The Role of the Founder in the Success of the Start-up: A Cross-sectional Study of the Entrepreneurial Personality and the Implementation of Management Control Systems

Caroline Dorothea Kehder & Sina Thomas

Student thesis: Master thesis

Abstract

In this cross-sectional study on the role of the founder, we explore the interaction between the founder’s personality as well as the implementation of Management Control Systems (MCS), and the resulting startup success. Basing the analysis on a sample of 86 founders and their start-ups, the findings are threefold. Firstly, we find that the personality of the founder plays a role in the success of the start-up. Secondly, we identify the founder’s personality to be associated with the implementation of MCS in general as well as with the implementation of specific MCS. Thirdly, we discover that MCS implementation in turn is positively associated with start-up success. The founder’s personality is measured using the “Big Five” personality factors: extraversion, agreeableness, conscientiousness, neuroticism and openness. We find two of the personality factors, conscientiousness and agreeableness, to be associated with start-up success. While conscientious founders achieve high start-up success, agreeable founders are found to be less successful. Furthermore, conscientious founders are discovered to implement a high percentage of MCS, especially planning-related MCS, whereas neurotic founders are discovered to adopt MCS at an earlier point. A founder characterized by a high degree of openness implements a low percentage of human resources MCS. Extraversion is found to be unrelated to both start-up success and MCS implementation, while openness and neuroticism are unrelated to start-up success. We do not find an association between the intensity of MCS implementation and start-up success, however, we show that an early implementation of MCS is positively associated with start-up success. Overall, these findings point to the important role both, the founder’s personality and MCS implementation, play in the growth of the entrepreneurial firm. In this respect, this Master’s thesis provides practical advice and implications for entrepreneurs based on empirical evidence. Further, it contributes to the existing literature on the entrepreneurial personality as well as MCS implementation in early-stage ventures.

EducationsMSc in Finance and Strategic Management, (Graduate Programme) Final ThesisMSc in Accounting, Strategy and Control, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2017
Number of pages146
SupervisorsMelanie L. Feldhues