Establishing a successful business requires a combination of business acumen, excellent leadership, and the right human resource. A lot of things can factor into an organization’s potential for success, but these three can play a huge role in driving it toward achieving its goals.
While human resources or the people within the company contribute a lot to the business’ operation, there is a long-standing debate on what exactly brings the organization to reach success: entrepreneurial skills or management skills?
This article will talk about the differences between entrepreneurs and managers, and how their attributes offer advantages to the business.
Differences in Traits Between Entrepreneurs and Managers
In lay terms, entrepreneurs and managers are defined in different ways. Entrepreneurs are people who plan, arrange, invest in, and manages a business, while managers are those who handle and supervise a team. These definitions are pretty simple and show essential differences between the two.
However, these two positions in a business have more in-depth differences. A 2002 research on a group of entrepreneurs and managers showed that they have traits and aspects of their backgrounds that that diverge and converge.
According to Ayala Malach-Pines, Dov Dvir, and Orenya Yafe-Yanai (2002), “entrepreneurs described themselves as loving challenge more, as greater risk-takers, and as showing more initiative as well as being more independent, more realistic, creative, and optimistic, and as being greater dreamers than managers,” (p. 179).
They were also found to get a greater sense of significance in their work, and are less likely to leave if they have the opportunity not to work.
These differences speak to the roles entrepreneurs and managers play in the company. Particularly with regard to the fact that entrepreneurs have been there at the beginning of the business, from conception and planning to operations.
They are much more involved in the company because, in the case of startups, they founded and invested in it. Managers, on the other hand, may have been brought on board once the startup launched.
Meanwhile, there are similarities in how entrepreneurs and managers describe themselves particularly in terms of commitment, involvement, energy, confidence, the need for control, and love of management (Malack-Pines, Dvir, & Yafe-Yanai, 2002, p. 179).
Role and Responsibilities of Entrepreneurs
Entrepreneurs are essentially the people who conceptualized and invested in the business. Doing so requires business acumen or a set of skills that make them effective business people.
A study by Hull Business School (2015) determined that “entrepreneurship skills are associated with competence in the process of opportunity identification (and/or creation), the ability to capitalize on identified opportunities and a range of skills associated with developing and implementing business plans to enable such opportunities to be realized,” (p. 5).
Having these skills can result in the success of the business. It is important to note that other factors can contribute to the success of the organization including the proper management of resources and performance in the operation.
The role of an entrepreneur has been apparent from the start. They have been involved in the startup since the conception and planning stage. They also assume risks in launching the company as they take on not only financial costs but opportunity costs, as well.
In small businesses and startups, they are likely to be in the company in a management position. Once the company expands, they require more people and they need to get managers to handle these additional personnel.
Role and Responsibilities of Managers
As mentioned, managers are hired to supervise the growing human resource of the company. Gavayne Tovamasyan (2017) classified the responsibilities of managers into three namely interpersonal, informational, and decisional roles (p. 21).
As leaders, they interact with other members of the team. They serve as the figurehead and liaison of the team. This means that they have social, legal, and ceremonial roles in the company as they are an authority. Moreover, they communicate internally and externally.
The informational aspect of their role requires them to look out for information in the organization and industry, and communicate them to their team. Certain managerial roles require them to speak for their team and their organization.
Lastly, Tovamasyan said that decisional roles involve the handling of disturbances, allocating resources, and negotiating. It is important to point out that the decisional roles of managers can also include entrepreneurial responsibilities such as creating and controlling changes, solving problems, coming up with ideas, and implementing them.
The Differences Between Entrepreneurs and Managers
|Goal||Establish the startup||Provide service to supervise a team|
|Standing||Founder and owner||Employee, but this role can also be played by the owner|
|Exemplary Traits||Typically risk-takers, love challenges, go-getters, creative||Typically the negotiator, confident, committed|
|Compensation||Profits, but can also earn salary for their role in the company||Salary and benefits|
|Qualifications||Business acumen and capital||As employees, they may be required to have experience and background in management|
Can Entrepreneurs Be Effective Managers and Vice Versa?
While entrepreneurs and managers tend to have differences in terms of their goals, standing, traits, and qualifications, they have notable similarities. Keep in mind that entrepreneurs can have the leadership and management skills of a manager, while managers can have the business acumen of an entrepreneur.
A study by Uchechi Bel-Ann Ordu (2020) noted that entrepreneurial leadership is a new leadership style that can be effective in the success of a business (p. 199). It is basically the combination of entrepreneurial skills with management skills, instead of having these traits and roles held by two separate people.
According to Ordu, an entrepreneurial leader exhibits innovativeness, locus of control, and the need for achievement (p. 200). They should also be receptive to risks, growth, and changes. They tend to be necessity-driven and opportunity-grabbers so as to survive in the business world.
Entrepreneurs and managers may have some differences, but they share enough similarities, the combination of which can drive the organization toward success. Entrepreneurial leaders have the potential to lead the startup in the face of changes.
- Hull University Business School. (2015). Entrepreneurship skills: Literature and policy review. Retrieved from https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/457533/BIS-15-456-entrepreneurship-skills-literature-and-policy-review.pdf
- Malach‐Pines, A., Sadeh, A., Dvir, D., & Yofe‐Yanai, O. (2002). Entrepreneurs and managers: Similar yet different. the international journal of organizational analysis, 10(2), 172–190. doi:10.1108/eb028949
- Tovmasyan, G. (2017). The role of managers in organizations: Psychological aspects. business ethics and leadership. 1 (3), 20-26. DOI:10.21272/bel.1(3).20-26.2017
- Ordu, U.B. (2020). Entrepreneurial leadership in start-up businesses. Educational reforms worldwide BCES Conference Books. (18), 197-204.