PERSONALITY CHARACTERISTICS OF THE SMALL BUSINESS ENTREPRENEUR
This research uses the DISC Assessment to measure the primary behavioral patterns of small business entrepreneurs and an open-ended survey to list the reasons why small business entrepreneurs started their business. The assessment categorizes the entrepreneur into four behavioral patterns that reflect of a person’s preferred behavior pattern. Although all four categories are represented in the sample, two categories had a higher propensity to start a business.
Over ten years ago, many magazines and newspapers articles profiled the most important characteristics of the entrepreneur and/or small business owner. From the interest generated by these articles, intensive academic attention has been given to understanding entrepreneurial activity and behavior. Despite the interest in the entrepreneur, not much has emerged to identify the personal attributes that differentiate small business owners, entrepreneurs, and non-entrepreneurs (ByGrave, 1994). However, a step toward distinguishing entrepreneurs from small business owners was reported by Carland and Carland (1996), who concluded that the entrepreneur is a risk taker, high achiever, innovator, and problem solver.
Although the Carlands’ work provides a contingency framework for entrepreneurial activity, the purpose of the present research is to identify primary entrepreneurial tendencies of small business entrepreneurs and to ascertain why these entrepreneurs decided to start a business. In addition, this paper reviews the literature about pertinent personality characteristics.
In this study, the owners of small businesses were given the DISC Assessment, which identifies four personality patterns: dominant, influential, steady-relationship, and compliant. An open-ended survey asked small business owners to list the reasons why they started their business. From the survey and the assessment, several questions arise: First, what behavioral characteristics does the assessment identify. Second, how do the reasons for beginning a business relate to behavioral characteristics of the assessment. Third, what type of businesses are represented and is mere any behavior pattern that correlates with the type of business.
REVIEW OF THE LITERATURE
The review of the literature focuses on the definition of entrepreneurship and on why people start businesses. The review also explains some personality instruments used to identify specific traits.
The review of the literature reveals many different definitions for entrepreneurship, but several definitions for entrepreneurship stand out. For example, Joseph Schumpeter noticed that entrepreneurs created new ideas and created different combinations of resources that spur economic activity (Ronstadt, 1984). Peter Drucker had a different perspective, which focused on defining entrepreneurship from a corporate and bureaucratic viewpoint, where resources are allocated to opportunities nrther man problems (Drucker, 1964). Drucker noted that “an entrepreneur has to redirect resources from areas of diminishing results, to areas of high or increasing results. The entrepreneur has to ‘slough off yesterday and to render absolute what already exists and is already known. The entrepreneur has to create tomorrow” (Drucker, 1974). These definitions emphasize Drucker’s theme that certain individuals play critical roles in changing stagnant bureaucracies into adaptive and creative organizations.
Although these entrepreneurial definitions are noteworthy, they do not explain the reasons for starting a small business, nor do they classify small businesses and the personality characteristics of their owners. In fact, most of the literature on entrepreneurship emphasizes success stories such as J.C. Penney’s, Apple Computer, the Marriott Corporation, Hewlett Packard, IBM, Ford, and others. However, these successes have spearheaded some research into those attributes an entrepreneur possesses, such as self-confidence, creativity, initiative, optimism, and knowledge of the market (Hornaday, 1988).
Some of the more recent entrepreneurial research on starting a business treats entrepreneurship as a dichotomous variable. For example, one is an entrepreneur if one opens the doors of a business, or one is not if one chooses not to start a business (Gartner, 1988). Other research indicates a more complex approach to identifying entrepreneurs by evaluating the personality characteristics of those who start a business (Carland, Hoy, & Carland, 1988). Recently, ByGrave, (1994) listed a number of attributes associated with individuals that start businesses.
* They have a vision and total commitment
* They are decisive and doers
* They don’t procrastinate
* They are devoted and dedicated to the business and their own independence because they love what they do.
