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Significance of Entrepreneurial Personality

Introduction

At present, entrepreneurship is a broad term used in various settings, industries, and areas of research. However, in general, it refers to the process of creating a business or developing an innovative business idea (Nilsson, 2021). Experts emphasize creativity, charisma, communication competencies, and the desire to make a positive change in society as some of the descriptive qualities of entrepreneurs (Walker, 2020). Based on these assumptions, the phrase “entrepreneurship is not for everyone” has become a well-known saying in business. However, the current study investigates entrepreneurial personality theories and claims that everyone can become an entrepreneur, albeit to various degrees of success.

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Entrepreneurship Overview

While entrepreneurship is a relatively new term, its ideas have been prominent for many centuries. Experts agree that entrepreneurship is a driving force of innovation, which is the natural extent of human curiosity (Nilsson, 2021). Even some of the most conservative people might experience the desire to explore new prospects, find a better alternative to an already existing solution, or realize their ambitions. Nilsson (2021, 3) states that “seeing and seizing opportunities” is the fundamental presumption of entrepreneurship. Thus, even though the term was first implemented in the 20th century, experts believe that the idea of entrepreneurship is an innate human desire and is the driving force of change in all human history (Luca, 2017). Based on this assumption, it is safe to assume that everyone can be an entrepreneur; nevertheless, it is also essential to note that personality traits might directly affect the entrepreneur’s success.

Entrepreneurship as a Research Area

From these considerations, entrepreneurship has become a prominent area of research with the objective of defining what personality traits are most desirable for success. In general, the studies on entrepreneurship and entrepreneurial personality theories commenced in the 1970s with specific attention to sociology and psychology (Luca, 2017). Since then, there has been a large number of academic and pseudo-scientific studies aimed to reveal the success formula. However, most experts agree that while some qualities are highly desirable for entrepreneurs, there is no definitive solution (Luca, 2017). Salmony and Kanbach (2021) examined 1453 publications on entrepreneurial personality without concluding findings regarding the most effective frameworks. Namely, the Big Five theory has received the most academic attention; however, the differences in “entrepreneurship” definition, various sub-types, and the impact of the environment significantly hindered the findings (Salmony and Kanbach, 2021). Furthermore, some of the most well-known entrepreneurs have conflicting personality traits, making it complicated to prove the effectiveness of specific theories.

Entrepreneurial Personality Theories

Nevertheless, despite the large variety of definitions and results, there are several relevant entrepreneurial personality theories. As mentioned before, the Big Five psychological theory and the theory of general entrepreneurship qualities have received significant academic attention. Most ideas are based on the assumption that personality traits cause behavior patterns, beneficial for entrepreneurship (Matthews, 2018). However, the relatively scarcely depicted relation between qualities and behaviors, a large number of conflicting information, and the wide variety of personality traits among entrepreneurs in practice complicate the research (Matthews, 2018). From these considerations, experts generally agree that it is necessary to define entrepreneurship more accurately since an entrepreneur in the family business is different from an innovator in spacecraft (Salmony and Kanbach, 2021). As a result, it is crucial to analyze the existing theories to determine whether some of the personality traits are desirable regardless of the industry and business.

Big Five Theory

The Big Five theory is a prominent psychological framework that can be used to evaluate every individual’s personality characteristics. In general, the Big Five or OCEAN theory concerns five core personality qualities, such as openness, conscientiousness, extraversion, agreeableness, and neuroticism (Cherry, 2021). According to the framework, each person’s traits can be characterized in the proposed scale. For instance, a high degree of openness would imply creativity, focus on innovation, and abstract thinking qualities, as opposed to conservatism and resistance to new ideas (Cherry, 2021). Evidently, a high level of openness is associated with the general entrepreneurial characteristics and is an apparent sign of the individual’s tendency to entrepreneurship. However, it is vital to remember that the Big Five theory represents a spectrum of personality traits, and the vast majority of people are located somewhere in the middle of the scale.

