A Downside to the
Entrepreneurial
Personality?
Danny Miller
The literature on entrepreneurship bears a distinctly positive cast, often with good reason. Entrepreneurs and their innovations have contributed enormously to national wealth, and so scholars have examined the personalities, capabilities, and contexts underlying these con-tributions. However, despite some early work, the negative aspects of the entrepreneurial personality have been largely ignored. We shall argue that given the nature of the challenges facing many entrepreneurs and the consequent demands of their jobs, certain personality traits will be quite valuable to them. These, however, tend to be Janus-faced in that positive attributes, such as energy, self-confidence, need for achievement, and independence, may sometimes devolve naturally into aggressiveness, narcissism, ruthlessness, and irrespon-sibility. Given the costly repercussions of the latter characteristics, we urge more study of their nature and causes among entrepreneurs.
A Positive Image of a Tough Job and Its Demands
Many years of productive research on entrepreneurship have celebrated the breed and its importance. Certainly, entrepreneurs have contributed in significant measure to eco-nomic growth, national employment, and the robustness and renewal of economies around the world (Acs & Szerb, 2007; Audretsch, 2007; Kirzner, 2009). They have sponsored life-saving and productivity-enhancing innovations, and have made significant improve-ments to our lifestyles, health, and well-being. Our established and emerging industries, from railroads and oil refineries to Internet start-ups, could not have been born without them.
Given the importance of entrepreneurs to society, a good deal of research has gone into specifying the demands of their jobs, and the types of contexts and people that make for a productive entrepreneur or an entrepreneurial culture (Legge & Hindle, 2012). Particular emphasis has been placed on the challenges facing entrepreneurs who are confronted with the prospect of starting a firm from scratch. Entrepreneurs frequently must vie against established organizations that have more resources—financial, material, and social. They must raise funds, recruit people, capture trade from rivals, deal for the first time with institutional authorities, and create new products or services (Timmons, 1978). Indeed, to build a business that in some way disrupts a market—to be, to
Please send correspondence to: Danny Miller, tel.: 1-514-340-6501; e-mail: [email protected].
P
T
E
&
1042-2587
paraphrase Schumpeter (1942), a “creative destroyer”—can take extraordinary drive and aggressiveness in the face of what would be, to many, daunting obstacles.
These demands suggest the need for a special type of individual: one willing to risk personal resources—funds, energy, and even reputation—on a venture that stands a good chance of failing. It is not surprising, then, that the literature has found particular person-ality traits to inhere in these individuals. For example, McClelland (1961, 1975, 1987) has suggested that entrepreneurs have unusually elevated needs for achievement, autonomy, power, and independence (see also Sexton & Bowman, 1986). Miller, Kets de Vries, and Toulouse (1982) discovered that successful entrepreneurs tended to have internal loci of control—that is, they believe that they, not their environments, control their destinies. This observation is consistent with more recent research on entrepreneurial self-efficacy (Markman, Balkin, & Baron, 2002), self-esteem (Arora, Haynie, & Laurence, 2011), passion for the mission (Cardon, Zietsma, Saparito, Matherne, & Davis, 2005), and eudaimonic vigor (Hahn, Frese, Binnewies, & Schmitt, 2012). The entrepreneurial pursuit also has been linked to a person’s quest for self-enhancement (i.e., for achievement, power, and hedonism) (Holland & Shepherd, 2011). Some scholars have even found that the testosterone hormone, a correlate of proactive initiative, is higher among entrepreneurs than among the general population (White, Thornhill, & Hampson, 2006)—although this has been disputed by recent work (van der Loos et al., 2013).
Many of the above personal qualities are said to enhance an entrepreneur’s willing-ness to take initiative, tolerate risk and uncertainty, be persistent in the face of challenge, and act with daring and energy (e.g., Foo, 2011; Holland & Shepherd, 2011). They enable an entrepreneur to pick himself up after failures, and to continue innovating, renewing, and venturing forth even after having achieved success. Thus, these personal character-istics seem suitable given the above-mentioned challenges confronting many entrepre-neurs.1However, self-confidence, vigor, aggressiveness, and also needs for achievement,
autonomy, and power, are Janus-faced: They have complementary facets that are less sanguine, and which have been too often ignored.
The Janus Face of the Positives
The facets we refer to arise when the positive personality characteristics we describe are taken to certain extremes. And to the extent that some entrepreneurs possess these positive qualities, they also risk embracing the less salutary elements.
