Effects of the Neuroticism and Agreeableness Personality Types on Entrepreneurial Intention with Subjective Norm as Moderator

Keywordsagreeableness entrepreneurial intentions neuroticism personality traits subjective norms the big five

JEL Classification M10, M12

Full Article

1. Introduction

Sixty years ago, McClelland (1961) conducted a study of the needs of achievement and entrepreneurship, namely strong interest and motivation that led entrepreneurs to start new businesses. Entrepreneurship is a way of thinking that emphasizes opportunities above obstacles (Krueger et al., 2000). Joseph Schumpeter, an economist in the early of 20^th century, defines entrepreneur as someone who damages the economic order through the introduction of new products and services, new production methods, creating new forms of organization, or exploitation of new raw materials (Bygrave and Zacharakis, 2008, p.1). In its development, entrepreneurship is a process where people recognize opportunities, take advantage of opportunities through discovery and innovation, and ultimately get satisfaction from them (Koe et al., 2012).

In fact, a person does not automatically decide to become an entrepreneur, first they reach the intention to become an entrepreneur. The concept of entrepreneurship emphasizes opportunities rather than obstacles, and its ability to identify opportunities requires mainly the study of individuals’ intentions for entrepreneurship (Krueger et al., 2000). As a psychological concept, entrepreneurial intentions are subjective attitudes of potential entrepreneurs who want to dedicate themselves to entrepreneurial activities (Krueger et al., 2000). Katz and Gartner (1988) define entrepreneurial intentions as the search for information that can be used to meet the goals of business creation. Intention is the best single predictor of entrepreneurial behavior (Soumyaja and Alexander, 2016).

Research into entrepreneurial intentions has been carried out both abroad and in Indonesia. The focus of these studies is to identify and validate psychological factors that predict an individual’s decision to become an entrepreneur. One predictor of psychological factors is the personality of The Big Five which consists of extraversion, agreeableness, conscientiousness, neuroticism, and openness to experience.

Nonetheless, several research shows that not all factors in the personality of the Big Five have a relationship with entrepreneurial intentions. In fact, the results of one study with another showed differences in factors related to entrepreneurial intentions. For example, extraversion influences entrepreneurial intentions in the studies of Chen et al. (2012), Soumyaja and Alexander (2016), May et al. (2017), and Sousa et al. (2018). Conversely, there was no relationship of extraversion with entrepreneurial intentions in the studies of Murugesan and Jayavelu (2017) and Butz et al. (2018). The difference in the results of the study shows that there is still a gap to examine the relationship between the personalities of the Big Five with entrepreneurial intentions.

Differences in personality factors of the big five influence entrepreneurial intentions also occur in Indonesia. Extraversion is related to entrepreneurial intentions (Novitaloka and Nurtjahjanti, 2015; Sarinah, 2017). Agreeableness relates to entrepreneurial intentions (Harahap and Fitria, 2017; Sah, 2013). Conscientiousness is related to entrepreneurial intentions (Harahap and Fitria, 2017; Sah, 2013; Suwarno and Ida, 2016). Neuroticism is associated with negative entrepreneurial intentions (Harahap and Fitria, 2017). Openness to Experience relates to entrepreneurial intentions (Harahap and Fitria, 2017). Below, Table 1 shows the results of similar research in Indonesia.

Table 1. Research Results of Relationship between the Big Five Personalities Traits and Entrepreneurial Intentions in Indonesia

In addition to personality, the subjective factors surrounding people also influence entrepreneurial intentions. Erikson (1999) states that various research results show that there is a relationship between subjective norms (family and friends’ support) with entrepreneurial intentions. Regarding entrepreneurial activities, when a person becomes an entrepreneur, he will be influenced by other individuals who are considered important (Ajzen, 2005).

