Small Business Economics

, Volume 42, Issue 4, pp 787–814 | Cite as

Personality characteristics and the decisions to become and stay self-employed

  • Marco Caliendo
  • Frank Fossen
  • Alexander S. Kritikos


Based on a large, representative German household panel, we investigate to what extent the personality of individuals influences the entry decision into and the exit decision from self-employment. We reveal that some traits, such as openness to experience, extraversion, and risk tolerance affect entry, but different ones, such as agreeableness or different parameter values of risk tolerance, affect exit from self-employment. Only locus of control has a similar influence on the entry and exit decisions. The explanatory power of all observed traits among all observable variables amounts to 30 %, with risk tolerance, locus of control, and openness having the highest explanatory power.


Entrepreneurship Personality Big five Risk tolerance Locus of control 

JEL Classifications

D81 J23 M13 L26 



We would like to thank two anonymous referees, Silke Anger, David Audretsch, Rob Fairlie, Philipp Koellinger, Maria Minniti, Martin Obschonka, Rainer Silbereisen, Siri Terjesen, Roy Thurik, Mirjam van Praag, the seminar participants in Berlin, Bloomington, Erfurt, Jena, Lüneburg, Rotterdam, and Washington, D.C., the participants of the Workshop on Entrepreneurship Research at IZA in Bonn, of the ESEM conference in Malaga and of the Verein für Socialpolitik in Frankfurt/Main for their helpful and valuable comments.

Supplementary material

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Supplementary material 1 (DOCX 62 kb)


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Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  • Marco Caliendo
    • 1
  • Frank Fossen
    • 2
  • Alexander S. Kritikos
    • 1
    • 3
  1. 1.University of PotsdamPotsdamGermany
  2. 2.Freie Universität BerlinBerlinGermany
  3. 3.German Institute for Economic Research (DIW Berlin)BerlinGermany

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