Characteristics of the Maltese Entrepreneuropenaccesslibrary.org/images/BGS332_Frank_Bezzina.pdfCharacteristics of the Maltese Entrepreneur Frank Bezzina, University of Malta, Malta

International Journal of Arts and Sciences 3(7): 292 - 312 (2010)

CD-ROM. ISSN: 1944-6934 © InternationalJournal.org

Characteristics of the Maltese Entrepreneur Frank Bezzina, University of Malta, Malta Abstract: This empirical study which is based in Malta seeks to characterize the personality/psychological profile of Maltese entrepreneurs (business owners and self-employed persons) and employed managers. The characteristics investigated in this study are the need for achievement, locus of control, tolerance towards ambiguity, self-confidence, creativity/innovativeness, risk-taking propensity and self-sufficiency/freedom. It also attempts to determine which of these characteristics can adequately distinguish between entrepreneurs and managers. Sixty entrepreneurs and sixty managers, selected by using a combination of purposive and quota sampling techniques, participated in the study by completing the Entrepreneurial Characteristics Questionnaire, which was purposely designed for the present study. Results showed that entrepreneurs have a greater need for achievement, more self-sufficiency/freedom, more self-confidence, a higher tolerance for ambiguity, more creativity/innovativeness, more internal locus of control and a higher propensity to take risks. However, the two characteristics that adequately distinguished between entrepreneurs and managers in this study were self-sufficiency and internal locus of control. In other words, Maltese entrepreneurs are more likely to prefer to be their own boss and to take decisions independently and believe more strongly than managers that they can influence events with their decisions. Additionally, binary logistic regression revealed that self-sufficiency is the most important predictor in classifying a person’s occupation as that of an entrepreneur or a manager, with an overall holdout accuracy of 73.3%. The implications of the findings are discussed. Keywords: Entrepreneurship, Entrepreneurial Profile, Personality/Psychological Characteristics, Malta. Introduction In the Entrepreneurship Survey of the EU 25 conducted by the Gallup Organisation Hungary (Flash Eurobarometer 192, 2007), Malta attained a relatively low score for entrepreneurial activity and this translated into a relatively low rating for Malta on the entrepreneurial index climate. In fact, the Maltese index was below the average standard obtained by the 25 EU member states. At the same time, Malta was characterised as having a very low rate of business failure and business transfer. Additionally, although in most countries a low rate of entrepreneurial activity is generally associated with a low preference for self-employment, the survey shows that this is not the case for Malta, as half of the Maltese respondents claimed that they would prefer to be self-employed. So, if we want the entrepreneurial spirit in Malta to flourish, we need to understand the factors that promote it and then we need to find effective ways of encouraging the growth of new business formations in order to stimulate economic growth and wealth creation.



A recent document published by the Central Bank of Malta (April 15, 2010) reports that entrepreneurial activity, particularly that of small businesses and of self-employed individuals, has undoubtedly contributed to the resilience shown by the Maltese economy during the recent recession and that entrepreneurial activity is the key for Malta to sustain the recovery and maintain its competitiveness Given the growing importance on entrepreneurship and the lack of empirical research in Malta on entrepreneurial profiles, this study seeks to characterise the entrepreneurial profile of Maltese entrepreneurs (company owners and self-employed persons) and employed managers. It also attempts to determine which of these characteristics can adequately distinguish between the entrepreneur and the employed manager. The implications of the findings together with avenues for future research will be discussed. Literature review Defining entrepreneurship Entrepreneurship is the process by which “opportunities to create future goods and services are discovered, explored and evaluated” (Shane & Venkataraman, 2000, p. 218). This definition has been chosen because it does not restrict the term entrepreneur exclusively to founders. Whilst giving high prominence to the firm founder and the degree of creativity involved in entrepreneurship (cf. Shane, Locke & Collins, 2003), it views other persons such as small business owners and self-employed persons as entrepreneurs and so this definition seems more fitting for the Maltese context. In fact, it has been argued that the field of small business is very closely tied to entrepreneurship since the entrepreneurship recognises the importance of the manager, who in most cases is the owner (cf. Hisrich & Dronvsek, 2002). After all, the importance of small businesses emerged in Europe after the publication of the Bolton Report (1971), which reported the economic importance of small firms. This led to a substantial increase in small businesses in Europe as well as educational programmes and initiatives aimed at promoting small business and entrepreneurship. Schools of entrepreneurship According to Cunningham & Lischeron (1991), research activities on entrepreneurship fall under six main schools of thought.