This study aims to examine the influence of the Big Five personality factors on entrepreneurial intentions in the community of Tegalyoso Village, Klaten Utara District, Klaten Regency, Republic of Indonesia. Subjective norms have a role as a moderating influence of the Big Five’s personality on entrepreneurial intentions. The selection of research subjects based on the consideration of previous studies are students from tertiary institutions. The preference of subjective norms as a moderating influence of personality on entrepreneurial intentions is due to the absence of prior research on this matter. This study was inspired by previous research, namely the role of subjective norms moderating the influence of attitudes towards advertising on purchase intentions (Peter et al., 2014).

2. Theoretical Framework

2.1. Entrepreneurial Intent

Theory of Planned Behavior (TPB) explains that individuals involved in an activity are intentional actions that are associated with their intention (intention) to behave (Ajzen, 1991). Intention is considered as an effort to capture motivational factors to influence a behavior, which is identified as an indicator of someone ready to display a behavior and is considered to be an antecedent of the behavior (Ajzen, 1991). According to Ajzen (1991) intentions are directly influenced by three antecedents, namely attitudes, subjective norms, and control of perceived behavior. Attitudes toward behavior are conceptualized as the extent to which a person has an evaluation or assessment of the behavior he likes or does not come benefit. Subjective norms are one’s perceptions of social pressure to do or not to do behavior (Azjen, 1988). Control of perceived behavior or also called behavioral control is a person’s feelings about the ease or difficulty of realizing a certain behavior (Ajzen, 2005).

TPB components and intention entrepreneurship is interesting to study. The intention entrepreneurship is expressed as a self-recognized belief by one to establish a new business and consciously plan to do in the future (Thompson, 2009). Entrepreneurial intentions are described as seeking information that is useful for achieving the goal of creating a business (Katz and Gartner, 1988; Choo and Wong, 2009). Therefore, entrepreneurial intentions determine the starting point of creating a new business before starting the actual business.

2.2. The Big Five Personality Traits

Goldberg (1993) advocates a comprehensive framework for various traits that can describe personality. Personality traits are characteristic patterns of thoughts, feelings, or behaviors that tend to be consistent over time and in relevant situations. For this purpose, he uses the personality traits of The Big Five which consists of extraversion, agreeableness, conscientiousness, neuroticism, and openness to experience (extraversion, friendliness, awareness, neuroticism, and openness to experience). John and Srivastava (1999) and Murugesan and Jayavelu (2017) describe the personality traits of the Big Five as follows:.

• · Extraversion is defined as the extent to which an individual is talkative, full of energy, enthusiastic, and emotionally expressive (warm). Extraversion characteristics include gregariousness (sociable), assertiveness (forceful), activity (energetic), excitement-seeking (adventurous), positive emotions (enthusiastic), and warmth (outgoing).
• · The definition of agreeableness is the extent to which an individual helps and is not selfish with others, has forgiveness and is generally trustworthy, with characteristics including trust (forgiving), straight rudeness (unstrict), kindness (warm), consent (unshakeable), humility (un-expose), and tender-mindedness (sympathetic).
• · Conscientiousness is defined as the extent to which an individual does a thorough job, that is, reliable and enduring until the work is completed, with characteristics of competence (efficient), order (organized), willingness (carefull), fight achievement (survive), self-discipline (dilligent), and consideration (un-impulsive).
• · The definition of neuroticism is the extent to which a person has tension, is more worried than others and is moody, which is characterized by characteristics of anxiety (tense), angry hostility (irritable), depression (not contented), self-consciousness (shy), impulsiveness (moody), and vulnerability (not self-confident).
• · The definition of openness to experience is the extent to which a person has originality, wants to know many things and inventive, with the characteristics of ideas (curious), fantasy (imaginative), aesthetics (artistic), actions (wide interests), feelings (excitable) and values (unconventional).

2.3. Personality Traits and Entrepreneurial Intention

According to McStay (2008), studies on entrepreneurship can be divided into three different approaches, namely: the trait approach (personality), the behavioral approach, and the cognitive approach. Researchers are interested in examining the effect of entrepreneurial intentions based on personality factors because the factors contained in individuals are considered to be one of the things that can shape intentions in entrepreneurship. Personality traits tend to be antecedents of entrepreneurial intentions (Rauch and Frese, 2007), because both are known to bring up individual differences as human development and remain consistent over time (McCrae and Costa Jr., 2008). Below is explained about the relationship two personality of the Big Five traits (agreeableness and neuroticism) with entrepreneurial intentions.

