The effect of psychopathic traits on the behavior of
entrepreneurs.
Adriaan Slotemaker
University of Groningen and NUBS
Faculty of Economics and Business
MSc International Business and Management
11-04-2019
Folkingestraat 10-B
9711 JW, Groningen
Tel: 0639483089
a.slotemaker@hotmail.com
Supervisors: Rudi de Vries and Jonathan Kimmitt
S2093723
Acknowledgements: I would like to sincerely thank professors Jonathan Kimmitt and Rudi de Vries for their time and support. The feedback I received was instrumental in guiding me through the process of writing this dissertation. It gave me the inspiration I needed to find the creativity that led to the completion of this project.
Abstract
cross-case analysis based on a grounded methodology approach was conducted out of which key themes emerged. Hypotheses were subsequently derived from those themes. This dissertation found that there is significant overlap between the traits of the psychopathic personality and traits found in entrepreneurs. In addition, it was found that traits of
psychopathy have an effect on the behavior of entrepreneurs. Notably, it was found that entrepreneurs with psychopathic personality traits tend to pursue rewards in an audacious manner. Furthermore,entrepreneurs with psychopathic personality traits tend to combine deception and antisocial behavior to further entrepreneurial goals. The findings from this research can be tested in future research conducted with primary data.
1. Introduction: 3-5
2.1 Literature Review (entrepreneurship): 5-9
2.2 Literature Review (psychopathy): 9-13 3. Methodology: 14-17 4. Case Analyses: 17-29 5. Findings: 6. Discussion: 29-30 7. Conclusion: 31 8. Glossary: 32 9. References: 32-40 1. Introduction
Entrepreneurship is mostly viewed from a positive perspective. Small business and
dealing with unethical products or services, con artistry, operating on the edges of legality and downright criminal behavior (Baumol, 1990).
Entrepreneurs are driven by their desires to achieve some goals. These goals may be constructive or destructive depending on the person. What kind of motivations and desires a person has is in large part determined by their personality. There is no doubt that
environment and ‘’nurture’’ plays a role as well, but these factors are highly diverse and volatile and therefore hard to study in isolation with regards to entrepreneurship. Personality, however, is a much more stable variable. In fact, personalities tend to stay fixed when adulthood is reached. Since personality is a reliable variable to isolate and study in relation to entrepreneurship, there is now a large body of literature that deals with personality in entrepreneurship (Kets de Vries, 1977, Rapp-Ricciardi et al., 2018). The results of these studies are mixed, some studies indicate that personality is a crucial factor in determining entrepreneurial intention and performance while some studies state that personality is unimportant and even that personality research with regards to entrepreneurship should be abandoned completely (Aldrich, 1999; Low and MacMillan, 1989). In this dissertation, however, it will be argued that personality is an important factor to consider with regards to entrepreneurship. The reason for this is that entrepreneurship is a human endeavour driven by human intentions and motivations. These motivations and intentions arise out of a certain personality which can be benevolent, malevolent or which can be characterized in a different way. Different personality types react differently to external stimuli which gives rise to
different behavioral patterns in the same environment. Thus, it can be said that personality is one of the main drivers of human behavior. Since personality has a big influence on human behavior, personality must also have a big influence on the behavior of entrepreneurs. For this reason, a personality based approach on studying entrepreneurship was chosen.
However, this dissertation will focus on the ‘dark side’ of entrepreneurship. The ‘dark side’ of entrepreneurship is related to entrepreneurs with psychopathic personality traits. The high proportion of psychopaths in business has stimulated research on the topic of psychopathy and its relationship to entrepreneurship. Persons who score high on the psychopathy index are much more likely to engage in irresponsible, high-risk taking and egocentric behavior (Hare, 2006). Yet, not all psychopathic traits lead to negative results. Psychopaths are known to be immune to stress, fearless, socially dominant and stimulation seeking. Those are traits that would work well for an entrepreneur and may lead to positive results. This dissertation will try to shed light on the following main research question: what is the relationship between traits of psychopathy and the behavior of entrepreneurs?
This question is important for a few reasons. First, it appears that psychopathic individuals would be attracted to a risky endeavour such as entrepreneurship due to the pecuniary reward and the rise of power and status associated with it. Furthermore, they can operate relatively independently without having a boss. This enables them to work as they please, which fits with their anti-authoritarian nature. The high-risk, high-reward, high-autonomy nature of entrepreneurship is an overall fit for the psychopathic personality type, at least in theory.
The second reason why the main research question is important is due to the effects that psychopathic entrepreneurs might have on business and society in general. This effect might be positive, associated with successful and productive entrepreneurship, or negative,
associated with destructive entrepreneurship. The third option is that there is no clear relationship between entrepreneurship and psychopathy. In any case, it is important to uncover what the relationship between entrepreneurship and psychopathy is regardless of the outcome of this study.
Recent research by Babiak and Hare (2010) revealed that 4% of the CEO population is psychopathic, while the average population consists for 1% of psychopaths. This sheds light on how common psychopathy is in the upper management classes, but it says little about the relationship between entrepreneurship and psychopathy. However, it can be concluded that there is at least a relationship between business and psychopathy. This is further confirmed by Vedel and Thomsen (2017) who found that, out of all academic majors, the business faculties have by far the highest number of people who score high on psychopathic traits. The aforementioned link seems now to be inescapable. With regards to the
relationship between psychopathy and entrepreneurship, there have been only a few studies conducted and all of these studies were conducted in the recent past. A few examples of these studies are the studies of Akhtar et al, 2013, who studied the relationship between subclinical psychopathy and entrepreneurship and the study of Fennimore and Sementelli (2016) who studied the effects of subclinical psychopathy on public entrepreneurship.
