Risk attitudes and the common personality traits a study on vietnamese young entrepreneurs

VIETNAM NATIONAL UNIVERSITY VIETNAM JAPAN UNIVERSITY -o0o - LE THI PHUONG RISK ATTITUDES AND THE COMMON PERSONALITY TRAITS: A STUDY ON VIETNAMESE YOUNG ENTREPRENEURS MASTER THESIS BUSINESS ADMINISTRATION VIETNAM NATIONAL UNIVERSITY VIETNAM JAPAN UNIVERSITY -o0o - LE THI PHUONG RISK ATTITUDES AND THE COMMON PERSONALITY TRAITS: A STUDY ON VIETNAMESE YOUNG ENTREPRENEURS MAJOR: BUSINESS ADMINISTRATION CODE: 8340101.01 RESEARCH SUPERVISORS: PROF PEIJUN GUO DR YOSHIFUMI HINO Hanoi, 2021 ABSTRACT This study aims to investigate the common personality traits of young Vietnamese entrepreneurs and the relationship between these personality traits to their risk attitudes The decisive factor for the success of a business is Entrepreneurs, the founders and making decisions about the growth strategy for the business To this, the author set Big-five personality traits, optimism and pessimism as the independent variable, risk attitude as the dependent variable, and then identified the relationships between them The author uses quantitative methods on a sample of 167 young Vietnamese entrepreneurs We use structural equation modeling (SEM) method by SmartPLS3 software Descriptive analysis and path analysis of the multivariate regression model support the validity of the proposed model Findings in this study are the common personality traits and risk attitudes of young Vietnamese entrepreneurs The analysis also shows that agreeableness has the greatest impact on risk attitudes of Vietnamese entrepreneurs, following that, the research shows the pessimism affects risk attitudes of Vietnamese entrepreneurs which the previous studies have not mentioned The results of the study are an important reference for policy researchers, investors and entrepreneurs in Vietnam Keywords: Big - five, optimism, pessimism, risk attitudes, Vietnamese entrepreneurs, personality traits ACKNOWLEDGMENT After two years of studying and researching at Vietnam Japan University, I am very pleased to write this thesis My passion for business has led to my research on Vietnamese entrepreneurial traits Research covers not only academic aspects but also practical aspects with practical implications The subjects and knowledge I gained through courses in Vietnam - Japan University and Yokohama National University played an essential role in supporting my research activities So I would like to thank professors and doctors for teaching and imparting valuable knowledge to me I hope that my research can contribute to studies of the personality traits of Vietnamese entrepreneurs First of all, I would like to thank my advisers, Professor Peijun Guo and Dr Yoshifumi Hino, for their guidance and suggestions My advisers gave me valuable advice on how I should conduct the research process Without their patiently quick guidance, I would not have been able to complete this thesis Second, I also want to send my sincere thanks to the program assistant Ms Huong, my classmates and all the people who have helped me with my research, and gave me the motivation during difficult times like reviewing surveys or collecting surveys so I can step by step and be able to complete the research paper Last but not least, I would like to thank my family, who care about me both mentally and physically so that I can focus as best as possible to complete this thesis TABLE OF CONTENT Contents ABSTRACT ACKNOWLEDGMENT TABLE OF CONTENT LIST OF TABLE i LIST OF FIGURES ii LIST OF ABBREVIATIONS iii CHAPTER 1: INTRODUCTION 1.1 Background of research 1.2 Problem statement 1.3 Research objective 1.4 Scope of the research 1.5 Significance of the research 1.6 Thesis structure CHAPTER 2: LITERATURE REVIEW 2.1 Risk management in business 2.2 Risk attitudes 2.3 Big five personality traits 2.3.1 Openness 10 2.3.2 Conscientiousness 10 2.3.3 Extraversion 11 2.3.4 Agreeableness 12 2.3.5 Neuroticism 13 2.4 Optimism and Pessimism 14 2.4.1 Optimism 14 2.4.2 Pessimism 15 2.5 The personality traits and risk attitude 15 2.6 Proposal Model 20 CHAPTER 3: METHODOLOGY 21 3.1 Research Process 21 3.2 Research design 21 3.3 Data collection instruments 22 3.4 Data analysis 25 CHAPTER 4: FINDINGS 26 4.1 Demographic results 26 4.2 Descriptive analysis 28 4.3 Common method bias test 32 4.4 Measurement model 32 4.5 Structural model assessment 38 4.6 Analysis summary 41 CHAPTER 5: DISCUSSION AND CONCLUSION 42 5.1 Discussion 42 5.2 Practical implications 47 5.3 Limitations and future research recommendation 48 REFERENCES 50 APPENDIX 53 LIST OF TABLE Table 1: Measurement items Table 1: Respondents background Table 2: Descriptive analysis Table 3: Skewness and Kurtosis test Table 4: Common method bias Table 5: Reliability test Table 6: Composite reliability and average variance extracted Table 7: Cross loadings Table 8: Fornell-Larker criterion Table 9: Heterotrait-Monotrait Ratio of Correlations (HTMT) Table 10: Collinearity assessments Table 11: Results of path significance 24 28 30 31 33 35 36 37 38 39 40 42 i LIST OF FIGURES Figure 1: Proposed model Figure 1: Research Process Figure 1: Results of PLS-SEM Model Figure 2: Path coefficient after hypothesis test 21 22 41 43 ii LIST OF ABBREVIATIONS VCCI DOSPERT ELOT PLS-SEM CEO O C E A N OP PE R KMO CR AVE HTMT Vietnam Chamber of Commerce and Industry Domain-specific risk attitudes Extended Life Orientation Test Partial least Squares – Structure Equation Modeling Chief Executive Officer Openness Conscientiousness Extroversion Agreeableness