Personality Traits of Entrepreneurs and the Size of Their Firms

Abstract

Personality research in entrepreneurship often focuses on venture entry and survival, leaving personality traits associated with firm size underexamined. Using novel data from the German Socio-Economic Panel that include a sample of owner-managers running larger firms, we investigate the relationship between personality—measured by the Big Five traits and risk tolerance—and firm size captured by the number of employees. We identify a dispositional divergence across entrepreneurial outcomes. Although high risk-taking is associated with an increased likelihood of firm exit, it is a robust characteristic of entrepreneurs who manage larger firms in the distribution. High scores in extraversion, not impacting firm survival, also characterize entrepreneurs managing larger organizations, while openness to experience, a main driver of venture entry, is negatively associated with firm size. Our results demonstrate that the personality characteristics associated with entrepreneurship are contingent upon organizational scale.