nach oben

Small Business Economics

Erschienen in:

10.11.2018

Prediction based on entrepreneurship-prone personality profiles: sometimes worse than the toss of a coin

verfasst von: Alexander Konon, Alexander S. Kritikos

Erschienen in: Small Business Economics | Ausgabe 1/2019

Einloggen

Aktivieren Sie unsere intelligente Suche, um passende Fachinhalte oder Patente zu finden.

search-config

KI-gestützte Suche

Aus

Abstract

The human personality predicts a wide range of activities and occupational choices—from musical sophistication to entrepreneurial careers. However, which method should be applied if information on personality traits is used for prediction and advice? In psychological research, group profiles are widely employed. In this contribution, we examine the performance of profiles using the example of career prediction and advice, involving a comparison of average trait scores of successful entrepreneurs with the traits of potential entrepreneurs. Based on a simple theoretical model estimated with GSOEP data and analyzed with Monte Carlo methods, we show, for the first time, that the choice of the comparison method matters substantially. We reveal that under certain conditions the performance of average profiles is inferior to the tossing of a coin. Alternative methods, such as directly estimating success probabilities, deliver better performance and are more robust.

Nächster Artikel Twenty-five years of research on institutions, entrepreneurship, and economic growth: what has been learned?

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Nur mit Berechtigung zugänglich

Similar approaches, as discussed here, are also used to provide advice, for instance, to young adolescent individuals seeking guidance on occupational choice.

For a review of the recent literature on entrepreneurship-related personality characteristics, see Kerr et al. (2017).

For an overview of studies analyzing the effect of risk attitudes on entrepreneurial activities, see also Kerr et al. (2017).

This kind of fit measure is widely used in psychology, and not only in entrepreneurship; see, inter alia, Chapman and Goldberg (2011).

Thus, this simplifying assumption can be relaxed by using a vector of personality variables instead of univariate Γ.

Blanchflower (2000), Hundley (2001), and Benz and Frey (2008a, 2008b) show that entrepreneurs experience higher job satisfaction than wage workers such that non-monetary benefits of entrepreneurship might play a significant role with respect to occupational choices.

There are two possible interpretations of π with respect to risk consistent with the model setting. First, entrepreneurship is not associated with any risk such that π is the deterministic relative income (relative to alternative income). Second, entrepreneurship is associated with risk and π is the average relative income but the client is risk-neutral and only cares about averages.

Typically, even if π can be measured without any problem, we would only have reliable historical data on it for a subset of individuals because it is a counterfactual for those who were never entrepreneurs.

Note that \(p_{\text {COIN}}=\mathbb {E}[\mathcal {S}_{\text {\textit {COIN}}}]=\mathbb {P}(\textbf {a}_{\text {\textit {COIN}}}= 1\wedge \textbf {t}= 1)+\mathbb {P}(\textbf {a}_{\text {\textit {COIN}}}= 0\wedge \textbf {t}= 0)\). The coin completely ignores historical and client data such that \(\mathbb {P}(\textbf {a}_{\text {\textit {COIN}}}=a)\) and \(\mathbb {P}(\textbf {t}=t)\) are independent. Hence, we get

For instance, Δ(ε,ε^′) = 1/2 implies that changing the similarity criterion by a certain amount would change the expected recommendation success rate by 50 percentage points in the same setting indicating that approach performance is unstable.

Self-employment and wage work can take place at the same time or at different time points.

Note that the relatively low number of observations is due to the fact that we need sufficient information about individuals who generated incomes from self-employment and wage work. This is also why we had to use the willingness to take risk as information instead of the Big Five. We show below that this choice does not affect the reasoning of our approach.

The code is provided upon request.

Anscombe, F., & Glynn, W. (1983). Distribution of Kurtosis statistic for normal statistics. Biometrika, 70, 227–234.

Astebro, T., & Chen, J. (2014). The entrepreneurial earnings puzzle. Journal of Business Venturing, 29, 88–105.CrossRef

Begley, T., & Boyd, D. (1987). Psychological characteristics associated with performance in entrepreneurial firms and smaller businesses. Journal of Business Venturing, 22, 147–173.

Benz, M., & Frey, B. (2008a). Being independent is a great thing. Economica, 75, 362–383.

Benz, M., & Frey, B. (2008b). The value of doing what you like. Journal of Economic Behavior and Organization, 68, 445–455.

