Previous research revealed that entrepreneurs possess certain personality traits that shape their being. Several studies (Brandstätter, 2011; Groves, Vance & Choi, 2008; Zhao and Seibert, 2006) indicated that entrepreneurs are generally more open, extraverted, and creative than managers. Moreover, those studies were able to provide valuable insights by disclosing that those personality traits are positively correlated with the intention to found a business and with business performance in general.
In order to examine the founders’ personality traits, we applied the MINDONE Potential test, which is based on the Big Five personality traits model. Our research was able to confirm the above mentioned, previous findings by revealing that there are statistically significant differences between managers and entrepreneurs within their personality (Figure 1).
Compared to the control group, the participating entrepreneurs of this study assessed themselves higher on the following traits:
- Activity level – entrepreneurs are more ready for action, possess a higher level of energy, and are capable of multitasking;
- Openness– entrepreneurs are more curious and interested in experiencing intellectual stimulation, new ideas, and theories;
- Emotionality – entrepreneurs are more empathetic and likable, easily trusted by their social environment, and possess a greater capacity to recognize another person’s needs and feelings.
Entrepreneurs, compared to the control group, assessed themselves lower on the following traits:
- Self-discipline – entrepreneurs compared to managers are less prepared for quick and timely responses, less able to resist challenges and distractions;
- Orientation on norms – entrepreneurs compared to managers insist less on order and tidiness, abide less to the implicit and explicit laws and rules of society, and possess a less strong sense of responsibility.
Figure 1: Entrepreneurs and control group compared within 11 personality characteristics1
Regarding the results highlighted above, it can be inferred that entrepreneurs possess certain personal characteristics that distinguish them from managers.
Being more active and able to work with a high level of energy is one statistically significant difference to the control group. Openness as the second important factor is one of the most crucial traits of entrepreneurs since the thinking-outside-the-box approach could guide them towards the development of new and unconventional ideas. Apart from that, one of the main characteristics of a founder is being highly sensitive and empathetic. Hence, they are capable of recognizing their own and other people’s emotional states and needs, to have more information and are able to integrate this into product or client relationships.
On the other hand, entrepreneurs turned out to be less norm oriented in comparison to the control group. Since entrepreneurs are driven by creativity, autonomy, meaning and values, it is not surprising that they do not like to follow strict rules and orders. They prefer to question common rules, disrupt routines and strive to conduct their work in their own way in order to keep their independence. Hence, entrepreneurs strive to decide for themselves what they work on and how.
Regarding self-discipline, entrepreneurs assessed themselves as less self-disciplined than the control group.
The present study was able to reveal that entrepreneurs are more motivated by Meaning and Values, Autonomy, and Flexibility. On the opposite side, Recognition, Achievement, Influence, and Material Award turned out to be less important motivators for founders compared to the control group.
Various studies have investigated motivational factors that prompt a person to become a founder (Van Gelderen, 2006, Tyszka, 2011). There are different opinions and findings on what those motivating factors are. The present research shows that founders are, above all, passionate and guided by their personal values. For them, it appears to be vastly important to achieve higher meaning with what they do and align their work with their personal values and ideologies.
Equally important motivational factors turned out to be Autonomy and Flexibility. Regarding Autonomy, previous research (Gelderen & Jansen, 2006, Tyszkaa, Cieslik, Domurat, & Macko, 2011) has shown that one of the most important motivational factors for self-employment is the desire to run one’s own business instead of working for somebody else. The majority of founders want to be responsible for their work, by deciding the strategy, working methods, and project structure. The same study was able to confirm that founders strive for the factor autonomy, because of the independence that is associated with it. The need for autonomy itself can foster the fulfillment of other motives since self-employment offers the opportunity to work consistently with one’s goals, values, and attitudes. Concerning Flexibility, the present study was able to confirm that this factor represents one of the key motivators for founders. In conclusion, when founding their own business, entrepreneurs choose to work on and develop ideas they truly believe in and enable them to work autonomously and independently.
On the other hand, compared to the control group, founders are less motivated by recognition, high professional status, and opportunities for professional advancement, which represent common motivators within hierarchically-structured companies. Likewise, common reward systems comprising high payment and bonuses, do not represent decisive motivational factors for startup founders.
Moreover, startup founders are statistically less motivated by Influence, compared to managers. However, this does not imply that founders are not motivated by opportunities to influence others generally. The findings of the present study do indeed reveal that influence is the fourth-strongest motivator for founders overall. However, it needs to be taken into account that the type of influence highly matters. Concerning our findings, entrepreneurs’ desire regarding influence is not connected with obtaining formal power and status that decision-makers in hierarchical, corporate environments strive for. Founders seek influence with respect to sharing and spreading their meanings, values, and visions in order to have an impact on the world.
