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

26 Pages Posted: 16 Apr 2008

See all articles by Marco Caliendo

Marco Caliendo

University of Potsdam; Institute for the Study of Labor (IZA)

Alexander Kritikos

Europa-Universitaet Viadrina - Fakultat fur Wirtschaftswissenschaften; German Institute for Economic Research (DIW Berlin); IZA Institute of Labor Economics

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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.

Suggested Citation

Caliendo, Marco and Kritikos, Alexander S., Is Entrepreneurial Success Predictable? An Ex-Ante Analysis of the Character-Based Approach. Kyklos, Vol. 61, Issue 2, pp. 189-214, May 2008, Available at SSRN: https://ssrn.com/abstract=1121094 or http://dx.doi.org/10.1111/j.1467-6435.2008.00398.x

Marco Caliendo (Contact Author)

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Alexander S. Kritikos

Europa-Universitaet Viadrina - Fakultat fur Wirtschaftswissenschaften ( email )

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Germany

German Institute for Economic Research (DIW Berlin) ( email )

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Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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