Description
With this criteria in regard to between personality traits and entrepreneurship have centred on the use of narrow traits.
382
SAJEMS NS 15 (2012) No 4
DOES PERSONALITY MATTER FOR
SMALL BUSINESS SUCCESS?
Shelley M Farrington
Department of Business Management, Nelson Mandela Metropolitan University
Accepted: July 2012
Personality traits influence occupational choice and are valid predictors of managerial success. The primary
objective of this study was to investigate whether a relationship exists between possessing certain
personality traits and small business success. The personality dimensions of the five-factor model of
personality, Extraversion, Conscientiousness, Openness to experience, Agreeableness and Neuroticism
were the focus of this study.
Convenience sampling was employed and 383 usable questionnaires were returned. The validity and
reliability of the measuring instrument was assessed. Multiple regression analysis was undertaken to
establish relationships between the independent variable (the five dimensions of personality) and the
dependent variable, Business success.
The findings of this study show that individuals who have high levels of the personality traits Extraversion,
Conscientiousness and Openness to experience are more likely to have successful small businesses.
Openness to experience is of specific importance as it demonstrates the strongest influence, and is the only
trait that has a positive influence on both the financial and growth performance of the business. As such,
insights are provided into the personality profile most suited to successful small-business ownership.
Key words: entrepreneurship, small business, personality, five-factor model of personality
JEL: L260
1
Introduction
Personality dispositions are associated with
happiness, physical and psychological health,
and the quality of relationships, as well
as occupational choice, job satisfaction and
performance (Ozer & Benet-Martínez, 2006;
Judge, Higgins, Thorsen & Barrick, 1999).
The relationship between personality and
performance is well supported by several meta-
analyses (Bergner, Neubauer & Kreuzthaler,
2010; Barrick, Mount & Judge, 2001), and
personality traits are agreed to be valid
predictors of managerial performance (Bergner
et al., 2010). For example, Nadkarni and
Herrmann (2010:1050) contend that the
personality of a business leader influences the
strategic decision processes and strategic
actions of a firm, ultimately having
implications for the firm’s performance.
Finkelstein and Hambrick (1996) conclude that
the personality of a business leader has
consequences for a firm. According to McCrae
and Costa (1980), personality traits influence a
person’s tendency to act, and different
tendencies can enable or hinder a business
owner’s behaviour. In their study among
project managers, Davir, Sadeh and Malach-
Pines (2006) have found that when the
personality type of the project manager
matches the project type, more successful
projects result. Similarly, Douglas (n.d.)
suggests that personality has a great deal to do
with being a successful entrepreneur.
According to Burger (2008:4), personality is
the consistent behaviour patterns and intra-
personal processes that originate from within
an individual, whereas Haslam (2007:4)
describes personality as characteristics that
give a person their individuality. It is widely
accepted that five broadly defined dimensions
of personality exist. These five dimensions
serve as a suitable method for classifying
personality attributes and make up what is
known as the five-factor model of personality
Abstract
SAJEMS NS 15 (2012) No 4
383
(Bergner et al., 2010; Llewellyn & Wilson,
2003; Costa & McCrae, 1992; Barrick &
Mount, 1991). The five-factor model of
personality, often termed the ‘big five’ (Costa
& McCrae, 1992), can be used to describe the
most salient aspect of personality (Judge,
Heller & Mount, 2002) and consists of five
broad dimensions of personality, namely
extraversion, conscientiousness, openness to
experience, agreeableness and neuroticism,
(Bergner et al., 2010; Cooper & Pervin, 1998).
These dimensions and their measures have
proved to be a reliable and valid measure of
personality and are among the most robust in
existence (Hetland, Mjeldheim & Johnsen,
2008; Barrick & Mount 1991). The dimensions
of the five-factor model are widely used in the
personality and prediction literature (Ozer &
Benet-Martínez, 2006), and have been researched
in many areas of industrial-organisational
psychology, most often with regard to job
performance (Barrick & Mount, 1991).
It is possible that many small-business
owners are not suited, based on their
personality disposition, to the occupation of
‘self-employment’. A high failure rate exists
among small businesses in South Africa (Small
business development in South Africa, 2009)
and a lack of suitability could be an
explanation for the low levels of business
performance and ultimate business failure.
Over the last two decades personality has
increasingly been investigated and used as a
means of personnel selection and human
resource development (Bergner et al., 2010;
Barrick & Mount, 1991). The question arises
why personality cannot be used to ‘select’ or
identify individuals who would be suitable for
small-business ownership. This study attempts
to establish whether a specific personality
disposition can be associated with successful
‘self-employment’ and ultimately a successful
business. More specifically, this study investi-
gates the influence of a small-business owner’s
personality on the success of his/her small
business.
Previous efforts to investigate the relationship
between personality traits and entrepreneurship
have centred on the use of narrow traits such as
risk-taking, locus of control and need for
achievement (Llewellyn & Wilson, 2003).
These studies have confirmed that further
research is needed to evaluate the role of
personality in relation to entrepreneurship
(Llewellyn & Wilson, 2003). Similarly, calls
have recently arisen to make use of
comprehensive and valid psychological frame-
works to investigate the relationships between
a business leader’s personality attributes and
firm performance (Hiller & Hambrick, 2005;
Cannella & Monroe, 1997). As far as can be
established, no studies using the five-factor
model of personality exist attempting to
investigate whether the personality dispositions
of small-business owners have an influence on
the success of their business.
Against this background, the primary
objective of this study is to investigate whether
a relationship exists between possessing certain
personality traits and small business success.
By identifying the personality traits associated
with business success, proactive steps can be
made to identify individuals who are more
likely to be successful at self-employment. In
an effort to guide future entrepreneurs, the
ultimate goal is to identify the trait profile
most common to successful small-business
owners.
For the purpose of this study, a small
business is defined as one that does not
employ more than 50 full-time employees. In
addition, the business should have been in
operation for at least one year and the owner
must be actively involved in the business.
According to Judge, Bono, Ilies and Gehardt
(2002), the five-factor model of personality is a
framework that provides a valid, robust and
comprehensive way of representing fundamental
personality differences between individuals. In
the present study, personality is represented by
the personality dimensions of the five-factor
model, namely Extraversion, Conscientiousness,
Openness to experience, Agreeableness and
Neuroticism.
2
Literature overview
2.1 Personality and personality traits
Defining ‘personality’ is a complex task (Gordon,
2002) and several descriptions are evident in
the literature. ‘Personality’ refers to the qualities
that form a person’s character (Waite &
384
SAJEMS NS 15 (2012) No 4
Hawker, 2009:681), or the characteristic patterns
of thought, feelings and behaviours that make
a person unique (Cherry, n.d). ‘Personality
traits’ are more specific constructs that explain
consistencies in the way people behave, and
help to explain why different people react
differently to the same situation (Llewellyn &
Wilson, 2003). Personality traits determine a
person’s words, deeds and role in life (Cooper,
1998), and as such, an individual’s actions and
thinking are derived from the personality traits
they possess (Costa & McCrae, 1992).
Personality traits differ in type and degree for
everybody (Costa & McCrae, 1992).
