The five-factor model of personality: assessing entrepreneurs and managers.

Envick, Brooke R. ; Langford, Margaret

INTRODUCTION

The word entrepreneur has existed for more than 250 years; however, entrepreneurism was not a well-respected career in United States until the 1980s. People like Sam Walton and Bill Gates suddenly brought appeal and status to the word entrepreneur. Attention quickly focused on identifying the entrepreneurial personality.

Today, researchers still attempt to discover personality characteristics and behaviors that distinguish entrepreneurs from other people, most typically managers. A few personality traits that recur in the entrepreneurship literature more often than others traits include the need for achievement (e.g. McClelland, 1961; Glennon, 1966; Hornaday & Aboud, 1971; Robinson, Stimpson, Huefner & Hunt, 1991), the propensity to take risks (e.g. Mill, 1848; Ginzberg, 1955; McClelland, 1961; Timmons, 1978; Welsh & White, 1981), and internal locus of control (e.g. Borland, 1974; Brockhaus, 1982; Timmons, 1978).

The purpose of this paper is to continue the study of entrepreneurs' personality traits. However, attention is shifted from the commonly studied aforementioned traits to the Five-Factor Model of personality (Goldberg, 1990; Goldberg, 1992; Goldberg, Sweeney, Merenda, & Hughes, 1998), which has recently emerged from the field of psychology into business applications. The paper compares entrepreneurs to managers on each of the five factors. First, we describe Five-Factor Model and discuss its recent applications to business research. Next, we review research findings that compare entrepreneurs to managers and suggest hypotheses regarding the Five-Factor model. Then, we describe our research methodology. Finally, we discuss results of the study and draw conclusions.

LITERATURE REVIEW

With some controversy in the psychological community, the Five-Factor Model (also referred to as the Big Five) emerged in recent years as a "robust model" or "Great Theory" of personality. While a discussion of the theoretical arguments pertaining to the Five-Factor Model is beyond the scope of this paper, its proponents believe that the model is robust in that the personality of every human being, regardless of his or her culture, can be described utilizing the five dimensions (see Costa & McCrae, 1995; Digman, 1990; Goldberg, 1990, 1992; Goldberg, Sweeney, Merenda, & Hughes, 1998; Wideger & Trull, 1997).

Disagreement exists regarding the exact vocabulary of the five factors (or superfactors); however, conceptually, the factors are these: (1) adjustment (on a continuum from stable to neurotic), (2) sociability (from extroverted to introverted), (3) intellectual openness (from imaginative and interested in many things to practical and narrowly focused), (4) agreeableness (from benevolent to belligerent), and (5) conscientiousness (from dependable and goal-oriented to undependable and impulsive). The interest of psychologists is not in describing a universal "right" personality (there is none), but rather in examining a person's "score" on each of the five factors in conjunction with other factors (e.g., education, age, gender, job). The Five-Factor Model as it is used in business research is illustrated in Figure 1 below:

The Five-Factor Model in Business Research

Recently, researchers have reported Five-Factor Model results contain implications for the workplace. In jobs involving personal interactions, one study reported that the factors of conscientiousness, agreeableness, and adjustment were related to job performance. Not surprisingly, emotional stability and agreeableness were found to be especially important in jobs involving teamwork (Mount, Barrick, & Stewart, 1998).

With business franchise owners as subjects, Morrison (1997) examined the relationships between the Five-Factor Model and other psychological constructs (e.g., Self-Monitoring, Type A Behavior, Locus of Control, and Subjective Well-being). Results indicate that franchise owners tend to be Type A persons who are more sociable and conscientious than not. They are relatively more agreeable than not, slightly less open to new experiences than average. As a group, franchise owners tend to have an internal locus of control, which is also strongly associated with adjustment.

