Entrepreneurial traits and firm innovation

Entrepreneurial behavior is widely considered to be influenced by the interaction between skills and motivation. And because entrepreneurial behavior is viewed as a causal determinant of firm performance, given the context in which the venture is embedded, factors determining entrepreneurial behavior are expected to influence firm performance. The research questions explored in this paper are: Do entrepreneurial traits have a direct effect on firm innovation? and if so, Is there a specific entrepreneurial profile that makes firms more innovative? I use a representative survey of firms from Chile to examine whether owners’ skills and motivations affect firm innovation. The survey collects information on both firm and owner characteristics, which allows us to put the entrepreneur back into the analysis of the determinants of firm innovation, a dimension that the related literature does not generally focus on. The survey also allows us to analyze the incidence of innovation in micro and small firms, which have been traditionally overlooked in the study of innovation, despite the fact that they represent the majority of firms in developing countries. The results from a probit model suggest that entrepreneurial traits are important in explaining firm innovation propensity, so any attempt to understand firm innovation should also take the characteristics of the entrepreneur into consideration. Furthermore, different entrepreneurial profiles are related to different firm innovation propensities, providing new evidence on the sources of firm heterogeneity. These results confirm the idea that not all entrepreneurs are the same and that some have particular traits that greatly affect the innovating performance of their ventures.