2.2 The five-factor model of personality
(The big five personality
dimensions)
Several researchers (Norman 1963; Fiske
1949, Cattell 1946) have contributed to the
development of a framework consisting of five
personality factors. This five-factor model
demonstrates that personality consists of five
relatively independent dimensions which
provide a useful means for studying individual
differences (Thal & Bedingfield, 2010; Costa
& McCrae, 1992; Barrick & Mount, 1991). It
categorises the many personality traits into a
more manageable number and has thus made
personality a more easily accessible topic
(Bergner et al., 2010). Furthermore, the model
provides a framework for understanding how
traits combine to form the way in which people
think, feel and behave in the world (Foulkrod,
Field & Brown, 2009:422) and is therefore
suitable for measuring individual personality
traits (Chen & Lai, 2010). The five broad
factors or personal trait dimension, Extraversion,
Conscientiousness, Openness to experience,
Agreeableness and Neuroticism, have been
identified through empirical research (Goldberg,
1993) and have consistently been replicated
as dimensions of enduring personality charac-
teristics (Foulkrod et al., 2009:422). Although
opinion is not yet unanimous, there is
increasing agreement among researchers that
the traits identified in the five-factor model of
personality capture the most important aspects
of personality (Nadkarni & Herrmann, 2010;
Judge et al., 2002; McCrae & Costa, 1997).
The big five are five broad domains or
dimensions of personality which have been
scientifically accepted as defining human
personality at the highest level of organisation
(Goldberg, 1993). Barrick, Mount and Gupta
(2003:46) assert that the five-factor model
describes the basic dimensions of personality
at a global level, and that specific personality
traits are likely to connect with at least one of
the five dimensions. These five factors provide
a rich conceptual framework for integrating all
research findings and theory in personality
psychology (Costa & McCrae, 1992). The five
factors are broad personality constructs, with
each capturing a unique set of psychological
traits (Nadkarni & Herrmann, 2010:1052),
several of which will be identified in the
paragraphs below.
The trait of Extraversion represents sociability
and expressiveness (Nadkarni & Herrmann,
2010; Judge et al., 2002) and is frequently
associated with individuals being sociable,
assertive, talkative and active (Llewellyn &
Wilson, 2003; Costa & McCrae, 1992; Barrick
& Mount, 1991). Individuals high in extraversion
are described as outgoing, gregarious, optimistic
and upbeat (Weiten 2010; Barrick et al., 2003),
as well as energetic, enthusiastic and adventurous
(John, 1990). Costa and McCrae (1992)
describe extraverted people as frank and
cheerful as well as being inclined to experience
positive emotions. Typically, people high in
extraversion seek out the company of others
and enjoy environmental stimulations, whereas
those low in extraversion prefer to spend time
alone and are more reserved, quiet and
independent (Foulkrod et al., 2009:422).
Extraverted leaders tend to take the initiative in
social settings, to introduce people to each
other and to be socially engaging by being
humorous, introducing topics of discussion and
stimulating social interactions (House &
Howell, 1992).
Conscientiousness, also sometimes referred
to as ‘a conscience’, reflects dependability,
being careful, thorough, organised and
responsible. In addition, people who are
conscientious are hardworking and achievement-
orientated, and persevere in their endeavours
(Nadkarni & Herrmann, 2010; Judge et al.,
2002; McCrae & Costa, 1997; Barrick &
Mount, 1991). John (1990) describes conscien-
tiousness as relating to issues of control and
constraint, which includes traits such as
SAJEMS NS 15 (2012) No 4
385
efficiency and deliberation. Costa and McCrae
(1992) report behaviours of highly conscientious
individuals as fussy, tidy, scrupulous, strong-
willed and punctual, whereas Foulkrod et al.
(2009) include aspects such as the ability to
organise, goal-directed behaviour, holding
impulsive urges in check, and working diligently.
According to Barrick et al. (2001), individuals
who score high on conscientiousness are orderly
and hardworking, and have a tendency
to be self-disciplined, act dutifully, aim
for achievement, and plan ahead rather than
act spontaneously. Furthermore, conscientious
individuals have a strong need to reduce
uncertainty and to receive specific feedback on
their performance (Judge et al., 2002).
Openness to experience, also sometimes
referred to as ‘intellect’ (Ozer & Benet-
Martínez, 2006; Barrick & Mount, 1991) is
associated with traits such as originality and
open-mindedness as well as being artistic,
insightful, imaginative and intelligent (Barrick
et al., 2003; John, 1990). Weiten (2010) as
well as Barrick and Mount (1991) also include
traits such as being cultured, curious and
flexible and having an unconventional attitude,
whereas Costa and McCrae (1992) refer
to independence and an inquiring intellect
when describing this personality dimension.
Being perceptive and thoughtful are also
traits associated with openness to experience
(Nadkarni & Herrmann, 2010). Openness to
experience determines whether one is likely to
seek out new ideas and think creatively or
whether one is more practical-minded, efficient
and conservative in outlook (Douglas, n.d).
Costa and McCrae (1992) are of the opinion
that individuals who score high on openness to
experience show social poise and are polished,
while McCrae (1990) contends that these
individuals are associated with a high tolerance
of ambiguity and an affinity for unconven-
tional ideas. ‘Open’ individuals have a strong
need for change and are highly capable of
understanding and adapting to the perspectives
of others (Costa & McCrae, 1992). Leaders
who are open to new experiences actively seek
out excitement and risks (Judge et al., 2002),
whereas individuals who score low on
openness to experience tend to have a
conservative outlook and prefer the familiar to
the unusual (McCrae & Costa, 1980).
According to Foulkrod et al. (2009:423),
Agreeableness describes a cluster of personality
traits such as altruism, nurturance, or caring at
the high end of the spectrum, and hostility,
indifference and egocentrism at the lower end.
Agreeableness represents the tendency to be
altruistic (empathetic, kind, cooperative, trusting
and gentle) and compliant (modest, having a
values affiliation and avoiding conflict) (Bono
& Judge, 2004). Agreeableness has also been
labelled as likeability or friendliness, and
includes traits such as being courteous,
considerate, flexible, trusting, good-natured,
forgiving, soft-hearted and tolerant (Barrick et
al., 2003; Barrick & Mount, 1991), affectionate,
generous and sympathetic John (1990), as well
as modest and straightforward (Weiten, 2010).
Highly agreeable people are easy to get on
with and will probably be widely liked
(Llewellyn & Wilson, 2003). They are friendly
and eager to help others and have a tendency to
be compassionate rather than suspicious and
antagonistic towards others (Costa & McCrae,
1992). Furthermore, behaviour associated with
highly agreeable individuals includes being
good-natured, mild, emotionally mature, self-
sufficient and attentive to others (Costa &
McCrae, 1992).
Neuroticism refers to the tendency of an
individual to experience unpleasant emotions
easily. Common traits displayed by neurotic
individuals include anxiety, depression, anger,
embarrassment, worry and insecurity (Costa &
McCrae, 1992; Barrick & Mount, 1991).
Neurotic individuals are prone to mood
swings, are emotionally unstable, highly
excitable (Llewellyn & Wilson, 2003; Costa &
McCrae, 1992) and self-conscious (Weiten,
2010). The reverse of neuroticism is referred to
as Emotional stability (Barrick & Mount,
1991) which reflects the capacity of an
individual to adjust their emotional state to the
demands of the situation and being able to
remain calm and balanced when faced with
adversities and stressful situations (Nadkarni &
Herrmann, 2010; Foulkrod et al., 2009;
McCrae & Costa, 1997). Individuals who have
low emotional stability are moody, melancholy
and apprehensive (Raab, Stedham & Neuner,
2005), as well as hostile, envious and
impulsive (Foulkrod et al., 2009; Costa &
McCrae, 1992). According to Barrick et al.
