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Abstract

This paper systematically investigates whether different kinds of personality characteristics influence entrepreneurial development. On the basis of a large, representative household panel survey, we examine the extent to which the Big Five traits and further personality characteristics, which are more specifically related to entrepreneurial tasks, influence entry into self-employment and survival of self-employed persons in Germany. The empirical analysis reveals that among the specific characteristics in particular "risk attitudes" and "locus of control" have strong effects on entry and survival. With respect to the Big Five approach, in particular the traits "openness to experience" and "extraversion" and to a lower extent "agreeableness" and "neuroticism" help to explain entrepreneurial development. The explanatory power of the Big Five is comparable to one of the most prominent determinants of entrepreneurship – education – and approximately three times larger than parental self-employment.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5566.

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Length: 64 pages
Date of creation: Mar 2011
Date of revision:
Handle: RePEc:iza:izadps:dp5566

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Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
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Web page: http://www.iza.org

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Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
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Related research

Keywords: entrepreneurship; personality; Big Five; risk aversion; locus of control;

Other versions of this item:

Find related papers by JEL classification:

• D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
• J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
• M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups

References

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1. Van de Ven, Wynand P. M. M. & Van Praag, Bernard M. S., 1981. "The demand for deductibles in private health insurance : A probit model with sample selection," Journal of Econometrics, Elsevier, vol. 17(2), pages 229-252, November.
2. Marco von Gelderen & Michael Frese & Roy Thurik, 2000. "Strategies, Uncertainty and Performance of Small Business Startups," Small Business Economics, Springer, vol. 15(3), pages 165-181, November.
   
   • van Gelderen, Marco & Frese, Michael & Thurik, Roy, 2000. " Strategies, Uncertainty and Performance of Small Business Startups," Small Business Economics, Springer, vol. 15(3), pages 165-81.
   • van Gelderen, M. & Frese, M. & Thurik, R., 2000. "Strategies, Uncertainty and Performance of Small Business Startups," Papers 0001/e, NEUHUYS - RESEARCH INSTITUTE FOR SMALL AND MEDIUM.
   • Marco van Gelderen & Roy Thurik & Micheal Frese, 2000. "Strategies, uncertainty and performance of small business startups," Scales Research Reports H200001, EIM Business and Policy Research.
   • Gelderen, A.M. van & Frese, M. & Thurik, A.R., 2000. "Strategies, Uncertainty and Performance of Small Business Startups," Research Paper ERS-2000-18-STR, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni.
3. van Praag, Mirjam & van Witteloostuijn, Arjen & van der Sluis, Justin, 2009. "Returns for Entrepreneurs vs. Employees: The Effect of Education and Personal Control on the Relative Performance of Entrepreneurs vs. Wage Employees," IZA Discussion Papers 4628, Institute for the Study of Labor (IZA).
4. van Praag, C M & Cramer, J S, 2001. "The Roots of Entrepreneurship and Labour Demand: Individual Ability and Low Risk Aversion," Economica, London School of Economics and Political Science, vol. 68(269), pages 45-62, February.

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Cited by:

1. Fossen, Frank M. & Büttner, Tobias J. M., 2012. "The returns to education for opportunity entrepreneurs, necessity entrepreneurs, and paid employees," Discussion Papers 2012/19, Free University Berlin, School of Business & Economics.
   
