Risk attitudes and the common personality traits a study on vietnamese young entrepreneurs

VIETNAM NATIONAL UNIVERSITY
VIETNAM JAPAN UNIVERSITY
---------o0o---------

LE THI PHUONG

RISK ATTITUDES AND THE COMMON
PERSONALITY TRAITS: A STUDY ON
VIETNAMESE YOUNG ENTREPRENEURS.

MASTER THESIS
BUSINESS ADMINISTRATION


VIETNAM NATIONAL UNIVERSITY
VIETNAM JAPAN UNIVERSITY
---------o0o---------

LE THI PHUONG

RISK ATTITUDES AND THE COMMON
PERSONALITY TRAITS: A STUDY ON
VIETNAMESE YOUNG ENTREPRENEURS.

MAJOR: BUSINESS ADMINISTRATION

CODE: 8340101.01

RESEARCH SUPERVISORS:
PROF. PEIJUN GUO
DR. YOSHIFUMI HINO

Hanoi, 2021


ABSTRACT
This study aims to investigate the common personality traits of young Vietnamese
entrepreneurs and the relationship between these personality traits to their risk
attitudes. The decisive factor for the success of a business is Entrepreneurs, the
founders and making decisions about the growth strategy for the business. To do this,
the author set Big-five personality traits, optimism and pessimism as the independent
variable, risk attitude as the dependent variable, and then identified the relationships
between them.
The author uses quantitative methods on a sample of 167 young Vietnamese
entrepreneurs. We use structural equation modeling (SEM) method by SmartPLS3
software. Descriptive analysis and path analysis of the multivariate regression model
support the validity of the proposed model.
Findings in this study are the common personality traits and risk attitudes of young
Vietnamese entrepreneurs. The analysis also shows that agreeableness has the greatest
impact on risk attitudes of Vietnamese entrepreneurs, following that, the research
shows the pessimism affects risk attitudes of Vietnamese entrepreneurs which the
previous studies have not mentioned. The results of the study are an important
reference for policy researchers, investors and entrepreneurs in Vietnam.
Keywords: Big - five, optimism, pessimism, risk attitudes, Vietnamese entrepreneurs,
personality traits.


ACKNOWLEDGMENT
After two years of studying and researching at Vietnam Japan University, I am very
pleased to write this thesis. My passion for business has led to my research on
Vietnamese entrepreneurial traits. Research covers not only academic aspects but also

practical aspects with practical implications. The subjects and knowledge I gained
through courses in Vietnam - Japan University and Yokohama National University
played an essential role in supporting my research activities. So I would like to thank
professors and doctors for teaching and imparting valuable knowledge to me. I hope
that my research can contribute to studies of the personality traits of Vietnamese
entrepreneurs.
First of all, I would like to thank my advisers, Professor Peijun Guo and Dr. Yoshifumi
Hino, for their guidance and suggestions. My advisers gave me valuable advice on
how I should conduct the research process. Without their patiently quick guidance, I
would not have been able to complete this thesis.
Second, I also want to send my sincere thanks to the program assistant Ms. Huong, my
classmates and all the people who have helped me with my research, and gave me the
motivation during difficult times like reviewing surveys or collecting surveys so I can
step by step and be able to complete the research paper.
Last but not least, I would like to thank my family, who care about me both mentally
and physically so that I can focus as best as possible to complete this thesis.


TABLE OF CONTENT

Contents
ABSTRACT
ACKNOWLEDGMENT
TABLE OF CONTENT
LIST OF TABLE .................................................................................................................. i
LIST OF FIGURES ............................................................................................................. ii
LIST OF ABBREVIATIONS ............................................................................................ iii
CHAPTER 1: INTRODUCTION........................................................................................ 1
1.1 Background of research............................................................................................... 1
1.2 Problem statement ....................................................................................................... 3

1.3 Research objective ...................................................................................................... 4
1.4 Scope of the research .................................................................................................. 5
1.5 Significance of the research ........................................................................................ 5
1.6 Thesis structure ........................................................................................................... 6
CHAPTER 2: LITERATURE REVIEW............................................................................. 6
2.1 Risk management in business ..................................................................................... 6
2.2 Risk attitudes ............................................................................................................... 7
2.3 Big five personality traits ............................................................................................ 9
2.3.1 Openness ............................................................................................................. 10
2.3.2 Conscientiousness ............................................................................................... 10
2.3.3 Extraversion ........................................................................................................ 11
2.3.4 Agreeableness ..................................................................................................... 12
2.3.5 Neuroticism ......................................................................................................... 13
2.4 Optimism and Pessimism .......................................................................................... 14
2.4.1 Optimism ............................................................................................................. 14
2.4.2 Pessimism............................................................................................................ 15
2.5 The personality traits and risk attitude ...................................................................... 15