This dissertation will use case studies based on secondary data conducted using a grounded methodology approach. The case studies feature well known entrepreneurs so there is an abundance of publicly available data to draw from. Different types of
entrepreneurs will be chosen as cases, where both entrepreneurs who generate value are selected as well as entrepreneurs who appropriate value. The ‘’rules’’ for case-study research are not as fixed as those of traditional hypothesis-testing research (Yin, 1984). However, that doesn’t mean that the results from case-study research are any less valid. In this dissertation, the theoretical and empirical findings of the existing literature will be used to analyze the case studies. Hypotheses will be developed based on the analysis of the case studies. These hypotheses can then be empirically tested by by future researchers that use primary data. That means that this study won’t give definitive answers to the questions raised, but will pave the road for the future by giving indications of the questions that are relevant to study in the field. The two-faced nature of business and psychopathy has generated a lot of confusion and this dissertation may help to take away some of that confusion through the hypotheses that were presented.
2. Literature review: entrepreneurship and psychopathy
This section will start by giving a general overview and conceptualization of
entrepreneurship. The definition of entrepreneurship will be described, as well as a
overview of personality traits associated with entrepreneurship as uncovered by previous personality research in entrepreneurship. Finally, a summary of this section will be provided.
There is no generally agreed upon definition of entrepreneurship (Shane et al., 2012). Entrepreneurship should be viewed as a process, rather than a fixed profession. Entrepreneurial actions are episodic and short lasting. Furthermore, entrepreneurs go through various stages of development starting with recognizing business opportunities, motivations to act on those business opportunities, and following through with the newly started business. This means that entrepreneurship is dynamic rather than static.
Nevertheless, a clear definition of entrepreneurship has been proposed in the
entrepreneurship literature. Entrepreneurship is the process by which opportunities to create future goods and services are discovered, evaluated, and exploited (Shane &
Venkataraman, 2000). Under this definition, not all entrepreneurs are founders of
businesses. Indeed, entrepreneurship can be practiced by non business founders in existing enterprises. Entrepreneurship depends on two factors: the presence of business
opportunities and individuals with entrepreneurial intentions (Shane & Venkataraman, 2000).
Baum & Locke, 2004, proposed that entrepreneurial traits and skills (passion, tenacity and new resource skill) and situationally dependent motivations (communicated vision,
self-efficacy, and goals) affect subsequent business growth. Their empirical research found that communicated vision, self-efficacy and goals had a direct impact on business growth. In addition, these attributes mediated the effect on passion, tenacity and new resource skill on subsequent business growth. There is ongoing disagreement in the entrepreneurship
literature about exactly what constitutes entrepreneurship and whether or not personality has an effect on entrepreneurship. Previous research has indicated that risk-taking propensity (Brockhaus, 1980), need for achievement (McClelland, 1965), and internal locus of control (Sexton & Bowman, 1986) are the wrong traits to study in relation to empirical research. For this reason, Baum & Locke (2004) have studied a different set of traits. It has to be stressed that risk-taking propensity, need for achievement and internal locus of control have been found to be significantly related to entrepreneurial actions by other researchers. For
instance, Knight et al., (2001) found that high risk-taking behavior is associated with higher entrepreneurial performance. Naturally, extreme or foolish risk-taking behavior will lead to lower business performance. In the same vein, self-efficacy usually leads to enhanced business performance (Bandura, 1997) but overconfidence leads to lower business performance.
Shane et al., 2012, summarized the entrepreneurial motivations from prior research as follows:
1. Need for achievement 2. Risk taking
3. Tolerance for ambiguity 4. Internal locus of control 5. Self-efficacy 6. Goal setting 7. Independence 8. Drive 9. Egoistic passion
The following table summarizes the hypothesized overlap between the psychological traits of entrepreneurs and psychopathy, where the first column represents the traits of
entrepreneurs, the second column represents the traits of psychopathy and the third row reveals the possible overlap:
Table 1: the overlap between psychological traits of entrepreneurs and psychopathy
Traits of entrepreneurs Traits of psychopathy Overlap Need for achievement Short term vision of life but
need for stimulation
Partial
Risk taking Risk taking to the point of
irresponsibility
Yes, psychopaths probably more risk taking than entrepreneurs
Tolerance for ambiguity Ability to adapt behavior to accommodate in different situations
Yes
Internal locus of control Blame externalization but not further specified
No or partial
Self efficacy Overconfidence Yes
Goal setting Short term vision of life No
Independence Disdain for authority but
parasitic lifestyle
Drive Strong drive for reward, disregard to punishment
Yes
Egoistic passion Grandiose sense of self Yes
The findings from the table imply that the psychological traits required for entrepreneurship and psychopathy have significant overlap, thus psychopaths may have an edge over non-psychopaths in entrepreneurship.
