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

In developing 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 developing 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.