2.6 Proposal Model ......................................................................................................... 20
CHAPTER 3: METHODOLOGY ..................................................................................... 21
3.1 Research Process ....................................................................................................... 21
3.2 Research design ......................................................................................................... 21
3.3 Data collection instruments ....................................................................................... 22
3.4 Data analysis ............................................................................................................. 25
CHAPTER 4: FINDINGS ................................................................................................. 26
4.1 Demographic results.................................................................................................. 26
4.2 Descriptive analysis .................................................................................................. 28
4.3 Common method bias test ......................................................................................... 32
4.4 Measurement model .................................................................................................. 32

4.5 Structural model assessment ..................................................................................... 38
4.6 Analysis summary ..................................................................................................... 41
CHAPTER 5: DISCUSSION AND CONCLUSION ........................................................ 42
5.1 Discussion ................................................................................................................. 42
5.2 Practical implications ................................................................................................ 47
5.3 Limitations and future research recommendation. .................................................... 48
REFERENCES .................................................................................................................. 50
APPENDIX ....................................................................................................................... 53


LIST OF TABLE
Table 3. 1: Measurement items.
Table 4. 1: Respondents background.
Table 4. 2: Descriptive analysis
Table 4. 3: Skewness and Kurtosis test
Table 4. 4: Common method bias
Table 4. 5: Reliability test
Table 4. 6: Composite reliability and average variance extracted.
Table 4. 7: Cross loadings
Table 4. 8: Fornell-Larker criterion
Table 4. 9: Heterotrait-Monotrait Ratio of Correlations (HTMT).
Table 4. 10: Collinearity assessments.
Table 4. 11: Results of path significance.

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28
30
31
33
35

36
37
38
39
40
42

i


LIST OF FIGURES
Figure 2. 1: Proposed model.
Figure 3. 1: Research Process
Figure 4. 1: Results of PLS-SEM Model
Figure 4. 2: Path coefficient after hypothesis test.

21
22
41
43

ii


LIST OF ABBREVIATIONS
VCCI
DOSPERT
ELOT
PLS-SEM
CEO

O
C
E
A
N
OP
PE
R
KMO
CR
AVE
HTMT

Vietnam Chamber of Commerce and Industry
Domain-specific risk attitudes
Extended Life Orientation Test
Partial least Squares – Structure Equation Modeling
Chief Executive Officer

Openness
Conscientiousness
Extroversion
Agreeableness
Neuroticism
Optimism
Pessimism
Risk attitude
Kaiser-Meyer-Olkin
Composite reliability
Average variance extracted

Heterotrait-Monotrait Ratio Correlations

iii


CHAPTER 1: INTRODUCTION
1.1 Background of research
The businesses and founders behind these businesses are in vogue everywhere
across Vietnam. The Vietnamese government is also experimenting with new ways to
promote the formation of new companies. The rise of entrepreneurship in Vietnam started
strongly since 2016, the year of “Vietnamese National Start-up”. It is an important socioeconomic development stage in Vietnam and the interest in entrepreneurship has never
been. According to a report by the Ministry of Planning and Investment, in the period
2016 - 2019, the number of Vietnamese enterprises increased by 10.5%, on average, more
than 100,000 new enterprises were established each year, twice as high as in the 20112015 period. Thus, by the end of 2020, there were about 810 thousand enterprises and
about 7 million business households operating in the whole country, of which small and
medium enterprises account for 97%. In recent years, the Government has continuously
implemented solutions to improve the investment and business environment, complete the
legal framework to innovate and create motivation for enterprises to develop. Prominent
as of 2020, Vietnam has signed 3 Free Trade Agreements (FTAs) signed with the
European Union (EVFTA), ASEAN region and 5 countries (RCEP) and an agreement
with the United Kingdom (UKVFTA) in 2020. These FTAs have created good conditions
for businesses in Vietnam to promote their strengths in production and business capacity
as well as access the global market. However, Vietnam is among the 20 countries with the
lowest ability to implement business plans. Survey results of the Vietnam Chamber of
Commerce and Industry (VCCI) given at the end of 2019 at the seminar "Completing the
startup support policy", Vietnam has less than 10% of successful startups. Although
entrepreneurship in Vietnam is high, due to market instability, complexity of capital
management and time, the risk is very high and many young entrepreneurs in Vietnam
have yet to confirm the importance of business risk management.
Entrepreneurs are decision makers, with a responsibility to understand risk

