Entrepreneurship in Practice
The typical functions of the entrepreneurial role that come with exposure, responsibility, and decision complexity naturally filter for certain trait compositions that suit the demands of the role. Personal character does not appear in isolation, though, but in interaction with external and internal factors; some of which are often interpreted as a trait itself. However, these factors differ in nature and can be supported to varying degrees using different strategic approaches. Therefore, a sound partnership and investment decisions requires accurate interpretation of signals indicating suitability, trustworthiness, and available resources.
The search for the set of human traits that are relevant for entrepreneurial trajectory is actively ongoing. Difficulties include that there there are no traits exclusive to entrepreneurship or any other roles. As per the current view in personality science, all humans share the same set of traits, the intensity of which can be described in a continuum, and their varying level of dominance and interaction is what makes up the characteristics for which a person is known for.
The conceptual distinction of entrepreneurial traits is further complicated by the fact that, although we define personality traits as relatively stable and biologically underpinned characteristics, in practice they are difficult to distinguish from patterns that develop as long-term adaptation to environmental conditions. We evolve as individuals in response to the environment from birth to death. Consequently, when removing a layer of environmental pressure, addressing mental distress, or going through major shifts in life, significant changes in character can appear without any substantial change in biologically underpinned trait dimensions. Often baseline characteristics that were thought to be inherent to the person turn out to be temporary adaptation, even if needed in the long term.
As a result, the research noise is significant in the area of understanding traits that support upward entrepreneurial trajectory. Nonetheless, certain characteristics have emerged by their consistent correlation, outlining a well-recognizable entrepreneurial character set. Conceptualisations of the character of someone who naturally fits with the demands of entrepreneurship or business leadership include terms such as need for achievement, achievement motivation, high agency, goal orientation, venturesomeness, and many others that differ in depth in their explanation.
Contemporary discussions typically use factor models with 3-12 defined set of traits to standardize terminology and make results of different fields comparable. On the other side, public discourse is still flooded with behavioral typification of entrepreneurs, mostly using lifestyles (grind culture, FOMO), mindsets, and other artificial signals to describe an entrepreneur. These are trend-based, subcultural signals that add a lot of noise because picking up the expectations and copying rewarded behaviors through social listening is quite easy. Consequently, many behavioral signals are part of an engineered social avatar, which without trait backing is a performance rather than self-actualization and predictive of entrepreneurial trajectory.
Traits Linked to Entrepreneurial Outcomes: The “Who has it” Question
Recent decades brought better clarity regarding the factors of entrepreneurial outcome. The growing use of Five-Factor Models (Big Five) and their variations in personality research created a shared framework that allows different fields to compare their findings through correlation, revealing a lot about how characters interact with other factors. With correlational data flooding in, the new challenge became selecting meaningful information from the surrounding noise. Example issues include explaining constructs with each other, such as self-efficacy, confidence, optimism, suggesting that self-efficacy is good for confidence, and confidence is good for self-efficacy, and optimism is good for everything.
While certain traits have been identified, the dominance of which shows consistently better entrepreneurial outcomes, the definitions used to measure these traits vary across studies. From which point, one needs to rely on their own interdisciplinary knowledge and common sense to decide which result to accept as relevant. A prime example of this is Extraversion.
Traits that demonstrate consistent correlation and are measured using more or less evidenced definitions can be accepted as relevant and predictive. A higher score in these traits is what personality research means under “entrepreneurial personality”. The term used for these traits differs across measures, schools, and disciplines, with the most descriptive ones selected for this paper, rather than the most frequently used ones. Below discussed the traits linked to entrepreneurial outcome:
The behavioral outcome of these traits is popular and tends to lead to success; consequently, it is frequently copied in an attempt to copy success as well. Many people within startup communities or entrepreneurial environments dissolve into roles without having a deeper examination of how much of it aligns with their inherent setup. As a result character expressions alone cannot serve as reliable signals for partner or deal selection as it often reflects engineered behavior as opposed to natural functioning.
The other reason for character manifestations observed in an entrepreneurial environment cannot, on their own, be considered reliable predictors, is that even in cases of strong character alignment there can be additional internal and external factors present that are often mistaken for character itself. A sound partnership and investment decisions therefore require the ability to confidently distinguish between the factors and their limits, and make informed decisions about the allowances to make and the risks to accept.
Where Entrepreneurial Traits and Resilience Overlap: The “Who Has it When and How Much for How Long” Question
With a deeper look at the traits accepted as relevant for entrepreneurial outcomes, it becomes transparent that these are traits that help to manage social pressure by providing the ability to rearrange the social, economic environment around. A high score on these traits means more internal capacity, making someone able to stand decades longer, under much harsher pressure, with far less damage suffered. It is important to recognize the delicate nature of discussing inherent factors. This paper does not suggest any rights associated with internal resources; it merely indicates that differences exist in relation to capacity.
While the impact of the right trait combination is immense, it does not guarantee invincibility by itself. Like all resources, internal ones are also finite. The capacity to keep pushing is a depleting one and without a strategy that maintains balance between burn and recharge, it can drain to the level of mental or physical incapability, known as burnout. This makes entrepreneurial fit a complex topic with inherent and strategic components involved. To begin with, the degree to which traits manifest, or their level of prominence, depends on many factors. These include the extent to which the environment, particularly the early environment, but also later environments, supports or punishes exploration and ambition, as well as exposure to relevant experiences, the presence of distress or socioeconomic constraints.
That means that the suitability for entrepreneurial roles is more nuanced than simply asking ‘Who has it’, rather is a matter of ‘Who has it, when and how much for how long’. A significantly more difficult question to answer that extends beyond the good ol’ entrepreneurial charisma. It includes recognizing whether a strategy to protect and actualize the internal resources is there, in other words, whether realization as business success is enabled.