   • Frank M. Fossen & Tobias J. M. Büttner, 2012. "The Returns to Education for Opportunity Entrepreneurs, Necessity Entrepreneurs, and Paid Employees," Discussion Papers of DIW Berlin 1241, DIW Berlin, German Institute for Economic Research.
   • Fossen, Frank M. & Büttner, Tobias J. M., 2012. "The Returns to Education for Opportunity Entrepreneurs, Necessity Entrepreneurs, and Paid Employees," IZA Discussion Papers 6819, Institute for the Study of Labor (IZA).
   • Frank M. Fossen & Tobias J. M. Büttner, 2012. "The Returns to Education for Opportunity Entrepreneurs, Necessity Entrepreneurs, and Paid Employees," SOEPpapers on Multidisciplinary Panel Data Research 482, DIW Berlin, The German Socio-Economic Panel (SOEP).
2. Charalampos A. Botsaris & Vasiliki Vamvaka, 2012. "Models Of The Determinants Of Entrepreneurial Behaviour: A Literature Review," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(3), pages 155-172, December.
3. Werner Boente & Monika Jarosch, 2011. "Gender Differences in Competitiveness, Risk Tolerance, and other Personality Traits: Do they contribute to the Gender Gap in Entrepreneurship?," Schumpeter Discussion Papers sdp11012, Universitätsbibliothek Wuppertal, University Library.
4. Lechmann, Daniel S. J. & Schnabel, Claus, 2011. "Are the Self-Employed Really Jacks-of-All-Trades? Testing the Assumptions and Implications of Lazear's Theory of Entrepreneurship with German Data," IZA Discussion Papers 6157, Institute for the Study of Labor (IZA).
   
   • Lechmann, Daniel S. J. & Schnabel, Claus, 2011. "Are the self-employed really jacks-of-all-trades? Testing the assumptions and implications of Lazear's theory of entrepreneurship with German data," IWQW Discussion Paper Series 11/2011, Friedrich-Alexander-Universität Erlangen-Nürnberg, Institut für Wirtschaftspolitik und Quantitative Wirtschaftsforschung (IWQW).
   • Lechmann, Daniel S. J. & Schnabel, Claus, 2011. "Are the self-employed really jacks-of-all-trades? Testing the assumptions and implications of Lazear's theory of entrepreneurship with German data," Discussion Papers 75, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
5. Sarah Brown & Karl Taylor, 2011. "Household finances and the 'Big Five' personality traits," Working Papers 2011025, The University of Sheffield, Department of Economics.
   
   • Brown, Sarah & Taylor, Karl, 2011. "Household Finances and the 'Big Five' Personality Traits," IZA Discussion Papers 6191, Institute for the Study of Labor (IZA).
6. Nyström, Kristina, 2012. "Entrepreneurial employees: Are they different from independent entrepreneurs?," Working Paper Series in Economics and Institutions of Innovation 281, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
7. Schöb, Ronnie & Thum, Marcel, 2011. "Job protection renders minimum wages less harmful," Discussion Papers 2011/14, Free University Berlin, School of Business & Economics.
8. Judith Offerhaus, 2013. "The Type to Train? - Impacts of Personality Characteristics on Further Training Participation," SOEPpapers on Multidisciplinary Panel Data Research 531, DIW Berlin, The German Socio-Economic Panel (SOEP).
9. Niels Bosma & Erik Stam & Sander Wennekers, 2012. "Entrepreneurial Employee Activity: A Large Scale International Study," Working Papers 12-12, Utrecht School of Economics.
10. Niels Bosma & Sander Wennekers & F. Stam, 2013. "Institutions and the allocation of entrepreneurship across new and established organizations," Scales Research Reports H201213, EIM Business and Policy Research.
11. Michael Fritsch & Alexander Kritikos & Alina Sorgner, 2013. "Drivers of Self-Employment - A Multivariate Decomposition Analysis for the Case of Germany," Jena Economic Research Papers 2013-006, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
12. Johannes Martin, 2013. "The Impact on Earnings when Entering Self-Employment: Evidence for Germany," SOEPpapers on Multidisciplinary Panel Data Research 537, DIW Berlin, The German Socio-Economic Panel (SOEP).
13. Krause, Annabelle, 2012. "Don't Worry, Be Happy? Happiness and Reemployment," IZA Discussion Papers 7107, Institute for the Study of Labor (IZA).
14. Alina Sorgner, 2012. "A Physician With A Soul Of A Cook? Entrepreneurial Personality Across Occupations," Jena Economic Research Papers 2012-063, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.

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