management, it is important to identify and assess risks properly. Their decisions will
affect the formation, development and existence of the business. However, individuals are
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often unique and different from others. In particular, personality is one of the
characteristics that distinguish a person's behavior or perception. This does not exclude
the risk of being influenced by individual perceptions. In other words, personality traits
can predict risk attitudes of decision makers (Beyer et al., 2015).
Risk attitude is an individual's chosen state of mind that can have a potential
positive or negative outcome on a decision (Hillson and Murray-Webster, 2005). The
term risk attitude is closely related to or influenced by an individual's perception of risk,
in relation to whether they view risk as a form of opportunity or a threat. The risk attitude
also represents an individual's perception of uncertainty. These categories are categorized
into areas, such as ethics, finance, health or safety, leisure and social (Weber et al, 2002).
Beside that the Big-five model is a multidimensional approach to identify the
characteristics by measuring openness to experience, conscientiousness, extroversion,
agreeableness, and neuroticism. This model has been the dominant model for personality
traits since the 1980s, Big-five was also found to influence career choice and job
performance (e.g., John et al., 2008; Rauch, 2014). In the previous study related to
personality traits and Risk Attitudes of Construction Industry Managers in Malaysia of
Lee & Foo, (2020) mentioned five personality traits as Big-five and proved that there are
relationships between these personality traits and risk attitudes.
Optimism and pessimism - expect a positive or negative future. A person can be
optimistic about a particular area of life (e.g., expecting his marriage/relationship to be
successful) but pessimistic about other aspects (e.g. expecting difficulties of finance in
future). Successful living requires a good balance between optimism and pessimism.
Excessive optimism can encourage a person to take uncalculated financial risks that will
result in disaster. On the other hand, worrying too much about potential dangers and
focusing one's energy on what could go wrong leads to avoidant or passive behavior

(Hecht, 2013). Like all other human experiences, the basic mental attitudes of optimism
and pessimism are closely linked to distinct physiological processes. The combination of
optimism and pessimism is reflected in people's thoughts, feelings, decisions, and
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behaviors. Therefore, optimism and pessimism are two important factors when studying
the relationship between personality traits and risk attitudes.
National culture can support or suppress corporate behavior at the individual level
(Hayton et al., 2002) from this perspective it can be seen in different countries with
different cultures supporting entrepreneurship. Each country has a different economic,
social and cultural situation, from which the personality characteristics of business people
in each country are also different. Therefore, when learning about the personality traits of
Vietnamese entrepreneurs, we must use research conducted in Vietnam. This article will
be the beginning of a formal study on personality characteristics and risk attitudes of
Vietnamese businessmen.
From the above arguments, the author combines five Big-five personality traits
with optimism and pessimism to demonstrate whether categorizing risk attitudes based on
individual personality traits is effective. This study aimed to investigate whether
personality traits contain any form of influence on risk attitudes of young Vietnamese
entrepreneurs. Entries from the Big Five Inventory (BFI), Extended Life Orientation Test
(ELOT) and Domain Risk-Attitude (DOSPERT) were used to study the correlation
between the two variables as well as to determine the risk-acceptance attitude of Young
Vietnamese businessman. Therefore, the objectives of this study were (1) to characterize
the general personality of young Vietnamese entrepreneurs, (2) to measure the
relationship between their personality traits and risk attitudes. Then contribute finding to
the policy makers, investors and final advisors.
1.2 Problem statement
Personality traits are considered well-suited to optimizing organizational
performance as they have been found to predict creativity and generate out-of-the-box