According to Kets de Vries (1985, p. 160): “the high degree of energy necessary to achieve a dream has desires and needs behind it that if let loose, can wreak havoc on an organization.” Thus, the energy, passion, and optimism said to be qualities of some entrepreneurs can turn to overconfidence—especially when the entrepreneur is greeted by success, and the adulation, prestige, and power that accompanies it (Kets de Vries & Miller, 1984, 1985; Miller, 1990).2
A related trait of entrepreneurs that has been signaled in the literature relates to self-efficacy and self-assurance, two primary requirements for a leader—especially one facing the uncertain and demanding setting of many business founders. Unfortunately, for
1. That is, establishing, protecting, and nurturing a nascent and fragile organization in what is often a hostile environment, vying against firms with more abundant resources, and breaking into the market.
some people, these traits can evolve into hubris and narcissism. In what is perhaps too extreme a statement, Freud (1921, pp. 123–124), in discussing one who chooses to lead, states: “[he] need love no one else, he may be of a masterful nature, absolutely narcissistic, self-confident, and independent.” Kernberg (1979, p. 33) complements that sentiment, claiming: “narcissistic personalities are often driven by intense needs for power and prestige to assume positions of authority and leadership.” Hayward, Shepherd, and Griffin (2006) have called attention to hubris in entrepreneurs, while McCarthy, Schoorman, and Cooper (1993) have noted that self-assured entrepreneurs will heedlessly escalate their commitment to a losing course of action. Indeed, Engelen, Neumann, and Schmidt (2013) confirm that narcissistic CEOs often tenaciously embrace misguided initiatives.
In similar fashion, need for achievement and power, when taken to extremes, can result in aggressive and even ruthless behavior (Belanger, 2011; Kets de Vries, 1996). Where a person’s desire for achievement or influence is great, there is always the temp-tation to push hard, cut corners, and disregard stakeholders. Although this may lead to temporary rewards, its long-term costs may vastly exceed them (Miller, 1990).
Along a different trajectory, a craving for autonomy and independence may give way to alienation. Indeed, many entrepreneurs take on that rolebecausethey do not fit well into standard jobs and because of their need to be independent and their difficulty with authority figures (Hirschhorn, 1990). This struggle against authority occasionally can generalize and result in deviant social conduct (Miller et al., 2010).
Finally, the need for control and dominance, which is intrinsic to some entrepreneurs as they strive to guide a nascent venture, can ultimately devolve into behaviors such as an obsessive wish to control the details of a business. In some cases, this tendency may be accompanied by mistrust and a groundless suspicion of partners, employees, and com-petitors (Kets de Vries, 1985; Kets de Vries & Miller, 1984).
Table 1 summarizes the above pairs of contrasts.
Evidence and Outcomes of Some Personality Downsides
Several bodies of evidence suggest that the negatives we have described do indeed inhere within the personalities of many entrepreneurs—some of these people highly successful and visible. The first evidentiary lode consists of biographies of entrepreneurs who have shaped the industrial landscape of America. The second type of evidence is to be found within accounts of deleterious founder effects on the evolution of their enterprises.
Table 1
The Janus Face of an Entrepreneurial Personality
Positive characteristics Negative extreme
Energy, passion, optimism Grandiosity, overconfidence
Self-efficacy, self-assurance Narcissism, hubris
Need for achievement and power Aggressiveness, ruthlessness
Independence, autonomy Social deviance, indifference to others
When one looks at the history of many of the world’s large fortunes, their origins appear to be gray. Some empires in distilling were built on bootlegging and smuggling operations (Newman, 1978). Railroad entrepreneur Cornelius Vanderbilt was a ruthless competitor who engaged in unethical stock manipulation (Stiles, 2009). Print magnate Moses Annenberg participated in violence in the circulation wars and was imprisoned for tax evasion (Cooney, 1982). Oil and steel dynasties have relied on cutthroat competition and cartels. John D. Rockefeller Sr., for example, despite his generosity and consolidation of a new industry, employed aggressive “cutthroat” pricing to bankrupt most of his competitors while he tied up their means of transportation (Chernow, 2007). Andrew Carnegie and Henry Ford I tolerated violence against their unions and workers (Brinkley, 2003; Wall, 1989).
These unsavory practices seem especially apt to occur early in the history of indus-tries, when a founding entrepreneur fights to gain the strongest possible foothold in an emerging sector. But even recently, as we know from the conduct of family firms like Parmalat and Adelphia, the malfeasance of powerful entrepreneurs continues to make headlines. Moreover, celebrated entrepreneurial leaders, such as Bill Gates, Steve Jobs, and Mark Zuckerberg, have been variously portrayed to be ruthless in their dealings with competitors, partners, and employees alike (e.g., Isaacson, 2011; Manes & Andrews, 1993). Finally, in emerging economies, such as China and India, where there remains something of an institutional void, corruption is endemic, and many entrepreneurs are only too happy to collaborate with authorities to subvert the forces of the market (De Jong, Tu, & Van Ees, 2012).