Considering the definition of entrepreneurship, it is safe to assume that a good entrepreneur should have high levels of openness, conscientiousness, extraversion, agreeableness, and a low level of neuroticism. Among these factors, openness, conscientiousness, and agreeableness directly correlate to the communication competencies, increasing persuasive power (Cherry, 2021). Extraversion is a more debatable quality, which might be beneficial for social entrepreneurship. However, the research also demonstrates that the world’s most famous entrepreneurs, including Bill Gates, Elon Musk, and Mark Zuckerberg, are introverts (Castrillon, 2019). All of them were self-starters highly passionate about their craft, and some of the characteristics that allowed them to succeed could probably be attributed to their introversion (Castrillon, 2019). In general, introversion refers to the need to restore energy after social interaction, which means more alone time to pursue one’s objectives. Ultimately, considering the stories of Gates, Musk, and Zuckerberg, introversion can become an advantage for entrepreneurship.

Lastly, neuroticism is the only personality trait in the Big Five theory that is harmful to entrepreneurship. This concept commonly refers to the lack of emotional resilience and determines how frequently the individual experiences mood swings and anxiety (Cherry, 2021). Naturally, mental health is complex, and nobody is entirely immune to neuroticism. However, entrepreneurship is a stressful environment, and the individual should be able to effectively deal with stress to strive in this setting. Thus, according to the Big Five theory, a low level of neuroticism is crucial to entrepreneurship.

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General Entrepreneurship Theory

The other prominent theory aligns with the interactionist view and claims that it is impossible to determine the individual’s talent for entrepreneurship due to the vast complexity of personality. In general, this framework implies that specific traits are beneficial for entrepreneurship, but they are not absolute measurements for the person’s success (Matthews, 2018). For instance, the individual’s surrounding external factors, such as family relationships, social interactions, and education, are arguably more vital to entrepreneurship (Matthews, 2018). Nevertheless, the extensive literature on the subject generally emphasizes such qualities as proactivity, innovativeness, locus of control, and risk propensity as primary characteristics for entrepreneurship. Thus, the current sub-chapter thoroughly analyzes each of the mentioned personality traits to determine their impact on success in entrepreneurship.

Proactivity

Extensive literature supports the idea that proactivity is one of the primary requirements for entrepreneurship. In general, this concept refers to intentional action as a method to achieve one’s objective (Blank, 2021). The proactive mindset is frequently opposed to reactive thinking, which implies that the individual’s actions are responses to external factors. In other words, proactive people take complete control of their actions, reach out to other people, explore new ventures, and have clear objectives. As mentioned before, entrepreneurship is a complex area of research with a wide variety of personality types and applicable industries. However, the research states that proactivity combined with determination and a moderate degree of aggressiveness have demonstrated its efficacy in entrepreneurship (Van Ness et al., 2020). Van Ness et al. (2020) propose the following framework to describe the various types of entrepreneurs:

Typology of enterprise professionals and impact of proactive position
Figure 1: Typology of enterprise professionals and impact of proactive position

Furthermore, the authors utilize the push/pull motivation theory to explain the position of proactive entrepreneurs as active leaders that might make a notable positive change in society (Van Ness et al., 2020). In this framework, proactivity is perceived as a magnet that attracts people with a more reactive mindset (Van Ness et al., 2020). Consequently, Watson et al. (2020) conducted a cross-comparative study of 761 franchisees from the USA, UK, France, and Spain, concluding that proactivity is the most important personality trait in entrepreneurship. The table below demonstrates the statistical data from the study:

Statistical analysis of relevant personality traits and franchise parameters in regard to their contribution to the company’s success
Table 1: Statistical analysis of relevant personality traits and franchise parameters in regard to their contribution to the company’s success

Ultimately, the research findings prove that proactivity is central to entrepreneurship and is frequently associated with such qualities as determination, openness, and self-reliance.

