Measuring the Mediating Role of Risk Propensity and Risk Perception between Entrepreneurs’ Personality and Firm Performance – A Micro, Small and Medium Enterprises (MSME) Perspective from Gujarat

Abstract

Purpose – The present study aims to conduct a comprehensive study to 1) Explore the relationship between the personality traits of entrepreneurs and the performance of their firms within the context of MSMEs of Gujarat, 2) Assess the influence of risk propensity on the relationship between the Entrepreneur’s personality and firm performance and 3) Measure the impact of risk perception on the relationship between the Entrepreneur’s Personality and Firm Performance. Design/methodology/approach – A total of 420 entrepreneurs of Micro, Small, and Medium Enterprises (MSMEs) in the state of Gujarat were part of the study. The data was collected using a structured questionnaire from entrepreneurs based out of different districts like; Ahmedabad, Vadodara, Bhavnagar, and Gandhinagar. Surat, Navsari, Rajkot to name a few. The questionnaire was shared both online and offline. Findings – The findings demonstrate that the personality of the CEO has a significant positive influence on firm performance. Furthermore, the study examined the individual impact of the five personality traits to determine the most influential personality trait. The results indicate that Openness to Experience, Agreeableness, Neuroticism, and Conscientiousness significantly impacted firm performance, while Extroversion was found to be insignificant. Additionally, though the results show that the personality of the CEO has a direct impact on firm performance, this relationship is partially mediated by risk perception and risk propensity. Originality/value –. The study provides useful insights into the relationships between personality traits, risk propensity, risk perception, and firm performance among MSMEs in Gujarat. The study enhances the understanding of risk-taking behaviour in an entrepreneur’s journey by exploring the mediating role of risk perception and risk propensity.