Less direct confirmation of these darker tendencies comes from studies of problematic successions in family firms—many of them originating with the overbearing personalities of entrepreneurial founders (Belanger, 2011). One such study noted three common pat-terns of problematic family successions following an entrepreneur’s tenure. First, a cowed offspring successor’s reluctance to change any policy the patriarch had implemented. Second, a rebellious successor wishing to destroy all vestiges of everything his or her “tyrannical old man” had put into place. Finally, a wavering, unsure heir grafting incon-gruous elements onto a strategy these did not fit (Miller, Steier, & Le Breton-Miller, 2003).
In discussions with consultants who have worked with the families of successful entrepreneurs, there emerges, too often, a theme of an aggressive, impatient, demanding, authoritarian, neglectful parent: typically, a business founder-patriarch. Indeed, there are accounts in the literature of the challenges to a family that derive from such personality characteristics in a founder–entrepreneur—accounts sometimes rife with instances of psychological violence (Belanger, 2011; Kets de Vries, 1996).
Qualifications
and nature of the above dysfunctions. Suffice it to say that the symptoms noted and the collateral damage entailed warrant further investigation. Indeed, there is something about the job requirements of most entrepreneurs, and the positive personality characteristics most suited to those requirements, that may be especially apt to bring with them the above-mentioned negatives.
Future Research Directions
Thus far, we remain quite ignorant of the personality dimensions and backgrounds that distinguish between ethical and healthy entrepreneurs and those whose darker side is more manifest. Some scholars have suggested that successful entrepreneurship
is born of personal shortcomings and disabilities.3 Does early hardship, for example,
result in more ruthless behavior? Do constraining social forces and compromised ethics in a community turn nascent entrepreneurs into reprobates? How much does family background matter? What roles are played by the nature and state of develop-ment of an industry (e.g., do early years of chaos promote malfeasance)? How may institutional forces, such as religion, education, and government regulation, limit the damage (Meek, Pacheco, & York, 2010)? To answer these questions, it may be useful to research the formative experiences and breeding grounds of entrepreneurs, their evo-lutionary trajectories, the types of businesses they develop, their behavioral manifesta-tions, the talents they possess and lack, and their impact on stakeholders and the economy.
This will not be an easy task as there is every incentive for entrepreneurs to conceal the less salutary aspects of their personalities and conduct. Nonetheless, there are numerous historical accounts and biographies of significant entrepreneurs, with a good deal of rich data regarding their life experiences, personalities, evolution, and deeds. Systematic collection and fine-grained analysis of such biographies may lead to better hypotheses regarding the dimensions that distinguish the more healthy, positive, and socially constructive entrepreneurs, from those having a darker side. Then, although tact and subtlety will be required, it may be useful to administer testing instruments to entrepreneurs, and to attempt to relate their personality dimensions to the conduct of their businesses.
In short, we would urge future scholars to research the possible downsides of the entrepreneurial personality, if only to distinguish those entrepreneurs who contribute to our economic and social well-being from those whose economic contributions are negated by the harm they cause to their families and other stakeholders. Given the impact of such individuals on our society, the pursuit may be well worth the effort.
REFERENCES
Acs, Z.J. & Szerb, L. (2007). Entrepreneurship, economic growth and public policy.Small Business Eco-nomics,28(2–3), 109–122.
Arora, P., Haynie, J.M., & Laurence, G.A. (2011). Counterfactual thinking and entrepreneurial self-efficacy: The moderating role of self-esteem and dispositional affect.Entrepreneurship Theory and Practice,37(2), 359–374.
Audretsch, D.B. (2007). Entrepreneurship capital and economic growth.Oxford Review of Economic Policy,
23(1), 63–78.
Belanger, C. (2011). L’echec des successions des fondateurs d’entreprise. La Revue Gestion, 36(1), 41– 46.
Brinkley, D. (2003).Wheels of the world. New York: Viking.
Cardon, M.S., Zietsma, C., Saparito, P., Matherne, B., & Davis, C. (2005). A tale of passion: New insights into entrepreneurship from a parenthood metaphor.Journal of Business Venturing,20(1), 23–45.
Chernow, R. (2007).Titan: The life of John D. Rockefeller, Sr. New York: Random House. Cooney, J.E. (1982).The Annenbergs. New York: Simon & Schuster.
De Jong, G., Tu, P.A., & Van Ees, H. (2012). Which entrepreneurs bribe and what do they get from it? Exploratory evidence from Vietnam.Entrepreneurship Theory and Practice,36(2), 323–345.
Engelen, A., Neumann, C., & Schmidt, S. (2013). Should entrepreneurially oriented firms have narcissistic CEOs.Journal of Management, doi:10.1177/0149206313495413.
Foo, M.D. (2011). Emotions and entrepreneurial opportunity evaluation. Entrepreneurship Theory and Practice,35(2), 375–393.