ideas when an 'optimal' balance of personality traits (Buchanan, 1998). The concept of
risk attitudes (risk-seeking, risk-neutral/accepting, and risk-averse), when translated into a
business context, can imply that a risk averse assessor may be willing to forgo the benefits
a deal can provide to avoid the uncertainty of economic losses. Research Weber et al.,
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(2002) also shows that an individual's perception of the level of risk in a situation can be a
lever for shifting risk attitudes from aversion to seeking; Therefore, identifying
personality traits, can be of great value in understanding the decisions of individuals or
groups in risky situations. However, there is no research to formally investigate
personality traits, risk attitudes and the relationship between personality traits and risk
attitudes in Vietnam. This study aims to help learn about the personality characteristics of
young Vietnamese entrepreneurs by conducting a behavioral psychology investigation of
young Vietnamese entrepreneurs. In a more common sense, it will help to find out
whether the personality traits of entrepreneurs studied around the world are important in
explaining the behavior of young Vietnamese entrepreneurs.
Based on Yoo and Lee's (2020) model of the relationship between big-five
personality traits and risky attitudes, the theoretical contribution of this study is to add
two personality traits that are optimism and pessimism to the current model to investigate
personality traits and determine the relationship between these characteristics and risk
attitudes of young Vietnamese entrepreneurs. The practical contribution of this study is
that the research results show the general personality traits of young Vietnamese
entrepreneurs. Determine the impact of the feature on the risk profile. This result will be a
useful reference for policymakers related to business, and also a database for domestic
and foreign investors to have a broad view and behavioral characteristics. of young
Vietnamese entrepreneurs. Besides, based on these results, business consultants can also
determine the focus to focus on when studying the behavior of young entrepreneurs
before giving advice.
1.3 Research objective

Studying the relationship between personality traits, optimism, pessimism and risk
attitudes will reveal major differences in how decision-makers choose to deal with
uncertainty depending on their respective human behavior. Such understanding helps to
develop a comprehensive risk management plan.

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This study will also contribute significantly to understanding the behavior of
Vietnamese entrepreneurs and will help policy makers to have reference when
researching new regulatory policy and will also help investors to come up with
appropriate recommendations on financial advice.
1.4 Scope of the research
This paper focuses on two main objectives as outlined above. Therefore, the
sample focuses on young Vietnamese entrepreneurs who are founders or owners of
enterprises in Vietnam. Quantitative questionnaires are used to study the phenomenon and
to examine the hypotheses outlined in the next chapter.
1.5 Significance of the research
This research aims to find out the common personality traits of young Vietnamese
entrepreneurs and examine the relationship between these personality traits and risk
attitudes of Vietnamese young entrepreneurs. The questionnaire was the tool used for data
collection with 167 survey participants. Quantitative methods were used to analyze data
across the sample and test hypotheses.
Entrepreneurship in Vietnam is currently extremely strong, contributing greatly to
the country's socio-economic development. This research can be a reference for
entrepreneurs who are preparing to start a business about the common personality traits
and level of risk that an entrepreneur can generally accept in Vietnam then they can build
a risk management plan that is more suitable for their business. Research can also serve as
a reference for policymakers when researching new policies related to entrepreneurs, and
helping the banker or investor to provide financial advice.

From the literature review, the researcher found that there are no academic
documents that have directly researched the general personality and the relationship
between these personality traits and risk attitudes of young Vietnamese entrepreneurs.
Due to the scarcity of research on Vietnamese entrepreneurs, scholars should also
consider this research and information related to the measurement of variables useful. The

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results of this article show the common characteristics and risk attitudes of Vietnamese
entrepreneurs and also useful for future research orientation on Vietnamese entrepreneurs.
1.6 Thesis structure
This thesis consists of 5 chapters:
Chapter 1: Introduction – Explaining basic ideas of the research in terms of the
background, objective, scope, and significance of the research.
Chapter 2: Literature review – Building comprehensive understanding over complicated
concepts of risk attitudes in business management as well as entrepreneur’s personality
traits.
Chapter 3: Methodology – describing the conceptual model and how the research is
designed and carried out.
Chapter 4: Finding – research results.
Chapter 5: Discussion and Conclusion - Discussion of research results and summarizing
the contributions, limitations and intentions for future research.

CHAPTER 2: LITERATURE REVIEW
2.1 Risk management in business
“Enterprise risk management provides the methods and processes used by business
institutions to manage all risks and seize opportunities to achieve their objectives” (Wu &
Olson, 2009). Risk management can be defined as the process of identifying, analyzing
and accepting or minimizing uncertainty in the investment decision-making process. Risk