The results of a study by Collins and Gleaves (1998) regarding job applicants indicated no significant differences in the Five-Factor Model between African American and Caucasian applicants, although both groups tended to provide socially desirable survey responses regarding the Five-Factor dimensions. Another study reported that applicants who were more sociable, open to experience, and relatively conscientious tended to employ more effective job search strategies and were more successful in obtaining second interviews than those who did not (Caldwell & Burger, 1998).

[FIGURE 1 OMITTED]

Although each factor represents a collection of traits, the link between personality and behavior becomes clearer when only one trait is the focus rather than one factor. There are several common personality traits that render a natural fit into one of the five factors. For example, locus of control is considered to be a part of the conscientiousness factor as it relates to job performance behaviors regarding dependability and responsibility (Lefcourt, 1992; Black, 1990). Another example is self-esteem. People with high self-esteem are more likely to take risks and enter difficult and unconventional occupations because they believe in their abilities. This is an important part of the adjustment factor as it relates to stability and confidence (Ellis & Taylor, 1983; Hollenbeck & Brief, 1987).

Other workplace-related studies utilized the Five-Factor Model include those involving employee absence (Judge, Martocchio, & Thoresen, 1997), expatriate success (Ones & Viswesvaran, 1997), job performance in the European Community (Salgado, 1997), and teamwork (Neuman, Wagner, & Christiansen, 1999).

Entrepreneurs Versus Managers

Managers and entrepreneurs are perceived as two groups of individuals, each having unique distinctions. For example, Vesper (1985) states that entrepreneurship is radically different from corporate management. Stevenson and Jarillo (1990) compare key components of entrepreneurial management and traditional management, where entrepreneurial management is characterized by the detection of and willingness to pursue opportunity. Carland, Hoy, Boulton, and Carland (1984) assert that the most critical factor distinguishing entrepreneurs from non-entrepreneurs is innovation. The entrepreneur has a preference for creating activity, manifested in some innovative combination of resources for a profit.

Chandler and Hanks (1994) contend that entrepreneurial competence is different from managerial competence, where entrepreneurial competence is comprised of six items: (1) time and energy spent looking for products/services that provide real benefits to customers; (2) accuracy in perceiving customers' unmet needs; (3) identifying products/services customers want; (4) seizing high-quality opportunities; (5) strong internal drive to see their venture through; and (6) ability to develop technically superior products/services. Managerial competence is characterized by: (1) proper resource allocation; (2) organizing and motivating people; (3) coordinating tasks; (4) ability to supervise, influence and lead people; (5) ability to delegate effectively; and (6) keep the organization running smoothly.

In a study using the Myers Briggs Type Indicator, entrepreneurs were most often profiled with the E, N, and T [i.e., they had an external orientation that promotes opportunity recognition (E), were innovative (N), and were flexible and actively responsive to change (T)]. In contrast, bureaucratic managers were profiled as I, S, and J [i.e., they had an inward orientation to their own practices (I), were sensitive to immediate events within their control (S), and adhered to structure while antagonistic toward change (J)] (Reynierse, 1997).

Hisrich (1990) compares traditional managers to entrepreneurs. He asserts that managers attempt to avoid mistakes and failure while entrepreneurs accept them. Managers' goals are short-term, while entrepreneurs' goals are long-term (5-10 years). He also states that the primary motivation of each group is very different. Managers are motivated by typical rewards such as gaining power and promotion. Entrepreneurs are motivated by opportunity and independence. Additionally, managers delegate tasks, while entrepreneurs prefer direct involvement.

Lastly, using sixteen adjective descriptors similar in concept to the Five-Factor Model, Brandstatter (1997) surveyed business founders, business heirs, and managers. Founders were reported to be more stable emotionally, more independent, and more open to new experiences than heirs as well as managers.

HYPOTHESES

The hypotheses are generated based upon empirical findings regarding the Five Factor Model, previous research regarding entrepreneurs compared to managers, and the nature of the job roles themselves. There is one hypothesis for each of the five factors.

H1: Entrepreneurs will score higher than managers on the adjustment factor.