1. The “great person” school of entrepreneurship, which deals with the notion of whether entrepreneurs are “born” or “made” and where successful entrepreneurs are characterized as individuals who are have strong drives for independence and success, have high levels of vigour, persistence and self-esteem.

2. The psychological characteristics school of entrepreneurship focuses on personality factors and considers entrepreneurs to have unique needs, drives, attitudes, beliefs and values which determine their behaviour and which distinguishes them from non-entrepreneurs.



3. The classical school of entrepreneurship distinguishes between entrepreneurship and management and identifies innovation, creativity and discovery as the key aspects of entrepreneurship.

4. The management school of entrepreneurship deals with the technical aspects of management by focusing on the central functions required in managing a firm – organizing and managing, and assuming risk for the sake of profit. This school of though is based on the belief that entrepreneurship can be developed and taught in a classroom.

5. The leadership school of entrepreneurship views the entrepreneur as a “people manager” or an effective leader/mentor whose key functions are to motivate, direct and lead.

6. The intrapreneurship school evolved in response to lack of innovativeness and competitiveness within organisations. An intrapreneur is not an owner but focuses strategic redirection, organizational duplication, product development, and operational efficiency. The emphasis is working together as a team to solve problems and create opportunities.

According to Cunningham & Lischeron (1991), to say that one school of thought is better than the other is like saying that one religion is more ‘godly’ than another. The selection depends on the information the researcher wants to emphasize when focusing on a specific aspect of the entrepreneurial process. Since the aim of this study was to determine those characteristics and attitudes that can adequately distinguish between entrepreneurs and employed managers in Malta, the psychological and “great person” schools of entrepreneurship were the most appropriate to address the research aims of this study. Personality/psychological characteristics Although no one has yet found the perfect entrepreneurial profile, certain characteristics and attitudes show up repeatedly when analyzing an entrepreneur’s personality (Gasse & Tremblay, 2009). Studies have identified numerous personality/psychological characteristics that are unique to entrepreneurs (vis-a-vis non-entrepreneurs). Such characteristics that have received particular attention in the entrepreneurial literature are: the need for achievement, locus of control, ambiguity tolerance, self-confidence, creativity/innovation, risk-taking propensity and self-sufficiency/freedom. These will be discussed in further detail below. Need for achievement McClelland’s (1961) theory of the need for achievement proposes that individuals who have a need to achieve seek to excel, progress and perform. Such individuals set high but obtainable targets and strive to attain them through their own efforts, are more concerned with the personal achievement rather than with the rewards of success, need regular feedback to monitor their progress of achievement and generally prefer to work alone or with other high achievers. This theory suggests that individuals that have a high need of achievement are more likely to seek out an entrepreneurial job rather than other roles. In fact, many studies have shown that entrepreneurs have a higher need for achievement than non-entrepreneurs (Robinson et al., 1991; Steward et al., 2003) and that entrepreneurially inclined persons have a greater need for achievement than those who are not entrepreneurially inclined (Gürol & Atsan, 2006). However, it has also been reported that this characteristic is not as effective in making the difference between firm founders and



managers but could be helpful in determining entrepreneurial activity (Collins, Locke & Hanges, 2000). So the first null hypothesis tested in the study is:

H1: Entrepreneurs and managers have the same level of the need for achievement.

Locus of control According to Rotter (1966), there are two aspects of locus of control: internal and external. Internal control expectations occur when an individual has got direct control over his life and when the outcome of his actions depends on his own performance or characteristics. External control expectations occur when an individual believes that life’s events are the result of external factors such as fate, chance or luck. Rotter argued that internal locus of control is related to learning and so those individuals with an internal locus of control are more likely to be motivated and to strive for achievement than those with an external locus of control. An external locus of control hampers learning and encourages passivity. While Rotter presented the internal/external divide as two opposite ends of a continuum, other researchers provided evidence that the internal and external should be treated as two separate dimensions. In this sense, an individual can have a positive or negative external control. According to Wong and Sproule (1984), positive external control boosts personal control and hence increases the expectation of success, while a negative external control hinders personal control. Additionally, Levenson (1981), in his research on the locus of control construct, differentiated between internality, powerful others and chance, thus splitting external control into two separate dimensions. Withstanding all this disagreement on dimensions, a common picture that emerges from studies is that entrepreneurs generally have an internal locus of control and believe that they have the potential to influence their own destiny (Koh, 1996; Utsch & Rauch, 2000). Additionally, there are studies which reported that this characteristic can distinguish between entrepreneurs and non-entrepreneurs (Mueller & Thomas, 2000), between successful and unsuccessful entrepreneurs (Brockhaus & Horwitz, 1986) as well as between entrepreneurially inclined and non-entrepreneurially inclined university students (Gürol & Atsan, 2006). Other studies found that locus of control did not distinguish between founders and managers (Begley, 1995) and between owners of new business and managers (Brockhaus, 1982). So the second null hypothesis tested in this study is:

