Thinking about Building the Box: Practical Intelligence & Entrepreneurs

TopicJob PerformancePotentialTalent Management

Publication: Personnel Psychology (SUMMER 2011)

Article: The Practical Intelligence of Entrepreneurs: Antecedents and a Link With New Venture Growth

Authors: Baum, J. R., Bird, B. J., & Singh, S.

Reviewed By: Thaddeus Rada

Although general intelligence has been found to be a good predictor of potential success in a job, recent research suggests that other, more specific forms of intelligence may also be useful in predicting job success. One aspect of these other intelligence constructs that is particularly encouraging is that they can be developed. As such, if a particular type of intelligence were demonstrated to have an especially positive impact on individuals’ success in a given field, then education and training in this field could emphasize cultivating this form of intelligence in the people studying it.

The current study, by J. Robert Baum and colleagues, examined one of these specific forms of intelligence, practical intelligence (PI), and its impact on the success of entrepreneurs. The authors focused on entrepreneurial success primarily because of the impact that entrepreneurs can have on business growth and job creation, qualities that are particularly important in light of current economic conditions.PI emphasizes the application of knowledge to novel problems or situations. In this sense, PI, although it is a distinct construct, can be roughly equated to common sense. The authors proposed a model in which the positive relationship between PI and industry experience, and PI and venture experience, are enhanced by two modes of learning: concrete experience and active experimentation.

That is, direct experience in the field the entrepreneur is operating in facilitates their ability to be a successful entrepreneur, primarily by developing successful (strong growth) ventures. The authors also found that adding growth goals to their model increased its ability to predict venture growth; indeed, the interaction between goals and PI was more effective at predicting venture growth than either goals or PI alone.

The findings of this study may be useful to educators, financial backers of entrepreneurs, and entrepreneurs themselves. By emphasizing hands-on, practical experiences in the training and development of entrepreneurs, future entrepreneurial success may be enhanced. As noted earlier, entrepreneurs are important for a number of reasons, not the least of which is their ability to be dynamic forces for change in industry, and their related ability to contribute to job creation.

Baum, J. R., Bird, B. J., & Singh, S. (2011). The practical intelligence of entrepreneurs: Antecedents and a link with new venture growth. Personnel Psychology, 64, 397-425.

human resource management,organizational industrial psychology, organizational management