It is assumed that in addition to these attributes, each entrepreneur is expected to have a high locus of control and high self-esteem. Although the entrepreneurial literature does not report on these entrepreneurial traits, other research that may explain the entrepreneurial personality indicates that people with a high self-esteem are more active individuals, more satisfied with their jobs, and more likely to select unconventional jobs (Robbins, 1996). Despite the culture and environmental impact of personality characteristics, there are some very specific reasons why individuals decide to go into business.
Why do people start businesses? Silver (1983) suggests that entrepreneurs start their own business because they are dissatisfied with their careers or when unemployment rises. Furthermore, as corporations adapt to a changing environment, many employees have been faced with pursuing other employment alternatives. Mergers, acquisitions, downsizing, and decentralization, have dumped highly educated and highly skilled people onto the job market. Some of these dislocated managers start new businesses based on new ideas, new market niches, new services, and new products. Others begin businesses because of their professional backgrounds, their vision, and their determination to be independent. Two examples of small business entrepreneurs who have started their businesses and provided quality products and innovative distributive services are Ted Haitt of Gateway 2000, Inc. and Michael Dell of Dell Computer, Inc.
To categorize entrepreneurs, some researchers provide novel, functional personality theories. One of these approaches creates four categories of entrepreneurs: finders, binders, grinders, and minders (Singer, 1990). Briefly, finders create new products, services and processes; grinders generate a new use for a product or service; minders replicate an existing product; and binders synthesize a number of ideas.
Another approach recognizes that each entrepreneur has a behavioral pattern that motivates him or her to start a business (Carland & Carland, 1992) (i.e., certain types of personality characteristics are associated with entrepreneurs). For example, the Meyers-Briggs behavioral assessment identifies four behavior temperaments: sensation thinkers, sensation feelers, interactive feelers, and intuitive thinkers (Furham & Springfield, 1993; Haley & Stumpf, 1989; Moore, 1987). By using the Meyers-Briggs test, Carland and & Carland (1992) found that entrepreneurs are more likely to display a propensity for intuitive thinking.
Another approach to categorizing managers is the DISC assessment, which measures inherent behavioral tendencies of individuals. D means dominant; I means influential and persuasive; S means stable and relationship oriented; C indicates compliant and detailed. For a further discussion of the four-style behavior grid training and consulting model, see Hudy, Warren, and Guest (1991) and Moore (1987).
Although the DISC assessment measures primary behavioral traits (Marston, 1979), there are other entrepreneurial attributes that appear to develop through our culture and environment. For example, a high locus of control and good self-esteem appear more as a reflection of the culture and the environment in which a person is reared (McClelland & Pilon, 1983), as opposed to traits that are part of a person’s basic personality. Numerous studies have demonstrated a gender basis for many personality traits (Arvey, Bouchard, Segal & Abraham, 1989; Loehlin & Nichols, 1976). Bouchard, Lykken, McGue, Segal, and Tellegrin (1990) showed that 50 percent of the variance in personality traits of identical twins is accounted for by the California Psychological Inventory and 18 scales of the Multidimensional Personality Questionnaire. Other research (Kendrick & Funder, 1988) provides evidence that people have an innate capacity to be satisfied with specific kinds of behavior. This propensity represents a need that guides individuals to select occupations and situations consistent with genetic predispositions. To provide further support for stable personality characteristics over time and place, two longitudinal studies indicated dispositional stability (House, Howard, & Walker 1991; Kohn & Schooler, 1983).
To determine why people start a business, an open-ended survey was administered to small business owners in St. Joseph, Missouri. The owners of the small businesses were then given the DISC Assessment, which was derived from Marston’s theory (Marston, 1979). According to Marston’s theory, people are classified as dominant, influential, steady-relationship, and compliant. Each category then is broken down in various groups of associated traits. These categories are briefly outlined below.
