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

38 Pages Posted: 18 Apr 2007

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

Multiple version iconThere are 2 versions of this paper

Date Written: March 2007

Abstract

This paper empirically analyzes whether the character-based approach, which is based 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 previously unemployed persons whose personal characteristics were screened by different methods, namely a one-day assessment center (AC) and a standardized questionnaire, before they launched their business. Results are partly unexpected: first, there is almost no correlation between the AC data and the questionnaire. 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.

Keywords: entrepreneurship, psychological assessment, character-based approach, success prediction

JEL Classification: M13, J23, C13

Suggested Citation

Caliendo, Marco and Kritikos, Alexander S., Is Entrepreneurial Success Predictable? An Ex-Ante Analysis of the Character-Based Approach (March 2007). IZA Discussion Paper No. 2687, Available at SSRN: https://ssrn.com/abstract=980731

Marco Caliendo

University of Potsdam ( email )

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Institute for the Study of Labor (IZA) ( email )

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Alexander S. Kritikos (Contact Author)

Europa-Universitaet Viadrina - Fakultat fur Wirtschaftswissenschaften ( email )

15230 Frankfurt (Oder)
Germany

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

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Berlin, 10117
Germany

IZA Institute of Labor Economics

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

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