H2: Entrepreneurs and managers have the same level of locus of control.

Tolerance towards ambiguity This characteristic relates to the ability of an individual to handle and manage stress created by ambiguity. Wilkinson (2006) calls this ambiguity tolerance as “emotional resilience”. Thus, individuals who are capable of making defensible decisions under uncertainty (when crucial pieces of information are unavailable or too costly to obtain) and view these situations as attractive rather than uncomfortable or threatening (while understanding the serious issue facing him or the organization) have a high level of tolerance towards ambiguity (Cresson Wood, 2008; Teoh & Foo, 1997). This ambiguity towards tolerance is quite vital when a business is set up for the first time since an unpredictable number of problems crop up and so it is important for the



entrepreneur to be in possession of this trait (Shane et al., 2003). Very often, entrepreneurs spend considerable amount of time at work facing forceful competition while lacking the resources to execute their plans and strategies. Therefore, entrepreneurs might experience a considerable amount of stress (Baron, 2008). However, many studies show that entrepreneurs and those who are entrepreneurially inclined have a significantly greater capacity to tolerate ambiguity and hence it is believed that tolerance of ambiguity is an entrepreneurial characteristic (Koh, 1996; Schere, 1982). At the same time, Shane et al (2003) reported that several studies did not match these findings and make reference to studies that reported no significant differences between firm founders and non-founders (Babb & Babb, 1992) and between firm founders and managers (Begley, 1995). So the third null hypothesis tested in this study is:

H3: Entrepreneurs and managers have the same level of tolerance ambiguity.

Self-Confidence Self-confidence is an individual’s belief in his own resources and abilities. In general, individuals who believe they are able and that they can and will do well are more likely to be motivated in terms of effort, persistence and behaviour than individuals who believe they are less able and do not expect to succeed (Pintrich, 2003). Self-confidence is very important in entrepreneurship because setting up a business and trying to be successful is not an easy task to do. Studies show that entrepreneurs and those who are entrepreneurially inclined generally report higher levels of self-confidence than others (Baum & Locke, 2004; Koh, 1996). So the fourth null hypothesis tested in this study is:

H4: Entrepreneurs and managers have the same level of self-confidence.

Creativity/innovativeness Schumpeter (1942) defined the entrepreneur as an individual able to:

…reform or revolutionize the pattern of production by exploiting an invention or, more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way, by revolutionizing an industry and so on (p. 132).

This definition underscores an important characteristic of the entrepreneur – innovation. In fact, entrepreneurs are generally characterized as individuals who are full of creative and innovative ideas and are also able to merge these ideas with the resources available in order to generate additional value. Hence, innovation carries the invention (the discovery) further “with the commercial realization of value of the invention or the receipt of an economic return” (Feldman, 2004, p. 3). Innovation and entrepreneurs are companion terms and in fact, studies show that entrepreneurs are more creative, imaginative and innovative than non-entrepreneurs (Thomas & Mueller, 2000), that entrepreneurially inclined individuals are more innovative than non entrepreneurially inclined individuals (Gürol & Atsan, 2006; Koh, 1996); and that innovation can also separate entrepreneurs from managers (Steward et al, 2003).



So the fifth null hypothesis tested in this study is:

H5: Entrepreneurs and managers have the same level of creativity/innovation.