management is also defined as the uncertainty management associated with a threat.
According to Sadgrove (2016) there are two types of business risk. The first and more
traditional is the dangerous risk, it is found in fire, pollution or fraud. Companies used to
protect themselves by buying insurance. The second category is business risks or
opportunity risks, these happen when a company develops a new plan, launches a new
product, or buys a company. If the company forecasts incorrectly, it will seek to eliminate
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risks. It is an essential part of the business. That is a prerequisite for innovation; And
without innovation, business will fail. An organization that tries to eliminate all possible
hazards cannot create value.
Risk is also a future event as a result of actions taken now. That is why managers
should consider different options for any problem and evaluate the results. Risk
management helps a company avoid cost, disruption, and unhappiness. Risk analysis also
helps you decide which risks are worth pursuing and which risks to avoid. Risk managers
can be tailored to meet the needs of each business, It can be used to educate employees
and give participants a deeper understanding of corporate risk. This turns managers into
business people and makes businesses more efficient. Risk management tools can include
creative risk financial solutions, combining finance, insurance and capital market strategy
(Baranoff, 2004).
2.2 Risk attitudes
The business world is arguably extremely risky, especially for those looking for
high growth opportunities. However, starting in the 21st century entrepreneurship evolved
more than ever in the world, even though the rate of business failure is not always low, as
shown by the National Business failure rate statistics. According to Capital & Services, a
staggering 6.5 million businesses are established each year, but only a few enjoy lasting
success. Specifically, “the failure rate after 1 year of business is 21.5%, after 2 years it is
30%, after 4 years it is 50% and after 10 years it is 70%. This rate can be increased to
90% if counted specifically in some countries”. (2019 Small Business Failure Rate:

Startup Statistics by Industry | NBC&S) So what attracts individuals to start a business
with at least one employee? One outstanding explanation is risk attitudes (Astebro et al.,
2014).
Discussions about risk and entrepreneurship stemmed from Knight, (1921) who
proposed that entrepreneurs differentiate themselves from others because entrepreneurs
are also identified as those who can handle business risk and uncertainty. They have
acumen in perceiving risks and acting on opportunities. Kihlstrom & Laffont, (1979)
developed a popular theoretical model and predicted that high risk averse people would
7


become employees while high risk takers would become entrepreneurs. Beside Astebro et
al, (2014) summarizes the standard expected utility model of risk preference as a function
of utility versus wealth in the expected standard framework. Most people have implied
utility functions that are risk averse, and such people are willing to work over regular and
less volatile wages. However, a small percentage of those who are less risk-averse are
more likely to be attracted to large returns from risky activities such as trading. Therefore,
holding on to other ongoing factors such as entrepreneurship and financial constraints as
well as personal preference for risk can play an important role in considering decisions.
Risk attitude is the evaluation of situations based on intent, in a favorable or
unfavorable way, and in an appropriate manner. (Rohrmann, 2005) believes that the basic
characteristics of risk attitudes include risk bias and risk aversion while (Hillson &
Murray-Webster, 2007) considers different factors. Risk is not stable and heterogeneous
in the definition of new hazards. Instead, people tend to hold sector-specific attitudes
depending on physical, financial, and social risks. (Weber et al., 2002) classified risk
scenarios in five different areas, namely ethical, financial, safe, recreational and social,
thus forming a scale. domain-specific risk attitudes (DOSPERT). Their measure of risk
attitude is influenced by three factors, namely, risk taking, risk perception through
assessment of expected benefit. However, many researchers have debated the reliability
of this risk scale as (Lönnqvist et al., 2015). Risk attitudes differ based on the types of risk

in different situations. Each individual has a unique way of assessing risks and it is not
necessarily consistent across sectors and the motivation for risk tolerance varies
significantly depending on the type of situation (Pearson et al., 2002) found that
respondents were not routinely afraid of risk or looked for risk across all sectors. They
argue that gender is also a factor, where risk aversion is more common in women than in
men, except for social risk. Gender differences and the content area of risk-taking are
clearly related to how people view activities through the benefits of risk. What's more is
the perceived difference in attitudes toward risk. Risk awareness is driven by many
factors, of which Murray-Webster & Hillson, (2008) grouped them into three categories,
that the perceptions of risk can be detailed in particular but they cannot function
independently. This thus constitutes a triad of effects, which individually or in groups
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react to any given situation based on three factors.
Risk attitude in the document is described as risk-taking or risk-aversion. All uses
of the concept attempt to answer the question of whether something in an individual's
personality causes them to accept the risk conditions of their business and the impact of
these characteristics on the result.
2.3 Big five personality traits
The Big five is a multidimensional approach to character identification, through
the measurements of openness, conscientiousness, extroversion, agreeableness, and
neuroticism (OCEAN). This was a predominant model for personality traits discovered by
Fiske, 1949 and later supported by development (Norman, 1967), and (McCrae & Costa,
1987). Big five traits have been found to influence career choice and job performance
according to (Rauch, 2014). The five macroscopic features consist of a set of distinct
features as described by (John et al, 2008):
• Openness to experience: Describe the breadth, depth, originality, and complexity of an
individual's spiritual and experimental life.
• Conscientiousness: Express the behavioral control and is also dictated by surroundings