Innovativeness

Innovativeness is another significant factor that is crucial to success in entrepreneurship. Experts associate this quality with creativity, which allows identifying potential ideas and implementing them to make a profit (Luca, 2017). As mentioned before, Nilsson (2021) defines entrepreneurship as “seeing and seizing opportunities”, which is impossible to do without a considerable degree of innovativeness. Luca (2017) also emphasizes that creativity might be useful for various prospects in business, such as differentiating a product from competitors’ merchandise or identifying a suitable positioning strategy. In other words, innovativeness is a multifaceted process with numerous benefits in entrepreneurship and even personal success. Creativity is also directly tied to problem-solving skills, which might be used to take an advantageous position in all areas of business (Walker, 2020). Ultimately, while slightly undervalued compared to proactivity, experts generally recognize innovativeness as a vital characteristic for entrepreneurship nonetheless.

Locus of Control

The third notable personality trait for entrepreneurship is the internal locus of control. Similar to proactivity, it refers to the degree of the individual’s control over themselves and their objectives (Luca, 2017). In other words, a person with an internal locus of control believes that no external forces might hinder their progress, and they are in control of their decisions. However, the locus of control is an emotional spectrum, ranging from internal to external, with most people being somewhere in the middle of the scale (Cherry, 2021). The more internal state is associated with a responsibility for one’s actions, own pace of work, self-efficacy, and emotional resilience (Cherry, 2021). On the other hand, external locus of control generally implies the shift of responsibilities or blaming others for one’s misfortune, lack of self-confidence, and vulnerability to anxiety.

However, while this is partially considered a personality trait, it is also possible to train locus of control and change the mindset. From these considerations, many academic studies do not emphasize this quality in entrepreneurial personality theories, but rather consider it an external factor (Luca, 2017). Thus, a person who is determined to become an entrepreneur might train their locus of control to improve their chances of success in business.

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Risk Propensity

Lastly, risk propensity might be beneficial for entrepreneurship and starting a new business. In general, this concept refers to the individual’s capability to action despite any potential uncertainties and risks (Luca, 2017). Naturally, risk management is crucial in business; however, it is also vital to understand that higher risk is associated with higher rewards. Entrepreneurship and business commonly force an individual to get out of their comfort zone and take a more proactive position. This approach always involves a certain degree of risks, and a high level of risk propensity might allow the entrepreneur to deal with anxiety and other challenges more effectively.

Conclusion

The current paper has argued that the phrase “entrepreneurship is not for everyone” is partially false. As seen from the analysis, there is a large number of personality traits, such as proactivity, emotional resilience, and innovativeness, that could be beneficial for entrepreneurship. However, it is also true that many prominent entrepreneurs have conflicting personality traits, and there are countless external factors that could affect one’s chances of success. Ultimately, contemporary academic studies have proven that certain qualities are beneficial for entrepreneurship, but the list is not definitive, and further research is required to determine the significance of personality traits in business.

Reference List

Blank, A. (2021). 5 ways successful people are proactive at work. Web.

Castrillon, C. (2019). How introverts can thrive as entrepreneurs. Web.

Cherry, K. (2021). Locus of control and your life. Web.

Cherry, K. (2021). The big five personality traits. Web.

Luca, M. R. (2017) ‘Entrepreneurial personality and entrepreneurial behavior’, Bulleting of the Transilvania University of Brasov, Series VII: Social Sciences and Law, 10(1), pp. 19-28.

Matthews, J. (2018) ‘Entrepreneurial personality: A configurational approach’, Colombo Business Journal: International Journal of Theory and Practice, 9(1), pp. 46-79.

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Nilsson, N. (2021). The entrepreneurial process: Seeing and seizing opportunities. Routledge.

Salmony, F. U. and Kanbach, D. K. (2021) ‘Personality trait differences across types of entrepreneurs: A systematic literature review’ Review of Managerial Science, pp. 1-37.

Van Ness, R. K., et al. (2020) ‘Proactive entrepreneurs: Who are they and how are they different?’, The Journal of Entrepreneurship, 29(1), pp. 148-175.

Walker, B. (2020). Six personality traits of successful entrepreneurs. Web.

Watson, A., et al. (2020) ‘The influence of entrepreneurial personality on franchisee performance: A cross-cultural analysis’, International Small Business Journal: Researching Entrepreneurship, 38(7), pp. 605-628.

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