Risk propensity of entrepreneurs - A study of underlying factors in background and personality in comparison with managers

Abstract

The purpose of this paper is to evaluate whether the risk propensity of entrepreneurs is different from others. We have compared this group to the professional field of managers, whose risk propensity we have put in comparison to the entrepreneurs. Our interest lies in examining this potentially superior risk propensity of entrepreneurs and the underlying factors for this; personality and the background factors. The previous research in this field supports the notion that entrepreneurs indeed are increasingly risk prone than others, though this has been widely debated amongst the discourses in the field. To enable us doing this comparison, we have conducted a survey amongst the two groups. To help us gain further insight into the results collected from our survey, we performed interviews with representatives from the two groups in focus. The results were then cross-referenced and analyzed to highlight the associations, dissimilarities and the possible explanations for these. The results of our study strengthen to some extent the previous research; there are differences in risk propensities in the two participating groups. Entrepreneurs are more risk prone in the work life than managers, but seem to be less willing to take risks in non-work environments, such as driving, sports and financial matters. Entrepreneurs as a group show that they to a greater extent are less willing to take risks in financial investment decisions than the managers. The risk taking of entrepreneurs does not increase in relation to an increasing income, which it in fact does for managers. Our research provides a contribution to the researching field of entrepreneurship with a further understanding of Swedish entrepreneurs. However, our study contains a fairly small sample and we therefore strongly recommends that further studies is performed in this area of research.