to facilitate task- and goal-oriented behavior.
• Extraversion: Includes sociability, assertiveness, and positive emotions. Implies a
positive approach to society.
• Agreeableness: Shown by traits such as altruism, tenderness, dependability, and
humility.
• Neuroticism: Expressed by emotional instability, often negative and often feel anxious,
stressed.
Personality traits cannot be judged with the naked eye, it must be interpreted with
measurable responses. According to Zhao & Seibert, 2006 found that entrepreneurs are
more open to experience (O +), more Conscientiousness (C +) and extroverted (E), less
agreeableness (A -) and less neuroticism (N -). However, some studies in different
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localities have given false results compared to this model. For example, in a survey of 218
entrepreneurs and managers in a major Canadian city found that the entrepreneur was
significantly less conscientious and pleasant (Envick & Langford, 2000) that the
entrepreneur was significantly less conscientious and agreeableness (O +, C -, E -, A-, N). Next, five characteristics of the big 5 model will be considered in detail:
2.3.1 Openness
Openness is the most controversial of the five factors of the Big 5 model (McCrae
& John, 1992). However, the stereotypes about open definition tend to be inconsistent
(Funder & Sneed, 1993). Researchers have previously hypothesized that entrepreneurs are
likely attracted by the constantly changing environment and new challenges in the venture
business landscape. Individuals who succeed in challenges are the ones who come up with
innovative solutions, business models and products. Entrepreneurs' openness can support
these functions, so the researchers hypothesize that both an entrepreneur's environment
and job requirements favor more open individuals to experience.
(McCrae & Costa Jr, 1997) explained the interpersonal differences in openness.
They are divided into two categories based on their influences, such as culture and
cognitive ability. Openness differs from skill and knowledge and involves a person

seeking and appreciating new experiences for his or her own benefit. Curiosity, creative
thinking, and a willingness to absorb unique ideas and values are some of the traits of
open-minded people. These people experience a host of intense emotions. On the
contrary, those who score low on openness, or a self-contained individual, tend to and
believe in a standard attitude, while at the same time expressing dogmatic and rigid in
their own beliefs. They often live by their teeth and are not emotionally reactive (Widiger
& Costa, 2012).
2.3.2 Conscientiousness
Conscientiousness is an aspect of ego and strength over time, and is often
associated with terms such as will, initiative, and responsibility. (Costa Jr et al., 1991)
says that conscientiousness encompasses both limited and proactive aspects. The most
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obvious side of this aspect of initiative is an individual's desire to achieve achievements
and commitment to his or her job, while the downside is seen in prudence and caution in
the moral side. The proposed aspects for conscientiousness are competence, order,
seriousness, gain, self-discipline and consideration (Costa Jr et al., 1991). This dimension
explains the level of organization, resilience, control, and the dynamics of goal-oriented
behavior. People who score high for conscientiousness tend to be well organized,
independent, hard-working, self-controlled, careful, ambitious, and have high
perseverance. In contrast, those with low scores are often aimless, lazy, careless, sloppy,
sloppy, and hedonist (Widiger & Costa, 2012)
Conscientiousness is a combination of achievement, motivation and confidence. In
a review of 41 research papers (Collins et al., 2004) concluded that entrepreneurs are
more likely to be more successful. Researchers have hypothesized that highly motivated
people are more attracted to an environment where success is more closely linked to
psychological impact than to a large institutional environment in which success or failure
in business due to their less efforts of themselves.
Conscientiousness is one of the most appreciated aspects of personality traits,

along with agreeableness. Agreeableness and conscientiousness are the traditional,
descriptive aspects of 'good' versus 'evil' and 'strong will' versus 'weak will'. This term
combines both aspects of organization and behavior, adjusted through conscience or
diligence (Widiger & Costa, 2012). Previous studies see conscientiousness as an aspect of
keeping impulsive behavior under control (Lee & Foo, 2020).
2.3.3 Extraversion
Extraversion is a personality trait that measures the degree to which a person has
the advantage of being active, talkative, and enthusiastic (Costa Jr & McCrae, 1992).
People who are highly extroverted tend to be more socially active, talkative, peopleoriented, optimistic, cheerful, and likable. While those with low scores are more discreet
by nature, it does not mean that they are socially hostile, but instead are independent,
quiet and noisy people. Although there is a lot of confusion, non-extroverts are not
11