Low and MacMillan (1989) suggested that personality based research on entrepreneurship did not provide any benefits in conceptualizing a comprehensive theory of entrepreneurship while Aldrich (1999) even proposed to discontinue research of personality in relation to entrepreneurship. More recent research, however, has indicated otherwise (e.g. Zhao & Seibert, 2006; Akhtar et al., 2013). Zhao and Seibert (2006) found significant differences on the big five personality traits between entrepreneurs and non-entrepreneurs. Stewart and Roth (2001) who found significant differences between risk taking propensity of managers and entrepreneurs. A high need for achievement was also found in entrepreneurs,
McClelland (1961) found a significant difference between needs of achievement of
entrepreneurs and non-entrepreneurs. Rauch and Frese (2007) conclude by stating that a high need for achievement, stress tolerance, innovativeness, risk taking, self-efficacy, proactive personality, a need for autonomy and an internal locus of control are essential for entrepreneurial tasks such as making rapid decisions under uncertainty. Psychopaths score high on risk taking, self-efficacy, proactive personality, a need for autonomy, stress tolerance and risk taking. Similar to the case of entrepreneurial motivations as indicated by Shane et al., (2012), traits of psychopathy are significantly related to traits of entrepreneurial
personalities outlined by Rauch and Frese (2007).
Rauch and Frese (2007) noted that, although there are significant differences in the big five personality traits between entrepreneurs and non-entrepreneurs, it is more important to match traits to tasks specific to entrepreneurship. In this way, more significant results could be found. Indeed, they found significant differences between entrepreneurs and
non-entrepreneurs on the traits listed in the previous paragraph. They state that this result is a clear verdict against the researchers who imply that personality doesn’t have an important role to play in entrepreneurship, a notion further supported by Paunonen and Ashton (2001). These researchers suggested that specific personality traits can add to the prediction of entrepreneurial behavior. Despite the suggestion of Rauch and Frese (2007) that it is
important to match traits to tasks specific to entrepreneurship, it is worth exploring the article of Zhao and Seibert (2006) in more detail to further uncover the commonalities between the entrepreneurial personality and psychopathic personality.
Zhao and Seibert (2006) found that entrepreneurs score higher than non-entrepreneurs on openness to experience and conscientiousness and lower on neuroticism and
agreeableness and low in neuroticism. A significant overlap between the psychopathic personality and the entrepreneurial personalities can be found based on this study. Interestingly, Nicholson, Fenton-O’Creevy, Soane, and William (2005) noted that risk propensity can be framed in terms of the big five personality traits as high extraversion and openness and low conscientiousness, agreeableness and neuroticism. This is almost completely in line with the psychopathic personality when framed in the big five context. Similarly, Zhao and Seibert (2006) stated that ‘’remarkable self-confidence and resilience in the face of stress therefore appear to be much more important for entrepreneurs than managers. These are traits that define low levels of neuroticism.” The quoted phrases describe a core feature of psychopathy, namely stress immunity, almost literally.
2.2 Literature review: psychopathy
Part one of the literature review has described entrepreneurship, in particular the ‘dark side’ of entrepreneurship, which entails commonalities between the traits required for
entrepreneurship and traits of the psychopathic personality. However, to fully understand to what extent entrepreneurship relates to the ‘dark side’ personalities, it is important to provide a reasonably comprehensive view of psychopathy itself. Only when psychopathy is properly understood can its relationship to entrepreneurship be understood. The following section will provide a theoretical overview of psychopathy to further that end. Please note that a few terms will be used in this section: primary psychopathy, secondary psychopathy, PCL-R and PPI. Further explanations of these terms can be found in the glossary.
Psychopathy is a multifactorial construct. In psychiatry it falls under the diagnosis of ASPD (antisocial personality disorder). However, it is acknowledged that psychopathy falls under a spectrum (like e.g. autism) and that some psychopaths manage to become successful (Dutton, 2012).
Psychopathy is a personality disorder broadly characterized by two factors: the first factor is ‘primary’ psychopathy and the second factor is ‘secondary psychopathy’ (Lilienfeld &
Andrews; 1996, Patrick et al., 2009; Harpur, Hakstian, & Hare, 1988). Primary psychopathy is associated with the affective facets of this personality disorder, the main component being emotional detachment. It causes proneness to boredom, fearlessness and a high need for stimulation. Secondary psychopathy is associated with behavioral deviance and criminal behavior. Primary and secondary psychopathy are divided as Fearless Dominance and Impulsive Antisociality respectively by Lilienfeld et al., (1996).
Although different researchers put a different emphasis on the two factors of psychopathy (e.g. Dutton focuses on primary psychopathy and its adaptive features while Hare focuses more on secondary psychopathy and its negative effects on society), research on
psychopathy has come to the conclusion that these two factors are always present in clinical psychopaths. That is, people incarcerated or in the mental health system are clinical
by definition maladaptive, which is why it is considered to be a personality disorder. In contrast, subclinical psychopathy is considered to be adaptive under some circumstances because not all of the destructive components of the clinical variant are present in this population. For this reason, whenever the term ‘psychopath’ is used in an adaptive context it refers to the subclinical population rather than the clinical population.
Cleckley described psychopaths as being ‘’outwardly mentally robust individuals with severe underlying psychopathology’’ in his classic work The Mask of Sanity. Cleckley’s main idea was that psychopaths are able to appear perfectly normal to the external world while being quite abnormal internally, hence the term ‘mask of sanity’ is applied. Primary psychopathy is associated with social potency and fearless dominance, so individuals high on factor 1 but low on factor 2 (negative externalizing behavior) would fit perfectly in the portrait of
psychopathy outlined by Cleckley. That is, absent antisocial behavior the primary psychopath would appear normal to his or her social environment. Indeed, many
psychopaths have learned to fake emotions and possess above average cognitive empathy enabling them to smoothly steer through social situations. Equipped with fearlessness, the primary psychopath may very well attain high social status and dominance when combined with the aforementioned traits.