Risk-taking propensity Risk taking was the first identified entrepreneurial characteristic (cf. Cantillon, 1755) and the term “risk-bearing” was used by Mill in 1848 to distinguish between the entrepreneur and the manager. McClelland (1961) reported that persons with a high need for achievement would have moderate risk-taking propensities. Many later studies supported and still continue to support the finding that entrepreneurs take more risks than managers and salaried employees (Cromie, 2000; Masters & Meier, 1988). However, a series of other studies indicated that the attitudes of entrepreneurs towards risk were not necessarily different from that of managers or even of the general population (Brockhaus, 1982; Thomas & Mueller, 2000; Unni, 1990). Delmar (1994) argued that this could be due to the fact that entrepreneurs are more inclined to take risks in the specific domain of their business venture where they are experts and where they have some degree of control. Thus, entrepreneurs, particularly the firm founders, do not perceive their actions as risky (cf. Sarasvathy, Simon & Lave, 1998) and this indicates that the measurement of risk-taking propensity may be confounded with high self-efficacy (cf. Shane et al., 2003). Moore and Gergen (1985) also add that entrepreneurs tend to take risks only after they have carefully analyzed the situation in hand and have developed at the same time a strategy that minimizes the risk. After all, as they put it: “well-seasoned risk required careful decision making” (p. 72). So the sixth null hypothesis tested in this study is:

H6: Entrepreneurs and managers have the same level of risk-taking propensity.

Self-sufficiency/freedom Self-sufficient individuals are those independent persons who want to be their own boss, who want to be able to make their own choices and who want to set their own constraints. In other words, they want to take decisions themselves and want to have liberty to take action (Stoner & Fry, 1982). They prefer to take the responsibility for their life rather than living off the efforts of others (Shane et al., 2003). Entrepreneurs are unique as they want to be the first in doing things or else they want to do things in a different way than others had done previously. Sometimes they even go against the traditional way of doing things or even do things that others claim as being mad or unwise. It has been reported many times that higher independence is seen in many entrepreneurs than in normal individuals and that entrepreneurs pursue entrepreneurial careers because they seek independence. Shane et al. (2003) point out that many of these statements are based on qualitative observations and that there is very little empirical evidence (cf. Shane et al., 2003) in the entrepreneurship literature. However, the little empirical evidence that exists still shows that entrepreneurs have a higher level of independence than the general population (e.g. Aldridge, 1997 and Hornaday & Aboud, 1973, as cited in Shane et al., 2003).



So the seventh hypothesis to be tested in this study is:

H7: Entrepreneurs and managers have the same level of self-sufficiency/freedom.

Research methodology Research framework This empirical study which is based in Malta examines seven personality/psychological characteristics highlighted in the foreign literature that seem particularly important in pre-disposing someone to become an entrepreneur (i.e., need for achievement, locus of control, ambiguity tolerance, self-confidence, creativity/innovativeness, risk-taking propensity and self-sufficiency/freedom) and seeks to determine the entrepreneurial profile of Maltese entrepreneurs (company owners and self-employed persons) and Maltese managers (employed). It also attempts to determine which of these characteristics can adequately distinguish between entrepreneurs and managers. The research framework used in this study is illustrated in Figure 1 below.

Fig.1 : Framework of the Study PERSONALITY/PSYCHOLOGICAL CHARACTERISTICS OCCUPATION 1. Need for achievement 2. Locus of Control 3. Ambiguity Tolerance 1. Entrepreneur 4. Self-Confidence 2. Employed Manager 5. Creativity/Innovativeness 6. Risk-Taking Propensity 7. Self-Sufficiency/Freedom

Research Setting The Republic of Malta lies at the centre of the Mediterranean Sea – 93 km South of Sicily and 288 km North of Africa, and has area of 316 km². It consists of an archipelago: Malta, Gozo and Comino and three other smaller uninhabited islets. The climate is Mediterranean with hot, dry summers and mild winters. Malta currently has 395,742 inhabitants (NSO, 2009a), thus making it the second most densely populated country in Europe with 1,309 persons per km². The residents in Malta are mostly Maltese (95.6%), Catholic and can speak both Maltese and English. Moreover, Malta receives around 1.2 million tourists. Malta became a full member of the European Union (EU) in 2004. Population of interest and sample selection The population of interest in this study concerns all entrepreneurs (here defined as those persons who founded a large company or a small business as well as self-employed persons) and employed managers that:

- are Maltese citizens; - have at least secondary level of education so that they would be in a better position to

respond to the survey questions;



- are currently employed (i.e., not retired or without a job); - are not employed by a non-profit organization.