Beyond Personality: The Non-Negotiable Factors of Entrepreneurial Outcomes
Although the trait fit is a major factor, it’s not the sole factor of entrepreneurial trajectory. There are additional internal and external factors the categorization and conceptualization of which can differ across sources. This paper adopts an approach synthesized from multiple resources with the following factors discussed:
In summary, the role of inherent traits is a fraction of what makes an entrepreneur trajectory. Nevertheless, that fraction is what provides the persistence to keep trying when the rest of the factors are down, thus serving as the captain of the ship. In this analogy, while the captain cannot control the weather above or the waves below, it defines how long to sail and in which direction, and with that, the chances to reach new lands. Those years and decades given by these traits represent huge advantages in themselves, as a lot can change during that time; new technologies emerge, new connections are formed, new industries develop. Being still around, and often with refined eyes for opportunities, is a market advantage on its own.
When Non-negotiable Factors Missing: Breakdown under Constraints
The traits that contribute to suitability for entrepreneurial roles mean a fundamentally different worldview and approach to process the world and deal with pressure. For the population characterized by the need for achievement, the biggest threat is not starvation, but identity erosion. For them, self-actualization is not on the top of Maslow’s pyramid, but directly above food. It is important to note that the general validity of Maslow’s hierarchy of needs is a subject of debate. As for example, belonging to a community (can contain a single person) that understands and accepts, is interpreted as a fundamental need according to several research directions. This is supported by contemporary suicide studies and findings from attachment theory, in contrast to the original model, which regards social attachment as a higher-order or comfort need.
As mentioned, the characteristics identified as entrepreneurial traits ensure suitability by providing capacity to rearrange the environment, including the human environment, as needed, rather than conforming to existing conditions. That operation is particularly well suited for business leadership. However, in an environment that is structurally biased, suppressive or inhuman, the constant attempt to rearrange can be perceived from the outside as a form of disruption, frequently categorized as problematic or antisocial behavior. In this type of environment, the constant fight against constraints, with the penalization received in return, and the resulting alienation, can lead to depletion or suicidal tendencies in the long run. Even with good trait fit, and with additional resilience strategies applied, the ultimate solution in such cases is to exit the environment in order to remove the external constraints.
Interpreting Founder Signals in Partner and Deal Selection
The most crucial aspect of the discussed factors is the interpretation of the associated signals, in order to translate into business conclusions during partner selection or funding decisions. Below is a detailed breakdown of the observable signals of the alignment or misalignment of these factors, accompanied by a summary table.
| Trait Factor | Factor 2 | Factor 3 | Factor 4 | |
|---|---|---|---|---|
| When the factor is in alignment with the resource needs and exposure of the entrepreneurial route | ||||
| How these signals can be misattributed | ||||
| When the factor is in misalignment with the resource needs and social exposure of the entrepreneurial route | ||||
| How these signals can be misattributed |
To What Degree Misalignment Can Be Realistically Addressed
Understanding the different nature of the factors becomes crucial when things do not go as expected. The flexibility of these factors varies, and they can be supported by different strategies to better align with the demands of the entrepreneurial context. Below is a breakdown on what can be realistically done and with what effort to support upward trajectory, accompanied by a summary table.
| Trait factor | Factor 2 | Factor 3 | Factor 4 | |
|---|---|---|---|---|
| Approach | ||||
| Effort needed | ||||
| Time involved |
The Scaling Dilemma: Where Entrepreneurial and Leadership Traits Diverge
Leadership and entrepreneurial fit have many traits in common. However, the context of leadership is significantly more diverse, making studies less conclusive. In case of small business leadership, the context is very similar to that of entrepreneurship; thus, the similar demands of the roles lead to a strong overlap in advantageous traits. In large organizations, though, the context shifts dramatically. Unlike entrepreneurial leadership, where the negotiation context is within business partners of similar characteristic, mainly differing in play style, the enterprise context comprises employees with typically lower internal capacity and moderately motivated managers with existential need for employment and without direct benefit from success. This is a completely different human environment to deal with, favoring completely different characteristics.
What was winning deals with similarly driven decision-makers at the time of establishing the company, becomes internal positional tetris. As all played out in a protected environment, deep within the belly of the organizational beast, there is no requirement for strong characteristics to deal with the battles of the open market. The main responsibility of a leader is to align the internal components while satisfying the ones below and those above. Which means that in an enterprise context, what makes a good leader is situational, specific to the stage of the company, and the expectations of the corporate community. This can present a significant shift in demand characteristics between a founder and a leader, which scaling companies need to acknowledge in time. Where possible, adapting to the shift can be achieved through the development of a conscious leadership strategy. However, a significant discrepancy between the core character and the adopted leadership behavior is not sustainable in the long run. Therefore, delegation or recruitment may become necessary.
Closing Thoughts
The set of traits, or internal capacity, is one of the non-negotiable factors of entrepreneurial trajectory that makes a person stand the pressure long enough to reach meaningful results. At the same time, other internal factors define how much is available when and for how long from that internal capacity. While external factors can be defined as enables, they ultimately determine whether the potential is realized, delayed or completely blocked.
Interpreting partner and founder signals is one of the most difficult tasks, yet it is also one of the most crucial when it comes to business or investment decisions. Research into entrepreneurial outcomes and relational dynamics offers guidance by pointing to certain traits and social attitude that are found to be predictive for upward business trajectory. However, since business is fundamentally a nuanced system of interpersonal relations, and the surrounding research noise is still significant, interpretations remain somewhat subjective. Therefore, the paper presented cannot claim itself as the exclusive interpretative framework. Its purpose is to provide a contemporary perspective for organizing information and interpreting relevant signals.