pessimists, they often dislike spiritual experiences compared to extroverts (Widiger &
Costa, 2012)
Extroversion is expressed in individual differences based on characteristic patterns
or feelings, actions, thoughts, and goals in a manner similar to other personality traits.
There are three main elements of extroversion that have been studied, the first being
extroversion emerging as one of the fundamental aspects of personality. Therefore,
extroversion has a great importance in describing many types of behaviors, being one of
the major concerns in the personality realm. Second, extroversion predicts efficiency and
well-being in many areas, from cognitive performance and social effort, to socioeconomic
status. Finally, extroversion is a good determinant of risk and also resilience with
different mental forms (Leary & Hoyle, 2009)
Researchers hypothesize that the entrepreneurial extroversion is higher than in
other research subjects because the entrepreneur is the person who sells their ideas to
partners, employees and customers or investors (Kerr et al., 2017). However Envick &
Langford, (2000) suggests that entrepreneurs can create small businesses in their place to
stay away from the bureaucracy that always requires a gentle peacemaker. Zhao &

Seibert, (2006) concluded that there is no big difference in the extroversion of an
entrepreneur compared to a related audience like management.
2.3.4 Agreeableness
While extroversion has much to do with the preferred amount of social homage,
agreeableness is a pretty edge of interpersonal behavior. Agreeableness affects an
individual's image of those around them, helping to shape one's own attitudes and
originality. According to Costa Jr et al., (1991) factors that describe agreeableness include
trust, frankness, altruism, obedience, humility, and tenderness. Entrepreneurs are a group
of people who are thought to have a very small degree of agreeableness. The researchers
also hypothesized that, Entrepreneurs do not have to worry about pleasing the people
around them because they will eventually become CEOs of their business (Kerr et al.,
2017).
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A person with a high level of agreeableness wants the other person to be pleasant
and likable and also implies the behavior from their partner. Instead of treating
agreeableness as a variable that only increases or decreases the degree of the mood
obstructions, agreeableness enters the stage as an equal partner. In some cases, the
presence of individuals with varying degrees of comfort can fundamentally change the
situation (Leary & Hoyle, 2009). In contrast, those who score low on agreeableness tend
to be skeptical, skeptical, or even rude, and irritable, worse than manipulating and paying
off, hateful and cruel (Widiger & Costa, 2012).
Agreeableness can be visualized as a moderator of various types of individual
rattle behavior. If an individual is individually motivated to maintain good relationships
with others, they can be expected to exhibit a higher level of motivation to engage in
positive, constructive behavior. In many areas compared with their peers such discoverers
have helped to uncover some of the key findings in conflict, cooperation, help, and
prejudice (Leary & Hoyle, 2009).
2.3.5 Neuroticism

Neuroticism refers to the degree of instability in an individual's emotional
regulation. People with high scores in psychosis are identified as prone to neuroticism;
they tend to have high pessimistic thinking patterns such as anger, hostility, depression,
and anxiety or fickleness. It is also related to an individual's vulnerability to stress, selfawareness and extreme desires, and difficulty handling the frustration of not acting on
their will (Widiger & Costa, 2012). These highly neurotic people often respond poorly to
environmental stress. These people are likely to perceive that normal conditions are risky
and may experience minor disappointment when exaggerated, feeling overwhelmed. They
are also self-conscious and shy and can find it difficult to control their own desires or
impulses when feeling sad. However, neurosis is now recognized as one of the more welldefined and fundamental aspects of cognitive structural function (Widiger & Costa,
2012).

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Entrepreneurs are thought to have minimal levels of neuroticism because they
require special confidence to take risks when starting a business (Zhao & Seibert, 2006).
(Bolger & Schilling, 1991) examined claims about an estimated relationship between
neuroticism and distress that may take longer for people with high neuroticism than for
those with low neuroticism, to recover from these stressors from day to day. Factors like
getting social support and their level of chronic stress affect the rate of recovery, as those
who get less support will show the impact of the stress factors daily in the next day
(Bolger và Schilling 1991).
2.4 Optimism and Pessimism
Optimism and pessimism - looking forward to a positive or negative future - are
different modes of thinking that best conceptualize, not rigid, dichotomous, but a
continuum of many degrees of optimism and pessimism (Hecht, 2013). A review and
synthesis of the literature on neurophysiology show that optimism and pessimism have a
different relationship with the two cerebral hemispheres. High self-esteem, cheerful
attitudes tend to look at the positive aspects of a given situation, as well as an optimistic
belief in a bright future associated with physiological activity in the left brain hemisphere.

