Theoretical Bases For Derivation Of Hypotheses Education Essay


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The basic aim of our research study is to ascertain significant characteristic personality traits in an individual that most positively correlate with the entrepreneurial inclinations in individuals.

Personality traits

While making a study of the inclination of students in Indian business schools towards Entrepreneurship we must explore their personality characteristics and take these into account to research their entrepreneurship inclination. Thus, we have taken the basic 5 personality traits, namely Neuroticism, Extraversion, Openness to Experience, Agreeableness and Conscientiousness (Big 5 Personality test) to test for entrepreneurial inclinations in Indian b-school students.

Neuroticism- Neuroticism represents individual differences in resilience and emotional stability. Highly emotionally stable (less neurotic) individuals are characterized with greater resilience, flexibility to adapt, poise, conviction to succeed, a calm temperament and relaxed attitude. People who are emotionally stable are described as calm, composed, stable and level headed persons who keep their cool even in the most gruesome situations. Entrepreneurs in both real life and the academic literature are typically described as highly optimistic and consistent in the face of social pressures, stresses and volatility.(Baron, 1999; Locke, 2000).

Entrepreneurs typically experience high levels of physical and emotional stresses dealing with the pressures of work, work-family balance, and financial risk of initiating and operating a new business. At the same time, entrepreneurs have been described as highly self-confident (Chen, Greene, & Cricke, 1998; Crant, 1996) with a strong credence in their ability to control outcomes in an unfavourable environment (Simon, Houghton, & Aquino, 2000). Entrepreneurs generally work more hours than do managers because of the greater level of uncertainty and accountability in their work and often lack the much needed balance between work and life spheres typical of managerial work (Dyer, 1994). They also have a substantial financial stake in the ventures they have undertaken and lack the security of benefits typically provided to mid-level and high-level managers, such as a severance package or a golden handshake or attractive retirement packages such as VRS schemes introduced in India. Thus, remarkable levels of self confidence and flexibility in the face of stress are required by entrepreneurs. These are traits that define high levels of emotional stability or low levels of Neuroticism.

People low on emotional stability (also known as high neuroticism), on the other hand, feel susceptible to psychological stress and experience a range of emotions more frequently and intensely, including anxiety, lack of self-confidence, depression, and low self-esteem. They are sensitive to negative feedback and tend to become disenchanted by small failures. They may feel perturbed, despairing and dejected in response to adverse situations. However, entrepreneurs are expected to take on a great deal of personal accountability and blame for the success or failure of their new venture as they are the ones who call the shots in decision making. Pressures include a heavy workload, critical decision making with little precedence as a guiding force, and often considerable financial resources at stake. People low on emotional stability (high neuroticism) are likely to shrug off from taking on the personal responsibilities and strains associated with the entrepreneurial role. People who are low on emotional stability are also likely to perform abysmally in the entrepreneurial role. Meta-analytical results indicate that emotional stability is consistently and positively correlated to job performance across occupations (Barrick, Mount, & Judge, 2001). The role of entrepreneur is likely to be even more challenging and taxing in terms of dedication of time, money and other resources than most traditional types of employment. This is because initiating and operating one's own business involves new and unforeseen challenges, highly uncertain outcomes, and high personal stakes in the results. Based on the aforementioned findings and our analysis, the research hypothesis for Neuroticism can be framed as follows:

H1: Big 5 Personality trait of Neuroticism is negatively correlated to entrepreneurial inclinations in individuals.