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SAJEMS NS 15 (2012) No 4
(2003:51), individuals who are low in emotional
stability are prone to stress, suggesting that
these people would prefer stress-free jobs.
2.3 Entrepreneurial personality
The entrepreneurship literature identifies nu-
merous attributes (traits, characteristics and
skills) associated with entrepreneurial behaviour
and entrepreneurial success (Deakins & Freel,
2009; Ramana, Aryasri & Nagayya, 2008;
Mahadea, 2001). Hornaday (1982) identifies as
many as 42 different characteristics common to
entrepreneurs, however, those most commonly
cited are the need to achieve, ability to take
risks, tolerance for ambiguity, good locus of
control, creativity and innovation (Chen & Lai,
2010; Deakins & Freel, 2009; Venter, Urban &
Rwigema, 2008).
According to Soetanto, Pribadi and Widya-
dana (2010), an abundance of literature exists
attempting to define the attributes that distinguish
entrepreneurs from others (Raab et al., 2005;
Cromie, 2000). As such various personality
attributes are associated with successful entre-
preneurs and small-business owners. According
to Barrick et al. (2003), the various attributes
or personality traits associated with successful
entrepreneurs are likely to be associated with
at least one of the five broad dimensions of the
five-factor model. As an example, Table 1
attempts to categorise several well-known
entrepreneurial traits into the dimensions of the
five-factor model.
Tabl e 1
Entrepreneurial attributes categorised into five dimensions
Conscientiousness
Hardworking,
Leadership,
Motivated,
Need for achievement,
Perseverance,
Commitment,
Responsibility.
Scarborough, 2011; Barringer & Ireland, 2010; Calvasina, Calvasina & Calvasina, 2010;
Scarborough, Wilson & Zimmerer, 2009; Timmons & Spinelli, 2009; Kuratko, 2009; Van
Aardt, Van Aardt, Bezuidenhout & Mumba, 2008; Kuratko & Hodgetts, 2007; Kroon, 2004;
Bolton & Thompson, 2004; Burns, 2001; Nieman, Hough & Nieuwenhuizen, 2003.
Agreeableness
Nurturing quality,
Get along with others.
Timmons & Spinelli, 2009; Van Aardt et al., 2008.
Openness to experience
Independence,
Tolerance of ambiguity,
Opportunism, Courage,
Initiative, Creative and
innovative, Overcome failure,
Tolerance of risk.
Scarborough, 2011; Chillemi, 2010; Barringer & Ireland, 2010; Timmons & Spinelli, 2009;
Scarborough et al., 2009; Kuratko, 2009; Nieman & Nieuwenhuizen, 2009; Van Aardt et al.,
2008. Venter, Urban & Rwigema, 2008; Kuratko & Hodgetts, 2007; Kroon, 2004; Bolton &
Thompson, 2004; Nieman et al., 2003; Burns, 2001.
Extraversion
Dynamic, Self-confidence,
High energy level.
Scarborough, 2011; Van Aardt et al., 2008.
Neuroticism
Locus of control Scarborough, 2011; Chillemi, 2010.
3
Hypotheses development
Research relating to the relationship between
personality and job performance has largely
been framed by the five-factor model of
personality (Bergner et al., 2010; Barrick &
Mount 1991). Meta-analytic research (Rothstein
& Goffin, 2006; Barrick & Mount, 1991; Tett,
Jackson & Rothstein, 1991) has confirmed the
use of the five-factor model to predict per-
formance in the workplace. Several researchers
(Barrick et al., 2001; Barrick & Mount, 1991)
have found strong correlations between job
performance and the five-factor model of
personality. According to Foulkrod et al.
(2009), compelling evidence exists supporting
the ability of the five-factor model of
personality to predict professional achievement.
3.1 Dependent variable
Little agreement exists on an appropriate
measure for small business success (Acs,
Glaeser, Litan & Fleming, 2008) and previous
SAJEMS NS 15 (2012) No 4
387
research has mainly focused on variables for
which information is easy to gather (Cooper,
1995). Although several researchers advocate
growth as the most important performance
measure for small businesses (Brown, 1996;
Chandler & Hanks, 1993; Tsai, MacMillan &
Low, 1991), others consider performance to be
multidimensional in nature, adding that it is
advantageous to integrate different dimensions
of performance in empirical studies (Lumpkin
& Dess, 1996). According to Zahra (1991),
financial performance and growth performance
represent different aspects of performance and
each reveals important performance information.
Taken together, growth and financial perfor-
mance provide a richer description of the
actual performance of the firm than each does
on its own (Zahra, 1991).
For the purpose of this study, the success or
performance of the small-business owner is
measured in terms of the success of his or her
business, and this is measured in terms of both
growth and financial indicators. Business success
refers to the business being successful, profit-
able and financially secure, and showing growth
in turnover, profits and number of employees.
3.2 Independent variables
The personality dimensions of the five-factor
model, namely Extraversion, Conscientiousness,
Openness to experience, Agreeableness and
Neuroticism, are the independent variables to
be investigated in this study. These five traits
have consistently been replicated as dimensions
of enduring personality characteristics (Foulkrod
et al., 2009).
Barrick and Mount (1991) report that
Conscientiousness appears to reflect traits which
are important to the accomplishment of tasks
in all jobs, and that measures associated with
Conscientiousness are most likely to be valid
predictors of job performance for all jobs.
Barrick and Mount (1991) report Extraversion
to be a valid predictor of job performance for
positions in management and sales. Interacting
with others is a significant part of these types
of jobs. Traits such as being sociable,
gregarious, talkative, assertive and active would
lead to effective performance in these types of
jobs. However, Extraversion would be less
important in jobs such as skilled/semi-skilled
and professionals (Barrick & Mount, 1991).
Barrick and Mount (1991) found no relationship
between Openness to experience and job
performance and concluded that this trait was
not a valid predictor of job performance. Low
correlations were reported between Emotional
stability and job performance (Barrick & Mount,
1991). For professionals, Emotional stability
produced a negative correlation, suggesting
that individuals who are worrying, nervous,
emotional, and high-strung are better performers
in these jobs (Barrick & Mount, 1991:20).
Barrick and Mount’s (1991:21) results for
Agreeableness suggest that this trait is not an
important predictor of job performance, implying
that being courteous, trusting, straightforward
and soft-hearted have a smaller impact on job
performance than being talkative, active and
assertive.
In their later meta-analysis investigating the
relationship between the personality dimensions
of the five-factor model and job performance,
Barrick et al. (2001) found that in addition to
Conscientiousness, Emotional stability (inverse
of Neuroticism) is also positively correlated
with performance criteria in virtually all jobs
across organisations and countries. The other
dimensions, Agreeableness, Extraversion and
Openness to experience also proved to be valid
predictors of performance but their relationship
to job performance varies depending on
criteria and occupational groups. Once again
Extraversion was found to be a valid predictor
but only for occupations typically requiring
interactions with others (e.g. managers and
sales). Openness to experience and Agreeableness
displayed weak relationships with overall job
performance (Barrick et al., 2001).