Agreeableness captures differences in love, respect and acceptance of others. Friendly people experience emotional care for the welfare of others, treat others regardly to their personal rights and preferences, and generally hold positive beliefs about others (Soto, 2018). A trusting and cooperative environment builds good relationships in alliances that facilitate technology exchange and increase capital for growth (Ciavarella, Buchholtz, Riodan, Gatewood, and Stokes, 2004). The positive and significant influence of agreeableness on entrepreneurial intentions is also supported by the results of research by Harahap and Fitria (2017), Murugesan and Jayavelu (2017), Sah (2013) and Sousa et al. (2018). Based on the description, the following hypotheses can be made:

H1: Agreeableness influences entrepreneurial intentions positively and significantly.

Neuroticism (are called socially desirable pole, Emotional Stability) captures differences in the frequency and negative emotions naturally. Highly neurotic individuals tend to experience anxiety, sadness, and mood swings (Soto, 2018). Highly neurotic individuals often show mood swings, impulsivity, self-awareness, low self-esteem and depression, thus neuroticism scores are expected to be low (Murugesan and Jayavelu, 2017). The results of Harahap and Fitria’s research (2017) and Murugesan and Jayavelu (2017) show that neuroticism affects business entrepreneurial intentions negatively. Based on the description, the following hypotheses can be made:

H2: Neuroticism influences entrepreneurial intentions negatively and significantly.

Subjective Norms is a tool for measuring social environmental pressures getting an entrepreneur person. (Liñán et al., 2011). The perception is considered as a reference, approve the decision whether someone becomes an entrepreneur or not. Theory of Planned Behavior (TPB) refers to subjective norms as perceptions or opinions that are considered when someone decides to act. The opinions change a person’s views and motivations, so that subjective norms can be defined as a social pressure that comes from those who are considered important when someone takes an action (Ajzen, 2001; Liñán et al., 2011).

H3: Subjective norms influences entrepreneurial intentions positively and significantly.

Previous research has noted that subjective norms have an important role in underlying entrepreneurial intentions (Ariff, Bidin, Sharif, and Ahmad, 2010; Bhuyan and Pathak, 2019; Krithikal and Venkatachalam, 2014; Van Gelderen, Brand, Van Praag, Bodewes, Poutsma, and Van Gils, 2008; Xue, David, and Liang, 2011). This study uses subjective norms as a moderating influence of the agreeableness and neuroticism personality on entrepreneurial intentions. The role of subjective norms as moderating is shown in previous subjective norm research, for example moderating the effect of perceived risk on the intention to use cloud computing services (Hsinkuang, Hueryren and Wei-chien, 2012) and subjective norms moderating the effect of attitudes on internet advertising on purchase intentions (Peter, Martin , and Lilly, 2014). Based on the description, the following hypotheses can be made:

H4: Subjective norms moderate the influence of agreeableness on entrepreneurial intentions

H5: Subjective norms moderate the influence of neuroticism on entrepreneurial intentions

2.4. Research Model

Based on the above framework, the research model of the influence of theagreeableness and neuroticism personality on entrepreneurial intentions, through moderating subjective norms can be described as follows in Figure 1.

Figure 1. Research Model Design

3. Research Method

3.1. Research Design

This study uses a survey research design with a questionnaire as an instrument. This study uses primary data that contains information obtained directly by researchers in accordance with the variables used to achieve the specific objectives of the study (Sekaran and Bougie, 2009). The period of time of data retrieval at one particular point in time (cross section).

