Why Is Internal Locus Of Control Important To An Entrepreneur?

Imagine you’re out walking your dog on a nice sunny morning. As you approach the intersection, you see a car attempt to make a lefthand turn, only to be hit by an oncoming car that runs the stop sign. No one’s hurt, but the cars are totaled.

What is your first thought concerning the innocent driver making the turn?

Is it “poor guy, he was in the wrong place at the wrong time”?

Or do you think “even though he had the right of way, he should have made sure the other car stopped before turning left”?

Believe it or not, your answer says more about you than either of the drivers. Behavior psychologists call it “locus of control.”

What is the locus of control and why is this important?

Actually, at first, researchers referred to the phenomenon as “control of reinforcement.” Psychologists defined the term as “[T]he perception of a situation as controlled by chance, luck, fate, or powerful others will lead to predictable differences in behavior, in comparison to situations where a person feels that reinforcement is controlled by his own behavior.”¹

In 1966, Julian B. Rotter published the culmination of more than a decade of his work in social learning theory² where he introduced the internal-external (I-E) scale regarding what is now referred to as the “Locus of Control.” Those who tend toward the internal end of this spectrum believe they can control their own lives. Those who find themselves on the external end generally believe they don’t control their lives.

The I-E scale has been used for all kinds of applications, from students in class to correlating it with stress and achievement.

Rotter’s scale is not without criticism. Psychologist Bernard Weiner suggested,³ rather than a binary scale (based solely on locus), the measure should be a 4-quadrant grid including a “locus” axis and a “control” axis.

In general, though, the binary scale appears most useful in a number of ways. The tendency to have the confidence you control your own destiny can have strong positive implications in all areas of your life.

“When I began taking 100% responsibility for everything in my life, I took the control and power back in my life,” says Rhett Doolittle, CEO & Founder of Business Warrior Corporation in Phoenix. “By taking responsibility, we are not a victim of our circumstances. That means I am in control of my actions, and I have the power to get the results I set out to achieve no matter what circumstances get in the way (even Covid).”

When equating internal locus of control with the inclination to experience reduced stress, you can see how this might lead to a more pleasant outlook on life.

“Personal responsibility is a strength if you own up to where you’re at in life,” says Brian Robben, CEO of Robben Media in Cincinnati. “It empowers you to know that if my actions create my reality, and if I then put in major actions toward a goal, I can achieve that goal. Those who blame others are victims, and victims are never successful in their pursuit of happiness or success.”

Do entrepreneurs have an internal locus of control?

As an entrepreneur, you certainly seek success. Is an internal locus of control part of the entrepreneurial formula? Academic research suggests that “an internal locus of control orientation is a prerequisite of success for entrepreneurs and may be an important moderator of successful use of achievement and other types of entrepreneurial training.”⁴

Real-life entrepreneurs agree. You are not in a position to blame others when on the path to creating a viable business.

“The buck stops with you,” says Taylor Matthews, Founder & CEO of Farther Finance in San Francisco. “If you want to succeed, you need to make your own luck. And when things don’t go your way, you need to find the silver lining and refocus your energy rather than dwell on the past or blame others.”

In the hands-on business world, you don’t have the forgiveness allowed for in the arena of theoretical research. It’s the real world. If you don’t trust yourself, who can you trust?

“As an entrepreneur, you cannot afford to be process-oriented: your very own survival depends on your ability to be result-driven,” says Thibaud Clement, CEO and Co-founder of Loomly in Los Angeles. “When you are legally, financially and ethically in charge of pretty much everything in your business, from customer satisfaction to labor law compliance and cash in the bank, you cannot hide behind someone else when things go south. Either you make payroll, or you don’t. Either you meet the deadline, or you don’t. When you don’t, no one cares why.”

It turns out that having a strong propensity towards an internal locus of control gives you a significant leg up when starting a business.

“As an entrepreneur, it is always important to not only make mistakes but take responsibility for those mistakes,” says Rizwan Girach, Owner of Chessgammon in Leicester, United Kingdom. “It is only after you have taken responsibility for those mistakes that you will realize how you can improve on those mistakes to prevent making them again.”

How does locus of control contribute to entrepreneurial mindset?

In fact, an internal locus of control may be what sets entrepreneurs apart from the rest of the world.

Psychologists say, “[P]roactivity and internal locus of control are highly significantly associated with the specific entrepreneurial traits, meaning that the entrepreneurs tend to have a specific configuration of traits that ensure the survival and success in their activity.”⁵

While they may not be directly cognizant of social learning theory jargon, it’s clear experienced entrepreneurs are living that theory. “If entrepreneurship is your art, then you must take full responsibility for it and be willing to be judged on the body of your work,” says Paul Polizzotto, Founder & CEO of Givewith in Manhattan Beach, California. “It’s about accepting complete responsibility for the solution’s shortcomings and then sharing the success with others as it succeeds. In other words, accept full responsibility for any failure, but give your team full credit for the company’s successes. This is when an entrepreneur becomes a true leader.”

Because you have confidence in what you’re doing, you don’t view setbacks as showstoppers but as improvement opportunities. An internal locus of control means you aggressively seize the day.

“If you’re going to be a successful entrepreneur, you are going to have to take responsibility for your actions,” says Andrew Taylor, Director and Founder of Net Lawman in the UK. “You cannot blame others—even if it has worked out for you. It is important because you need to be able to learn from your mistakes so you do not make them again. If you believe it was someone else’s fault, you won’t learn anything.”

This behavior defines the entrepreneurial spirit in practical terms. The best way to control your destiny is to discover self-improvement while working on the job. The world doesn’t stop for you, and you don’t stop for the world.

“This is hugely important,” says Neal Taparia, Founder of Solitaired in New York City. “When you blame others, that means you’re not learning. Entrepreneurship is an education learned through failure. Blaming others means you’re missing important lessons. This will hold you back from succeeding.”

You hear this kind of enthusiasm from entrepreneurs all the time.

“Ultimately, I am either in charge of my own destiny, which means the buck stops with me, or I am a pawn in someone else’s game,” says Chane Steiner, CEO of Crediful in Scottsdale, Arizona. “As I choose to take charge of my life, then anything that happens is going to be down to my decisions. To be a passive passenger in your own life means others could be to blame. To start a business means you aren’t passive, you are the active decision-making part of it all, and all decisions rest on your own shoulders. It’s worth noting that nobody who is successful starts out hoping others will fix things for them or blaming others when things don’t work out.”

Where do you fall on the I-E spectrum? Take Rotter’s original Locus of Control Scale Quiz and find out.

¹ Rotter, Julian B. and Mulry, Ray C., “Internal Versus External Control of Reinforcement and Decision Time,” Journal of Personality and Social Psychology, 1965, Vol. 2, No. 4, 598-604

² Rotter, J. B. (1966). Generalized expectancies for internal versus external control of reinforcement. Psychological Monographs: General and Applied, 80(1), 1-28.

³ Weiner, B. (1974). Achievement Motivation and Attribution Theory. General Learning Press.

⁴ Anderson, Carl R., “Locus of Control, Coping Behaviors, and Performance in a Stress Setting: A Longitudinal Study,” Journal of Applied Psychology, 1977, Vol. 62, No. 4, 446-451

⁵ Marcela Rodica Luca, A. Robu. “Personality traits in entrepreneurs and self-employed,” Bulletin of the Transilvania University of Braşov, Series VII: Social Sciences and Law 2-Suppl:91-98.