In their study investigating the ability of
personality to predict project manager success,
Thal and Bedingfield (2010) found that
Conscientiousness and Openness to experience
are strongly correlated with perceptions of
performance. A positive correlation between
Conscientiousness and job performance is well
supported in the literature (Salgado, 2003;
Barrick & Mount, 1991). The findings of Thal
and Bedingfield (2010) regarding Openness to
experience, however, contradict those of
Barrick et al. (2001) who found Openness to
experience to have a weak relationship with
job performance. Consistent with the literature,
Thal and Bedingfield (2010) found that Emotional
388
SAJEMS NS 15 (2012) No 4
stability is a good predictor of project success.
Thal and Bedingfield (2010) found little
support for Extraversion and Agreeableness
being able to predict success. In contrast to
Thal and Bedingfield (2010), Witt, Burke,
Barrick and Mount (2002) found Extraversion
to be positively correlated with performance
among highly conscientious workers and
negatively correlated with less conscientious
workers. As reported by Thal and Bedingfield
(2010), Agreeableness has consistently been
shown to have little influence on performance.
More recent meta-analyses (Bergner et al.,
2010), show that the relationship between
personality traits and performance differs to
some degree among people in executive
positions. According to Judge et al. (2002),
Extraversion produced the highest correlations
with managerial performance across different
criteria and across different vocational settings.
Following Extraversion, Conscientiousness
displayed the strongest and most stable
correlations across managerial performance
criteria and across management settings. The
correlations of Neuroticism and Openness to
experience with managerial performance
showed that these two personality factors were
of equal importance, whereas Agreeableness
appeared to be the least relevant of the big five
traits. Similarly, Bergner et al. (2010) report
Extraversion and Conscientiousness as being
the most consistent correlates with success
across different criteria. Bergner et al. (2010)
conclude that within a group, individuals who
are extraverted and conscientious as well as
emotionally stable and open to experience will
emerge as leaders.
In their study investigating CEO personality
and firm performance, Nadkarni and Herrmann
(2010) found that Extraversion, Emotional
stability and Openness to experience enhanced
firm performance by fostering strategic flexi-
bility, whereas Conscientiousness undermined
firm performance by inhibiting strategic
flexibility. The results of Nadkarni and
Herrmann (2010) for Emotional stability,
Extraversion and Openness to experience are
consistent with published psychology and
leadership research (Bono & Judge, 2004;
Judge et al., 2002). However, their results for
Conscientiousness and Agreeableness differ
somewhat from those of existing studies. Their
results indicate that Conscientiousness under-
mines firm performance by inhibiting strategic
flexibility, whereas a medium level of
Agreeableness maximises strategic flexibility
and consequently firm performance. Nadkarni
and Herrmann (2010) conclude that very high
levels of Conscientiousness may result in
inertia and adverse performance, whereas very
low levels of Conscientiousness may create
instability and uncertainty for firms, and as a
result firm performance may be maximised at
medium levels of Conscientiousness.
Given the contradictory findings elaborated
on in the paragraphs above, it was decided to
subject the following hypotheses to empirical
testing:
H
1
There is a positive relationship between
possessing the trait Extraversion and the
Business success experienced by a small-
business owner.
H
2
There is a positive relationship between
possessing the trait Conscientiousness and
the Business success experienced by a
small-business owner.
H
3
There is a positive relationship between
possessing the trait Openness to experience
and the Business success experienced by
a small-business owner.
H
4
There is a positive relationship between
possessing the trait Agreeableness and the
Business success experienced by a small-
business owner.
H
5
There is a negative relationship between
possessing the trait Neuroticism and the
Business success experienced by a small-
business owner.
4
Research methodology
4.1 Measuring instrument
This study makes use of an existing measuring
instrument to collect the necessary data,
namely the ‘big five inventory’’ (BFI). The
BFI is a self-report inventory designed to
measure the big five dimensions of the five-
factor model of personality, and consists of 44
statements (Srivastava, 2010). The questionnaire
also contains six items to measure the
dependent variable Business success. These six
items have been used in previous studies
SAJEMS NS 15 (2012) No 4
389
(Eybers, 2010; Farrington, 2009; Cowie, 2007)
and relate to perceptions of success,
profitability and financial security as well as
increasing turnover, profits and number of
employees.
The measuring instrument consisted of a
covering letter and two sections. The cover
letter stipulated the objective of the study,
detailed the criteria for participation, and
provided assurances of confidentiality. Section
1 of the questionnaire requested general demo-
graphic information from respondents and
Section 2 contained 44 statements describing
various aspects of a person’s nature. Several of
these items were negatively phrased and were
reverse-scored for the statistical analysis.
Section 2 also contained 6 items relating to
Business success. A 5-point Likert-type scale
(1 = strongly disagree and 5 = strongly agree)
was used, requesting respondents to indicate
the extent of their agreement or disagreement
with the statements posed.
4.2 Sampling and data collection
As far as can be established, no national
database or list of small businesses exists in
South Africa or in the Eastern Cape. Therefore,
a convenience sampling technique was employed
in this study. The focus of the study was on
small businesses in the Eastern Cape Province.
To be eligible to participate in the study,
respondents had to meet specified criteria,
namely, operate a business in the Eastern Cape
Province, the business had to have been in
operation for at least one year, did not employ
more than 50 full-time employees and the
owner of the business had to be actively
involved in the business. During the months of
March and April 2010, fieldworkers from the
Nelson Mandela Metropolitan University
approached small-business owners in the
Eastern Cape and invited them to participate in
the study. The questionnaires were personally
delivered to the small-business owners and
collected upon completion. A total of 383
usable questionnaires were returned.
5
Empirical results
The data collected were subjected to various
statistical analyses using SPSS (SPSS Inc,
2008). An exploratory factor analysis was
undertaken and Cronbach-alpha coefficients
(CA) were calculated to assess the discriminant
validity and reliability of the measuring
instrument respectively. Descriptive statistics
were calculated to summarise the sample data
and the hypothesised relationships were assessed
by means of multiple regression analysis.
Multiple regression analysis was considered
appropriate for this study because it allows a
researcher to predict the score of one variable
(Business success) on the basis of scores
reported on several other variables (five
personality dimensions).
5.1 Sample description
The majority of the respondents participating
in this study were males (69.7 per cent) and
28.5 per cent were females. Most (35.0 per
cent) respondents were between 40 and 49
years old and 57.4 per cent were white. Of the
respondents, 66.8 per cent held a tertiary
qualification. Tenure referred to how long the
respondent had owned the business. In this
study, the majority (81.5 per cent) of
respondents had owned the business for more
than 3 years. The majority (75.7 per cent) of
respondents employed fewer than 10 people.
Industry referred to the nature of the business,
or the industry in which the business operated.
Most (45 per cent) respondents were in the
service industry, followed by the retail and
wholesale industries (21 per cent).
5.2 Discriminant validity and
reliability results
An exploratory factor analysis was conducted
to identify the unique factors present in the
data, and to assess the discriminant validity
of the measuring instrument. Principal axis
factoring with an oblimin rotatin (Oblimin
with Kaiser Normalisation) was specified as
the extraction and rotation method. In
determining the factors (constructs) to extract
the percentage of variance explained and the
individual factor loading were considered.
Bartlett’s Test of Sphericity reported a Kaiser-
Meyer-Olkin measure (KMO) of 0.791 (p
With this criteria in regard to between personality traits and entrepreneurship have centred on the use of narrow traits.