Hard driving and results oriented
Assertive and active
Creative or judgmental
Enthusiastic-can motivate others
Approachable and people oriented
Wants to lead
Avoids details by socializing
Tendency to be disorganized
Predictable and dependable
Organized and systematic
Friendly and helpful
Good listener and patient
Thorough and well prepared
Factual and technically competent
Reliable, accurate, systematic
Sensitive and detailed oriented
Likes routines and procedures
Not a risk taker
The personality assessment (DISC) provided information about small business owners personalities. Approximately 60 entrepreneurs that were in business one year or more were asked to participate; only 34 agreed when solicited. In trying to determine why some small business owners did not wish to participate, it became obvious that some had literacy problems, others were afraid of the psychological nature of the assessment, and others did want to spend the time. The survey and assessment took roughly a half hour to complete. Table 1 shows the type of business and the behavior pattern of the respondent. Table 2 provides the reasons why small business owners start a business.
Table 1 suggests there is a difference between two of the four personality categories compared to the general population incidence of 25 percent for each of the categories. From the DISC assessment, 11 small business owners fell into the dominant category, 3 were in the influential category, 12 were in the steady-relationship category, and 7 were in the compliant category. From the list of reasons why individuals started a business, the desire for independence was reported by 13 respondents, which represented 34 percent of the total. Next, previous experience was listed by 6 respondents, which represented 18 percent of the total. Other reasons, such as hobbies, family history, the opportunity, and few alternatives, were equally divided at three each. One respondent listed preference for spouses career.
From previous research about entrepreneurs, people who start new businesses exhibit certain personality propensities (Cariand & Carland, 1992). Dominant types are considered entrepreneurial types because they are risk takers, but in this survey the steady-relationship individuals are equally represented. Therefore, not only are doers trying to start a business, but individuals who are patient and dedicated also are apt to start a business. The compliant category represents the cautious and detailed individual. Although this category does not represent personality attributes that involve risk, 21 percent of small business owners came from the compliant category. The compliant are not risk takers; because they are cautious and conservative, they are not expected to start businesses as quickly or in greater numbers than others. The influential are motivated by social relationships recognition, and by nature show less desire to become independent. The influential category had the lowest percentage of individuals.
The reasons given for starting a business varied, but the desire for independence was predominant. This desire for independence was consistent with others findings (ByGrave, 1994). Previous experience ranked second; roughly 18 percent of owners started businesses based on their previous experience. The alternate reasons for starting a business were hobbies, preference for spouses’ career, the opportunity, and few other alternatives.
This research suggests that dominant and steady-relationship individuals have a higher propensity to start their own businesses. In addition, the results of the survey did not show any particular personality pattern associated with the various reasons why individuals start businesses. A larger sample and future research may provide more information about the matching proportion of entrepreneurs’ personalities to specific reasons for starting a business. As for personality and type of business, cultural and environmental variables such as self-confidence and self-esteem hold predictive power, but are difficult to measure.
It is important to acknowledge that the present study has several limitations. The sample is small and drawn from a small city in the Midwest; therefore, these results have limited generalability. The researchers made no attempt to differentiate between primary personality patterns and any distinctive behavior. No distinction was made between successful and unsuccessful small business entrepreneurs. Despite its limitations, this study may provide a direction for future research. A larger sample would increase reliability and may provide more specific reasons why individuals start businesses. Furthermore, demographic variables may indicate different demographic profiles and different personality profiles. For example, female and male entrepreneurs may differ from the general population on both personality and on other demographic variables, such as age and education. By continuing personality research, a more refined profile may emerge.
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Missouri Western State College
Dr. Dale Krueger, an Associate Professor of Business and Economics at Missouri Western State, teaches the Small Business Management Practicum, Organizational Behavior, and Strategic Management. In addition to his teaching interests, Dr. Krueger has been involved in small business consulting and economic development in the State of Missouri for the last twelve years. He won the Governor’s Award for his work.
Copyright Association for Small Business and Entrepreneurship Mar 1998
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