The first and most broadly used way to measure psychopathy is the PCL-R (psychopathy checklist revised), developed by Hare (2003). The purpose of the psychopathy checklist is to test criminals on their degree of psychopathy, so the PCL-R is administered in clinical
settings. For this reason, the PCL-R contains more deviance related items rather than positive adjustment related items (Patrick et al., 2009). The PCL-R is primarily concerned with the negative effects of psychopathy and tends to neglect the adaptive features that are inherent to primary and subclinical psychopathy. Therefore, high scores on the PCL-R (>25 out of 40) reflect antisocial impulsivity more than fearless dominance (Lilienfeld et al., 1996). Still, features of primary psychopathy are at least somewhat represented by the PCL-R.
The other, less widely used, framework to measure psychopathy is the psychopathic personality inventory or PPI by Lilienfeld & Andrews (1996). The PPI was specifically
designed to measure psychopathy in non-criminal populations (e.g. university students) and is therefore more like a general personality test rather than a tool for clinical purposes. Nevertheless, the PPI is used in clinical settings as well. Contrary to the PCL-R, the PPI is based on self-reports rather than on interviews. The PPI doesn’t assume any links to
antisocial behavior which is why it could be said that the PPI focuses more on primary rather than secondary psychopathy.
Factor 1 psychopathy correlates negatively with fearfulness, anxiety, depression and
frequency and severity of antisocial and criminal behavior . Factor 2 shows a positive
relation to alcohol and drug dependence as well as suicidality while Factor 1 does not (Hare, 2003; Smith & Newman, 1990).
Hall et al., (2004) noted that factor 1 psychopathy is associated with social efficacy and emotional resiliency. Primary psychopathy was associated positively with extraversion, openness to new experiences and conscientiousness and negatively with neuroticism. It is worth noting again that psychopathy is classically characterized by very low levels of neuroticism. Cleckley described psychopaths as outwardly normal individuals with severe underlying pathologies which are hard to detect in psychiatric settings, Karpman (1946) described psychopaths as immune to stress and McCord & McCord (1964) described psychopaths as ‘’the antithesis of neurosis’’. Interestingly, Lykken (1995) found that fearlessness is the main trait out of which the full condition of psychopathy arises.
The primary take-away from the previous outline is that psychopathy is a multi-faceted construct that varies in degree and configuration of traits. Primary psychopathy can be related to positive adjustment and secondary psychopathy is related to negative externalizing behaviors. In particular, secondary psychopathy is related to impulsive antisociality. Given this information, it is reasonable to propose that individuals who have traits from primary psychopathy could have an edge over those who don’t in business and entrepreneurship. This notion is further supported by Vedel & Thomsen (2017) who found that people scoring high on psychopathy are overrepresented in faculties of business and economics. The question remains, however, how traits of psychopathy (when present in entrepreneurs) relate to the behavior of entrepreneurs.
3: Methodology
This dissertation will use secondary data in the form of case studies to provide an empirical underpinning on the hypotheses that will be developed. These hypotheses can then be further tested in future research. The use of secondary data to develop theory as a grounded theory based approach has been used (Shepherd and Williams, 2014), as well as to test theory (Pinfield, 1986).
research have no validity. As the cases are grounded in their real world setting and the analysis of those cases is supported by existent theory, the validity of the results is ensured. However, subjectivity is an issue that should be kept in mind as a possible limitation of this study.
In order to study how psychopathic traits relate to the behavior of entrepreneurs, cases of entrepreneurs with suspected psychopathic traits were chosen. There were various reasons to use multiple case studies rather than for instance interviews or surveys. The controversial nature of the topic of psychopathy leads to difficulty in interviewing or surveying individuals about this subject. Furthermore, time constraints limited the options further. Therefore, an analysis on well known entrepreneurs appeared to be the most fitting option.
Since psychopathy as a psychiatric label is exclusively used in criminal settings, very few public entrepreneurs have the diagnosis of psychopathy. For this reason, the term
‘’subclinical’’ psychopath is used in the body of literature on the link between psychopathy and entrepreneurship. As psychopathy falls under a spectrum (from 0-40 on the PCL-R), many individuals can score high on psychopathic traits while avoiding incarceration and scrutiny of the psychiatric system. These ‘subclinical’ psychopaths can function normally in society. The cases of entrepreneurs used in this dissertation consider subclinical
psychopaths. Their behaviors will be interpreted using the criteria of psychopathy outlined in the literature about psychopathy. The selection of these entrepreneurs will be justified through the reference to the psychopathy literature. This may convince the reader that said entrepreneurs have psychopathic traits and are therefore justified as cases. Secondly, since only secondary data is used, it is more feasible to analyze public entrepreneurs because an abundance of information about their personal and professional lives is available.
This means that there were at least two selection criteria for the cases in this dissertation: the entrepreneurs had to have suspected traits of psychopathy and they had to be publicly known. These two criteria drastically reduced the number of possible candidates for cases. In addition, it was chosen to take a polar based approach in the selection of cases
(Eisenhardt, 1989). The two ‘poles’ are: value appropriating or malevolent entrepreneurs and value generating or benevolent entrepreneurs. Two benevolent entrepreneurs were chosen as cases and two malevolent entrepreneurs. The reason for this is that the traits of
psychopathy in themselves (such as immunity to anxiety and need for stimulation) don’t always imply malevolent use of those traits. Therefore, people with traits of psychopathy can choose to either use those traits productively or destructively. Given this fact, it makes sense to investigate cases from both sides of that spectrum. The four selected cases are: Donald Trump, Elon Musk, Martin Shkreli and Bernard Madoff. Donald Trump and Elon Musk represent the benevolent pole while Martin Shkreli and Bernard Madoff represent the malevolent pole. An introduction to each case will be given in the section of the case analyses.
