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Entrepreneur’s personality

Past research on the entrepreneur’s personality has shown the important role that the entrepreneur’s family plays in the development of certain entrepreneurial characteristics. In their work, Collins and Moore (as cited by Dyer & Handler, 1994) noted that the childhoods of most entrepreneurs they studied were filled with a lot of insecurity poverty and child neglect. Entrepreneurs who have experienced such a childhood have a desire to create and control their own businesses in order to overcome what they experienced.

A person with this personality also affects how the entrepreneurial firm performs by influencing the decision-making process, employee reactions and successive planning. Entrepreneurs are also most likely to emerge from families where the parents were also entrepreneurs or self employed (Dyer & Handler, 2004). The relationship of the entrepreneur’s family to the business is an important factor to the success of the business. The initial capital usually generated from family assets and personal finances.

A family member might also be involved in the start-up and running of the business as a partner or as a member of the entrepreneurial team. This might lead to more members coming in to help with the running of the business. Researchers have noted that almost 90% of businesses owned in the United States are family managed and controlled. The economic value that these businesses provide is enhanced by their tendency toward focusing on the long term strategies instead of the short term.

A number of studies that have been carried out have shown that family businesses outperform other companies in the same industry group. In 1969, Monsen (as cited by Bellet et al, 2005) found that family owned businesses had a net income that was 75% higher than businesses controlled by managers. His conclusion was that the family run firms provided a greater return on investment, had a better managed capital structure and efficiently allocated and used their resources.

A study carried out in 1986 by the United States News and World Report found that out of the 47 family owned businesses, 31 outperformed the Dow-Jones Index in the New York Stock Exchange Market. In Germany, 75% of workers employed by family businesses contribute 66% of the Gross Domestic Product. These companies are viewed as the backbone of Germany’s economy. In Australia and Chile, 75% of the companies, owned and managed by families contribute to the employment and Gross Domestic Product levels of these countries (Bellet et al, 2005).

The Societal Value of Family firms have a direct impact on the self-sufficient aspect of the society and its workers. Novak and Jaffe, in their work of 1990 (as cited by Bellet et al, 2005), point out that the basic economic and social building blocks of a country are the families that create, control and operate businesses. The characteristics of individual entrepreneurs, their family backgrounds, culture, ethnicity and community involvement are the basis on which majority of businesses are built and managed. These businesses remain to be a force in the development of societal socioeconomic systems.

Family businesses are considered the recharging of stagnant economies around the world. Benedict’s 1968 multicultural research revealed the critical nature of a family business primarily in developing economies that are still growing (Bellet et al, 2005). His studies led him to the conclusion that the family enterprise cannot be matched in terms of its potential for taking on risks, its ability to access capital and the development of human resources when compared with the large public or privately introduction of hotel reservation system.