading. There is the appearance of a body of consistent and additive knowledge about craftsmen and opportunist entrepreneurs that does not rest upon a careful consideration of the methodologies employed. Yet, how likely are we to obtain the same groupings of entrepreneurs from different classification schemes as implicitly assumed in the cross-references we have accepted? This study explicitly evaluated the impact of such differences by contrasting the groupings of entrepreneurs obtained through three different classifications. It is, we think, the first empirical examination of the extent to which traditionally defined entrepreneurial typologies are sensitive to the classification criteria used. Patterned after demonstrated practices in the literature, this study grouped entrepreneurs using: (1) goals; (2) goals and background (education and experience); and (3) goals, background, and management style. Within each classification, entrepreneurs were divided into two groups using cluster analysis. The results showed that different classification criteria did result in different groupings. In particular, classification based solely on goal orientation demonstrated the most pronounced differences from the results of the other classifications. Second, we found that none of the three pairs of groups patterned closely the craftsman/opportunist delineation as described in the literature. The primary conclusion that different groupings result from different classification frameworks should not be surprising, at least from a methodological standpoint. Yet the problem has been totally overlooked in the analysis and interpretation of entrepreneurial types. Very likely, the same labels may have been applied to rather different entities. What then are the implications for the use of this typology as an evaluative tool? First, we note that the definitions of craftsman and opportunist have not been resolved and take on as many variations as the number of studies on the topic. Second, the findings of each study have not really been corroborated by findings in other analyses. As such, the level of generalizability and confidence attached to each must be checked. Third, the cumulative evidence in the body of literature on entrepreneurial typologies cannot be taken as additive knowledge about the wide range of characteristics associated with each type. Hence, the predictive power of the craftsman-opportunist typology cannot be taken for granted. Fourth, it remains to be demonstrated what percentage of the population of entrepreneurs can be represented by the two types. How universal are craftsman and opportunist entrepreneurs or can only some entrepreneurs be classified in this way? Do other types, though yet unidentified, exist? The above reservations lead us to conclude that while the craftsman-opportunist classification appears to serve as a useful yardstick for measuring the potential behavior and likely success of entrepreneurs, its applicability and scope may have been exaggerated to this point. This is not to say that typologies have little value, but rather to demonstrate the need for consistency and careful consideration of the definition of types before integrated and validated portrayals of entrepreneurs can be developed. Without these, the validity of our yardstick remains questionable.

Venture capital investing differs in important respects from investment decisions involving the securities of Fortune 500 companies, or decisions to purchase established companies, which are generally made in accord with widely recognized financial models. Investing in new ventures involves a high level of uncertainty as well as a high risk of failure. Venture capital investing is characterized by high variability in the outcomes of new ventures and in the performance of venture capital portfolios. Venture capital investing decisions are complicated by a general lack of quantifiable financial and market data for early-stage ventures, and investment decisions remain hostage to unanticipated competitors, market shifts, and financial cycles. Some observers have suggested that venture capital investment decisions are primarily subjective assessments. While the question of risk in venture capital investing has been addressed on an ad hoc basis in several empirical studies, there has been little effort to develop a theoretical framework of risk perceptions and risk-reduction strategies. Despite differences in investor experience, investment preferences, and tolerance for risk, venture capital managers share many common perceptions of the risks involved in investing in new ventures and the distribution of those risks over the venture-capital-funded phase of development. Venture capital managers also utilize many common behaviors and strategies in adapting to these risks. These perceptions and reactions to risk in investing, and strategies for controlling risk can, in theory, be used to construct a behavioral framework that can predict how venture capital managers will behave in choosing between various investment opportunities in order to minimize risk and to maximize potential returns. In an attempt to begin to identify various elements of such a behavioral framework of venture capital reactions to risk, the authors have drawn upon psychological risk theory of decision-making under uncertainty, including classic expected utility theory, later modifications to that theory by Kahneman and Tversky (1979). and Coombs and Huang's (1970) “portfolio approach” to risk, that are applicable to venture capital investing. These expected behaviors to risk have been used in conjunction with empirical studies of venture capital investment and portfolio outcomes, distributions of investments within portfolios, and venture capitalist perceptions of risk, to propose nine hypotheses about how venture capital managers behave in making investment decisions. These hypotheses include differences in variation and magnitude of returns for early-stage versus later-stage ventures, explanations of how risk distributions change over the stagewise development of new ventures, differences in the behavior of “aggressive” versus “conservative” investors in screening investment prospects, and strategies utilizing a lower “ideal level of risk” to reduce the chances of achieving negative or sub-normal final portfolio returns.