Data collection
The sources of the information retrieved range from newspaper articles and video
the scope and depth of this study, it was hard to find many quality sources on this particular subject. The subject itself is a niche, which limits the amount of information available.
The following newspapers were used as sources:
- The New York Times
- The Wall Street Journal
- The Washington Post
- The Atlantic
- The Telegraph
- The Guardian
- Haaretz (Israeli newspaper)
These are commonly acknowledged and respected newspapers. The articles within those newspapers contained information mostly about the professional lives of the entrepreneurs in this study. The newspaper articles, and most of the other sources, were found either on the internet or through the internet. Keywords like ‘’psychopathic entrepreneurs’’ or
‘’psychopathy and entrepreneurship’’ were typed in the search engine which gave a large number of results. From these results a snowball effect took place, where sources contained the information or reference to more sources. If there was information in a newspaper of insufficient quality, it was omitted. It was also important to see if there was a connection between the academic literature and the secondary data. If such a connection was found, then the source was more likely to be used. Whenever there was a link between the publicly available information and the literature, the information was judged to be of value.
The following online media sources were used:
- YouTube
- International Business Times
- Forbes - Scientific American - CNBC.com - CBS news - ABC news
YouTube was an important source because it contains video and audio material. The audiovisual content aids in analyzing the cases involved since it gives a more
the way the newspaper sources were found. Sources that seemed interesting but didn’t add value were omitted.
The following books were used as sources:
- The Art of the Deal
- Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future
- Too Good to Be True: The Rise and Fall of Bernie Madoff
- What Goes Up: The Uncensored History of Modern Wall Street as Told by the
Bankers, Brokers, CEOs, and Scoundrels who Made it Happen - Coping With Institutional Order Flow
- Quirky: The remarkable story of the traits, foibles, and genius of breakthrough
innovators who changed the world
The search for books was simple once the entrepreneurs for the cases were selected: books have been published about all of the entrepreneurs in this dissertation. Similarly, books have been published about related topics or fields to which some of these entrepreneurs were connected. The books were used to get the deepest possible insight into the psyche, background and actions of the entrepreneurs studied in this dissertation.
For the Trump case, seven sources were used.The Art of The Deal contains biographical information which aids in understanding the personality of Mr Trump. The New York Times released an article detailing some of Mr Trump’s business endeavours, the same goes for the article published in the International Business Times. These business endeavours were important to study in order to see how psychopathic personality traits relate to the actions of the entrepreneur involved. The Washington Post published an article concerning Mr Trump’s misstatements as a president, labeling him an unreliable politician. This is relevant when viewed from the lens of psychopathy as telling lies is a common feature of the disorder. The Telegraph wrote an article which revealed that Donald Trump scores very high on the Psychopathic Personality Inventory revised (PPI-R).
For Martin Shkreli’s case, the shortest of all cases, three sources were used. An article in Scientific American describes the rising price of the AIDS medication caused by Shkreli’s actions. An article on CNBC news revealed Shkreli’s prison sentence as well as a publicity stunt concerning pulling out the hair of Hillary Clinton’s head during her presidential
campaign. The third source was a YouTube video from Shkreli’s own YouTube channel. This video gives a clearer picture of Shkreli’s personality than one would get from just reading about his actions.
For the fourth and last case, that of Bernard Madoff, eight sources were used. The first of these sources featured an article from the New York Times which describes the biggest financial fraud in US history, committed by Bernard Madoff. The book ‘Coping With Institutional Order Flow’ describes Madoff’s engagement in the securities business. CBS news describes how many major derivatives firms were reluctant to trade with Madoff since they suspected Madoff was a fraud. An article in the Israeli newspaper Haaretz revealed an estimate of Madoff’s net fraud, Erin Arvedlund presented a different number in the book Too Good to be True. Too Good to Be True also gives a deeper insight into the way Bernard Madoff conducted his ponzi scheme, it shows how people were willing to buy into Madoff’s story and how eventually everything had to fall apart. An article in the Wall Street Journal describes Madoff’s case in court, including quotes from the judge involved in his case. An article on ABC news revealed that an expert on psychopathy, Paul Babiak, rejected to give a testimony regarding the absence or presence of psychopathy in Bernard Madoff. Lastly, Business Insider (a channel on YouTube) published a video about Madoff featuring excerpts from talks of Madoff. In these excerpts, Madoff describes the motivations and cognitive processes behind his crimes.
