Business Courage A Risky Balancing Act For MBA Leaders

Entrepreneurial spirit, innovation and the confidence to take on the business world are all things that many of Australia’s MBA strive to teach its students. However, a world-first international study has found that bold and entrepreneurial individuals possess the same qualities that bring greater risks.

QUT Associate Professor Martin Obschonka, Director of the Australian Centre for Entrepreneurship Research, recently joined forces with researchers from Germany’s University of Mannheim and the University of Cambridge in the UK to study data on courage from more than 390,000 Americans.

The study was the first ever to map out differences in the prevalence of the personality trait courage in regional populations across the USA, and found that courage in the world of business can often be a double-edged sword.

“Courage seems to contribute to more economic vitality in a region with more entrepreneurship rates and more start-ups,” University of Mannheim lead author Tobias Ebert said.

“This finding supports the general assumption that it requires brave people to drive modern economic activity, compared to historical times when it required a workers culture to stimulate the economy with its large industries and factories.

“The dark side to courage is that we found evidence it is associated with risk-taking and higher start-up failure rates.”

Professor Obschonka supported these findings by saying positivity and courage were vital characteristics to have in business, but may lead to negative results if in abundance.

“Our modern society often requires some sort of courage/bravery/personal agency to cope with the uncertainty of our times, which present us with less clear career paths, extreme technological change, lots of societal challenges and other unsettling trends,” he said.

“Those same personality traits are able to take advantage of the unprecedented opportunities that now exist to foster creativity, entrepreneurship, ‘changing the world’ via innovations, global exchange, use of new technologies, and the development of fascinating new products and services.

“… too strong courage might increase uncertainty and risks. So educators, policy-makers, entrepreneurs etc. should keep in mind that while promoting courage can be a powerful tool in growing a local economy, it can have a down side,” Professor Obschonka said.

As part of the study, areas with comparatively high levels of courage are found in the Eastern and Southern regions of the US (from California, Arizona, Utah, Colorado, New Mexico to Texas and Oklahoma) as well as the state of Florida.

Areas with comparatively low levels of courage spanned eastwards from the Midwest, including the Dakotas, Minnesota, Iowa, Nebraska, Missouri, across the Rust Belt (Illinois, Indiana, Pennsylvania, New York, New Jersey) up to Boston and down to the Carolinas.

“Regions with elevated levels of courage show higher start-up rates so findings suggest a lack of courage within local populations might be an important driver of the consistently weak entrepreneurial dynamic in areas like the rust belt,” Professor Obschonka said

 “Yet companies founded in these courageous regions demonstrated a lower share of start-ups surviving the first five years after foundation. Findings suggest that excessive courage within local populations comes at a cost and might contribute to an overheated regional economic climate.”

The project was a collaboration with Time Magazine which collected the data gathered from an online Harry Potter-style sorting hat quiz publicised on its website.

The findings – Regional Variation in Courage and Entrepreneurship: The Contrasting Role of Courage for the Emergence and Survival of Start-Ups in the US – have now been published by Wiley’s Journal of Personality.

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Greg Peake has been a journalist since 2010 and has covered stories for a range of industries including local government, sport, property development and education. Greg joined MBA News in 2016.

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