Bernardo, A., & Welch, I. (2001). On the evolution of overconfidence and entrepreneurs. Journal of Economics & Management Strategy, 10, 301–330.CrossRef

Blanchflower, D. (2000). Self-employment in OECD countries. Labour Economics, 7, 471–505.CrossRef

Bono, J., Boles, T., Judge, T., Lauver, K. (2002). The role of personality in task and relationship conflict. Journal of Personality, 70, 311–344.CrossRef

Borghans, L., Duckworth, A., Heckman, J., ter Weel, B. (2008). The economics and psychology of personality traits. Journal of Human Resources, 43, 972–1059.

Bosma, N., Hessels, J., Schutjens, V., Van Praag, M., Verheul, I. (2012). Entrepreneurship and role models. Journal of Economic Psychology, 33, 410–424.CrossRef

Caliendo, M., Fossen, F., Kritikos, A. (2009). Risk attitudes of Nascent entrepreneurs. Small Business Economics, 32, 153–167.CrossRef

Caliendo, M., Fossen, F., Kritikos, A. (2010). The impact of risk attitudes on entrepreneurial survival. Journal of Economic Behavior and Organization, 76, 45–63.CrossRef

Caliendo, M., Fossen, F., Kritikos, A. (2014a). Personality characteristics and the decision to become and stay self-employed. Small Business Economics, 42, 787–814.

Caliendo, M., Kritikos, A., Künn, S., Loersch, C., Schröder, H., Schütz, H. (2014b). Evaluation der Programme Gründercoaching Deutschland. IZA Research Report 61.

Chapman, B., & Goldberg, L. (2011). Replicability and 40-year predictive power of childhood ARC types. Journal of Personality and Social Psychology, 101, 593–606.CrossRef

Costa, P., McCrae, R., Holland, J. (1984). Personality and vocational interests in an adult sample. Journal of Applied Psychology, 69, 390–400.CrossRef

Cronbach, L., & Gleser, G. (1953). Assessing the similarity between profiles. Psychological Bulletin, 50, 456–473.CrossRef

D’Agostino, R. (1970). Transformation to normality of the null distribution of G1. Biometrika, 57, 679–681.

Fischer, R., & Boer, D. (2014). Motivational basis of personality traits: a meta-analysis of value-personality correlations. Journal of Personality, 83, 491–510.CrossRef

Gartner, W. (1989). ‘Who is an entrepreneur?’ Is the wrong question. Entrepreneurship: Theory and Practice, 12, 47–68.

Green, D., Müllensiefen, D., Lamb, M., Rentfrow, P. (2015). Personalty predicts musical sophistication. Journal of Research in Personality, 58, 154–158.CrossRef

Heckman, J., Stixrud, J., Urzua, S. (2006). The effects of cognitive and noncognitive abilities on labour market outcomes and social behavior. Journal of Labor Economics, 24, 411–482.CrossRef

Heller, D., Ferris, D., Brown, D., Watson, D. (2009). The influence of work personality on job satisfaction: incremental validity and mediation effects. Journal of Personality, 77, 1051–1084.CrossRef

Helmers, C., & Rogers, M. (2010). Innovation and the survival of new firms in the UK. Review of Industrial Organization, 36, 227–248.CrossRef

Holland, J. (1997). Making vocational choices: a theory of vocational personalities and work environments (3rd edn.) Odessa: Psychological Assessment Resources.

Holmes, T., & Schmitz, J. (1990). A theory of entrepreneurship and its application to the study of business transfers. Journal of Political Economy, 98, 265–294.CrossRef

Hundley, G. (2001). Why and when are the self-employed more satisfied with their work? Industrial Relations, 40, 293–316.

Jokela, M. (2009). Personality predicts migration within and between U.S. States. Journal of Research in Personality, 43, 79–83.CrossRef

Kalleberg, A. L., & Leicht, K. T. (1991). Gender and organizational performance: determinants of small business survival and success. Academy of Management Journal, 34, 136–161.

Kerr, W., Nanda, R., Rhodes-Kropf, M. (2014). Entrepreneurship as experimentation. Journal of Economic Perspectives, 28, 25–48.CrossRef

Kerr, S., Kerr, W., Xu, T. (2017). Personality traits of entrepreneurs: a review of recent literature. Harvard Business School Working Paper, 18–047.

Kihlstrom, R., & Laffont, J.-J. (1979). A general equilibrium entrepreneurial theory of firm formation based on risk aversion. Journal of Political Economy, 87, 719– 748.CrossRef

Koellinger, P., Minniti, M., Schade, C. (2007). I think I can, I think I can. Journal of Economic Psychology, 28, 502– 527.CrossRef

Kösters, S., & Obschonka, M. (2011). Public business advice in the founding process: an empirical evaluation of subjective and economic effects. Environment and Planning C: Government and Policy, 29, 123–138.CrossRef

Levine, R., & Rubinstein, Y. (2017). Smart and illicit: who becomes an entrepreneur and do they earn more? Quaterly Journal of Economics, 132, 963–1018.

