Psychological Characteristics Associated with Performance in Entrepreneurial Firms and Smaller Businesses

Evaluates the relationship between the psychological traits of entrepreneurs and the financial performance of their businesses. Prior research is used as the basis for the following ten hypotheses--in a sample of small business CEOs, founders will: (1) demonstrate a higher achievement orientation than will non-founders, (2) show a greater internal locus of control than non-founders, (3) manifest higher risk-taking propensity than non-founders, (4) display a higher tolerance for ambiguity than non-founders, and (5) will embody more Type A behaviors than non-founders. Among small business founders, a positive relationship will exist between: (6) corporate financial performance and the need for achievement, (7) corporate financial performance and an internal locus of control, and (8) corporate financial performance and a tolerance of ambiguity. A negative relationship will exist between: (9) corporate financial performance and risk-taking propensity, and (10) corporate financial performance and Type A behavior. Data for this study consist of responses to 239 questionnaires sent to randomly selected members of the Smaller Business Association of New England. All are small business owners; approximately 62% founded those firms. Findings indicate that, overall, founders have a higher need for achievement, risk-taking propensity, and tolerance for ambiguity than do non-founders. However, the two groups showed no difference in their locus of control and Type A personality traits. In addition, little connection is shown between psychological attributes and corporate financial performance. (SFL)