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Is Entrepreneurial Success Predictable? An Ex-Ante Analysis of the Character-Based Approach

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Abstract

This paper empirically analyzes whether the character-based approach, which focuses on the personality structure and the human capital of business founders, allows prediction of entrepreneurial success. A unique data set is used consisting of 414 persons whose personal characteristics were analyzed by different methods, namely an one-day assessment center (AC) and a standardized questionnaire, before they launched their business. Results are partly unexpected and weaker than previous ex-post findings: first, we found correlations between the AC data and the questionnaire in one subgroup only. Second, the predictive power of the AC data is slightly better than that of the questionnaire, but lower than expected in theory. Interestingly, for those subgroups where the AC data have low predictive power, the questionnaire does better. Third, when success is measured in terms of employees hired, the character-based approach is a poor predictor.

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Bibliographic Info

Paper provided by Hanseatic University, Germany, Department of Economics in its series Working Papers with number 001.

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Length: 38 pages
Date of creation: Jan 2008
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Handle: RePEc:phu:wpaper:001

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Web page: http://www.hanseuni.com

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  1. Brandstatter, Hermann, 1997. "Becoming an entrepreneur -- A question of personality structure?," Journal of Economic Psychology, Elsevier, vol. 18(2-3), pages 157-177, April.
  2. Caliendo, Marco & Kritikos, Alexander S. & Wießner, Frank, 2006. "Existenzgründungsförderung in Deutschland: Zwischenergebnisse aus der Hartz-Evaluation," Discussion Papers 253, European University Viadrina Frankfurt (Oder), Department of Business Administration and Economics.
  3. Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 808-27, August.
  4. Blanchflower, D.G. & Oswald, A., 1991. "What Makes an Entrepreneur?," Economics Series Working Papers 99125, University of Oxford, Department of Economics.
  5. Caliendo, Marco & Fossen, Frank M. & Kritikos, Alexander S., 2006. "Risk Attitudes of Nascent Entrepreneurs: New Evidence from an Experimentally-Validated Survey," IZA Discussion Papers 2168, Institute for the Study of Labor (IZA).
  6. J. Wagner, 2003. "Testing Lazear's jack-of-all-trades view of entrepreneurship with German micro data," Applied Economics Letters, Taylor & Francis Journals, vol. 10(11), pages 687-689.
  7. Holmes, Thomas J & Schmitz, James A, Jr, 1990. "A Theory of Entrepreneurship and Its Application to the Study of Business Transfers," Journal of Political Economy, University of Chicago Press, vol. 98(2), pages 265-94, April.
  8. Bonnett, Celia & Furnham, Adrian, 1991. "Who wants to be an entrepreneur? A study of adolescents interested in a Young Enterprise scheme," Journal of Economic Psychology, Elsevier, vol. 12(3), pages 465-478, September.
  9. Begley, Thomas M. & Boyd, David P., 1987. "Psychological characteristics associated with performence in entrepreneurial firms and smaller businesses," Journal of Business Venturing, Elsevier, vol. 2(1), pages 79-93.
  10. Edward P. Lazear, 2004. "Balanced Skills and Entrepreneurship," American Economic Review, American Economic Association, vol. 94(2), pages 208-211, May.
  11. Bianchi, Milo & Henrekson, Magnus, 2005. "Is Neoclassical Economics still Entrepreneurless?," Working Paper Series in Economics and Finance 584, Stockholm School of Economics, revised 02 Feb 2005.
  12. Dunn, Thomas & Holtz-Eakin, Douglas, 2000. "Financial Capital, Human Capital, and the Transition to Self-Employment: Evidence from Intergenerational Links," Journal of Labor Economics, University of Chicago Press, vol. 18(2), pages 282-305, April.
  13. Kihlstrom, Richard E & Laffont, Jean-Jacques, 1979. "A General Equilibrium Entrepreneurial Theory of Firm Formation Based on Risk Aversion," Journal of Political Economy, University of Chicago Press, vol. 87(4), pages 719-48, August.
  14. Hartog, Joop & Ferrer-i-Carbonell, Ada & Jonker, Nicole, 2002. "Linking Measured Risk Aversion to Individual Characteristics," Kyklos, Wiley Blackwell, vol. 55(1), pages 3-26.
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Cited by:
  1. Caliendo, Marco & Fossen, Frank M. & Kritikos, Alexander S., 2011. "Personality Characteristics and the Decision to Become and Stay Self-Employed," IZA Discussion Papers 5566, Institute for the Study of Labor (IZA).
  2. Marco Caliendo & Frank M. Fossen & Alexander S. Kritikos, 2010. "Trust, Positive Reciprocity, and Negative Reciprocity: Do These Traits Impact Entrepreneurial Dynamics?," Discussion Papers of DIW Berlin 1085, DIW Berlin, German Institute for Economic Research.
  3. Joyce Koe Hwee Nga & Gomathi Shamuganathan, 2010. "The Influence of Personality Traits and Demographic Factors on Social Entrepreneurship Start Up Intentions," Journal of Business Ethics, Springer, vol. 95(2), pages 259-282, August.
  4. Joanna Tyrowicz & Joanna Nestorowicz, 2010. "Cynicism Starts Young: Age and Entrepreneurship over Transition," Working Papers 2010-02, Faculty of Economic Sciences, University of Warsaw.
  5. Tyrowicz, Joanna, 2011. "What distinguishes entrepreneurs? Evidence on the motives for self-employment," Economics Letters, Elsevier, vol. 112(3), pages 226-229, September.
  6. Man Zhang & Patriya Tansuhaj & James McCullough, 2009. "International entrepreneurial capability: The measurement and a comparison between born global firms and traditional exporters in China," Journal of International Entrepreneurship, Springer, vol. 7(4), pages 292-322, December.
  7. Rotger, Gabriel Pons & Gørtz, Mette & Storey, David J., 2012. "Assessing the effectiveness of guided preparation for new venture creation and performance: Theory and practice," Journal of Business Venturing, Elsevier, vol. 27(4), pages 506-521.
  8. repec:hal:cesptp:halshs-00467900 is not listed on IDEAS
  9. Willebrands, Daan & Lammers, Judith & Hartog, Joop, 2012. "A successful businessman is not a gambler. Risk attitude and business performance among small enterprises in Nigeria," Journal of Economic Psychology, Elsevier, vol. 33(2), pages 342-354.
  10. Simoes, Nadia & Moreira, Sandrina B. & Crespo, Nuno, 2013. "Individual Determinants of Self-Employment Entry – What Do We Really Know?," MPRA Paper 48403, University Library of Munich, Germany.

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