Extraversion- Extraversion is the personality trait which describes the kind of people who are gregarious, sociable, assertive, energetic, active, talkative, and enthusiastic (Costa & McCrae, 1992). People who score high on Extraversion tend to be cheerful and love interacting with people and large groups, and seek excitement and energy from talking to others. People who score low on Extraversion prefer to spend more time alone and are characterized as reticent, quiet and concerned about their own self. People high on extraversion are gregarious, outgoing, warm, and friendly; they bustle with energy and are, active, assertive, and dominant in social situations; they experience more positive emotions and are optimistic; and they seek excitement and exhilaration from interactions with others. Assertiveness, high energy levels, a high activity level, and unwavering optimism are the characteristic traits that have been associated with people's perception of entrepreneurs (e.g., Baron, 1999; Locke, 2000). Research using Holland's vocational typology shows that extraverts are attracted to enterprising (i.e., business) occupations (Costa, McCrae, & Holland, 1984). An entrepreneurial career may appear to be more invigorating and exciting than many traditional business occupations, and thus more appealing to extraverts. In addition, entrepreneurs can be viewed as the leaders of their new venture teams (Vecchio, 2003) and its associated attributes such as energy, assertiveness, and sociability, are associated with people's implicit perceptions of the leadership role (Lord, DeVader, & Alliger, 1986). The match between the traits of extraversion and the attributes associated with leading a new venture lead us to expect extraverts to be more inclined to entrepreneurship. Thus, based on the earlier research done and our analysis the hypothesis of extraversion can be framed as follows:

H2: Big 5 personality trait of extraversion is positively correlated to entrepreneurial inclinations in individuals.

Openness to Experience- Openness to Experience is a personality attribute that characterizes someone who is intellectually curious and tends to seek relatively new experiences and explore novel ideas. Someone high on openness can be described as creative, innovative, imaginative, introspective and unconventional. Openness to experience is positively correlated with intelligence, especially aspects of intelligence related to ingenuity, such as divergent thinking (McCrae, 1987). Embarking on a new venture is likely to require the entrepreneur to explore new or novel ideas, use his or her ingenuity to solve novel problems, and take an innovative approach to products, business ploys, or tactics. Schumpeter (1942/1976) argued that the defining characteristic of the entrepreneur is his or her emphasis on innovation and creativity. More recent research has also substantiated the strong desire of entrepreneurs to be innovative and to create something larger than their own self (Engle, Mah, & Sadri, 1997). Thus, entrepreneurs typically score higher than other managers on Openness to Experience. Entrepreneurs are also likely to rely on their ingenuity to solve day-to-day problems and formulate firm strategies using the limited resources at their disposal (e.g., Baron, 2007; Schumpeter, 1942/1976; Zhao & Seibert, 2006). Although openness is not consistently related to job performance in all occupations, it is related to performance in learning situations such as workplace training and educational institutions.(Barrick & Mount, 1991). Successful entrepreneurship is also likely to require constant information monitoring and learning to keep abreast with changing tastes and market trends, competitor behaviour etc. For the personality trait of Openness to experience, the research hypothesis can thus be framed as follows:

H3: Big 5 personality trait of Openness to experience is positively correlated to entrepreneurial inclinations in individuals.

Agreeableness- Agreeableness assesses one's interpersonal orientation and one's ability to strike a consensus with everyone in case of a conflicting situation. Typical characteristics of individuals high on Agreeableness are being trustworthy, forgiving, caring and altruistic. The high end of Agreeableness represents someone who has cooperative values and a preference for positive interpersonal relationships. Although ‘Agreeableness' may lead one to be seen as trustworthy and may help one form positive, cooperative working relationships, high levels of Agreeableness may inhibit one's willingness to drive hard bargains, look out for one's own self interest, and influence or manipulate others for one's own advantage. McClelland and Boyatzis's (1982) research has also shown that a high need for affiliation, a component of Agreeableness, can be a detriment to the careers of managers, apparently because it interferes with the manager's ability to make difficult decisions affecting subordinates and co-workers. Entrepreneurs often work in severe constraints with limited access to legal and financial resources. Thus, entrepreneurs are more likely than managers to suffer serious repercussions from even having small bargaining powers, i.e. a high degree of agreeableness. Entrepreneurs work in smaller organizations and they are less likely to be constrained by dense and interlocking social relationships (Burt, 1992). Therefore, we expect lower levels of Agreeableness among entrepreneurs than other managers. Some theorists have viewed the ability to build trusting relationships with venture capitalists (Cable & Shane, 1997) or among founding team members (Eisenhardt & Schoonhoven,1990) as a critical element of entrepreneurial success. However, being too trustworthy may be detrimental if it leads to easy exploitation by others. Entrepreneurs typically have only limited resources at their disposal and a small margin for error; they often do not have a long-term knowledge of or experience with business partners, clients, or investors where trust could be reasonably developed. The ability to drive hard bargains, look out for one's own interests, and even manipulate others may be more important skills for survival and growth (Zhao & Seibert, 2006). Consistent with this rationale, we expect less agreeable individuals to be more successful as entrepreneurs. Thus, our research hypothesis for Agreeableness can be framed as follows:

H4: Big 5 personality trait of Agreeableness is negatively correlated to entrepreneurial inclinations in individuals.

Conscientiousness- Conscientiousness is defined as an individual's ability to be organized, persistent, hard working, and motivated in the pursuit of his/her goal but with a sense of conscience that acts as a guiding force in times of distress. Sometimes, researchers perceive this as an indicator of a person's ability to work hard (Barrick & Mount, 1991). As per the paper presented in the ‘Journal of Applied Psychology' by Scott E. Seibert and Hao Zhao, the personality construct with the strongest relationship to Entrepreneurial scale was Conscientiousness (Zhao & Seibert 2006). Conscientiousness has been a consistently high predictor of performance in work related matters across all types of jobs and occupations (Barrick, Mount, & Judge, 2001). Researchers and scholars have regarded conscientiousness as comprising two angles- a high need for achievement motivation and the ability to be dependable (e.g., Mount & Barrick, 1995). McClelland (e.g., McClelland, 1961) initially propounded that entrepreneurship would be motivated by a high need for achievement (nAch) especially because of individuals preference to work and feel the tangible rewards of their own efforts. The dependability side of Conscientiousness reflects the extent to which one is organized, deliberate, and methodical and can be relied on to fulfil one's duties and responsibilities. Typically, entrepreneurs work in environments with a weak framework and depending on other stakeholders and being depended upon by them is a necessity for all entrepreneurs. It has been concluded that Entrepreneurs will score higher than managers on Conscientiousness, achievement motivation and dependability. Subsequent analyses examined achievement and dependability as separate constructs. Achievement motivation has been implicated as an important individual difference variable predicting entrepreneurship since the work of McClelland (1961). According to McClelland's (1961) early work on achievement motivation, individuals who score high on need for achievement are attracted to work situations in which they have personal control over outcomes, face moderate risk of failure, and experience direct and timely feedback on their performance. McClelland inferred that high-need-for-achievement individuals would be inclined to entrepreneurship because it offers more of these conditions than most conventional forms of employment. Certain other traits under the conscientiousness dimension, such as work goal orientation and perseverance are also likely to be associated with the entrepreneurial role. For example, Markman and Baron (2003) suggest that perseverance is called for by entrepreneurial work, while others have emphasized the importance of motivation, persistence, and hard work (e.g., Chen et al., 1998; Baum & Locke, 2004). Thus, the research hypothesis of our study can be framed as follows:

H5: Big 5 personality trait of Conscientiousness is positively correlated to entrepreneurial inclinations in individuals.

There are constructs of entrepreneurship orientation and family background which act as mediator and moderator respectively between Big 5 personality traits and entrepreneurship inclination in individuals. Hence the moderator and mediator hypotheses of our study can be framed as under:

H6: Entrepreneurship orientation will mediate the relationship between Big 5 personality traits and entrepreneurial inclination such that the relationship is stronger for individuals that score higher on entrepreneurial orientation.

H7: Family background will moderate the relationship between Big 5 personality traits and entrepreneurial inclination such that the relationship is not impacted by business background of family.

Parent's self-employment is a major factor affecting those who become an entrepreneur. Previous research has shown a strong inter-generational continuity in self-employment. There is added evidence that the gap between the offspring of self-employed fathers and employee fathers varies considerably among major ancestry groups. Indeed it is also proven that, with some exceptions (notably Jewish and African-Americans), ethnic variation in the pick-up rate accounts for ethnic differences in overall self-employment because the self-employment of men whose fathers were employees or absent varies little across ancestral groups.


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