Data Analysis
The data analysis was performed using a grounded methodology approach (Strauss and Corbin, 1998). The goal was to unpack themes across the four case analyses, such cross-case analyses are common when using case studies in qualitative research
(Yin,1984). In order to unpack these themes, commonalities between the four cases had to be found. It became increasingly obvious, while conducting the research, that it was unclear how traits of psychopathy always related to the behavior of entrepreneurs. For this reason, it was decided to code the data by searching for behavioral patterns of the entrepreneurs as described in the case analyses. An iterative process was followed where the analysis moved back and forth between the data and the literature reviewed (most importantly, the models of primary/secondary psychopathy and the personality literature in entrepreneurship). Thematic categories then emerged based on the sub-themes that emerged from first-order codes. These thematic categories assisted in formulating hypotheses that need to be tested in future research. Indeed, the hypotheses were based entirely on the uncovered thematic categories and are therefore empirically and theoretically supported.
quite small. this small amount of data provided a clear overview in itself which rendered a code and retrieval program unnecessary. The computer assisted data analysis software can help organise the data in order to search for themes across cases. However, this software can’t replace the analysis of the researcher himself (Weitzman, 2000). In other words, computer assisted data analysis software can help to organize the data but does not replace the intellectual input of the researcher. Therefore, a manual data analysis approach was used where groups of similar codes were assigned to a specific color. Each group of codes represented a specific kind of behavior, e.g. audacious behavior (which received the color pink). Only codes that were found in three out of four cases or four out of four cases were kept as material to construct sub-themes, codes found in two out of four cases or less were removed. This was done in order to assure that the thematic categories that would
eventually emerge from these codes were represented by the majority of cases in the research. As a result, the validity of the thematic categories and the formulated hypotheses increased. A second set of iterations between the data in the case analyses and the
theoretical models described in the literature review was performed to reveal thematic categories based on the sub-themes uncovered through linking relevant first-order codes. For example, audacious behaviors were grouped and given the code ‘Audaciousness’. Behaviors that were reward-driven were grouped and given the code ‘Reward Orientation’. The thematic category ‘Audacious Reward-Orientation’ emerged as the aforementioned sub-themes collapsed into one overarching main thematic category. The second main thematic category, Deceptive Antisociality, emerged in the same fashion. More iterations were performed between the data, theory and emerging themes (to examine fit), until a workable set of themes emerged. Figure 1 shows the results of the coding process, including first-order codes, sub-themes and the main thematic categories. Having explained the data analysis process, this dissertation will continue by describing the four case analyses. The findings from the cross case analysis will be presented after the individual case analyses. Finally, the implications on entrepreneurship research in relation to psychopathy will be discussed.
4: Case Analyses
Donald Trump is one of the cases of benevolent entrepreneurs with suspected psychopathic traits. Trump was used in this dissertation because he is a well known public figure which assures that information about him is easily accessible. Since this dissertation uses only publicly available secondary data, an abundance of secondary data was necessary to provide the required information for every case. Since a ‘polar’ based approach was used in the search for cases, in this case the poles being benevolent and malevolent entrepreneurs, Donald Trump appeared to be a good candidate for the benevolent pole. Although some people may consider Trump malevolent due to his behaviors, in this dissertation he is considered benevolent because his business endeavours are legal rather than criminal in nature. In addition, Trump has no criminal record from his private life.
4.1: Donald Trump
Organization in 1971. Trump’s business endeavours consists of two main elements:
acquisition and management of property, and the building of the Trump brand. Aged 23, he invested $70,000 to become co-producer of the 1970 Broadway comedy Paris is out! (The New York Times, 2016). Trump suffered six bankruptcies between 1991 and 2009, these bankruptcies were caused by the over leveraging of the casinos and hotels involved (Li, 2011). Trump’s real estate expansions in Manhattan were successful, the most well known building of Donald Trump in Manhattan is the Trump Tower. Trump has had several side ventures among which the purchasing of the New Jersey Generals, an American Football team that played in the USFL.
In addition, Trump owned the Miss Universe pageants, he started Trump University and he also became executive producer of NBC Reality show The Apprentice in 2003. In 2011, Forbes estimated the Trump brand’s net value to be $200 million. Trump’s business endeavours have been a mixed bag, consisting of both successes and failures. This is common in entrepreneurship, but it shows that Trump has no problems taking risks and continuing in the face of adversity. Despite inheriting wealth, Trump decided to expand his family’s business and accumulate increasingly large amounts of wealth. This means that he is extremely reward-oriented, and less considered about punishment or negative
consequences. These are traits he has in common with psychopathy (Lykken, 1957; Newman et al, 1987; Scerbo et al, 1990; Shapiro et al, 1988). Robert Hare considers a ‘’grandiose sense of self’’ to be an important trait of psychopathy (Hare, 2006). Trump started activities in the media since the earliest stages of his career, in 1970. In addition, he made cameo appearances in 12 films and 14 series , he hosted the TV show The Apprentice and he ran for president of the U.S. Furthermore, his marketing strategy involves his own name: the Trump brand. The Trump name has appeared on many buildings and some structures carry his name, such as the Trump Tower. It seems clear that Trump likely has a grandiose sense of self, thus sharing another trait with psychopathy.
Deception, fraudulent behavior, conning and lying are very commonly found in the psychopathic population. Psychopaths often lie for the sake of lying, taking pleasure in fooling other people. Trump has been accused of making a very large amount of false statements during his career as president of the United States. The Washington Post wrote (Kessler and Lee, 2017):
"President Trump is the most fact-challenged politician that The Fact Checker has ever encountered ... the pace and volume of the president's misstatements means that we cannot
possibly keep up."
The fact that president Trump is the most fact-challenged politician ever encountered characterizes him as a person who has no problem bending the truth or even telling lies. This means that another commonality with the psychopathic personality has been found (Ekman, 2009). Mr Trump has also drawn considerable negative attention, starting early in his career, at least in 1973 when the Justice Department contended that the Trump
income and not on race. In 1980,Trump demolished the Bonwit Teller flagship store. Several valuable Art-Deco sculptures which were promised by Trump himself to the Metropolitan museum of Art were destroyed (Gray, 2014).