The findings of the present study regarding Achievement are inconsistent with the results of previous studies (Tyszkaa, Cieslik, Domurat, & Macko, 2011). The present results indicate that high Achievement is a less influential motivator for startup founders than for managers. We will further investigate this discrepancy by evaluating achievement separately, according to the respective startup stages. However, a possible explanation could be that founders are primarily driven by their values, while creativity enables them to create and introduce highly unconventional and novel products or services to the market. By that, they expand the existing market, reconstruct the current state of industries (by expanding their boundaries), and penetrate market niches with lower-competition levels. This approach is referred to as blue ocean strategy2 (Kim, & Mauborgne, 2006) and it enables founders to be less focused on high achievement and competition while striving for the creation of meaning and value for their customers. Which might be important at the beginning, as the niche has yet to be found.
Figure 2: Entrepreneurs and control group compared within 9 motivators1
The present research shows that entrepreneurs are more interested in Creative and Technical occupations, while Administrative and Transforming Processes and Leading are less important factors for entrepreneurs compared to the Control group (Figure 3).
It is no surprise that entrepreneurs are strongly interested in creative pursuits. After all, Eckhardt and Shane (2003, p. 336) define entrepreneurship “as the discovery, evaluation, and exploitation of future goods and services [by] creation or identification of new ends and means previously undetected or unutilized by market participants”. This implies, by definition, that entrepreneurship is mainly characterized by novelty and creativity. Startups subsequently are new, creative, and innovative enterprises that strive to explore uncharted tracks and create new and innovative products or services. More than 50 percent of our sample consisted of entrepreneurs working within the IT-sector, which explains the entrepreneurs’ technical interest.
Accordingly, founders aspire to create novelties (mainly within the tech industry, respecting the current trend), rather than conducting administrative/bureaucratic work and Implementing work procedures. Those facets simply appear to be too restrictive and conventional to them. Taking into account that startups comprise flat hierarchies compared to typical corporate businesses, it is no surprise that entrepreneurs are less interested in Leading. The startup environment enables them not to be strictly forced to settle into a certain role like a leader or an implementer. Since they highly value flexibility and autonomy, it is vastly comprehensible that entrepreneurs choose to realize their interests within this type of environment.
Figure 3: Entrepreneurs and control group compared within 12 interests1
It is commonly assumed that when complex decisions need to be made successful entrepreneurs often rely on nonlinear thinking processes such as creativity, intuition, holistic thinking, and experienced-based judgment. The depicted thinking style is characterised by spontaneity and flexibility.
Correspondingly, the present study has been able to confirm that entrepreneurs do possess a more Flexible and less Structured thinking style compared to the control group. Therefore entrepreneurs command a creative, nonlinear, open, flexible, and intuitive approach to solve problems and make decisions (Figure 4). This thinking style enables founders to cope with inconsistent and unpredictable changes within their highly unstable business. Those findings are consistent with previous research by Afshar Jahanshahi, Brem & Shahabinezhad in 2018. The results of their research indicated that possessing a non-rational thinking style enables entrepreneurs to be more confident about their decisions when facing an uncertain environment.
Moreover, a flexible thinking style helps entrepreneurs to successfully develop their businesses since it fosters quick anticipations of business-related changes (Afshar Jahanshahi, Brem & Shahabinezhad, 2018). Sadler-Smith’s (2004) study found that a flexible decision style is positively correlated with the financial and non-financial performance of small and medium-sized enterprises. In conclusion, it can be derived that the possession of a flexible thinking style benefits founders in accepting volatile changes and business instability.
Figure 4: Entrepreneurs and control group compared within 4 thinking styles1
The majority of the startups has its headquarter in Vienna (72,8%). Tyrol region follows, with 10.5%. Upper Austria counts 5.3% of participants, while Styria 4.4% and Lower Austria 3.9% (Figure 5).
Lower Austria: 3.9%
Upper Austria: 5.3%
Figure 5: Startup locations in percent (the darker the color, the larger the percentage)
Most entrepreneurs within this study work 50 – 60 hours per week in their startup (Figure 6).
Figure 6: Frequencies of answers to the question “How many hours do you work in your startup company weekly?”, N=221
The majority (64%) started with an initial capital of less than 50.000 EUR (Figure 7), and most often it was secured through private funds/loans (77%).
Figure 7: Initial startup capital frequencies, N=220
Within the socio-economic questionnaire the participating entrepreneurs assessed their startups’ success over the timespan. Most entrepreneurs (43%) reported that their company’s results turned out to be as they had expected at the beginning. Less frequently, 34% reported that the results were better than expected, while 23% reported that the results were worse than expected.
Figure 8: Entrepreneurs’ self-assessed startup success (N=223)1
The self-assessed startup success turned out to be correlated with two other factors of the questionnaire:
- First, an increase in headcount is positively correlated with the self-assessed startup success (standardized regression coefficient3
β = .37, significance level p<.001).
- Secondly, more experienced startup founders estimated their company’s success to be less than those of younger startups
(β = - .16, p<.05).
The self-assessment, however, is not related to any of the founders' individual characteristics (personality traits, motivation, interests or thinking style).
There are several perspectives to evaluate the above-mentioned results:
- Even though the sample only included startups that have succeeded by proving themselves on the market, still nearly 25% of the entrepreneurs assessed their results as “below expected”. Those results might indicate that some entrepreneurs possess overly ambitious expectations at the beginning.