Since in this study it was not possible to get the names and contact details of all self-employed persons, company owners and employed managers due to Data Protection Act, it was not possible to use probability sampling methods. Thus, with no sampling frame available, non-probability sampling methods had to be adopted. In view of this, the distribution of resident business units for sole ownership/partnership and for limited liability companies by industry for the year 2008 was obtained from ‘Business Demographics: 2000-2008’ news release (NSO, 2009b). Then, the entrepreneurs sample was determined by proportionate allocation. The total number of entrepreneurs in the sample by industry was then matched with an equal number of managers. This matching was an important means of controlling any opportunity biases that might vary within industry (cf. Shane et al., 2003). The resulting sample characteristics are presented in Table 1 below. After internal discussion with a well-informed person on local businesses from the Malta Chamber of Commerce and Enterprise, a pool of prospective respondents was identified. These persons were contacted by phone and were invited to participate in the survey by responding to an online questionnaire. Some individuals declined to participate while others opted to reply online but failed to submit their responses. Non-respondents were chased and the sampling process continued until the pre-determined quotas were obtained.

Table 1: Sample Characteristics by Industry Type Entrepreneurs

Sole Ownership/

Partnership Limited Liability EmployedManagers

Industry Type Population

(%) Sample

Size Population

(%) Sample

Size Sample

Size

Mining, Quarrying & Construction 4,891

(11.71%) 5 554

(5.58%) 1 6

Manufacturing 2,509

(6.00%) 2 989

(9.98%) 2 4

Wholesale and Retail Trade 12,617

(30.21%) 12 3356

(33.85%) 7 19

Hotels and Restaurants 3,067

(7.34%) 3 767

(7.77%) 2 5 Transport, Storage and Communications

2,574 (6.16%) 2

668 (6.74%) 1 3

Real estate, renting and related activities

9,117 (21.83%) 9

2,994 (30.20%) 6 15

Community, Social & Personal Service

6,523 (15.62%) 6

585 (5.90%) 1 7

Others 467

(1.11%) 1 0

(0.00%) 0 1

Total 17,109

(100.00%) 40 9,913

(100.00%) 20 60



The instrument used In this study, all participants were asked to respond to a self-report questionnaire entitled “Entrepreneurial Characteristics Questionnaire”. This questionnaire consists of 36 items, and takes around 10 minutes to complete. Participants are required to respond to the items on a forced four-point Likert scale ranging from ‘1’ = totally disagree to ‘4’ = totally agree. A good number of items in this questionnaire pertaining to five characteristics (need for achievement, self-sufficiency/freedom, self-confidence, tolerance towards ambiguity/resistance to stress, creativity/innovativeness) were adapted from the “Am I the Entrepreneurial Type” questionnaire, which is available online on the Business Development Bank of Canada (BDC, 2009) website while some other items as well as those pertaining to the other two characteristics (locus of control and risk-taking propensity) were adapted from various other sources (e.g. Lee & Ashton, 2004; Van der Brink et al., 2004). After pilot testing, some of the initial set of items had to be worded and others replaced as the internal consistency reliability coefficients were not satisfactory. Examples of some of the items pertaining to each of the seven characteristics used in the final version of the questionnaire are presented in Appendix A. Before conducting the field study, the questionnaire was pilot tested again with 12 entrepreneurs and 12 managers who volunteered to participate in the pilot stage. To determine the internal consistency reliability of the instrument, the Cronbach alpha was used (see Table 2). In fact, this time, all characteristics produced coefficients indicative of acceptable levels of internal consistency reliability (cf. Field, 2009). After two weeks, the same questionnaire was re-administered to the same participants. The responses on both administrations were used to assess the test-retest reliability of the instrument. In fact, all constructs produced a positive and significant correlation coefficient (N = 24, p < 0.01), thus confirming the temporal stability of the instrument. More details on the Spearman Rank Order correlation coefficients and the Cronbach alpha coefficients are presented in Table 2.

Table 2: Test-retest Reliability Correlation Coefficients (Pilot Study) Personal/Psychological

Characteristics Correlation Coefficient r

Cronbach α coefficient

Need for Achievement/Success 0.783 0.693 Self-Sufficiency/Freedom 0.892 0.722

Ambiguity Tolerance 0.715 0.742 Self-Confidence 0.831 0.698

Creativity/Innovativeness 0.782 0.712 Locus of Control 0.822 0.763

Risk-taking Propensity 0.796 0.783 (**p < 0.01)

