Does breaking rules an entrepreneur make?

Entrepreneurs are often characterised by traits such as innovation, independence, and high risk taking. Invariably, a flair for breaking rules seems to be de rigueur to be innovative and successful in a venture.

However, breaking rules does not necessarily have to be completely negative. Positive forms include challenging established standards and practices, and bypassing obsolete norms to improve efficiency.

Essentially, thinking out of the box can lead to new product inventions, new production methods, new markets generated, and new ventures established.

Orville Wright did not have a pilot’s licence, but that did not stop him from inventing the first successful airplane.

In Singapore, home-grown cake shop “Awfully Chocolate” broke away from convention many times over. Its founder, not trained in baking, was a lawyer who decided to leave the legal profession.

When its first shop was opened, it sold only one product – the chocolate cake. There was no product variety: unlike other cakes that are colourful, its chocolate cake looked very simple.

Orville Wright did not have a pilot’s licence, but that did not stop him from inventing the first successful airplane

Yet, despite breaking these norms, the entrepreneurs behind Awfully Chocolate found success and have expanded their philosophy to open franchise stores across East Asia.

But there are also negative forms of rule breaking. Particularly during adolescence, rule breaking itself may be a norm. It may seemingly appear to be trivial and part of growing up, but eventually can manifest repercussions on one’s career aspirations in adulthood.

Rule breaking in adolescence can range from modest to severe: Modest, reflecting true independence from norms; or severe, reflecting a rebellious posture or an anti-social behaviour, often accompanied by societal sanctions.

Constructive vs. destructive

In our research at NUS we have studied whether engaging in modest or severe rule breaking during adolescence is constructive or destructive to entrepreneurship in later years.

TA6 no borderThe rule breaking behaviours we examined included:

  • delinquency (eg, deliberately damaging school property),
  • family and school offences (eg, defying parents’ authority or sent for school detention),
  • official contact (eg, being picked up by the police),
  • drug use, and serious crime (eg, stealing valuable things).

Delinquency and family/school offences were considered modest rule breaking while the others were categorised as more severe.

Our findings indicated that individuals who engaged in modest rule breaking when young are more likely to become entrepreneurs than corporate managers in their later life.

By contrast, severe rule breaking was not related to becoming an entrepreneur or a corporate executive, suggesting that severe rule breaking could impede an individual’s career attainment and reduce the likelihood of becoming either an entrepreneur or a manager.

Why so? Engaging in severely risky behaviours when young negatively impacts an individual’s psychological well-being, academic achievement and future success.

Severe rule breaking experiences in earlier life may well have shaped the way individuals develop their moral values and ethical codes, which in turn can impair adult functioning. Further, severe rule breaking can impede subsequent educational attainment which is likely to affect future occupational and life opportunities.

For example, venture capitalists making funding decisions may understandably have reservations in regarding a severe rule breaker’s business proposal. Likewise, the promotion decisions of corporate managers may be more tentative when it comes to reviewing a severe rule breaker.

Risk takers

clownshoes280Modest rule-breaking can pay dividendsIn contrast, the demonstration of independence that underlies modest rule breaking may help individuals develop a habit of thinking “out of the box” and behave in ways that are more innovative to solve problems.

These experiences may trigger development along the entrepreneurial route and facilitate their subsequent entrepreneurial endeavours.

We also found that people with a propensity to take risks are more likely to exhibit rule-breaking behaviour when young, by challenging the status quo and breaking established rules/expectations from school and parents. However, unlike severe rule-breaking, modest rule-breaking in adolescence helps to form a behavioural pattern that provides people with a higher probability of successfully grasping a business opportunity and starting a new venture.

Beyond identifying future entrepreneurs by their rule breaking behaviour, this also raises the question whether a tendency to engage in negative rule breaking persists in adulthood in terms of neglecting or bypassing social codes of ethical standards. It is possible that, having repeatedly broken rules when young, ethic numbing occurs – whereby individuals become desensitised to ethics and moral awareness is reduced. Entrepreneurs who frequently break rules might perceive less danger in a risky decision-making situation with regard to ethical issues.

For examples, recognising the importance of ethical behaviour, the Association of Small and Medium Enterprises (ASME) and the Rotary Club of Singapore amended its judging criterion for the Entrepreneur of the Year Award to include business ethics, specifically taking into account “the steps that the entrepreneur has taken to ensure fair and ethical business practices”.

Being alert to ethics in decision-making is perhaps more crucial for entrepreneurs than for managers in conventional employment settings because entrepreneurs face a highly unstructured environment and more severe pressures for financial performance. Enormous pressure from investors, limited resources, and a highly unstructured competitive environment may make it difficult for entrepreneurs to resist the temptation to transgress their personal values to meet financial demands.

Compared with corporate managers, entrepreneurs might more easily be drawn into a web of unethical behaviours for venture capital investment, harsh treatment of employees, use of illegal copies of software for cost cutting, and other opportunistic behaviours in accounting and tax filing.

Thus, while closing an eye to modest delinquent and authority-undermining behaviours from adolescence is a way to encourage future entrepreneurship, schools and families should be aware of the possible long term effects of such behaviour.

School programmes that impart civic and ethical behaviours may help towards reining in ethic numbing among rule breakers.

This research was collaborated with Zhen Zhang, and published in the Journal of Business Venturing

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