This paper presents the preliminary and presently speculative conclusions of a psychological study of entrepreneurial phenomena in Japan and Silicon Valley. A questionnaire was developed to identify two major ways in which entrepreneurs were different from average managers of large corporations. First, the entrepreneurs' perceived difference between themselves and managers was measured to create a Personal Difference Index (PDI). Second, the entrepreneurs' perceived difference between their firms and a typical large firm was measured to develop a Corporate Difference Index (CDI). Our primary finding is that U.S. high-tech and Japanese entrepreneurs have the same minimum hurdle degree of entrepreneurial spirit. Both U.S. and Japaneses entrepreneurs require a certain minimum personal and corporate difference to overcome the obstacles to becoming an entrepreneur. However, the types of entrepreneurs in Japan and Silicon Valley are different. We also found that entrepreneurs with higher growth firms fell within a certain range of PDI's and GDI's. Entrepreneurs or entrepreneurial firms that were too similar or too different from corporate counterparts tended to fail or to remain small. This report presents the preliminary and presently speculative conclusions from a study of the characteristics of entrepreneurs in Japan and Silicon Valley. As a result of this study, we hope to understand better the following: • What are the universal characteristics of entrepreneurs?

The literature identifies four important factors1 that determine the success of a corporate venture: culture, climate, and corporate support (Schon 1966; Kanter 1983; MacMillan, Block, and Subba Narasimha 1984; Fast and Pratt 1981; Roberts 1980; Maidique and Hayes 1984); structure and venturing effort (Burgelman 1983, 1985; Souder 1981; Maidique 1980; Block 1985; MacMillan and George 1985); planning, monitoring and evaluation (Vesper andHolmdahl 1973, Quinn 1979; Fast 1981; Block and MacMillan 1985); and strategy and environment (Cooper 1979, 1983; Hobson and Morrison 1983; Biggadike 1979). This paper focuses on the last of the above issues. It seeks to explore the importance of environment and strategy for corporate venture success. At the broadest level, two theoretical perspectives have dominated the organization-environment-strategy literature in recent years: population ecology and strategic adaptation. The population ecology perspective argues that organizational survival is determined by environmental selection (Hannan and Freeman 1979,1984; Aldrich 1979; Greenfield and Strickon 1986). Technological and demographic change results in “new resource sets” that provide opportunities for the expansion of existing, or the founding of new, organizations (Brittain and Freeman 1980). A shifting network of social linkages, both within and between existing firms, connects aspiring venture managers/entrepreneurs with resources and opportunities (Aldrich and Zimmer 1986). While managers develop and implement strategies, these strategies do not directly determine success. Instead, they are one of many sources of random variation that will be selected for, or against, by the environment. In contrast, the strategic adaptation perspective implies that new venture success is a function of the manager's or entrepreneur's ability to assess internal capabilities and environmental conditions for the purpose of developing and executing effective strategies (Andrews 1980; Porter 1980; Vesper 1980; Timmons 1982). The environment is viewed as a (major) constraint within which strategy is developed. Furthermore, environments are not immutable and are subject to negotiation and manipulation (Child 1972; Miles and Cameron 1982; MacMillan 1983). In recent years it has been acknowledged that both population ecology and strategic adaptation perspectives provides valuable insight. A new body of literature has emerged that attempts to reconcile these theories (Tushman and Anderson 1986; Van de Ven, Hudson and Schroeder 1984; Singh, House, and Tucker 1986; Aldrich and Auster 1986). This paper follows in this tradition and seeks to explore empirically the relative impact of strategy and environment on new corporate venture performance in industrial markets.