382
SAJEMS NS 15 (2012) No 4
DOES PERSONALITY MATTER FOR
SMALL BUSINESS SUCCESS?
Shelley M Farrington
Department of Business Management, Nelson Mandela Metropolitan University
Accepted: July 2012
Personality traits influence occupational choice and are valid predictors of managerial success. The primary
objective of this study was to investigate whether a relationship exists between possessing certain
personality traits and small business success. The personality dimensions of the five-factor model of
personality, Extraversion, Conscientiousness, Openness to experience, Agreeableness and Neuroticism
were the focus of this study.
Convenience sampling was employed and 383 usable questionnaires were returned. The validity and
reliability of the measuring instrument was assessed. Multiple regression analysis was undertaken to
establish relationships between the independent variable (the five dimensions of personality) and the
dependent variable, Business success.
The findings of this study show that individuals who have high levels of the personality traits Extraversion,
Conscientiousness and Openness to experience are more likely to have successful small businesses.
Openness to experience is of specific importance as it demonstrates the strongest influence, and is the only
trait that has a positive influence on both the financial and growth performance of the business. As such,
insights are provided into the personality profile most suited to successful small-business ownership.
Key words: entrepreneurship, small business, personality, five-factor model of personality
JEL: L260
1
Introduction
Personality dispositions are associated with
happiness, physical and psychological health,
and the quality of relationships, as well
as occupational choice, job satisfaction and
performance (Ozer & Benet-Martínez, 2006;
Judge, Higgins, Thorsen & Barrick, 1999).
The relationship between personality and
performance is well supported by several meta-
analyses (Bergner, Neubauer & Kreuzthaler,
2010; Barrick, Mount & Judge, 2001), and
personality traits are agreed to be valid
predictors of managerial performance (Bergner
et al., 2010). For example, Nadkarni and
Herrmann (2010:1050) contend that the
personality of a business leader influences the
strategic decision processes and strategic
actions of a firm, ultimately having
implications for the firm’s performance.
Finkelstein and Hambrick (1996) conclude that
the personality of a business leader has
consequences for a firm. According to McCrae
and Costa (1980), personality traits influence a
person’s tendency to act, and different
tendencies can enable or hinder a business
owner’s behaviour. In their study among
project managers, Davir, Sadeh and Malach-
Pines (2006) have found that when the
personality type of the project manager
matches the project type, more successful
projects result. Similarly, Douglas (n.d.)
suggests that personality has a great deal to do
with being a successful entrepreneur.
According to Burger (2008:4), personality is
the consistent behaviour patterns and intra-
personal processes that originate from within
an individual, whereas Haslam (2007:4)
describes personality as characteristics that
give a person their individuality. It is widely
accepted that five broadly defined dimensions
of personality exist. These five dimensions
serve as a suitable method for classifying
personality attributes and make up what is
known as the five-factor model of personality
Abstract
SAJEMS NS 15 (2012) No 4
383
(Bergner et al., 2010; Llewellyn & Wilson,
2003; Costa & McCrae, 1992; Barrick &
Mount, 1991). The five-factor model of
personality, often termed the ‘big five’ (Costa
& McCrae, 1992), can be used to describe the
most salient aspect of personality (Judge,
Heller & Mount, 2002) and consists of five
broad dimensions of personality, namely
extraversion, conscientiousness, openness to
experience, agreeableness and neuroticism,
(Bergner et al., 2010; Cooper & Pervin, 1998).
These dimensions and their measures have
proved to be a reliable and valid measure of
personality and are among the most robust in
existence (Hetland, Mjeldheim & Johnsen,
2008; Barrick & Mount 1991). The dimensions
of the five-factor model are widely used in the
personality and prediction literature (Ozer &
Benet-Martínez, 2006), and have been researched
in many areas of industrial-organisational
psychology, most often with regard to job
performance (Barrick & Mount, 1991).
It is possible that many small-business
owners are not suited, based on their
personality disposition, to the occupation of
‘self-employment’. A high failure rate exists
among small businesses in South Africa (Small
business development in South Africa, 2009)
and a lack of suitability could be an
explanation for the low levels of business
performance and ultimate business failure.
Over the last two decades personality has
increasingly been investigated and used as a
means of personnel selection and human
resource development (Bergner et al., 2010;
Barrick & Mount, 1991). The question arises
why personality cannot be used to ‘select’ or
identify individuals who would be suitable for
small-business ownership. This study attempts
to establish whether a specific personality
disposition can be associated with successful
‘self-employment’ and ultimately a successful
business. More specifically, this study investi-
gates the influence of a small-business owner’s
personality on the success of his/her small
business.
Previous efforts to investigate the relationship
between personality traits and entrepreneurship
have centred on the use of narrow traits such as
risk-taking, locus of control and need for
achievement (Llewellyn & Wilson, 2003).
These studies have confirmed that further
research is needed to evaluate the role of
personality in relation to entrepreneurship
(Llewellyn & Wilson, 2003). Similarly, calls
have recently arisen to make use of
comprehensive and valid psychological frame-
works to investigate the relationships between
a business leader’s personality attributes and
firm performance (Hiller & Hambrick, 2005;
Cannella & Monroe, 1997). As far as can be
established, no studies using the five-factor
model of personality exist attempting to
investigate whether the personality dispositions
of small-business owners have an influence on
the success of their business.
Against this background, the primary
objective of this study is to investigate whether
a relationship exists between possessing certain
personality traits and small business success.
By identifying the personality traits associated
with business success, proactive steps can be
made to identify individuals who are more
likely to be successful at self-employment. In
an effort to guide future entrepreneurs, the
ultimate goal is to identify the trait profile
most common to successful small-business
owners.
For the purpose of this study, a small
business is defined as one that does not
employ more than 50 full-time employees. In
addition, the business should have been in
operation for at least one year and the owner
must be actively involved in the business.
According to Judge, Bono, Ilies and Gehardt
(2002), the five-factor model of personality is a
framework that provides a valid, robust and
comprehensive way of representing fundamental
personality differences between individuals. In
the present study, personality is represented by
the personality dimensions of the five-factor
model, namely Extraversion, Conscientiousness,
Openness to experience, Agreeableness and
Neuroticism.
2
Literature overview
2.1 Personality and personality traits
Defining ‘personality’ is a complex task (Gordon,
2002) and several descriptions are evident in
the literature. ‘Personality’ refers to the qualities
that form a person’s character (Waite &
384
SAJEMS NS 15 (2012) No 4
Hawker, 2009:681), or the characteristic patterns
of thought, feelings and behaviours that make
a person unique (Cherry, n.d). ‘Personality
traits’ are more specific constructs that explain
consistencies in the way people behave, and
help to explain why different people react
differently to the same situation (Llewellyn &
Wilson, 2003). Personality traits determine a
person’s words, deeds and role in life (Cooper,
1998), and as such, an individual’s actions and
thinking are derived from the personality traits
they possess (Costa & McCrae, 1992).
Personality traits differ in type and degree for
everybody (Costa & McCrae, 1992).