On the contrary, the gloomy outlook, the tendency to focus on the negative and overstate
the magnitude of the problem, low self-esteem as well as a pessimistic view of what the
future holds in is related to the neurophysiology in the right brain hemisphere (Hecht,
2013). According to (Kahneman, 2011) a person for success needs a good balance
between optimism and pessimism. Over-optimism can encourage a person to take
unimaginable financial risks that end up catastrophically. Likewise, overconfidence can
lead to negligent and reckless behaviors. Excessive pessimism makes people avoid
financial risks, they are too cautious and do not want to take on new challenges.
2.4.1 Optimism
Optimism represents the tendency that individuals have unrealistic beliefs about
good outcomes (Astebro et al., 2014). An optimist chooses positive environmental
reinforcement and tends to filter and ignore information that doesn't match his brighter
outlook (Hecht, 2013). This suggests that individuals with a high score for optimism are
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often those with high self-esteem, enthusiasm, and risk-taking. Entrepreneurs are
considered highly optimistic, as any decision they make about the business's development
is fraught with risks. They often make optimistic judgments about the outcome of an
action taking place in the future. Charles S.Carver (2010) points out that the task-focused
approach that optimists take to achieve their goals is also linked to economic gains. In
practice sometimes optimism does not convey an advantage and there are instances when
it can be detrimental, however those are relatively rare. In short, the behavioral patterns of
optimists seem to provide living models for others to learn from.
2.4.2 Pessimism
Pessimists disproportionately allocate more attention to negative signals, while
tending to forget the positive aspects of a situation (Hecht, 2013). This suggests that,
individuals with high pessimism scores often suffer from depression or excessive worry
about their surroundings, they are more susceptible to being influenced by surrounding
factors, timid, less shared. features that are easy to see in them. Previous studies on

personality traits of entrepreneurs all did not mention the relationship between pessimism
and risk-taking, but only the relationship of optimism and risk-taking. This indicates that
previous studies have not distinguished the difference between optimism and pessimism,
instead they hypothesized that optimism and pessimism are two one-way characteristics.
Therefore, to be aware of the difference between optimism and pessimism through
psychological studies. The author has decided to choose the relationship of pessimism and
risk attitude to verify.
2.5 The personality traits and risk attitude
Personality traits and risk attitudes have been identified over the years and vary
among researchers, new trait dimensions continue to be developed from theory. Besides,
the concept of attitude has been popularized by social psychologists in describing human
behavior. (Ajzen, 2005) explained the relationship between attitudes, behaviors and
personality traits, assuming that these factors are correlated. Like personality traits,
attitudes are a hypothetical construct that cannot be judged through direct observation.
Rather it must be interpreted from measurable responses (Lee & Foo, 2020). The response
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or result will reflect the positive or negative impact of the subject's re-reading. An attitude
can be inferred from a variety of responses, including cognitive response, emotional
response, and agreeable response (Ajzen, 2005). This type of response is similar to the
finding of (Murray-Webster & Hillson, 2008) by constructing a triad that influences risk
attitudes. Planning behavioral theory explains the correlation between these two traits in
an indirect way. One of the factors that influence intent is attitude toward behavior that
can be correlated with personality traits. (Murray-Webster & Hillson, 2008) studied the
factors influencing risk perception and risk attitudes, describing the factors divided into 3
groups of factors that are discrete but dependent. it is the consciousness (rationalism), the
subconscious and the emotional or emotional factors. These findings are shown to
function similar factors with personality traits. In the Big Five, psychosis and extroversion
are two personality traits related to an individual's use of emotions. Similar optimistic and

pessimistic traits are found in emotional factors that influence risk perception and
attitudes. Conscious factors emphasize how individuals make reasonable judgments to
determine the severity of risk, resulting in changes in risk perception and risk attitudes. In
addition, optimism and pessimism also emphasize the degree to which an individual can
accept risks, in which optimism affects the ability to accept high risks, while pessimism
emphasizes the impact on the level of risk tolerance is low. Based on these grounds, this
study assumes that the aspects of the personality trait in question are positively and
negatively related to risk attitudes. The following hypotheses are constructed and shown
in Figure 2.6.1.
Relationship between openness (O) to experience to risk attitude
The term openness to experience often implies an individual's willingness to seek
new experiences (Lee & Foo, 2020). This suggests that those who score high on openness
are willing to face uncertainty or risk in order to get new experiences for their own
benefit, and vice versa, individuals with low scores in being open are not willing to take
risks to do something new. According to (McGhee et al., 2012), openness is correlated
with risk-taking behavior, and research by (Lee & Foo, 2020) has also determined the
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