Furthermore, undocumented Polish immigrant workers were suspected to be involved in the destroying of these structures. Trump denied that he was aware of the activities of these Polish immigrant workers. In addition, Trump has been accused of sexual misconduct by a total of 19 women as of December 2017 (Ford, 2017). The infamous incident of ‘’grab ‘em by
the pussy’’ took place, a quote of Mr Trump from a hot mic recording when he was preparing
for an episode of Access Hollywood. Trump stated that, if you are a star, women will allow you to do anything so you don’t have to wait to make sexual advances. Lastly, Trump installed a policy of family separation at the U.S. - Mexican border as of April 2018. During this act, children were forcibly separated from parents. This resulted in a public outcry to end the policy of family separation.
These incidents indicate a considerable lack of empathy from the side of Mr Trump. Indeed, a lack of empathy or compassion is one of the hallmark features of psychopathy (Hare, 2006). It can be concluded that Mr Trump scores high on the measure of primary
psychopathy, which is fearless dominance. In terms of the triarchic model of Patrick et al., 2009, Trump scores high on disinhibition and boldness. Secondary psychopathy is related to impulsive antisociality, which is most often expressed in criminal behavior. Meanness, which is the third aspect of the triarchic model, is also expressed in criminal behavior. For this reason, it makes sense to investigate Mr Trump’s history with the criminal justice system. Trump does not have a criminal record, he has never been in jail or prison. The vast majority of his encounters with the justice system were concerned with alleged white-collar crimes such as tax evasion. The second issue with the law he had concerned allegations about sexual assault, but none of those allegations were proven to be true.
Interestingly, Dr Kevin Dutton (author of The Wisdom of Psychopaths) ,who is a researcher at Oxford University, assessed Donald Trump’s personality using the Psychopathic
Personality Inventory revised (PPI-R). Dutton scored Trump at 171 points and Hitler on 169 points (Knapton, 2016). He also found that Trump scores high on fearless dominance. The analysis of Donald Trump’s personality and behavior reveals that he scores high on primary psychopathy but low on secondary psychopathy. Trump has no substance abuse disorder, no comorbid mental health disorder, and no criminal record, which are some of the main characteristics of secondary psychopathy.
Elon Musk’s case is interesting due to his public persona. He warns openly about the dangers of A.I. and the disastrous effects of global warming. In addition, he has a vision of making the human race a space-faring civilization. His endeavours in entrepreneurship seem to be connected to a broader and more meaningful mission than being successful and
involved. This dissertation already mentioned risk-taking propensity as a trait of both
entrepreneurs and psychopaths, but is interesting to dive deeper than that and uncover more personality traits and their subsequent effect on the actions of entrepreneurs. Since Elon Musk appeared to be a bit unhinged and a number of his actions were controversial, it was found that he would be a good candidate to study with regards to the relationship between psychopathy and entrepreneurship. Elon Musk represents the second of the two cases of benevolent entrepreneurs, because his companies were started with an improvement for humanity in mind and because no criminal behavior was involved in Musk’s business endeavours.
4.2: Elon Musk
Elon Musk is one of the most famous entrepreneurs alive today. His activities can be characterized as extremely audacious. He started his entrepreneurial career early in his twenties. He attended Stanford University to pursue a PhD in energy physics, but
abandoned this endeavour to start his own software company, Zip2 Corporation. Compaq acquired Zip2 for 307 million US dollars in cash in 1999 (Vance, 2015). Musk received 22 million US dollars for his 7% share from the sale (Advameg, 2005). This means he was a multi-millionaire by the age of 28. In March 1999 Musk co-founded X.com, mainly with the capital he received from the sale of Zip2 Corporation. Musk used 10 million US dollars to found X.com. X.com company merged with Confinity in 2000 and PayPal was part of Confinity at that time. Paypal was acquired by eBay in October of 2002 for 1.5 billion US dollars in stock, Musk received 165 million US dollars.
Elon Musk’s wealth had been steadily increasing since the 1990’s, by the early 2000’s he was already incredibly rich. Musk’s audaciousness was present since the earliest stages of his entrepreneurial career, but his ambitions were far greater than what he had achieved so far. One of Musk’s great goals is the vision of a human colony on Mars. His Space
Exploration Technologies (SpaceX) was founded in may 2002 with 100 million US dollars of Musk’s own capital (Wayne, 2006). One can see a pattern in Musk’s entrepreneurial
process: he has an innovative and audacious business plan, has no fear of executing it, and then takes on increasingly grandiose projects with increasingly large amounts of money. SpaceX develops and manufactures space launch vehicles. Interestingly, as of 2012, SpaceX was the first commercial company to launch and berth a vehicle to the International Space Station. Musk’s goal with the development of reusable rockets is to make space travel affordable, yet most experts in the space industry think this is not achievable (Melissa, 2018). Musk frames himself as a lover of mankind. He is quoted as saying “I love humanity, I
think it’s great” in an interview with Joe Rogan (2:29:37) and “this may sound corny, but love
is the answer” (PowerfulJRE, 2018). He states that the human race risks extinction if it stays
on planet earth, thus interplanetary colonization is necessary for survival according to him. Musk stated in a biography that he wants to establish a colony on Mars by the year 2040 with a population of eighty thousand people. One may wonder about the feasibility of such a project.
