Elon Musk’s guest appearance on The Joe Rogan Experience raised a few eyebrows within the tech community. Why was someone so esteemed willing to engage in such a stunt? Would the conversation revolve around business or technology, or neither? Perhaps more importantly, did he have to use cannabis so openly?
Entrepreneurs are certainly a mixed bunch. Just ask Gartner, who argued that they were so different from each other, that they defied definition. We know that entrepreneurs require certain fundamental characteristics like a solid work ethic and innovative ideas. However, these innovative tycoons are more than their work. Social media has humanised them and challenged the notion of entrepreneurs as clandestine, idea machines. How then, does personality play a role in their success? Using McCrae and Costa’s Big Five personality model, it seems that psychological research has a lot to say about entrepreneurship.
Entrepreneurial traits: The Big Five
This model has become the industry standard for understanding personality. It is a particularly useful predictor of several life outcomes, and it is composed of five unique factors – extraversion, agreeableness, openness, conscientiousness, and neuroticism. The individual is scored on a continuum for their levels of each trait, with these factors expected to be relatively stable over time. As traits are subject to environmental factors and genetics, this model also suggests that around half of our traits are inherited.
Openness, broadly characterised by curiosity and imagination, is the first factor in the Big Five model. It is not surprising that having higher scores in openness is more conducive to success as an entrepreneur. Think startup business environments; challenging logistical situations, working around competitive markets and contributing to a team. These are all instances that require an increased level of openness, not just to survive, but to thrive. One meta-analysis found that openness was integral to the performance of an entrepreneurial firm when taking into account factors such as firm growth and sustainability. In another study, based on interviews with sixty-two entrepreneurs (at various career stages) it was found that operational startups were more likely to be run by those possessing higher levels of openness to experience. We know that openness plays a significant role in entrepreneurial motivation, and some studies have looked into how opportunity-driven entrepreneurs tend to be more educated than necessity-driven entrepreneurs. Here, necessity-driven individuals are those who work to survive, and opportunity-driven refers to established individuals who are looking to expand their business.
Conscientiousness is the next Big Five factor, covering aspects of character such as organisational skills, responsibility and work ethic. Individual studies on this trait have produced mixed results, despite many studies proposing that high conscientiousness is critical to succeed as an entrepreneur. One study in particular found that conscientiousness is the most important factor differentiating between managers and entrepreneurs. This trait is broken down into achievement motivation and dependability, both of which have been deemed important for occupational success.
Across several studies achievement motivation, defined as the desire and drive to succeed, was found to be critical to entrepreneurial success. Some academics suggest entrepreneurs find the greatest fulfillment from the success achieved by their own efforts, rather than with the assistance of others. But this characteristic can backfire, with strong individual achievement motivation sometimes leading entrepreneurs into high risk situations. This characteristic means it is important for entrepreneurs to maintain a trusted professional circle of like-minded individuals, to ensure that the risks they take are measured and balanced. That said, researchers agree that the capacity to tolerate risk and uncertainty is essential to participate in entrepreneurial endeavours. The second factor of conscientiousness, dependability, refers to preparation for the future, including things like goal-setting and organisation. Studies indicate that having high levels of dependability is important for success as an entrepreneur, as this trait predisposes an individual to deal with fast-paced and uncertain situations.
Extraversion, the next factor in the Big Five model, covers personality aspects such as sociability, positive emotionality and social confidence. The literature is unclear on how this helps entrepreneurs. Entrepreneurs certainly need to market their products and must have the charisma to attract investors. Social networking would be impossible without sociability, but this kind of social confidence also affects team dynamics. Some researchers are adamant that high levels of social skills are conducive to better performance, as extraversion is positively related to better results for an entrepreneurial firm. We do know that better performance as a salesperson is assisted by higher extraversion, though this does not necessarily mean the same for entrepreneurs. Some academics propose that the heterogeneity of entrepreneurship means that extraversion may not always be necessary. By this, they mean that being a good entrepreneur is not a one-size-fits-all situation. Success in this field comes in many forms, with each individual able to use their strengths to find different career paths. Compare an entry level entrepreneur who codes for hours, with one who is trying to market his latest app. The latter will require more sociability to ensure success, whereas the former will likely be required to focus more on the mechanics of their craft.
Agreeableness is the fourth factor in the Big Five model and encompasses character traits such as optimism, friendliness and prosociality. Some studies point to both the advantages and disadvantages of being an agreeable entrepreneur. One article found that individuals with higher levels of this trait tend not to become entrepreneurs, as some characteristics of this personality factor, such as kindness, are counter-productive to situations that demand decisiveness. Optimism is critical for growth as an entrepreneur, though it can have both positive and negative effects. Some research suggests optimism can help entrepreneurs to succeed in their capacity to secure startup capital investment. However, the so-called ‘superiority illusion’ can blind an optimistic entrepreneur to the various drawbacks or risks associated with their products. Overall, studies have found that agreeableness is not a vital trait for entrepreneurs. This is because assertiveness is more critical than amiability to succeed as an entrepreneur. Whilst one must be agreeable enough to trade ideas and opinions, it is suggested that lower levels of this trait may lead an individual to be more single minded in their focus, ultimately resulting in greater success.
Neuroticism completes the Big Five model. Highly neurotic individuals tend not to opt for entrepreneurial careers, with some evidence suggesting that this line of work is incompatible with high levels of neuroticism. The highly neurotic individual is emotionally volatile, anxious and fearful, so successful entrepreneurs tend to be lower in this personality trait. Several researchers have also pointed out that neuroticism negatively affects the mental wellbeing of entrepreneurs.
Entrepreneurship is a complex concept and there are many ways to succeed as an entrepreneur. Increased levels in certain traits seem to predispose success, yet outliers defy the statistics time and time again. Despite the lack of consensus within the literature, we know one thing to be true; the ecosystem of entrepreneurs is filled with all kinds of characters that defy the research in one way or another. Thanks to the antics of figures like Elon Musk, we tend not to be surprised when we see entrepreneurs displaying particularly novel behaviour. These innovative individuals are outliers, without question, but perhaps being an outlier is exactly what is needed to find success in such a complex industry.
Author: Michael Furcciniti, Macquarie University
Editor: Shireen Bernstein, Insights and Partnerships Manager, North Sydney Innovation Network