Magnusson, D., & Törestad, B. (1993). A holistic view of personality: a model revisited. Annual Review of Psychology, 44, 427–452.CrossRef

Manso, G. (2016). Experimentation and the returns to entrepreneurship. Review of Financial Studies, 29, 2319–2340.CrossRef

Mardia, K. (1974). Applications of some measures of multivariate skewness and kurtosis for testing normality and robustness studies. Sankhy A, 36, 115–128.

Mayer, J., & Skimmyhorn, W. (2017). Personality attributes that predict cadet performance at west point. Journal of Research in Personality, 66, 14–26.CrossRef

Obschonka, M., & Stuetzer, M. (2017). Integrating psychological approaches to entrepreneurship: the entrepreneurial personality system (EPS). Small Business Economics, 49, 203–231.CrossRef

Obschonka, M., Silbereisen, R., Schmitt-Rodermund, E. (2010). Entrepreneurial intentions as development outcome. Journal of Vocational Behavior, 77, 63–72.CrossRef

Obschonka, M., Schmitt-Rodermund, E., Silbereisen, R., Goslin, S., Potter, J. (2013). The regional distribution and correlates of an entrepreneurship-prone personality profile in the United States, Germany, and the United Kingdom: a socioecological perspective. Journal of Personality and Social Psychology, 105, 104–122.CrossRef

Quatraro, F., & Vivarelli, M. (2015). Drivers of entrepreneurship and post-entry performance of newborn firms in developing countries. The World Bank Research Observer, 30, 277–305.CrossRef

Rauch, A., & Frese, M. (2007). Let’s put the person back into entrepreneurship research. European Journal of Work and Organizational Psychology, 16, 353–385.CrossRef

Rodionova, Z. (2015). The personality test that could one day decide your credit score. The Independent, 2. September.

Schmitt-Rodermund, E. (2004a). Pathways to successful entrepreneurship: parenting, personality, entrepreneurial competence, and interest. Journal of Vocational Behavior, 65, 498–518.

Schmitt-Rodermund, E. (2004b). Pathways to successful entrepreneurship: parenting, personality, entrepreneurial competence, and interests. Journal of Vocational Behavior, 65, 498–518.

Schumpeter, J. (1934). The theory of economic development. Cambridge: Harvard University Press.

Shaver, K., & Scott, L. (1991). Person, process, choice: the psychology of new venture creation. Entrepreneurship Theory & Practice, 16, 23–45.CrossRef

Stewart, W., & Roth, P. (2001). Risk propensity differences between entrepreneurs and managers. Journal of Applied Psychology, 86, 145–153.CrossRef

Stuetzer, M., Goethner, M., Cantner, U. (2012). Do balanced skills help nascent entrepreneurs to make progress in the venture creation process? Economics Letters, 117, 186–188.CrossRef

Zhao, H., & Seibert, S. (2006). The big five personality dimensions and entrepreneurial status. Journal of Applied Psychology, 91, 259–271.CrossRef

Zhao, H., Seibert, S., Lumpkin, G. (2010). The relationship of personality to entrepreneurial intentions and performance: a meta-analytic study. Journal of Management, 36, 381–404.CrossRef

Titel: Prediction based on entrepreneurship-prone personality profiles: sometimes worse than the toss of a coin
verfasst von: Alexander Konon
Alexander S. Kritikos
Publikationsdatum: 10.11.2018
Verlag: Springer US
Erschienen in: Small Business Economics / Ausgabe 1/2019
Print ISSN: 0921-898X
Elektronische ISSN: 1573-0913
DOI: https://doi.org/10.1007/s11187-018-0111-8

Springer Professional

Abstract

Bitte loggen Sie sich ein, um Zugang zu Ihrer Lizenz zu erhalten.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Springer Professional "Wirtschaft"

Weitere Artikel der Ausgabe 1/2019

The emergence of the global fintech market: economic and technological determinants

Firm size and productivity from occupational choices

Market imperfections and crowdfunding

Family-centered goals, family board representation, and debt financing

New firm survival: the interdependence between regional externalities and innovativeness

Public policies to enhance regional entrepreneurship: another programme failing to deliver?

Premium Partner