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It’s Official: Entrepreneurs Have Better Personalities than Managers

Developing the Innate Index got me wondering if there was a link between personality and success as an entrepreneur. My business partner is a behavioral Psychologist who has spent a few decades coaching executives and entrepreneurs, so naturally I asked him about it.

As it turns out there is actually a lot of research! Here’s a summary he wrote up for me that compares entrepreneurs to managers:

Recent research in the field of psychology suggests that personality has a great deal to do with being a successful entrepreneur.  In a recent study published in the highly regarded Journal of Applied Psychology (2006, Vol. 91, No. 2, 259-271), Hao Zhao of the University of Illinois at Chicago and Scott E. Seibert of the Melbourne Business School analyzed and combined the results of twenty-three independent research studies.  A statistical method known as meta-analysis was used which allows research studies to be combined in a way that yields overall trends within a field of research.

The twenty-three studies included in the meta-analysis compared entrepreneurs to a group of managers on the five factor personality (FFM) traits.  Statistical differences between entrepreneurs and managers were found on four out of the five personality traits.   Entrepreneurs scored significantly higher than managers on the scales of Openness to Experience and Conscientiousness.  In general, entrepreneurs can be characterized as more creative, more innovative, and more likely to embrace new ideas than their manager counterparts (Openness to Experience).  Second, the results indicated that entrepreneurs were higher than managers on Conscientiousness (i.e., drive and work ethic).  Further analysis indicated that the differences were due to the entrepreneurs having a higher achievement orientation as compared to managers.  Entrepreneurs and managers did not differ on other aspects of the Conscientiousness factor such as dependability, reliability, planning and organizational skills.

The second key set of results showed entrepreneurs to be significantly lower than managers on Neuroticism and Agreeableness.  In general, entrepreneurs appear to be more self-confident, resilient, and stress-tolerant than non-entrepreneurial managers.  These results are logical given the highly stressful, demanding, and changing  work environments which entrepreneurs usually find themselves.  Entrepreneurs are able to tolerate a greater amount of stress without anxiety, tension and psychological distress.  This may help entrepreneurs handle ambiguity, take risks and feel greater comfort with failure.

With regard to lower scores on Agreeableness, entrepreneurs were found to be tougher, more demanding, and more likely to use more negotiation and influence skills than managers.  Finally, no significant differences were found between the two groups on Extroversion.  Therefore, entrepreneurs were no more or less outgoing than the managers.

To simplify, entrepreneurs have a few very specific traits that separate us from our managerial brethren.

  1. We are typically more driven and have a stronger work ethic,
  2. We’re less susceptible to stress,
  3. We’re more self-confident,
  4. We’re tougher, and
  5. We’re better at influencing others.

(Take that, managers!)

Who are you?

The next question I asked my partner is “How does this research relate to the Innate Index?”

Innate measures 8 personality factors that are the most relevant to the workplace. Here’s how the key traits mentioned above match up:

  • High Conscientiousness = High scores for Achievement, Energy and Self-Confidence on the Innate
  • High Openness to Experience = High score for Adventuresome on the Innate
  • Low Neuroticism = High score for Resilience on the Innate
  • Low Agreeableness = Low score for Sensitivity on the Innate

You should take the Innate Index here if you haven’t already then come back to compare your results.

How does your profile compare to the ideal? And…

What if your scores aren’t a good fit?

Have you considered management? Just kidding… Sort of…

Your scores on a personality test are a measurement of how high or low you scored yourself as compared to others who have taken it before you. The test results offer an imperfect mirror, albeit one that is pretty accurate if you were honest while completing the questions.

If the results are telling you that your profile isn’t a perfect match for entrepreneurship it doesn’t mean you are doomed to fail. If you’re way off on a lot of the factors, I would say that you’d have a harder time dealing with the ups and downs inherent in steering your own ship but it is not impossible to succeed.

“What do I do with this Information?”

That’s the question many people have after they see their results. The first step in dealing with what you perceive to be a problem or shortcomings is to be aware it exists. That’s where tests like the Innate get their real utility.

Take my scores for example:

They are in-line except for a pesky, very low score on Energy, which I believe is tied to my low scores on sociability (I appear to be not very excitable because I am shy in social situations.)

I actually knew this from other tests I’ve taken over the years and have wondered if it would be “easier” to be an entrepreneur if activities like networking came more naturally. Alas, It doesn’t matter; I’m an introvert.

Because I’m aware of my natural tendencies to shy away from social situations, I can do something about it. For example:

  1. I can hire or partner with extroverted people to balance things out and stay away from sales-oriented or customer service activities
  2. I can suck it up and work twice as hard to compensate for my weakness with the hope of reaching a “good enough” level.

If you look at your own results, you can start to imagine how a high or low score on certain factors could affect your relationships and your business-building efforts. From there you can start to figure out what you’d like to do about it, if anything.

Are Entrepreneurs Really “Better” Than Managers?

That depends on who you ask. As you can see, my personality fits pretty closely with the typical entrepreneurial type. The thing about personality test results is that the results should reflect who you are. For those of us with high self-confidence, it’s hard to understand how you’d want to be any other way.

If I were forced to be 100% objective, there are traits that the typical manager have that are “better” than Entrepreneurs. For example, is it really so great to be insensitive? Especially if you knew that good employees will probably leave you if you are a bad boss, which is true, and most employees will judge you on the basis of your interpersonal skills, which is also true.

The Bottom Line

Knowing who you are helps you leverage your strengths and manage with your shortcomings before they become a problem. Go find out.

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