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© 2014 Baylor University

A Downside to the
E T&P Entrepreneurial
Personality?
Danny Miller

The literature on entrepreneurship bears a distinctly positive cast, often with good reason.
Entrepreneurs and their innovations have contributed enormously to national wealth, and so
scholars have examined the personalities, capabilities, and contexts underlying these con-
tributions. However, despite some early work, the negative aspects of the entrepreneurial
personality have been largely ignored. We shall argue that given the nature of the challenges
facing many entrepreneurs and the consequent demands of their jobs, certain personality
traits will be quite valuable to them. These, however, tend to be Janus-faced in that positive
attributes, such as energy, self-confidence, need for achievement, and independence, may
sometimes devolve naturally into aggressiveness, narcissism, ruthlessness, and irrespon-
sibility. Given the costly repercussions of the latter characteristics, we urge more study of
their nature and causes among entrepreneurs.

A Positive Image of a Tough Job and Its Demands

Many years of productive research on entrepreneurship have celebrated the breed and
its importance. Certainly, entrepreneurs have contributed in significant measure to eco-
nomic growth, national employment, and the robustness and renewal of economies around
the world (Acs & Szerb, 2007; Audretsch, 2007; Kirzner, 2009). They have sponsored
life-saving and productivity-enhancing innovations, and have made significant improve-
ments to our lifestyles, health, and well-being. Our established and emerging industries,
from railroads and oil refineries to Internet start-ups, could not have been born without
them.
Given the importance of entrepreneurs to society, a good deal of research has gone
into specifying the demands of their jobs, and the types of contexts and people that make
for a productive entrepreneur or an entrepreneurial culture (Legge & Hindle, 2012).
Particular emphasis has been placed on the challenges facing entrepreneurs who are
confronted with the prospect of starting a firm from scratch. Entrepreneurs frequently
must vie against established organizations that have more resources—financial, material,
and social. They must raise funds, recruit people, capture trade from rivals, deal for the
first time with institutional authorities, and create new products or services (Timmons,
1978). Indeed, to build a business that in some way disrupts a market—to be, to

Please send correspondence to: Danny Miller, tel.: 1-514-340-6501; e-mail: Danny.Miller@hec.ca.

January, 2015 1
DOI: 10.1111/etap.12130
paraphrase Schumpeter (1942), a “creative destroyer”—can take extraordinary drive and
aggressiveness in the face of what would be, to many, daunting obstacles.
These demands suggest the need for a special type of individual: one willing to risk
personal resources—funds, energy, and even reputation—on a venture that stands a good
chance of failing. It is not surprising, then, that the literature has found particular person-
ality traits to inhere in these individuals. For example, McClelland (1961, 1975, 1987) has
suggested that entrepreneurs have unusually elevated needs for achievement, autonomy,
power, and independence (see also Sexton & Bowman, 1986). Miller, Kets de Vries, and
Toulouse (1982) discovered that successful entrepreneurs tended to have internal loci of
control—that is, they believe that they, not their environments, control their destinies. This
observation is consistent with more recent research on entrepreneurial self-efficacy
(Markman, Balkin, & Baron, 2002), self-esteem (Arora, Haynie, & Laurence, 2011),
passion for the mission (Cardon, Zietsma, Saparito, Matherne, & Davis, 2005), and
eudaimonic vigor (Hahn, Frese, Binnewies, & Schmitt, 2012). The entrepreneurial pursuit
also has been linked to a person’s quest for self-enhancement (i.e., for achievement,
power, and hedonism) (Holland & Shepherd, 2011). Some scholars have even found that
the testosterone hormone, a correlate of proactive initiative, is higher among entrepreneurs
than among the general population (White, Thornhill, & Hampson, 2006)—although this
has been disputed by recent work (van der Loos et al., 2013).
Many of the above personal qualities are said to enhance an entrepreneur’s willing-
ness to take initiative, tolerate risk and uncertainty, be persistent in the face of challenge,
and act with daring and energy (e.g., Foo, 2011; Holland & Shepherd, 2011). They enable
an entrepreneur to pick himself up after failures, and to continue innovating, renewing,
and venturing forth even after having achieved success. Thus, these personal character-
istics seem suitable given the above-mentioned challenges confronting many entrepre-
neurs.1 However, self-confidence, vigor, aggressiveness, and also needs for achievement,
autonomy, and power, are Janus-faced: They have complementary facets that are less
sanguine, and which have been too often ignored.

