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Personality traits of entrepreneurs linked to cities they live in

Posted by Chad O'Connor  September 26, 2013 11:00 AM

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For years, Personality Psychology has provided a broad understanding of individuals and behavior. So, the idea that there is an “entrepreneurial type” of person with a set of psychological traits, probably doesn’t come as much of a surprise. We are all familiar with the fact that some people just ‘have what it takes’ to succeed in various fields, and entrepreneurship is a field like any other.

With a tremendous amount of startup activity and growing businesses in the Cambridge/Boston area, it’s easy to come to the conclusion that there is a high density of these “entrepreneurial types.” But what exactly is it that sets entrepreneurs apart? And what draws entrepreneurs to certain parts of the country over others?

Back in 1934, Joseph Schumpeter hypothesized that “the entrepreneur” could be described by means of a specific Big Five personality trait profile. That is, he hypothesized that the specific skills that made entrepreneurs successful could be mapped onto the Big Five. The Big Five, affectionately acronymed OCEAN, include the traits of Openness, Conscientiousness, Extraversion, Agreeableness, and Neuroticism. These core set of traits are widely recognized by researchers as the universal framework of personality.

As with most measurements, there are multiple ways of analyzing the data. The two most common ways of interpreting personality trait scores are either relative to the individual (i.e. I am more Extraverted than I am Agreeable) or second, relative to a population of people (I am high in Extraversion compared to the average American). The first approach can be thought of as a profile-based approach (i.e., each person has a unique profile of personality scores) while the second is thought of as a trait-centered approach.

Recently, a large cross-cultural study confirmed the trait profile of an entrepreneur to generally adhere to the following pattern (summarized from Obschonka et al. 2013):

  • Higher in Openness: Useful for developing innovative products and services.

  • Higher in Conscientiousness: Makes them adept at managing finances and overseeing production.

  • Higher in Extraversion: Allows them to acquire new customers and inspire investors with ease.

  • Lower in Agreeableness: Gives them the ability to take a hard line in negotiations.

  • Low in Neuroticism: Allows for risk taking and the graceful handling of failure and stress.

Throughout the past decade, cities like Boulder, Silicon Valley, Cambridge and Seattle have continually been cited as the top cities for tech startups. It has been previously revealed that there are regional differences in personality (Florida, 2008). But earlier this year Obschonka et al. (2013) took this hypothesis to a new level: could the specific entrepreneurial profile of personality traits be geographically clustered too? The simple answer is yes, but there are further insights to be gleaned from their research.

Obschonka et al. found, in a study of over half a million Americans, that the frequency of the entrepreneurial personality profile within each state was correlated with a higher rate of actual entrepreneurial activity in that state (as defined by archival data on business creation, self-employment, etc.). In less supportive entrepreneurial climates, slower effects of profile were seen. The entrepreneurial profile is less common in historically industrial regions. In these areas, the ability to follow rules, not to innovate, was valued and considered true success. In addition, the effect of the profile was present even when controlling for the entrepreneurial climate index of the region/state. Additionally, the findings were robust to the overall economic prosperity of the regions.

Personality psychology continues to provide a rich context for the business world, and provides a strong challenge to the Boston/Cambridge area or any city that hopes to be the hub of startups and innovation. People with entrepreneurial trait profiles are drawn to where the action is. To be a competitive entrepreneurial hub we must continue to be a city that invests in and prioritizes innovation and new business by fully understanding what is important to entrepreneurs.

Emily Dyess is the Marketing Manager of TipTap Lab, a technology and consulting startup that uses uses a unique psychological approach to identify the true motivations behind consumer behavior.

This blog is not written or edited by or the Boston Globe.
The author is solely responsible for the content.

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