By the nature of their job roles, it is logical to assume that entrepreneurs will score higher on the adjustment factor, which is characterized by resilience, confidence, and stability. This is not to say that managers are not stable or confident, nor is it likely they fall on the extreme end of the continuum characterized as self-doubting and nervous. However, entrepreneurs must be more proactive and resilient than managers who have more freedom to be reactive. Studies show that most successful entrepreneurs are self-confident individuals who see the problems in launching a new venture but believe in their own ability to overcome these problems (Longenecker, Moore, & Petty, 1997). Brandstatter (1997) reports founders to be more emotionally stable than heirs or managers.

H2: Managers will score higher than entrepreneurs on the sociability factor.

One common trait entrepreneurs possess is the need to be independent. A 1991 survey reveals that 83% of small business owners left corporate jobs because they wanted to be on their own (Viraelli, 1991). Entrepreneurs have an inherent desire to be independent (Brandstatter, 1997) and do not mind working alone. Managers must work with several people, subordinates, supervisors, and other managers. This requires them to be somewhat sociable and talkative. While entrepreneurs must also communicate with several different types of people, it is not uncommon for them to spend an entire day without any personal interactions, especially those operating home-based businesses.

H3: Managers will score higher than entrepreneurs on the conscientiousness factor.

Again, this is not to say that entrepreneurs are not conscientious. However, regarding relative positions on the continuum it is logical to assume that managers are more conscientious than entrepreneurs. Managers must be planful, organized, and cautious. Also, managers are accountable and must report to superiors regarding results. Entrepreneurs, by the nature of their job role, can and must take more risks make decisions on impulse. Hisrich (1990) states that entrepreneurs are moderate risk takers, whereas, managers are more cautious and risk-adverse.

H4: Managers will score higher than entrepreneurs on the agreeableness factor.

Entrepreneurs are the CEOs and presidents of their organizations. They make the ultimate decisions in many cases. Their independent nature does not provide the propensity to score high on the agreeableness factor, which characterizes someone who is more of a team player, attempting to satisfy others in many situations. Managers do spend a significant amount of time trying to work well with others and encouraging others to work well with one another. Entrepreneurs tend to be more independent, skeptical, and self-interested.

H5: Entrepreneurs will score higher than managers on the openness factor.

Intellectual openness is similar to several definitions of entrepreneurship, which involves creating new products, new markets, and innovative ideas. Entrepreneurs are naturally curious and must be imaginative and original. They are open to new experiences (Brandstatter, 1997) This is at the very heart of entrepreneurship. While managers can be open to new ideas and originality, much of their job role requires practicality and conservatism. As Hisrich (1990) contends, managers tend to avoid mistakes and failures and are risk-adverse. This leads to very routine thinking and behavior.

METHODOLOGY

The hypotheses are tested using ANOVA to determine if significant differences exit between entrepreneurs and managers on all five factors.

Subjects

Two hundred and eighteen subjects represent the findings, 99 managers and 119 entrepreneurs. A manager is defined as someone who manages people and or tasks in an organization owned by someone else. An entrepreneur is defined as someone who owns and operates his/her own business.

The Chamber of Commerce in a large Southwestern city generated a list of 2,500 entrepreneurs and managers. Twelve hundred were randomly selected from this list to receive the survey. With a response rate of over 19%, 237 surveys were returned, and 218 were usable. The average career length for manager participants is 17 years, with 9 years being the average tenure in their current position. Entrepreneur participants have owned an average of three businesses, and have owned their current business for an average of 14 years.

Procedures

All subjects received a survey containing background questions regarding their job role and type of business. The Five-Factor Model was tested using the questionnaire developed by Howard, Medina, and Howard (1996), which is commonly used by consultants and trainers and published in textbooks (Hellriegel, Slocum & Woodman, 1998). The survey included twenty-five sets of descriptive words on opposite ends of a continuum. Respondents were asked to circle the number on the continuum that most closely describes their personality. A few examples are provided in Figure 2.

