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Entrepreneurs' Four Worst Personality Traits And The One That Can Redeem Them

Entrepreneurs' personalities often overlap with criminals', but this trait can channel those tendencies for better uses.

Leonardo DiCaprio is Jordan Belfort in THE WOLF OF WALL STREET

[Photo: Mary Cybulski, courtesy of Paramount Pictures]

Recent psychological research hints that entrepreneurs may boast a few advantages over the general population—for instance, in their ability to cope with stress, higher levels of optimism, and resilience. But those advantages, such as they are, may come at a price. Researchers have noticed how these characteristics often go hand in hand with less savory ones. Here's a look at four of the more common negative personally traits entrepreneurs tend to share, plus one that can not only hold the others in check but even put them to good use.

1. Problems With Authority

Entrepreneurs have been found on balance to distrust authority, and it's easy to understand why. They dislike the status quo and are reluctant to follow rules. That's why they make much better leaders than followers and tend to be innovative thinkers. But this tendency may also help explain why many great entrepreneurs are too volcanic and emotionally unintelligent to be good managers. Even the Dalai Lama would be stressed working for Steve Jobs or Jeff Bezos.

2. Excessive Risk-Taking

We often celebrate bold risk-taking in successful business leaders, but some studies suggest entrepreneurs are more prone to take risks to a reckless degree. Although the reasons for this are unclear, there are two probable causes. One has to do with a low tolerance for boredom, which propels entrepreneurs (and criminals) to seek out risky activities sheerly for the thrilling experience. This pattern of behavior is also pretty common among artists and those who love extreme sports like deep-sea diving, mountain boarding, and skydiving, and the like.

The other reason relates to a tendency to distort reality in one’s favor. That is, entrepreneurs are more inclined than most to interpret events as opportunities—largely because they're more prone to overconfidence and less aware of threats than other people generally are. In the psychological sense, at least, it may not be totally ludicrous to regard some entrepreneurs as highly functioning psychopaths.

3. High Levels Of Narcissism

As some studies indicate, entrepreneurs are often more self-centered and can be susceptible to feelings of entitlement. That occasionally gives many business leaders the vision they're celebrated for. Sometimes—think Henry Ford, Walt Disney, or Elon Musk—those visions are translated into actual innovation. However, for plenty of ambitious entrepreneurs, their visions will remain just dreams. As Thomas Edison famously noted, "vision without implementation is just hallucination." Perhaps it isn't all that surprising that such a high percentage of corporate crimes can be pretty reliably correlated with the narcissistic personalities of their perpetrators.

4. Machiavellianism

Psychological studies suggest that entrepreneurs are often more manipulative, which arguably helps them become effective salespeople. Remember that successfully entrepreneurship is as much about having great ideas as it is about persuading people that they're great.

In that sense, entrepreneurial people are more likely to possess a dangerous combination of higher social skills and lower moral inhibitions. This sometimes helps them charm and influence others, or even take advantage of them.

What It Takes To Harness Bad Habits

Many of these qualities are well known, having seeped into the popular imagination. But not only do many of these personality tendencies have roots in science, researchers are also beginning to understand how they can be channeled for either positive or negative outcomes. After all, a narcissistic personality, for instance, doesn't necessarily predict destructive behavior—some narcissists can do real good in the world.

The question, then, is what determines whether individuals with these characteristics will find success in entrepreneurship—in ways that don't come at others' expense—or simply wind up criminals. One key differentiator some studies have indicated is self-control: The more conscientious or prudent people are—no matter their other characteristics—the less likely they'll be to drawn toward harmful or illegal activities.

Researchers are still parsing the links between IQ and delinquency, sensitive to the more direct causal role that poverty plays in crime, but some studies suggest that cognitive abilities may have a more indirect influence on criminal behavior as well, when coupled with other predictive personally traits including self-control. Finally, gender also seems to be a factor—even though that finding may also be more heavily influenced by social forces than psychological ones: While researchers have found no major differences in entrepreneurial aptitude between men and women, men have been found to be more likely to engage in illegal activities than women.

Personality is far from the only factor that influences success or failure for entrepreneurs. Education, geography, the quality of your ideas, and of course luck, all play roles—sometimes decisively. Even people with counterproductive personality traits can be effective. They key is first becoming aware of them and, second, possessing the self-control to channel those negative tendencies into useful results.

It's actually pretty hard to think of a single well-known business leader who hasn't shown some kind of disruptive—and even delinquent—personality qualities. But it's equally difficult to think of one who didn't manage to harness those tendencies or balance them out by relying on people with strong personalities of an opposite sort. After all, few of us accomplish great things alone. An arguably true test of our personalities is how we behave—indeed, who we become—when we interact with others.