Statistical methods and software package used In preliminary analysis, chi-squared tests of independence are performed on gender, age and education to ensure that the entrepreneurs and the managers were homogeneous with respect to



these background characteristics. In the case of any significant chi-squared statistics, appropriate weights will be applied to account for the discrepancies. As for the main analysis, descriptive statistics (frequencies, means, standard deviations, standard error of means) for each of the seven characteristics are obtained for the entrepreneurs and the managers in order to obtain an entrepreneurial profile of each group. To test the seven hypotheses outlined in this study, independent samples t-tests are used to determine which of the characteristics can actually distinguish between the entrepreneurs and the managers. Whereas statistical test of significance tell us the likelihood that experimental results differ from chance expectations, effect size measurements tell us the relative magnitude of the experimental treatment (Thalheimer & Cook, 2002). So, in the presence of a significant p-value, effect size r is computed to tell us the size of the experimental effect. Effect sizes ranging from 0.1 to 0.23, 0.24 to 0.36 and 0.37 to 1 represent small, medium and large effect sizes respectively (cf. Cohen, 1988). Additionally, binary logistic regression is used to predict which of the two categories (entrepreneur or manager) each respondent is likely to belong to, based on the entrepreneurial profile that emerges from the survey. The statistical software package used in this study is PASW (previously SPSS V18.0). Statistical results and discussion In preliminary analysis, chi-squared tests of independence were used to ensure that age, gender and education did not produce any confounding effects and hence change the form of the relationship between the personality/psychological characteristics and occupation type. However, the chi-squared test confirmed that no significant associations exist in the sample between gender and occupation (χ2=1.601, df = 1, p = 0.206), age and occupation (χ2 = 0.796, df = 2, p = 0.671) as well as education and occupation (χ2 = 5.197, df = 2, p = 0.074). Hence, the analysis of results proceeded. Descriptive statistics (see Table 3) on the seven entrepreneurial characteristics indicated that the entrepreneurs reported higher means than the managers in every single characteristic. This is consistent which the entrepreneurial literature, that entrepreneurs have a greater need for achievement, more freedom, more self-confidence, a higher tolerance for ambiguity, more creativity and innovativeness, more internal locus of control and a higher propensity to take risks.

Table 3: Descriptive Statistics for Characteristics by Occupation

Characteristic

Type

N

Mean (Min = 1, Max = 4)

Std. Deviation

Std. Error Mean

Need for

achievement 1 60 3.25 .484 .062 2 60 3.17 .480 .062

Self-sufficiency/ Freedom

1 60 2.59 .504 .065 2 60 2.11 .488 .063



Self- Confidence

1 60 3.16 .604 .078 2 60 3.02 .542 .070

Tolerance Ambiguity

1 60 2.91 .483 .062 2 60 2.79 .609 .078

Creativity/ Innovation

1 60 3.11 .471 .060 2 60 3.01 .478 .061

Locus of Control

1 60 2.98 .509 .065 2 60 2.73 .556 .071

Risk-taking Propensity

1 60 3.06 .561 .072 2 60 3.00 .552 .071

Type coding: 1=Entrepreneur, 2 = Manager

The following box plots provide a graphical overview of the distribution of the managers and the entrepreneurs in each of the seven characteristics addressed in this study. The box plots clearly illustrate that the entrepreneurs obtained a higher average score (here indicated by the median) in all characteristics. However, it is also evident that the largest discrepancy occurred for self-sufficiency/freedom followed by locus of control. What is also interesting to note is that although the average score of the entrepreneurs for self-sufficiency is higher than that of the managers, the average score for the entrepreneurs in this variable is relatively low, particularly when compared with the average score of other characteristics. Additionally, it is also clear that the scores of the managers and those of the entrepreneurs are widely spread. Although many factors such as personal circumstances and timing come into play when a person is attracted to the idea of becoming an entrepreneur (Gasse, as cited in BDC, 2009), the distributions clearly indicate that a good number of managers do possess the specific set of attributes that make up the entrepreneurial mindset and this could make them potential entrepreneurs. As Lachman (1980) put it, if persons have the same characteristics as entrepreneurs, they are more likely to perform entrepreneurial acts than others who do not possess such characteristics. A series of independent samples t-tests (see Table 4) revealed that entrepreneurs reported significantly higher means in only two of the seven personality/psychological characteristics investigated in this study. In fact, occupation type (entrepreneur vs manager) produced a significant effect on self-sufficiency/freedom (p < 0.01) which in Cohen’s terms represents a large-sized effect (r = 0.44), while occupation type produced a small but significant effect on locus of control (p = 0.02, r = 0.22). The remaining five characteristics - need for achievement (p = 0.39), self confidence (p = 0.19), ambiguity tolerance (p = 0.24), creativity/innovativeness (p = 0.29) and risk taking propensity (p = 0.51) - produced means that were not statistically significant from each other and hence the null hypotheses of no difference in means between entrepreneurs and managers for these five characteristics were retained.



