Personality Traits of Entrepreneurs and the Size of Their Firms

Berfin Kardaslar, Alexander S. Kritikos and Lukas Menkhoff

No 2173, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: In this study, we examine the relationship between personality traits, captured by risk tolerance and the Big Five traits, and firm size, as measured by the number of employees. We show that the personality of entrepreneurs matters for the size of their firm they operate. We use a novel add-on to the German Socio-Economic Panel that includes a sub-sample of owner-managers running larger firms. High levels of risk tolerance – associated with an increased likelihood of firm exit in existing research – is positively associated with firm size for entrepreneurs in the market. High scores in extraversion are also associated with larger firms. However, a high level of openness for experience, a main driver of founding ventures, is negatively related to firm size. Overall, we show that running larger firms is associated with traits that are partially different from those that increase the likelihood of entrepreneurial entry or survival.

Keywords: Entrepreneurship; risk tolerance; Big Five personality traits; firm size (search for similar items in EconPapers)
JEL-codes: D81 J24 L26 (search for similar items in EconPapers)
Pages: 34 p.
Date: 2026
New Economics Papers: this item is included in nep-lma
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