Neuroticism Optimism Pessimism Risk attitude Kaiser-Meyer-Olkin Composite reliability Average variance extracted Heterotrait-Monotrait Ratio Correlations iii CHAPTER 1: INTRODUCTION 1.1 Background of research The businesses and founders behind these businesses are in vogue everywhere across Vietnam The Vietnamese government is also experimenting with new ways to promote the formation of new companies The rise of entrepreneurship in Vietnam started strongly since 2016, the year of “Vietnamese National Start-up” It is an important socioeconomic development stage in Vietnam and the interest in entrepreneurship has never been According to a report by the Ministry of Planning and Investment, in the period 2016 - 2019, the number of Vietnamese enterprises increased by 10.5%, on average, more than 100,000 new enterprises were established each year, twice as high as in the 20112015 period Thus, by the end of 2020, there were about 810 thousand enterprises and about million business households operating in the whole country, of which small and medium enterprises account for 97% In recent years, the Government has continuously implemented solutions to improve the investment and business environment, complete the legal framework to innovate and create motivation for enterprises to develop Prominent as of 2020, Vietnam has signed Free Trade Agreements (FTAs) signed with the European Union (EVFTA), ASEAN region and countries (RCEP) and an agreement with the United Kingdom (UKVFTA) in 2020 These FTAs have created good conditions for businesses in Vietnam to promote their strengths in production and business capacity as well as access the global market However, Vietnam is among the 20 countries with the lowest ability to implement business plans Survey results of the Vietnam Chamber of Commerce and Industry (VCCI) given at the end of 2019 at the seminar "Completing the startup support policy", Vietnam has less than 10% of successful startups Although entrepreneurship in Vietnam is high, due to market instability, complexity of capital management and time, the risk is very high and many young entrepreneurs in Vietnam have yet to confirm the importance of business risk management Entrepreneurs are decision makers, with a responsibility to understand risk management, it is important to identify and assess risks properly Their decisions will affect the formation, development and existence of the business However, individuals are There are relationships mentioned in the hypothesis, Researcher has incorporated personality traits, including big-five, optimism, and pessimism into the study This study confirms the positive effects of extraversion on risk attitudes, confirms the negative effects of conscientiousness, agreeableness and pessimism on risk attitudes Besides, the three personality traits, openness, neuroticism and optimism, have been shown to have no effect on the risk attitude of young Vietnamese entrepreneurs Analytical results support hypotheses 2, 3,4 and Hypothesis H1 states that the openness factor has a positive effect on the risk attitude of young Vietnamese entrepreneurs After testing the reliability with Cronbach's Alpha coefficients and analyzing the discovery factors, EFA removed inappropriate variables SEM estimation results show that the openness factor has no relationship with risk attitude This is contrary to the views of previous researchers (Widiger & Costa, 2012), (McGhee et al., 2012) on personality traits of entrepreneurs This means that in Vietnam, with specific geographical characteristics, culture and legal policies, it creates the characteristics of open-minded personality of people including entrepreneurs However, it is not possible to assess an entrepreneur's risk attitude by his open-minded personality traits Grasping this feature will be a good support for investors and corporate finance advisors Next, the hypothesis H2 shows that Conscientiousness has a negative impact on the risk attitude of young Vietnamese entrepreneurs The analysis results of the SEM show that Conscientiousness has an inverse relationship through the path Coefficient weight β = -0.127; p value = 0.026 ensure the statistical significance of this relationship with a 95% confidence level Therefore, the hypothesis is accepted This means that the higher the degree of Conscientiousness by individuals, the more risk-averse they are This implies that serious individuals with a strong sense of vision, self-awareness, and consideration will take a long time to make a decision because they are afraid of risks This result is similar to the previous research results on the relationship between Conscientiousness and risk attitude 44 On the other hand, hypothesis H3 states that extraversion has a positive effect on the risk attitude of young Vietnamese entrepreneurs After testing the SEM model shows that hypothesis H3 is accepted, this analysis results are equivalent to previous studies on the positive relationship between extraversion and risk attitude Therefore, in Vietnam, business people who tend to be more socially active, talkative, people-oriented, are optimistic, cheerful and likable will be less afraid of risks, they are willing to innovate and break through to have great successes Besides, hypothesis H4 states that Agreeableness is inversely related to the risk attitude of young Vietnamese entrepreneurs Based on the results of the linear structure model (SEM), it shows that the hypothesis is reasonable, this is reflected in the impact coefficient β = -0.341 and p = 0.000