The Janus Face of the Positives

The facets we refer to arise when the positive personality characteristics we describe
are taken to certain extremes. And to the extent that some entrepreneurs possess these
positive qualities, they also risk embracing the less salutary elements.
According to Kets de Vries (1985, p. 160): “the high degree of energy necessary to
achieve a dream has desires and needs behind it that if let loose, can wreak havoc on an
organization.” Thus, the energy, passion, and optimism said to be qualities of some
entrepreneurs can turn to overconfidence—especially when the entrepreneur is greeted by
success, and the adulation, prestige, and power that accompanies it (Kets de Vries &
Miller, 1984, 1985; Miller, 1990).2
A related trait of entrepreneurs that has been signaled in the literature relates to
self-efficacy and self-assurance, two primary requirements for a leader—especially one
facing the uncertain and demanding setting of many business founders. Unfortunately, for

1. That is, establishing, protecting, and nurturing a nascent and fragile organization in what is often a hostile
environment, vying against firms with more abundant resources, and breaking into the market.
2. Some authors, however, have argued that many entrepreneurs actually feel a sense of inferiority. For them,
the passion comes from a need to constantly prove themselves via their ventures. However, that insecurity can
make them intransigent, domineering bosses (Kets de Vries, 1985; Shapero, 1975).

2 ENTREPRENEURSHIP THEORY and PRACTICE

some people, these traits can evolve into hubris and narcissism. In what is perhaps too
extreme a statement, Freud (1921, pp. 123–124), in discussing one who chooses to lead,
states: “[he] need love no one else, he may be of a masterful nature, absolutely narcissistic,
self-confident, and independent.” Kernberg (1979, p. 33) complements that sentiment,
claiming: “narcissistic personalities are often driven by intense needs for power and
prestige to assume positions of authority and leadership.” Hayward, Shepherd, and Griffin
(2006) have called attention to hubris in entrepreneurs, while McCarthy, Schoorman, and
Cooper (1993) have noted that self-assured entrepreneurs will heedlessly escalate their
commitment to a losing course of action. Indeed, Engelen, Neumann, and Schmidt (2013)
confirm that narcissistic CEOs often tenaciously embrace misguided initiatives.
In similar fashion, need for achievement and power, when taken to extremes, can
result in aggressive and even ruthless behavior (Belanger, 2011; Kets de Vries, 1996).
Where a person’s desire for achievement or influence is great, there is always the temp-
tation to push hard, cut corners, and disregard stakeholders. Although this may lead to
temporary rewards, its long-term costs may vastly exceed them (Miller, 1990).
Along a different trajectory, a craving for autonomy and independence may give way
to alienation. Indeed, many entrepreneurs take on that role because they do not fit well into
standard jobs and because of their need to be independent and their difficulty with
authority figures (Hirschhorn, 1990). This struggle against authority occasionally can
generalize and result in deviant social conduct (Miller et al., 2010).
Finally, the need for control and dominance, which is intrinsic to some entrepreneurs
as they strive to guide a nascent venture, can ultimately devolve into behaviors such as an
obsessive wish to control the details of a business. In some cases, this tendency may be
accompanied by mistrust and a groundless suspicion of partners, employees, and com-
petitors (Kets de Vries, 1985; Kets de Vries & Miller, 1984).
Table 1 summarizes the above pairs of contrasts.

Evidence and Outcomes of Some Personality Downsides

Several bodies of evidence suggest that the negatives we have described do indeed
inhere within the personalities of many entrepreneurs—some of these people highly
successful and visible. The first evidentiary lode consists of biographies of entrepreneurs
who have shaped the industrial landscape of America. The second type of evidence
is to be found within accounts of deleterious founder effects on the evolution of their
enterprises.

Table 1

The Janus Face of an Entrepreneurial Personality

Positive characteristics Negative extreme

Energy, passion, optimism Grandiosity, overconfidence

Self-efficacy, self-assurance Narcissism, hubris
Need for achievement and power Aggressiveness, ruthlessness
Independence, autonomy Social deviance, indifference to others
Need for control, dominance Obsessive behavior, mistrust, suspicion

