Personality Characteristics and the Decision to Become and Stay Self-Employed
Institute for the Study of Labor (IZA)
Frank M. Fossen
Free University of Berlin (FUB) - Department of Business and Economics; German Institute for Economic Research (DIW Berlin); Institute for the Study of Labor (IZA)
Europa-Universitaet Viadrina - Fakultat fur Wirtschaftswissenschaften; German Institute for Economic Research (DIW Berlin); Institute for the Study of Labor (IZA)
March 1, 2011
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.
Number of Pages in PDF File: 64
Keywords: entrepreneurship, personality, big five, risk aversion, locus of control
JEL Classification: D81, J23, M13working papers series
Date posted: May 25, 2011
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