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The Positive Psychology of Entrepreneurship

Entrepreneurship is the ultimate exercise in positive psychology.

There's a lot of buzz about entrepreneurship right now. This is especially obvious if you hang out on LinkedIn, Twitter, or cruise the Ning social networks. It is not surprising, given the amount of people looking for jobs due to cutbacks and restructuring and a few bankruptcies thrown in for good measure. So far, the government plans to promote economic growth have tried to stimulate a lot of things, but stimulating entrepreneurs doesn't seem to be one of them. It's important to encourage entrepreneurship and not just for economic reasons. Entrepreneurship is the ultimate exercise in developing the attributes that we know from positive psychology to be essential to having a good life: self-competence, optimism, engagement, and resilience.

I'm against government stimulus the way it's usually done for the same reasons that I'm for entrepreneurship. Sending people checks in the mail may give them money to spend--and I'm not saying that's not fun--but they might as well print a card to stick in the envelope with the check that says: "You can't do it yourself, so we have to help you." There is no indication that anyone in government from either side of the aisle thinks we can take care of ourselves. There is no encouragement to start a business or suggestions about how do it with or without the stimulus checks. There are no messages about how starting a business is way to turn one dollar into two. Or even how important it is for everybody's morale if you just get busy and make or do something. We don't even teach it in schools unless you make it all the way to an MBA. For a country founded on initiative and pioneer spirit, this seems totally out of character. The stimulus program is a message about powerlessness and consumption. And worse, this type of stimulus is promoting consumption without any ties to an individual's effort. Every parent knows that's a recipe for disaster. Aside from what that kind of incentive does to someone's work ethic, it is even worse psychologically because it undermines people's belief in themselves.

When someone starts a business, it's just the opposite. It draws on your passion and energy, your creativity and innovation, your resourcefulness and your guts. You do not have to start the next Apple or IBM to have the satisfaction of making a positive contribution. And if you're even remotely successful, you'll also give someone else a job. Do you have a passion for making scented soap? Can you keep somebody's books, build a website, knit a sweater, wash a dog, tutor kids, repair cars, mow a lawn, or teach someone how to use their computer? From a practical standpoint, thanks to media and communication technologies, some of the major hurdles to starting a business are incredibly low. With the Internet and social media, you can research legal issues, apply for licenses, get supplies, and launch marketing campaigns all on a shoestring budget. With the Internet, service jobs can be done without having to drive your car or put on a tie. If geography matters to what you want to do, then you've got Craig's List or EBay. Mickey Rooney and Judy Garland put on a show in their father's barn. You can start a business in yours. If you don't have a barn, how about the garage or the basement?

However, the logistics of starting a business are not the point.

It isn't what business you do, or how you do it that brings psychological value. It's that you are doing something. Once you have a plan, you are engaged. You take action, figure out problems, try things, and your belief in yourself grows. Those feelings are self-reinforcing; they build on each other and it's empowering, if not slightly exhausting. In the recent issue of Psychological Science, Park and Peterson (2009) review what it means to live well according to the positive psychology literature. From Freud to Seligman, the recurring themes include autonomy, competence, initiative, environmental mastery, purpose in life, personal growth, engagement, meaning, and the balance of skills and challenges. Sounds like the manifesto of an entrepreneur.

Positive psychology gets a bad rap because many people think it's just about being "happy" and, aside from our moral ambivalence about happiness, many construe that as a fairly shallow construct. If all we--or the economy--needed to feel better was money, the government stimulus checks would really be doing the trick. But that approach misses the point. Positive psychology is about the attributes that make you feel good, which is a different thing. It's about feeling like you matter, that what you do has meaning, and that you believe in your ability to get stuff done. (Psychologists like to call that ‘self-efficacy'.) When you feel like that, you also feel more optimistic and hopeful which makes you more willing to take risks and try other new things. If you don't believe me, read Nobel Prize winner Muhammad Yunus' "Banker to the Poor" in which he describes how microlending (lending people small amounts of money to start businesses) has positively transformed the lives of people around the world, lifting them out of both poverty and helplessness. Or go to Kiva and read about their social network approach to financing small business ventures.

This is the kind of stimulus we need. Let's at least focus a couple of initiatives on creating the opportunity to achieve some autonomy, meaning, independence, and engagement through entrepreneurship. It would be nice if the government could show us they have faith in us, too. We could stand a little more optimism all around.

Park, N., & Peterson, C. (2009). Achieving and sustaining a good life. Perspectives on Psychological Science, 4(4), 422-428. Retrieved July 15, 2009. from