The persistent risk-taking that characterises entrepreneurs is a personality trait shared with those who are a menace to society, according to recent research by professors at the Australian School of Business.
Chris Jackson, a professor of business psychology, and Benjamin Walker, a PhD student, conducted an empirical study to test the notion that disinhibition – persistence in risk-taking during adversity – is shared among entrepreneurs and psychopaths.
The results of three experimental studies involving 605 participants supported their hypothesis. High levels of disinhibition were found to correlate with high entrepreneurial intentions.
“[We] expected participants high in psychopathic tendency to be fearless and insensitive to punishment. Psychopaths commit an offence, go to prison, the come out and commit the offence again,” says Mr Walker. “Our study showed … that participants high in entrepreneurial intentions showed the same pattern of results.”
This is important, the researchers argue, because this shared disinhibition may provide entrepreneurs with the tendency to persist with their business ventures in the face of overwhelming challenges, “and exhibit overconfidence and over-optimism that their venture will succeed,” they write.
Though compulsive risk-taking can lead to business failure and bankruptcy, it can also lead to great success, notes Mr Walker. The relentless pursuit of success despite adversities may be an advantageous quality for a company’s chief executive to have, he says.
However, the authors warn companies should take care in their selection of leader. “While risk-taking during punishing circumstances can be advantageous, … in many cases it is disadvantageous,” they write. They recommend therefore that disinhibited chief executives be moderated by those who are more risk-averse.