Figure 2: Box Plots of each of the characteristic scores split by occupation

Table 4: Summary of the Independent Samples t-tests and effect size r Variable Df t-value p-value effect size r Need for achievement 118 0.871 0.386 Self-Sufficiency/Freedom 118 5.334 < 0.01** 0.44 Self-Confidence 118 1.311 0.193 Ambiguity Tolerance 112.2* 1.189 0.237 Creativity/Innovation 118 1.058 0.292 Locus of Control 118 2.481 0.015** 0.22 Risk Taking Propensity 118 0.656 0.513

*equal variances not assumed ** statistically significant

To investigate the entrepreneurial characteristics further, a forward stepwise binary logistic regression was performed, with occupation type (entrepreneur vs. manager) as the dependent categorical variable and the seven characteristics as the continuous predictor variables.



Prior to the interpretation of results, a residual analysis was conducted to ensure that there were no isolated points that might fit the model poorly or exert an undue influence on the logistic regression model. The basic residual statistics were pretty good, according to the guidelines given by Field (2009). In fact, all DFBetas were less than 1, the leverage statistics were close to the average value [number of predictors plus 1, divided by the sample size = (7+1)/120 = 0.067)] and none were greater than twice or three times this average value. There were no unusually high values of Cook’s distance since none were greater or equal to 1 and so no influential cases could have an effect on the model. Finally, only 1.7% (which does not exceed the threshold of 5%) of the cases had absolute standardized residual above 2 which implies that there weren’t isolated points for which the model fits poorly. Thus, as Field (2009) put it “there seems to be very little here to concern us” (p. 293).

The first variable entered was sufficiency/freedom since it produced the most significant p in the -2 log likelihood test and hence emerged as the best predictor. The PASW output also shows that when this variable was entered, the model became better at predicting if someone is an entrepreneur than it was with only the constant included (χ2 = 25.46, df = 1, p < 0.01). After this variable was entered, all the other variables did not provide a significant increment in the fit of the model. Thus the probability of being classified as an entrepreneur was associated with greater self-sufficiency/freedom. A summary of the binary logistic regression is presented in Table 5.

Table 5: Variables in the Equation

B S.E. Wald df Sig. Exp(B)

95% C.I.for EXP(B)

Lower Upper

Step 1a SS 1.928 .436 19.520 1 .000 6.877 2.924 16.176

Constant -4.535 1.045 18.822 1 .000 .011

a. Variable(s) entered on step 1: SS.; Model χ2 (1) = 25.44, p < 0.01

The classification table presented in Table 6 indicates how well the model predicts group membership. In fact, the current model correctly classifies 75% of the managers (but misclassifies 25% of the cases) and 71.7% of the entrepreneurs (but misclassifies 28.3% of cases) so that the overall accuracy of classification of the model is a “good” 73.3%.



Table 6: Binary Logistic Regression Classification Tablea Observed Predicted Type Percentage

Correct 0 1

Step 1 Type Managers 45 15 75.0

Entrepreneurs 17 43 71.7

Overall Percentage 73.3

a. The cut value is .500; Step 1 = Self-sufficiency/freedom

Conclusion Summary of findings and implications From these seven personality/psychological characteristics examined in this study, two variables emerged that could adequately distinguish between managers and entrepreneurs. These were sufficiency/freedom and locus of control. This implies that entrepreneurs have a greater desire to be independent and to be their own boss. By setting up their own business, they feel in control of their destiny and pursue their dreams. Further analysis revealed that self-sufficiency/freedom emerged as the single and most important predictor in classifying a person’s occupation as that of an entrepreneur or of a manager, with an overall holdout accuracy of 73.3%. While this model indicates that self-sufficiency/freedom is a distinguishing criterion that Maltese entrepreneurs possess, it also acknowledges the important role of the other characteristics have in shaping the entrepreneur’s profile. In fact, this study has shown that entrepreneurs obtained higher mean scores than managers in each of the seven personality/psychological characteristics investigated. This is consistent with entrepreneurship literature, that entrepreneurs have a greater need for achievement, more freedom, more self-confidence, a higher tolerance for ambiguity, more creativity and innovativeness, more internal locus of control and a higher propensity to take risks. These findings support the “great person” school of entrepreneurship which posits that entrepreneurs are characterized as persons who have strong drives for independence as well as the psychological characteristics school of entrepreneurship which is based on the premise that entrepreneurs’ needs, values and attitudes as well as beliefs propel them to behave in certain ways that can distinguish them from non-entrepreneurs. According to Koh (1996), given the importance of entrepreneurship, there is practical value in being able to identify entrepreneurial characteristics that can distinguish between entrepreneurs and non-entrepreneurs. This is because such entrepreneurial assessments give the opportunity to an individual to do self-reflection on his/her own strengths and weaknesses and gives them the opportunity to compare their own values with those of self-employed persons and successful entrepreneurs (Gasse & Tremblay, 2009). Additionally, with a detailed knowledge of those psychological characteristics and attitudes that predispose someone to become an entrepreneur,