2.2 The five-factor model of personality
(The big five personality
dimensions)
Several researchers (Norman 1963; Fiske
1949, Cattell 1946) have contributed to the
development of a framework consisting of five
personality factors. This five-factor model
demonstrates that personality consists of five
relatively independent dimensions which
provide a useful means for studying individual
differences (Thal & Bedingfield, 2010; Costa
& McCrae, 1992; Barrick & Mount, 1991). It
categorises the many personality traits into a
more manageable number and has thus made
personality a more easily accessible topic
(Bergner et al., 2010). Furthermore, the model
provides a framework for understanding how
traits combine to form the way in which people
think, feel and behave in the world (Foulkrod,
Field & Brown, 2009:422) and is therefore
suitable for measuring individual personality
traits (Chen & Lai, 2010). The five broad
factors or personal trait dimension, Extraversion,
Conscientiousness, Openness to experience,
Agreeableness and Neuroticism, have been
identified through empirical research (Goldberg,
1993) and have consistently been replicated
as dimensions of enduring personality charac-
teristics (Foulkrod et al., 2009:422). Although
opinion is not yet unanimous, there is
increasing agreement among researchers that
the traits identified in the five-factor model of
personality capture the most important aspects
of personality (Nadkarni & Herrmann, 2010;
Judge et al., 2002; McCrae & Costa, 1997).
The big five are five broad domains or
dimensions of personality which have been
scientifically accepted as defining human
personality at the highest level of organisation
(Goldberg, 1993). Barrick, Mount and Gupta
(2003:46) assert that the five-factor model
describes the basic dimensions of personality
at a global level, and that specific personality
traits are likely to connect with at least one of
the five dimensions. These five factors provide
a rich conceptual framework for integrating all
research findings and theory in personality
psychology (Costa & McCrae, 1992). The five
factors are broad personality constructs, with
each capturing a unique set of psychological
traits (Nadkarni & Herrmann, 2010:1052),
several of which will be identified in the
paragraphs below.
The trait of Extraversion represents sociability
and expressiveness (Nadkarni & Herrmann,
2010; Judge et al., 2002) and is frequently
associated with individuals being sociable,
assertive, talkative and active (Llewellyn &
Wilson, 2003; Costa & McCrae, 1992; Barrick
& Mount, 1991). Individuals high in extraversion
are described as outgoing, gregarious, optimistic
and upbeat (Weiten 2010; Barrick et al., 2003),
as well as energetic, enthusiastic and adventurous
(John, 1990). Costa and McCrae (1992)
describe extraverted people as frank and
cheerful as well as being inclined to experience
positive emotions. Typically, people high in
extraversion seek out the company of others
and enjoy environmental stimulations, whereas
those low in extraversion prefer to spend time
alone and are more reserved, quiet and
independent (Foulkrod et al., 2009:422).
Extraverted leaders tend to take the initiative in
social settings, to introduce people to each
other and to be socially engaging by being
humorous, introducing topics of discussion and
stimulating social interactions (House &
Howell, 1992).
Conscientiousness, also sometimes referred
to as ‘a conscience’, reflects dependability,
being careful, thorough, organised and
responsible. In addition, people who are
conscientious are hardworking and achievement-
orientated, and persevere in their endeavours
(Nadkarni & Herrmann, 2010; Judge et al.,
2002; McCrae & Costa, 1997; Barrick &
Mount, 1991). John (1990) describes conscien-
tiousness as relating to issues of control and
constraint, which includes traits such as
SAJEMS NS 15 (2012) No 4
385
efficiency and deliberation. Costa and McCrae
(1992) report behaviours of highly conscientious
individuals as fussy, tidy, scrupulous, strong-
willed and punctual, whereas Foulkrod et al.
(2009) include aspects such as the ability to
organise, goal-directed behaviour, holding
impulsive urges in check, and working diligently.
According to Barrick et al. (2001), individuals
who score high on conscientiousness are orderly
and hardworking, and have a tendency
to be self-disciplined, act dutifully, aim
for achievement, and plan ahead rather than
act spontaneously. Furthermore, conscientious
individuals have a strong need to reduce
uncertainty and to receive specific feedback on
their performance (Judge et al., 2002).
Openness to experience, also sometimes
referred to as ‘intellect’ (Ozer & Benet-
Martínez, 2006; Barrick & Mount, 1991) is
associated with traits such as originality and
open-mindedness as well as being artistic,
insightful, imaginative and intelligent (Barrick
et al., 2003; John, 1990). Weiten (2010) as
well as Barrick and Mount (1991) also include
traits such as being cultured, curious and
flexible and having an unconventional attitude,
whereas Costa and McCrae (1992) refer
to independence and an inquiring intellect
when describing this personality dimension.
Being perceptive and thoughtful are also
traits associated with openness to experience
(Nadkarni & Herrmann, 2010). Openness to
experience determines whether one is likely to
seek out new ideas and think creatively or
whether one is more practical-minded, efficient
and conservative in outlook (Douglas, n.d).
Costa and McCrae (1992) are of the opinion
that individuals who score high on openness to
experience show social poise and are polished,
while McCrae (1990) contends that these
individuals are associated with a high tolerance
of ambiguity and an affinity for unconven-
tional ideas. ‘Open’ individuals have a strong
need for change and are highly capable of
understanding and adapting to the perspectives
of others (Costa & McCrae, 1992). Leaders
who are open to new experiences actively seek
out excitement and risks (Judge et al., 2002),
whereas individuals who score low on
openness to experience tend to have a
conservative outlook and prefer the familiar to
the unusual (McCrae & Costa, 1980).
According to Foulkrod et al. (2009:423),
Agreeableness describes a cluster of personality
traits such as altruism, nurturance, or caring at
the high end of the spectrum, and hostility,
indifference and egocentrism at the lower end.
Agreeableness represents the tendency to be
altruistic (empathetic, kind, cooperative, trusting
and gentle) and compliant (modest, having a
values affiliation and avoiding conflict) (Bono
& Judge, 2004). Agreeableness has also been
labelled as likeability or friendliness, and
includes traits such as being courteous,
considerate, flexible, trusting, good-natured,
forgiving, soft-hearted and tolerant (Barrick et
al., 2003; Barrick & Mount, 1991), affectionate,
generous and sympathetic John (1990), as well
as modest and straightforward (Weiten, 2010).
Highly agreeable people are easy to get on
with and will probably be widely liked
(Llewellyn & Wilson, 2003). They are friendly
and eager to help others and have a tendency to
be compassionate rather than suspicious and
antagonistic towards others (Costa & McCrae,
1992). Furthermore, behaviour associated with
highly agreeable individuals includes being
good-natured, mild, emotionally mature, self-
sufficient and attentive to others (Costa &
McCrae, 1992).
Neuroticism refers to the tendency of an
individual to experience unpleasant emotions
easily. Common traits displayed by neurotic
individuals include anxiety, depression, anger,
embarrassment, worry and insecurity (Costa &
McCrae, 1992; Barrick & Mount, 1991).
Neurotic individuals are prone to mood
swings, are emotionally unstable, highly
excitable (Llewellyn & Wilson, 2003; Costa &
McCrae, 1992) and self-conscious (Weiten,
2010). The reverse of neuroticism is referred to
as Emotional stability (Barrick & Mount,
1991) which reflects the capacity of an
individual to adjust their emotional state to the
demands of the situation and being able to
remain calm and balanced when faced with
adversities and stressful situations (Nadkarni &
Herrmann, 2010; Foulkrod et al., 2009;
McCrae & Costa, 1997). Individuals who have
low emotional stability are moody, melancholy
and apprehensive (Raab, Stedham & Neuner,
2005), as well as hostile, envious and
impulsive (Foulkrod et al., 2009; Costa &
McCrae, 1992). According to Barrick et al.
