Nature, nurture and circumstance

Before we consider ethnicity as the natural basis for being entrepreneurial, let me first share some facts that have supported this seemingly logical conclusion.

Sometime in the mid-20th century and even in earlier periods of their colorful history, many Chinese fled mainland China and resettled in neighboring countries. In this strange new environment, they had to have a source of livelihood in order to survive.

Since they were not citizens, they could not apply for government positions. Not knowing the local language nor the community, neither could they be hired by business owners. Most were further handicapped by their lack of education. As a matter of necessity, they had to put up entrepreneurial ventures in order to survive. Many started by selling some of the possessions they had brought in with them. Soon enough, they found out that what they possessed was not a bottomless pit and had to be replenished. They wound up buying and selling–in effect, trading.

Because they were not trained accountants, they monitored their profitability differently. Although the practice of paying one’s debts as a new year is welcomed has become a matter of good luck, this is rooted in the way entrepreneurs unschooled in accounting tracked profitability. If all the loans were paid, the remaining assets were those that were purely owned by the entrepreneur. If there were more assets at year-end (relative to the start of the same year), then the business, which was for the most part a family matter, grew.

There was no distinction between family and business expenses inasmuch as they did not pay themselves a salary. The same resources used in the business were used by the family. The same wad of money paid for both business expenses and family expenses. And the business had to grow at a faster rate than the family.

As the business grew, the children also grew up. The founding entrepreneur did not want them to go through the same resettlement difficulties. The children were sent to the local schools. The founding entrepreneur saw to it that they could become employable in the area, unlike the earlier generation.

However, the business had to pay for the education. When not studying for their lessons, the children started to get involved in and slowly learned the ins and outs of the business. Soon, the children were either running it, got employed and/or had businesses of their own.

Thus far, what does this story tell us?

Entrepreneurship has a third component. Aside from nature or nurture, there is circumstance. The circumstance will bring out or even force out the natural entrepreneurial component. The natural component is the ability to see and identify opportunities. The circumstance is often described as a crisis or a survival situation.

If a person has the natural ability, it would surface in a crisis or survival situation. Otherwise, the person will not survive the crisis. The crisis circumstance will be the acid test of the nature component. The entrepreneur should be able to see or visualize the opportunity in the crisis.

People who pass this acid test and discover their natural entrepreneurial ability can start to practice the talent even in a non-crisis situation. Not only can he/she survive, but the entrepreneur would have a head start to grow, enlarge and further expand the business venture.

The nurture component is the skill of converting the opportunity into economic reality. The nurture component can be learned or taught. It will also convert the opportunity sooner rather than later and with lesser mistakes and costs.

This skill refines the opportunity or vision to show the fine details of the opportunity. In addition, it will clarify how the opportunity can be possessed on a step-by-step basis. In other words, it defines the "how".

The application of the nurture skill is not limited to planning. Execution is as critical as planning. Execution involves organizing, delegating and monitoring. In other words, these are the management skills.

The story further tells us that the entrepreneur must not stop at circumstance and nature. Measuring the growth (asset value at the start and at the end of the year) of the business must be made. Many entrepreneurs had to learn the skills the hard way. They learned it through hard knocks or by trial and error (mostly error).

When an entrepreneur reviews and reflects on what has happened, there will be learning or improvement of skills. This is also another reason why entrepreneurs allow their children the skill of turning opportunities into reality, something that the farsighted entrepreneur would like to pass on to the next generation. Moreover, the children’s involvement helps the family business which, after all, pays not only for their formal education but also for the food on the table, the clothes on their back and the roof over their heads.

Skills are transferable or can be learned. There are many ways of learning or nurturing. It can range from the informal or the proverbial school of hard knocks to formal schooling. Often the subject of debate, many wonder which option is cheaper. One view is that the cost of mistakes is often more expensive than the cost of formal education. Many a doubting Thomas have even gone to the extent of actually computing expensive mistakes and were taken aback by the staggering figures.

However, it is not an either/or situation of nature or nurture but of both. Furthermore, nature is not based on ethnic background. The reason why there are more Chinese entrepreneurs is simply because of circumstance. The overseas Chinese who migrated in droves over time had to be entrepreneurs. Those who couldn’t, perished.

By force of circumstances, the successor generations lived on and were nurtured by learning and sharpening their entrepreneurial skills. Any other ethnic grouping under the same set of circumstances will bring out the entrepreneurial nature in some, while those without the ability will eventually die. Nature, nurture and circumstance explain the entrepreneurial mystique.

(Alejandrino Ferreria is the associate dean of the Asian Center for Entrepreneurship of the Asian Institute of Management. For further comments and inquiries, you may contact him at: [email protected]. Published "Entrepreneur’s Helpline" columns can be viewed on the AIM website at http//: www.aim.edu.ph).