- However, almost 75% of entrepreneurs evaluate the achieved results as either consistent with or above expectations. Those results are highly encouraging for anticipating entrepreneurs. Unfortunately, the optimistic point of view tends to decrease as the years go by and the startups grow older.
Sectors within the startup ecosystem
The startups included in this study are operating in different industries, such as IT/Software, Fintech, or Biotech, and they also have different cycles or require more capital in their stages.
Given that two Venture Capital Partners with a focus on IT/Software companies are involved, the amount of IT-focussed companies is comparably high. Accordingly, most of the founders referred to their startup as an IT/Software startup (42%).
Even though many startups did not declare themselves as IT-startups, most of them tend to be associated with the IT sector or vastly depend on technology. For instance, some startups that classified themselves as Healthcare-startups, provide medical services via a customized app, which enables the patient to communicate with the medical facilities, and analyzes their lab report. Others developed an innovative visual-audio technology that promotes relaxation in pre- or post-operative phases.
Conclusively, the questionnaire’s categorization rather reflects the subjective perception of the startup founders regarding the startup’s sector, than representing an accurate and objective criterion. Accordingly, the present sample aligns with the common expression “Every Business is a Digital Business”.
A startup’s age is a proven indicator of the company’s success. A question we wanted to investigate is whether there exists a certain critical phase for a startup and if so, which developmental period bears the greatest risk of failure (Lueger, 2007).
Previous research regarding a startup’s age revealed that (Mansfield, 2019):
- Only 10% of startups have failed during their first year;
- More than 50% of all startups have survived on the market up to their fourth year;
- The startup failure rate at four years amounts to 44%;
- Failure is most common for companies that have been in business between 2 and 5 years: a striking 70% in total.
In the current study, the majority of the startups participating in the study has been existing for more than three years, 34% between one and three, while 25% are less than a year old.
Startups are typically founded by up to three founders, that strive to grow rapidly in order to improve their chances of becoming a successful and stable startup in the future. In Austria, 80% of startups are built by a team with an average size of 2,5 founders. Previous research suggests that startup teams outperform single founder startups significantly (Kamm, 1990).
Within the present study, the participating entrepreneurs were asked to assess their headcount at the foundation of their startup and at the time of the data collection. All answers were sorted into 9 categories:
- categories from 1 to 5 represented a headcount between 1 to 5 employees;
- category 6 included a headcount between 6 to 10 employees;
- category 7 between 11 and 15 employees, category 8 between 16 and 25 employees, and category 9 more than 25 employees (Figure 9).
In our sample, most startups had two (28%) or three team members (26%) at the beginning. Currently, 20% of the startups count more than 25 employees, whereas the majority (41%) count more than 10 employees.
Hiring a diverse team has been proven to have a significant influence on a startup’s success, since making use off of a variety of perspectives and different backgrounds enables the team to profit from diverse knowledge (Jin, 2017).
For that reason, the present study applied Belbin's Theory of Team Roles to the collected data as a standard model to classify the participating entrepreneurs (Belbin, 1981, 1993, 2019)
Belbin categorized team members into nine team roles. Those team roles are based on observed behaviors and interpersonal interaction styles. These roles are further divided into three groups:
- Shaper, Implementer and Completer-Finisher - Action-Oriented roles;
- Coordinator, Team Worker and Resource Investigator - People-Oriented roles;
- Plant, Monitor-Evaluator and Specialist - Thought-Oriented roles.
The participating entrepreneurs assessed which team roles they fulfilled at the beginning of the startup, and which roles they engaged in by the time of the data collection. The questionnaire offered the possibility to choose more than one role.
The most frequent team roles turned out to be the following:
|Implementer (Action Oriented) – Converts ideas into action:||62%|
|Shaper (Action Oriented) – Challenges the team to improve:||49%|
|Plant (Thought Oriented) – Presents new ideas and approaches:||47%|
Table 1: Top three roles for pre-seed startups
|Shaper (Action Oriented) – Challenges the team to improve:||48%|
|Co-ordinator (People Oriented) – Acts as a chairperson:||47%|
|Implementer (Action Oriented) – Converts ideas into action:||47%|
Table 2: Top three roles for seed/scaleup startups
Figure 10: Team roles at the beginning and currently
44% of participants changed their roles during the startup development; the majority moved towards the leadership role. The entrepreneurs that changed their roles during their startup’s development most often shifted towards the following roles:
Table 3: Top three roles after the startup's development
Founders take on an average of 2,7 roles and mostly started with the role of Implementer. However, the exercise of this role decreased most during the course of the startup growth (from 64% to 33%). During growth, 43% of founders changed roles, with the respective startups growing twice as fast, in comparison to startups where the founders did not change roles. There was also a clear trend that founders of fast-growing teams were most likely to take on the coordinator role, with that growing to 66% in the sample and leave the implementer role.
1 for all graphs * significance level:
p = < .05, ** significance level: p = < .01
2 In contrast to red ocean strategy, which represents the known market space where industries and their boundaries are well known and established, where strong competition is present, and the aim represents to outperform others in order to seize more profit.
3 Standardized regression coefficients depict how many standard deviations a dependent and independent variable will change (range between -1 and +1).