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Start Your Business Entrepreneurs

Seeking Entrepreneurial Success? Study Advises Common Sense

It may seem like common sense, but common sense itself can mean the difference between entrepreneurial success or failure, new research shows. After taking a close look at the whole gamut of business smarts, J. Robert Baum at the University of Maryland has shown that practical intelligence is an indicator of likely entrepreneurial success.

Baum, director of the university’s entrepreneurship research, defines practical intelligence as “an experience-based accumulation of skills and explicit knowledge as well as the ability to apply knowledge to solve everyday problems.”

Translated into English, what the academics call “practical intelligence” is another way of describing “know-how” or common sense.

Practical intelligence is the result of an experimental hands-on operating style that leads to specific learning.

“Those with high practical intelligence tend to develop useful knowledge by doing and learning, not by watching or reading,” Baum said in a statement.

A lot of smart people flop at business. Conversely, there are plenty of examples of not-so-smart people who take the business world by storm. Practical intelligence is the concept that helps explain this surprising phenomenon, Baum said.

To determine the effect of practical intelligence on the success of entrepreneurs , Baum and his fellow researchers compared responses to a set of business scenarios from founders of newly started businesses with responses from founders/CEOs of successful and established printing companies.  The researchers  were then able to discover that each group of founders  possessed different levels of practical intelligence.

Comparing the interaction of practical intelligence growth goals, they were able to successfully predict an increase in sales and employment 27 percent of the time.

There are many kinds of intelligence, including emotional , social and creative. Practical intelligence is just one, said Baum but it’s a critical one for entrepreneurial success. However, personal characteristics such as confidence and the ability to make quick decisions and take action are important as well, he said.

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Reach BusinessNewsDaily senior writer Ned Smith at nsmith@techmedianetwork.com.  Follow him on twitter@nedbsmith .

Ned Smith

Ned was senior writer at Sweeney Vesty, an international consulting firm, and was Vice President of communications for iQuest Analytics. Before that, he has been a web editor and managed the Internet and intranet sites for Citizens Communications. He began his journalism career as a police reporter with the Roanoke (Va.) Times, and was managing editor of American Way magazine and senior editor of Us. He was a Captain in the U.S. Air Force and has a masters in journalism from the University of Arizona.