386
SAJEMS NS 15 (2012) No 4
(2003:51), individuals who are low in emotional
stability are prone to stress, suggesting that
these people would prefer stress-free jobs.
2.3 Entrepreneurial personality
The entrepreneurship literature identifies nu-
merous attributes (traits, characteristics and
skills) associated with entrepreneurial behaviour
and entrepreneurial success (Deakins & Freel,
2009; Ramana, Aryasri & Nagayya, 2008;
Mahadea, 2001). Hornaday (1982) identifies as
many as 42 different characteristics common to
entrepreneurs, however, those most commonly
cited are the need to achieve, ability to take
risks, tolerance for ambiguity, good locus of
control, creativity and innovation (Chen & Lai,
2010; Deakins & Freel, 2009; Venter, Urban &
Rwigema, 2008).
According to Soetanto, Pribadi and Widya-
dana (2010), an abundance of literature exists
attempting to define the attributes that distinguish
entrepreneurs from others (Raab et al., 2005;
Cromie, 2000). As such various personality
attributes are associated with successful entre-
preneurs and small-business owners. According
to Barrick et al. (2003), the various attributes
or personality traits associated with successful
entrepreneurs are likely to be associated with
at least one of the five broad dimensions of the
five-factor model. As an example, Table 1
attempts to categorise several well-known
entrepreneurial traits into the dimensions of the
five-factor model.
Tabl e 1
Entrepreneurial attributes categorised into five dimensions
Conscientiousness
Hardworking,
Leadership,
Motivated,
Need for achievement,
Perseverance,
Commitment,
Responsibility.
Scarborough, 2011; Barringer & Ireland, 2010; Calvasina, Calvasina & Calvasina, 2010;
Scarborough, Wilson & Zimmerer, 2009; Timmons & Spinelli, 2009; Kuratko, 2009; Van
Aardt, Van Aardt, Bezuidenhout & Mumba, 2008; Kuratko & Hodgetts, 2007; Kroon, 2004;
Bolton & Thompson, 2004; Burns, 2001; Nieman, Hough & Nieuwenhuizen, 2003.
Agreeableness
Nurturing quality,
Get along with others.
Timmons & Spinelli, 2009; Van Aardt et al., 2008.
Openness to experience
Independence,
Tolerance of ambiguity,
Opportunism, Courage,
Initiative, Creative and
innovative, Overcome failure,
Tolerance of risk.
Scarborough, 2011; Chillemi, 2010; Barringer & Ireland, 2010; Timmons & Spinelli, 2009;
Scarborough et al., 2009; Kuratko, 2009; Nieman & Nieuwenhuizen, 2009; Van Aardt et al.,
2008. Venter, Urban & Rwigema, 2008; Kuratko & Hodgetts, 2007; Kroon, 2004; Bolton &
Thompson, 2004; Nieman et al., 2003; Burns, 2001.
Extraversion
Dynamic, Self-confidence,
High energy level.
Scarborough, 2011; Van Aardt et al., 2008.
Neuroticism
Locus of control Scarborough, 2011; Chillemi, 2010.
3
Hypotheses development
Research relating to the relationship between
personality and job performance has largely
been framed by the five-factor model of
personality (Bergner et al., 2010; Barrick &
Mount 1991). Meta-analytic research (Rothstein
& Goffin, 2006; Barrick & Mount, 1991; Tett,
Jackson & Rothstein, 1991) has confirmed the
use of the five-factor model to predict per-
formance in the workplace. Several researchers
(Barrick et al., 2001; Barrick & Mount, 1991)
have found strong correlations between job
performance and the five-factor model of
personality. According to Foulkrod et al.
(2009), compelling evidence exists supporting
the ability of the five-factor model of
personality to predict professional achievement.
3.1 Dependent variable
Little agreement exists on an appropriate
measure for small business success (Acs,
Glaeser, Litan & Fleming, 2008) and previous
SAJEMS NS 15 (2012) No 4
387
research has mainly focused on variables for
which information is easy to gather (Cooper,
1995). Although several researchers advocate
growth as the most important performance
measure for small businesses (Brown, 1996;
Chandler & Hanks, 1993; Tsai, MacMillan &
Low, 1991), others consider performance to be
multidimensional in nature, adding that it is
advantageous to integrate different dimensions
of performance in empirical studies (Lumpkin
& Dess, 1996). According to Zahra (1991),
financial performance and growth performance
represent different aspects of performance and
each reveals important performance information.
Taken together, growth and financial perfor-
mance provide a richer description of the
actual performance of the firm than each does
on its own (Zahra, 1991).
For the purpose of this study, the success or
performance of the small-business owner is
measured in terms of the success of his or her
business, and this is measured in terms of both
growth and financial indicators. Business success
refers to the business being successful, profit-
able and financially secure, and showing growth
in turnover, profits and number of employees.
3.2 Independent variables
The personality dimensions of the five-factor
model, namely Extraversion, Conscientiousness,
Openness to experience, Agreeableness and
Neuroticism, are the independent variables to
be investigated in this study. These five traits
have consistently been replicated as dimensions
of enduring personality characteristics (Foulkrod
et al., 2009).
Barrick and Mount (1991) report that
Conscientiousness appears to reflect traits which
are important to the accomplishment of tasks
in all jobs, and that measures associated with
Conscientiousness are most likely to be valid
predictors of job performance for all jobs.
Barrick and Mount (1991) report Extraversion
to be a valid predictor of job performance for
positions in management and sales. Interacting
with others is a significant part of these types
of jobs. Traits such as being sociable,
gregarious, talkative, assertive and active would
lead to effective performance in these types of
jobs. However, Extraversion would be less
important in jobs such as skilled/semi-skilled
and professionals (Barrick & Mount, 1991).
Barrick and Mount (1991) found no relationship
between Openness to experience and job
performance and concluded that this trait was
not a valid predictor of job performance. Low
correlations were reported between Emotional
stability and job performance (Barrick & Mount,
1991). For professionals, Emotional stability
produced a negative correlation, suggesting
that individuals who are worrying, nervous,
emotional, and high-strung are better performers
in these jobs (Barrick & Mount, 1991:20).
Barrick and Mount’s (1991:21) results for
Agreeableness suggest that this trait is not an
important predictor of job performance, implying
that being courteous, trusting, straightforward
and soft-hearted have a smaller impact on job
performance than being talkative, active and
assertive.
In their later meta-analysis investigating the
relationship between the personality dimensions
of the five-factor model and job performance,
Barrick et al. (2001) found that in addition to
Conscientiousness, Emotional stability (inverse
of Neuroticism) is also positively correlated
with performance criteria in virtually all jobs
across organisations and countries. The other
dimensions, Agreeableness, Extraversion and
Openness to experience also proved to be valid
predictors of performance but their relationship
to job performance varies depending on
criteria and occupational groups. Once again
Extraversion was found to be a valid predictor
but only for occupations typically requiring
interactions with others (e.g. managers and
sales). Openness to experience and Agreeableness
displayed weak relationships with overall job
performance (Barrick et al., 2001).