Freud, S. (1921). Group psychology and the analysis of the ego. Standard edition of the complete psychological works of Sigmund Freud, XVIII. London: Hogarth Press.
Gladwell, M. (2008).Outliers: The story of success. London: Penguin.
Hahn, V.C., Frese, M., Binnewies, C., & Schmitt, A. (2012). Happy and proactive? The role of hedonic and eudaimonic well-being in business owners’ personal initiative.Entrepreneurship Theory and Practice,36(1), 97–114.
Hayward, M.L., Shepherd, D.A., & Griffin, D. (2006). A hubris theory of entrepreneurship.Management Science,52(2), 160–172.
Hirschhorn, L. (1990).The workplace within. Cambridge, MA: MIT Press.
Holland, D.V. & Shepherd, D.A. (2011). Deciding to persist: Adversity, values, and entrepreneurs’ decision policies.Entrepreneurship Theory and Practice,35(2), 331–358.
Isaacson, W. (2011).Steve Jobs. New York: Simon & Shuster.
Kernberg, O. (1979). Regression in organizational leadership.Psychiatry,42, 29–39.
Kets de Vries, M. (1985). The dark side of entrepreneurship. Harvard Business Review, 63(6), 160– 167.
Kets de Vries, M. (1996). The anatomy of the entrepreneur: Clinical observations.Human Relations,49(7), 853–883.
Kets de Vries, M. & Miller, D. (1984).The neurotic organization. San Francisco: Jossey-Bass.
Kirzner, I.M. (2009). The alert and creative entrepreneur: A clarification.Small Business Economics,32(2), 145–152.
Legge, J. & Hindle, K. (2012).Entrepreneurship: Context, vision and planning. London: Palgrave Macmillan. Logan, J. (2009). Dyslexic entrepreneurs.Dyslexia,15(4), 328–346.
Manes, S. & Andrews, P. (1993).Gates: How Microsoft’s mogul reinvented an industry—And made himself the richest man in America. New York: Simon & Schuster.
Markman, G., Balkin, D., & Baron, R. (2002). Inventors and new venture formation: The effects of general self-efficacy and regretful thinking.Entrepreneurship Theory and Practice,27(2), 149–165.
McCarthy, A.M., Schoorman, F.D., & Cooper, A.C. (1993). Reinvestment decisions by entrepreneurs: Rational decision-making or escalation of commitment?Journal of Business Venturing,8(1), 9–24. McClelland, D.C. (1961).Achieving society. New York: Simon and Schuster.
McClelland, D.C. (1975).Power: The inner experience. New York: Irvington Publishers.
McClelland, D.C. (1987). Characteristics of successful entrepreneurs. The Journal of Creative Behavior,
21(3), 219–233.
Meek, W., Pacheco, D., & York, J. (2010). The impact of social norms on entrepreneurial action: Evidence from the environmental entrepreneurship context.Journal of Business Venturing,25(5), 493–509.
Miller, D. (1990).The Icarus paradox. New York: HarperBusiness.
Miller, D. (2011). The dyslexic researcher.Academy of Management Learning and Education,10(2), 340– 350.
Miller, D., Kets de Vries, M., & Toulouse, J.M. (1982). Top executive locus of control and its relationship to strategy-making, structure, and environment.Academy of Management Journal,25(2), 237– 253.
Miller, J., Dir, A., Gentile, B., Wilson, L., Pryor, L., & Campbell, W. (2010). Searching for a vulnerable dark triad.Journal of Personality,78(5), 1529–1564.
Miller, D., Steier, L., & Le Breton-Miller, I. (2003). Lost in time: Intergenerational succession, change, and failure in family business.Journal of Business Venturing,18(4), 513–531.
Newman, P.C. (1978).Bronfman dynasty. Toronto: McClelland and Stewart.
Schumpeter, J. (1942).Socialism, capitalism and democracy. New York: Harper and Brothers.
Sexton, D.L. & Bowman, N. (1986). The entrepreneur: A capable executive and more.Journal of Business Venturing,1(1), 129–140.
Shapero, A. (1975). The displaced, uncomfortable entrepreneur. Psychology Today, November, pp. 83–88.
Stiles, T.J. (2009).The first tycoon. New York: Vintage.
Timmons, J.A. (1978). Characteristics and role demands of entrepreneurship.American Journal of Small Business,3(1), 5–17.
Wall, J. (1989).Andrew Carnegie. New York: Oxford.
White, R.E., Thornhill, S., & Hampson, E. (2006). Entrepreneurs and evolutionary biology: The relationship between testosterone and new venture creation.Organizational Behavior and Human Decision Processes,
100(1), 21–34.
Danny Miller is research professor, HEC Montreal, and Chair in Family Enterprise and Strategy, University of Alberta, 3000 Cote-Ste-Catherine Road, Montreal, Quebec, H3T 2A7 Canada.