Three variables in this study were the personality of the Big Five (independent variable), entrepreneurial intentions (the dependent variable), and subjective norms (moderator variables). The analysis of this study tested the hypothesis using linear regression. The personality of the Big Five was measured through The Big Five Inventory developed by John and Srivastava (1999) with 44 items. Entrepreneurial intentions are measured through a scale developed by Liñán and Chen (2009), which consists of 6 items that contain the desire and readiness to become an entrepreneur. Subjective norms are measured through 3 items (family, friends and colleagues). All three variables use a 5-point Likert scale measurement, from 1 = strongly disagree, 2 = disagree, 3 = somewhat agree, 4 = agree, and 5 = strongly agree.

3.2. Data Collection and Sample

Respondents were 149 peoples of Tegalyoso Village, Klaten Utara District, Klaten Regency, Central Java Province, Republic of Indonesia. The sample selection in this study uses a purposive sampling method, which selects respondents with certain criteria to fit the research objectives of residents with a minimum age of 17 years who are considered to be adults and ready to work.

3.3. Profile of Respondents

A total of 200 questionnaires were distributed, returning as many as 185 copies (response rate 92.5 percent). However, 36 were incomplete, so that 149 exemplars can be used (74.5 percent used rate). The respondent’s profile is indicated by age, occupation, gender, and education, as in table 2.

Table 2. Profile of Respondents

3.4. Validity and Reliability

The validity testing of the research indicators was carried out using the exploratory factor analysis method with principal component analysis and varimax rotation techniques. Size of the level of validity is expressed by the loading factor score. According to Hair et al. (2006, p.779), an indicator is declared valid if it has a loading factor score ≥ 0.5.

From the five personality variables of the Big Five, four variables are valid namely agreeableness, conscientiousness, neuroticism and openness to experience. From the 9 items agreeableness questions, only 3 are valid. From the 9 items of conscientiousness questions, only 2 are valid. From the 8 items of neuroticism questions, only 4 were valid. From the 10 items openness to experience questions are valid, only 2 are valid. The reliability test results showed only agreeableness (α = 0.621) and neuroticism (α = 0.611) were reliable because the Cronbach value of α> 0.600. Conscientiousness (α = 0.521) and openness to experience (α = 0.410) are not reliable because the Cronbach value α <0.600.

Subjective norms are indicated by 3 questions. The test results show that all three are valid and reliable. The results of the six questions on entrepreneurial intentions show that all questions are valid and reliable. Table 3 presents the validity and reliability tests of each variable.

Table 3. Validity and Reliability Tests

Descriptive statistics show that agreeableness has a negative and significant relationship with neuroticism, and is positively and significantly related to entrepreneurial intentions. Neuroticism has a negative and significant relationship with subjective norms and entrepreneurial intentions. Subjective norms are positively and significantly related to entrepreneurial intentions. The results of processing descriptive statistics can be shown in table 4 below.

Table 4. Descriptive Statistics and Correlations

Notes: ** p <0.01; * p <0.05

4. Results and Discussion

The results of regression test were carried out in 3 models. Model 1 tested the effect of personality on entrepreneurial intentions. Model 2 examined the influence of personality and subjective norms on entrepreneurial intentions. Model 3 examined the role of moderating subjective norms on the influence of personality on entrepreneurial intentions. Regression test results are shown with an increase in Adj R² starting from Model 1, Model 2, and Model 3.

Table 5. Regression Test Result

Dependent Variable: Entrepreneurial Intentions

Notes:Agreeableness (AG), Neuroticism (NE), Subjective Norm (NS), Entrepreneurial Intentions (NW)

In model 1,agreeableness personality influences entrepreneurial intentions positively and significantly, so the H1 hypothesis was supported. Neuroticism personality influences entrepreneurial intentions negatively and significantly, so the H2 hypothesis was supported. It should be suspected, only two valid and reliable personalities, as well as developing in Tegalyoso Village, are the influences of the Javanese socio-cultural environment that tend to prioritize harmony, namely human life is said to be an unrelenting process of feeling towards harmony with the surrounding environment (Trimulyaningsih, 2017). Personality is inherited through environmental conditions (Kodiran, 2004). The agreeableness personality that has the characteristic of helping, being selfless, having a forgiving nature, and being trustworthy is a driving force for someone intending to be an entrepreneur.