January, 2015 3
 When one looks at the history of many of the world’s large fortunes, their origins
appear to be gray. Some empires in distilling were built on bootlegging and smuggling
operations (Newman, 1978). Railroad entrepreneur Cornelius Vanderbilt was a ruthless
competitor who engaged in unethical stock manipulation (Stiles, 2009). Print magnate
Moses Annenberg participated in violence in the circulation wars and was imprisoned for
tax evasion (Cooney, 1982). Oil and steel dynasties have relied on cutthroat competition
and cartels. John D. Rockefeller Sr., for example, despite his generosity and consolidation
of a new industry, employed aggressive “cutthroat” pricing to bankrupt most of his
competitors while he tied up their means of transportation (Chernow, 2007). Andrew
Carnegie and Henry Ford I tolerated violence against their unions and workers (Brinkley,
2003; Wall, 1989).
These unsavory practices seem especially apt to occur early in the history of indus-
tries, when a founding entrepreneur fights to gain the strongest possible foothold in an
emerging sector. But even recently, as we know from the conduct of family firms like
Parmalat and Adelphia, the malfeasance of powerful entrepreneurs continues to make
headlines. Moreover, celebrated entrepreneurial leaders, such as Bill Gates, Steve Jobs,
and Mark Zuckerberg, have been variously portrayed to be ruthless in their dealings with
competitors, partners, and employees alike (e.g., Isaacson, 2011; Manes & Andrews,
1993). Finally, in emerging economies, such as China and India, where there remains
something of an institutional void, corruption is endemic, and many entrepreneurs are
only too happy to collaborate with authorities to subvert the forces of the market (De Jong,
Tu, & Van Ees, 2012).
Less direct confirmation of these darker tendencies comes from studies of problematic
successions in family firms—many of them originating with the overbearing personalities
of entrepreneurial founders (Belanger, 2011). One such study noted three common pat-
terns of problematic family successions following an entrepreneur’s tenure. First, a cowed
offspring successor’s reluctance to change any policy the patriarch had implemented.
Second, a rebellious successor wishing to destroy all vestiges of everything his or her
“tyrannical old man” had put into place. Finally, a wavering, unsure heir grafting incon-
gruous elements onto a strategy these did not fit (Miller, Steier, & Le Breton-Miller,
2003).
In discussions with consultants who have worked with the families of successful
entrepreneurs, there emerges, too often, a theme of an aggressive, impatient, demanding,
authoritarian, neglectful parent: typically, a business founder-patriarch. Indeed, there are
accounts in the literature of the challenges to a family that derive from such personality
characteristics in a founder–entrepreneur—accounts sometimes rife with instances of
psychological violence (Belanger, 2011; Kets de Vries, 1996).

Qualifications

To be clear, we are not suggesting that it is only entrepreneurs who may be subject to
these negative aspects of personality or engage in such behavior. Some “professional”
executives of public companies are equally susceptible, as we were reminded quite
recently during the financial crisis of 2008. Nor are we referring to “the average” entre-
preneur who must struggle to set up a small business. Most of the evidence we cite above
refers to significant entrepreneurs who have built large firms, often early in the develop-
ment of an industry, and who have achieved a good deal of financial success—at least for
a protracted period of time. It should not be forgotten, also, that we are dealing here with
something of an unexplored domain, and systematic evidence is lacking on the prevalence

4 ENTREPRENEURSHIP THEORY and PRACTICE

and nature of the above dysfunctions. Suffice it to say that the symptoms noted and the
collateral damage entailed warrant further investigation. Indeed, there is something about
the job requirements of most entrepreneurs, and the positive personality characteristics
most suited to those requirements, that may be especially apt to bring with them the
above-mentioned negatives.

Future Research Directions

Thus far, we remain quite ignorant of the personality dimensions and backgrounds
that distinguish between ethical and healthy entrepreneurs and those whose darker side
is more manifest. Some scholars have suggested that successful entrepreneurship
is born of personal shortcomings and disabilities.3 Does early hardship, for example,
result in more ruthless behavior? Do constraining social forces and compromised
ethics in a community turn nascent entrepreneurs into reprobates? How much does
family background matter? What roles are played by the nature and state of develop-
ment of an industry (e.g., do early years of chaos promote malfeasance)? How may
institutional forces, such as religion, education, and government regulation, limit the
damage (Meek, Pacheco, & York, 2010)? To answer these questions, it may be useful
to research the formative experiences and breeding grounds of entrepreneurs, their evo-
lutionary trajectories, the types of businesses they develop, their behavioral manifesta-
tions, the talents they possess and lack, and their impact on stakeholders and the
economy.
This will not be an easy task as there is every incentive for entrepreneurs to conceal
the less salutary aspects of their personalities and conduct. Nonetheless, there are
numerous historical accounts and biographies of significant entrepreneurs, with a good
deal of rich data regarding their life experiences, personalities, evolution, and deeds.
Systematic collection and fine-grained analysis of such biographies may lead to better
hypotheses regarding the dimensions that distinguish the more healthy, positive, and
socially constructive entrepreneurs, from those having a darker side. Then, although tact
and subtlety will be required, it may be useful to administer testing instruments to
entrepreneurs, and to attempt to relate their personality dimensions to the conduct of
their businesses.
In short, we would urge future scholars to research the possible downsides of the
entrepreneurial personality, if only to distinguish those entrepreneurs who contribute to
our economic and social well-being from those whose economic contributions are
negated by the harm they cause to their families and other stakeholders. Given the
impact of such individuals on our society, the pursuit may be well worth the effort.

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Danny Miller is research professor, HEC Montreal, and Chair in Family Enterprise and Strategy, University
of Alberta, 3000 Cote-Ste-Catherine Road, Montreal, Quebec, H3T 2A7 Canada.

I would like to thank Carol Belanger, Nick Fairclough, Gerard Ouimet, and Isabelle Le Breton-Miller for their
most helpful suggestions.

8 ENTREPRENEURSHIP THEORY and PRACTICE