In their study investigating the ability of
personality to predict project manager success,
Thal and Bedingfield (2010) found that
Conscientiousness and Openness to experience
are strongly correlated with perceptions of
performance. A positive correlation between
Conscientiousness and job performance is well
supported in the literature (Salgado, 2003;
Barrick & Mount, 1991). The findings of Thal
and Bedingfield (2010) regarding Openness to
experience, however, contradict those of
Barrick et al. (2001) who found Openness to
experience to have a weak relationship with
job performance. Consistent with the literature,
Thal and Bedingfield (2010) found that Emotional
388
SAJEMS NS 15 (2012) No 4
stability is a good predictor of project success.
Thal and Bedingfield (2010) found little
support for Extraversion and Agreeableness
being able to predict success. In contrast to
Thal and Bedingfield (2010), Witt, Burke,
Barrick and Mount (2002) found Extraversion
to be positively correlated with performance
among highly conscientious workers and
negatively correlated with less conscientious
workers. As reported by Thal and Bedingfield
(2010), Agreeableness has consistently been
shown to have little influence on performance.
More recent meta-analyses (Bergner et al.,
2010), show that the relationship between
personality traits and performance differs to
some degree among people in executive
positions. According to Judge et al. (2002),
Extraversion produced the highest correlations
with managerial performance across different
criteria and across different vocational settings.
Following Extraversion, Conscientiousness
displayed the strongest and most stable
correlations across managerial performance
criteria and across management settings. The
correlations of Neuroticism and Openness to
experience with managerial performance
showed that these two personality factors were
of equal importance, whereas Agreeableness
appeared to be the least relevant of the big five
traits. Similarly, Bergner et al. (2010) report
Extraversion and Conscientiousness as being
the most consistent correlates with success
across different criteria. Bergner et al. (2010)
conclude that within a group, individuals who
are extraverted and conscientious as well as
emotionally stable and open to experience will
emerge as leaders.
In their study investigating CEO personality
and firm performance, Nadkarni and Herrmann
(2010) found that Extraversion, Emotional
stability and Openness to experience enhanced
firm performance by fostering strategic flexi-
bility, whereas Conscientiousness undermined
firm performance by inhibiting strategic
flexibility. The results of Nadkarni and
Herrmann (2010) for Emotional stability,
Extraversion and Openness to experience are
consistent with published psychology and
leadership research (Bono & Judge, 2004;
Judge et al., 2002). However, their results for
Conscientiousness and Agreeableness differ
somewhat from those of existing studies. Their
results indicate that Conscientiousness under-
mines firm performance by inhibiting strategic
flexibility, whereas a medium level of
Agreeableness maximises strategic flexibility
and consequently firm performance. Nadkarni
and Herrmann (2010) conclude that very high
levels of Conscientiousness may result in
inertia and adverse performance, whereas very
low levels of Conscientiousness may create
instability and uncertainty for firms, and as a
result firm performance may be maximised at
medium levels of Conscientiousness.
Given the contradictory findings elaborated
on in the paragraphs above, it was decided to
subject the following hypotheses to empirical
testing:
H
1
There is a positive relationship between
possessing the trait Extraversion and the
Business success experienced by a small-
business owner.
H
2
There is a positive relationship between
possessing the trait Conscientiousness and
the Business success experienced by a
small-business owner.
H
3
There is a positive relationship between
possessing the trait Openness to experience
and the Business success experienced by
a small-business owner.
H
4
There is a positive relationship between
possessing the trait Agreeableness and the
Business success experienced by a small-
business owner.
H
5
There is a negative relationship between
possessing the trait Neuroticism and the
Business success experienced by a small-
business owner.
4
Research methodology
4.1 Measuring instrument
This study makes use of an existing measuring
instrument to collect the necessary data,
namely the ‘big five inventory’’ (BFI). The
BFI is a self-report inventory designed to
measure the big five dimensions of the five-
factor model of personality, and consists of 44
statements (Srivastava, 2010). The questionnaire
also contains six items to measure the
dependent variable Business success. These six
items have been used in previous studies
SAJEMS NS 15 (2012) No 4
389
(Eybers, 2010; Farrington, 2009; Cowie, 2007)
and relate to perceptions of success,
profitability and financial security as well as
increasing turnover, profits and number of
employees.
The measuring instrument consisted of a
covering letter and two sections. The cover
letter stipulated the objective of the study,
detailed the criteria for participation, and
provided assurances of confidentiality. Section
1 of the questionnaire requested general demo-
graphic information from respondents and
Section 2 contained 44 statements describing
various aspects of a person’s nature. Several of
these items were negatively phrased and were
reverse-scored for the statistical analysis.
Section 2 also contained 6 items relating to
Business success. A 5-point Likert-type scale
(1 = strongly disagree and 5 = strongly agree)
was used, requesting respondents to indicate
the extent of their agreement or disagreement
with the statements posed.
4.2 Sampling and data collection
As far as can be established, no national
database or list of small businesses exists in
South Africa or in the Eastern Cape. Therefore,
a convenience sampling technique was employed
in this study. The focus of the study was on
small businesses in the Eastern Cape Province.
To be eligible to participate in the study,
respondents had to meet specified criteria,
namely, operate a business in the Eastern Cape
Province, the business had to have been in
operation for at least one year, did not employ
more than 50 full-time employees and the
owner of the business had to be actively
involved in the business. During the months of
March and April 2010, fieldworkers from the
Nelson Mandela Metropolitan University
approached small-business owners in the
Eastern Cape and invited them to participate in
the study. The questionnaires were personally
delivered to the small-business owners and
collected upon completion. A total of 383
usable questionnaires were returned.
5
Empirical results
The data collected were subjected to various
statistical analyses using SPSS (SPSS Inc,
2008). An exploratory factor analysis was
undertaken and Cronbach-alpha coefficients
(CA) were calculated to assess the discriminant
validity and reliability of the measuring
instrument respectively. Descriptive statistics
were calculated to summarise the sample data
and the hypothesised relationships were assessed
by means of multiple regression analysis.
Multiple regression analysis was considered
appropriate for this study because it allows a
researcher to predict the score of one variable
(Business success) on the basis of scores
reported on several other variables (five
personality dimensions).
5.1 Sample description
The majority of the respondents participating
in this study were males (69.7 per cent) and
28.5 per cent were females. Most (35.0 per
cent) respondents were between 40 and 49
years old and 57.4 per cent were white. Of the
respondents, 66.8 per cent held a tertiary
qualification. Tenure referred to how long the
respondent had owned the business. In this
study, the majority (81.5 per cent) of
respondents had owned the business for more
than 3 years. The majority (75.7 per cent) of
respondents employed fewer than 10 people.
Industry referred to the nature of the business,
or the industry in which the business operated.
Most (45 per cent) respondents were in the
service industry, followed by the retail and
wholesale industries (21 per cent).
5.2 Discriminant validity and
reliability results
An exploratory factor analysis was conducted
to identify the unique factors present in the
data, and to assess the discriminant validity
of the measuring instrument. Principal axis
factoring with an oblimin rotatin (Oblimin
with Kaiser Normalisation) was specified as
the extraction and rotation method. In
determining the factors (constructs) to extract
the percentage of variance explained and the
individual factor loading were considered.
Bartlett’s Test of Sphericity reported a Kaiser-
Meyer-Olkin measure (KMO) of 0.791 (p