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The mediating role of personality traits on the entrepreneurial orientation–firm performance relationship: informal entrepreneurship context

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Abstract

In develo** countries, informal entrepreneurship makes a significant contribution to poverty eradication and economic development. Thus, understanding the factors that predict the success of informal entrepreneurs has important implications for improving economic outcomes. This paper examined the mediating role of entrepreneurial personality traits of informal entrepreneurs on the link between the entrepreneurial orientation (EO) of a business and its performance in a develo** country context. A sample of 236 informal micro-entrepreneurs living in Bangladesh completed a questionnaire to measure control variables (sex, age, education level), entrepreneurial personality traits, EO and firm performance on one occasion. A variance-based structural equation modelling (SEM) technique using partial least squares (PLS) techniques was applied to test hypotheses based on the dynamic capability view and the trait-based explanations of entrepreneurship. The results demonstrated that entrepreneurial personality traits completely mediated the overall relationship between EO and performance of the firm and therefore indicate the importance of personal characteristics for determining business outcomes for informal entrepreneurs. These results extend theoretical explanations of formal entrepreneurship to the informal entrepreneurship context. The findings have implications for identifying micro-firms likely to succeed for the purpose of strategic allocation of financial and educational support.

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Availability of data and materials

The data and all the materials used for this study are with the authors and will be made available to the journal on reasonable request.

Abbreviations

EO:

entrepreneurial orientation

SEM:

structural equation modelling

PLS:

partial least squares

ILO:

International Labour Organization

CR:

composite reliability

AVEs:

average variance extracted

VAF:

variance accounted for

NGOs:

non-governmental organizations

AM:

achievement motivation

TA:

tolerance of ambiguity

LC:

locus of control

RP:

risk-taking propensity

IN:

innovativeness

RT:

risk taking

PR:

proactiveness

FP:

firm performance

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Acknowledgments

We thank six surveyors for their efforts throughout the data collection process. We also thank all of the informal micro-entrepreneurs who contributed to the study. In addition, we would like to thank anonymous reviewers for their invaluable comments on the paper. All errors and omissions remain our own.

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Authors and Affiliations

  1. Melbourne Institute of Technology, School of Business, Sydney, Australia

    Eijaz Ahmed Khan

  2. Chartered Accountants ANZ, 33 Erskine Street, Sydney, 2000, Australia

    Lynne Harris

  3. School of Management and Marketing, Curtin Business School, Curtin University, Perth, Australia

    Mohammed Quaddus

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  1. Eijaz Ahmed Khan
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Correspondence to Eijaz Ahmed Khan.

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Table 8 Measures of constructs
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Khan, E.A., Harris, L. & Quaddus, M. The mediating role of personality traits on the entrepreneurial orientation–firm performance relationship: informal entrepreneurship context. J Glob Entrepr Res 11, 41–52 (2021). https://doi.org/10.1007/s40497-021-00263-4

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