On the other hand, harmony with the environment sometimes makes someone takes distance themselves from things that smell of competition and selfish efforts. Though the rapid development of technology and economy pushes someone to compete in order to survive. This raises concerns in some people about the certainty of their future. Neuroticism personality which has the characteristics of tension, worry, moody, shame, depression, and lack of confidence in facing the demands of a complex life is an inhibiting factor for someone intending to become an entrepreneur who has the courage to take risks. This can be seen from the composition of work that is more inclined to traditional jobs (farmers) who mostly work part-time as builders or construction workers, work for others (private), or the State Civil Apparatus.

In model 2, subjective norms affect entrepreneurial intentions positively and significantly, so hypothesis H3 was supported. The role of close people such as family, friends and colleagues strongly encourages someone to be an entrepreneur. People close to encourage someone to increase income or open a business field independently.

In model 3 the regression test results show that the AG_NS significance value is 0.071 (> 0.05), it means that the interaction between agreeableness with subjective norms does not significantly influence entrepreneurial intentions. This means that subjective norms are not able to moderate the effect of agreeableness on entrepreneurial intentions, so the hypothesis H4 was not supported. In fact, close people do not interact with agreeableness personality, because agreeableness personality is sure of their intention to become entrepreneurs without the encouragement of close people.

While the NE_NS test results showed a significance value of 0.026 (<0.05). It means that the interaction between neuroticism and subjective norms had a significant effect on entrepreneurial intentions, so the H5 hypothesis was supported. Initially, someone with a neuroticism personality did not intend to become an entrepreneur, but after getting input or encouragement from close someone, and then turned into intending to become entrepreneurs. Closest people encourage through the provision of information, business alternatives, hopes to develop, and provide support should be a risk that must be borne. Regression test results are shown with an increase in Adj R² starting from Model 1, Model 2, and Model 3.

5. Conclusion

5.1 Theoretical Contributions

The main purpose of this study is to examine the influence of The Big Five’s personality on entrepreneurial intentions. This study also examined the effect of moderating subjective norms on the influence of The Big Five’s personality on entrepreneurial intentions. The results showed that:

a. From the five personalities of the Big Five, only two (agreeableness and neuroticism) are valid and reliable for further testing.

b. Agreeableness influences entrepreneurial intentions positively and significantly, while neuroticism affects entrepreneurial intentions negatively and significantly.

c. Subjective norms moderate the influence of neuroticism on entrepreneurial intentions, but do not agreeableness.

5.1. Managerial Implications

The results of this study have several managerial implications including:

a. This research is useful for government administrators at the village, sub-district and district / city levels.

b. The regional government (Pemerintah Daerah) should evaluate and design social, economic and cultural programs for residents who are interested in opening an independent business.

c. Local governments work together with educational institutions, financial institutions, companies, or other institutions to support the interests of citizens for entrepreneurship.

5.2. Limitations

Although this research contributes to entrepreneurial intention research, there are a number of limitations to note. These limitations are as follows:

a. Research is only done in one village, so generalization of research results must be done carefully.

b. The measurement of entrepreneurial intention variables and subjective norms is carried out by respondents at the same time (cross section), giving rise to a common method bias (Podsakoff and Organ, 1986).

c. The measurement of the entrepreneurial intention variable is carried out independently by the respondent (self-reported) to enable the subjectivity of self-assessment to occur. The subjectivity of self-assessment has the potential to assess entrepreneurial intentions higher (inflated ratings) to improve self-image (Allen et al., 2000).

5.3. Suggestions for Further Research

There are several research agendas that can be carried out for future development directions, including:

a. The research was developed in several villages, sub-districts, and districts, so that the generalization of research results was increased.

b. A broad scope of research area will make the five personality factors of The Big Five accommodated.

c. To overcome the common method bias can be done by considering the time lag (longitudinal) filling each item statement. For example, filling in the bullet statements of the Big Five Personality and Entrepreneurial Intentions is done in the first week of the survey, filling in bullet points about subjective norms in the second week.

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