Each of the Five Factors is measured by the sum of scores received on a total of five questions. The numerical scale above is converted so that one end of the continuum is a five and the other end is a one. The above scale was used in the survey so that participants would not be biased to circle numbers on either end of the scale assuming the word either next to the one or five was the "right" or "best" answer.

RESULTS

ANOVA was used to test all five hypotheses in order to compare entrepreneurs to managers on each personality factor. The first hypothesis tests adjustment. The second tests sociability. The third hypothesis tests conscientiousness. The fourth one tests agreeableness. And the fifth hypothesis tests intellectual openness. Table 1 presents the all means, standard deviations, and p-values.

With the first hypothesis, regarding adjustment, no significant findings are present. However, the general direction of the hypothesis holds true with entrepreneurs scoring higher (M=13.496) than managers (M=13.152).

No significant findings are present with the second hypothesis regarding sociability. Again, however, the general direction appears to be there. Managers are more sociable (M=17.596) than entrepreneurs (M=17.277). However, entrepreneurs may balance their need for independence with a demand for social contact, i.e., customers (Brandstatter, 1997).

The third hypothesis is supported. Managers (M=19.667) are significantly more conscientious [F(1,216) = 3.817; p<.10] than entrepreneurs (M=18.639). This means that managers are more planful, organized, and cautious while entrepreneurs are more impulsive, risky, and flexible.

The fourth hypothesis is also supported. Managers (M=20.081) are significantly more agreeable [F(1,216) = 4.152; p<.05] than entrepreneurs (M=19.101). This means that managers are more team-oriented and considerate to other people's desires while entrepreneurs are more independent and self-interested.

The fifth hypothesis is not significant regarding intellectual openness. However, the general direction appears to hold some merit. Entrepreneurs are more open (M=14.941) than managers (M=14.515).

DISCUSSION

This paper makes a contribution by further identifying psychological traits that differentiate entrepreneurs from managers. While several psychological characteristics have been analyzed in order to define entrepreneurs and managers, the Five-Factor Model provides another avenue to differentiate and define each group.

Two of the five hypotheses are supported. Managers are significantly more conscientious and agreeable than entrepreneurs. While the other three hypotheses did not result in significant differences, the general direction of each has some merit. Entrepreneurs scored higher on adjustment and openness, while managers scored higher on sociability.

This study does provide more insight into the psychological profile of the entrepreneur. Several questionnaires exist for the purpose of helping individuals determine if an entrepreneurial career is suitable for them. These quizzes focus on background (education and experience), motivations, and personality traits. The increasingly accepted and robust Five Factor Model of Personality would be valuable tool to include in any questionnaire that guides people toward a corporate versus entrepreneurial career choice, with conscientiousness and agreeableness being especially important to consider in order to avoid a misfit between personality and profession.

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Brooke R. Envick, St. Mary's University

Margaret Langford, St. Mary's University

Table 1: The Five Factor Model: Means, Standard Deviations,
and p-Values

Factor Group Mean SD p-value

Adjustment Managers 13.152 2.701 0.3517
 Entrepreneurs 13.496 2.721

Sociability Managers 17.596 3.49 0.4896
 Entrepreneurs 17.277 3.293

Conscientiousness Managers 19.667 3.493 .0520 *
 Entrepreneurs 18.639 4.153

Agreeableness Managers 20.081 3.383 .0428 **
 Entrepreneurs 19.101 3.658

Intellectual Openness Managers 14.515 3.253 0.3931
 Entrepreneurs 14.941 3.967

* Significant @ .10

** Significant @ .05

Figure 2: Sample Survey Questions

 Factor Measure
 Question (not on survey)

Outgoing 3 2 1 2 3 Cool (sociability)
Trusting 3 2 1 2 3 Skeptical (agreeableness)
Seek novelty 3 2 1 2 3 Seek (openness)
 Routine