the local policy makers can invest in entrepreneurship education programmes aimed at helping those interested (employees, managers who thus far may be limiting themselves to managerial positions rather than exploiting their full potential, and practicing entrepreneurs) in developing and refining their entrepreneurial beliefs, attitudes and skills through entrepreneurship education, thus enhancing the economic propensity of the country. Limitation of the study There are some limitations to the findings, however, that must be noted.

1. The survey was based entirely on responses from a self-report questionnaire. Thus, it was assumed that respondents are capable of an acceptable degree of rating with precision and objectivity. It is possible that some respondents might have presented themselves in what they consider to be a positive manner and this might bias to some extent the results.

2. Since the sampling frame of the population considered was not available, the researcher used a combination of quota and purposive quota sampling techniques. This means that the sample elements are not necessarily representative of the target population (cf. Hair et al., 2007).

3. Although this study examined the degree of relatedness of the items pertaining to each characteristic via Cronbach alpha coefficients, it was possible to confirm that these items were uni-dimensional via Factor Analysis. Factor Analysis confirms whether on not the items measuring each characteristic have been assigned to the appropriate dimension within the instrument. However, the sample size used in this study (N = 120) was not sufficient to conduct Factor Analysis (cf. Comrey & Lee, 1992).

Suggestions for further research This study demonstrated that there are Maltese managers whose entrepreneurial profile based on personality/psychological characteristics indicates that they have the potential to become entrepreneurs; yet they still opt to remain employed rather than seize a business opportunity. The reasons for such a stance may include the need for an appropriate business idea, lack of finance, fear of bankruptcy, the need for security, family responsibilities, uncertainty of income, the complexity of the administrative process, the small size of domestic market or a combination of factors. There is need for further research to address these problems and to investigate empirically and inductively with a view to explore possible explanations. Such research will generate more information than is currently available. Further examination of embeddedness theories and different schools of thought on entrepreneurship together with the role of environmental factors could help identify the factors that further affect the criteria explored in this paper. The personal characteristics such as personality characteristics are formed by the interplay between the individual and the environment (cf. Littunen, 2000). Ignoring environmental characteristics when studying personality/psychological characteristics could lead to simple conclusions when the reality is much more complex.



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APPENDIX A Sample Items from the Entrepreneurial Characteristics Questionnaire ____________________________________________________________________________________________________________ Need for Achievement/Success I want to shoot for excellence in everything I do. I always try to learn lessons from my failures. Self-Sufficiency/Freedom I prefer being my own boss. I want to be the sole decision maker and have liberty to take any action I deem necessary. Ambiguity Tolerance/ Resistance to Stress I am a lot less effective in stressful situation.* I am fairly at ease in difficult situations. Self-Confidence/ Enthusiasm For me everything is possible if I believe I can do it. When I take on a project I have confidence that I will carry it out successfully. Creativity/Innovativeness I am always in the midst of launching new project. I am fairly curious and I am continually in search of discovery. Locus of Control According to me, it’s possible to influence one’s destiny. The outcome of my actions depends on my own performance. Risk-Taking Propensity I’m prepared to invest a lot of my own capital to take a business opportunity I believe that higher risks are worth taking for higher rewards. For me, the best possible plan is one that is risk free.* I regularly take calculated risks to gain potential advantage. ____________________________________________________________________________________________________________ *Reversed scale

Documents

Characteristics of the Maltese Entrepreneuropenaccesslibrary.org/images/BGS332_Frank_Bezzina.pdfCharacteristics of the Maltese Entrepreneur Frank Bezzina, University of Malta, Malta