How Non-cognitive Skills Influence Entrepreneurial Behaviour

Abstract

Investigating how non-cognitive skills—captured by traits—influence entrepreneurial behaviour helps understand why some individuals are more likely to become and remain entrepreneurs. This chapter reviews research on the relationship between personality traits and entrepreneurship. With respect to the entry decision, research finds that high scores in three of the Big Five factors (openness to experience, extraversion, and emotional stability), alongside several specific personality characteristics, positively influence the entry probability into entrepreneurship. Moreover, scoring higher in risk tolerance, trust, openness to experience, and conscientiousness increases the odds that entrepreneurs hire employees. However, other factors, like low scores in agreeableness, affect entrepreneurial survival. Some characteristics influencing entrepreneurial entry, like high scores in openness to experience or in risk tolerance, unfold ‘revolving door effects’: the exit probability also increases, thus explaining why some entrepreneurs subsequently quit.