an indication of excessive risk taking. However one may see the feasibility of the space-faring project, Musk shares at least one core feature of psychopathy, namely risk-taking propensity. Musk is also well known for being the CEO of Tesla Motors, a company that produces electric cars with the goal of being fully self-driving cars. However, the goal of Tesla goes further than producing self-driving electric cars. The philosophy behind the cars is to be fueled by solar energy in order to indirectly reduce global warming. Musk was able to convince Daimler and Toyota to become long-term investors in Tesla (Muller, 2013). SolarCity is the producer of the solar energy systems to the Tesla cars. By 2013, SolarCity was the second largest provider of solar energy systems in the US. As in the case with SpaceX, Tesla’s activities are extremely audacious. Musk was able to convince business partners and customers of the feasibility of his projects time and time again in his career. Musk has the charm and social potency characteristic of primary psychopathy. However, Musk aims to be philanthropic as he tries to solve the problems of the world. As in the interview with Joe Rogan, where he emphasizes his love for mankind, it seems that Musk’s main aims are completely benevolent. However, there have been a few
controversies that may highlight the two-faced nature of Musk’s pursuits. In July 2018, the Tham Luang cave rescue incident occurred. The situation was as follows: twelve children who were part of a football team (called ‘’Wild Boar’’) were stuck in the Tham Luang cave and had to be rescued quickly in order to survive. Elon Musk came to the rescue, designing a mini submarine and sending it to Thailand within two days. However, by the time the submarine arrived to Thailand eight of the twelve children were already rescued by a team of divers. Thai authorities stated that, although the submarine was technologically impressive, it was impractical and wouldn’t be put to use (Suhartono and Jacobs, 2018). The fact that the submarine was impractical raised questions about Musk’s intentions.
Was the development of the submarine an act of philanthropy or a publicity stunt? One of the divers involved in the rescue of the Thai boys commented that the submarine had no chance of success since it wouldn’t be able to pass through the narrow cave passages. Musk subsequently tweeted that he believed the submarine would work and called the diver a ‘’pedo guy’’ without any evidence to support the claim (Levin, 2018) which caused
significant backlash against Musk. Musk also tweeted to another critic ‘’stay tuned, jackass’’, but he deleted those tweets. In response to Musk’s verbally aggressive behavior, Tesla investors demanded that Musk should apologize (Levin, 2018). Musk did apologize, saying
“the fault is mine alone and my words were spoken in anger’’. A journalist from BuzzFeed
news published an email from Musk that was sent on August 30 in which Musk said: "I suggest that you call people you know in Thailand, find out what's actually going on and stop defending child rapists, you fucking asshole. As for this alleged threat of a lawsuit, which
magically appeared when I raised the issue ... I fucking hope he sues me" (Levin, 2018).
Although outbursts like these are insufficient to label someone a psychopath, they are indicative of a callous personality with an antagonistic nature. Musk’s comments also don’t align with his self-professed love of humanity. In any case, there are more dark sides to the personality of Musk. Consider the working conditions at Tesla. Ashlee Vance wrote a book titled “Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future’’, which is a
“Elon's worst trait by far, in my opinion, is a complete lack of loyalty or human connection. Many of us worked tirelessly for him for years and were tossed to the curb like a piece of litter without a second thought. Maybe it was calculated to keep the rest of the workforce on their toes and scared; maybe he was just able to detach from human connection to a
remarkable degree. What was clear is that people who worked for him were like ammunition:
used for a specific purpose until exhausted and discarded.”
A complete lack of human connection is one of the core traits of psychopathy. Psychopaths are unable to experience affective empathy which enables them be callous and cold with a total disregard to others, all the while not feeling any guilt or remorse. The lack of remorse and the ability to be cruel or harsh to other people stems from a lack of human connection. This is also the reason why psychopaths are unloyal. If the above quote from the Tesla worker is true, then Musk shares another main trait of primary psychopathy, in addition to the charm and risk-taking propensity mentioned before. In the same book, J.B. Straubel (chief technology officer at Tesla and one of its co-founders) said: “He can be impatient and say, 'God damn it! This is what we have to do!' and some people will get shell-shocked and
catatonic. It seems like people can get afraid of him and paralyzed in a weird way.”
There are more indications of Musk’s ‘dark’ side. The Guardian published several articles on working conditions at Tesla for the blue-collar workers. In one article, Jonathan Galescu (production worker) said : “I’ve seen people pass out, hit the floor like a pancake and smash their face open, they just send us to work around them while they’re still lying on the floor” (Wong, 2017). Ikey Catura, worker on the battery pack line, said: ““We had an associate on my line, he just kept working, kept working, kept working, next thing you know – he just fell
on the ground,”. The working conditions may be so hard because of Elon Musk’s highly
ambitious goals and subsequent grueling deadlines.
The ‘human factor’ appears to be missing in the actual business practices of Elon Musk. Tesla’s total recordable incident rate was above the automotive industry average between 2013 and 2016. Musk reportedly told investors (Wong, 2017): “You really can’t have people
in the production line itself. Otherwise you’ll automatically drop to people speed.” At a later
date, Musk said: “Going forward, I’ve asked that every injury be reported directly to me, without exception. I’m meeting with the safety team every week and would like to meet every
injured person as soon as they are well” although The Guardian pointed out that none of the
injured workers they interviewed had directly heard from Musk or met with him (Wong, 2018). Musk is well known for making exaggerated claims: he announced he received government approval for a New York to Washington DC hyperloop that he hadn’t received, he announced to test-drive a fully autonomous Tesla car by the end of 2017 which he didn’t do, and claimed the Model 3 production would reach 5000 cars per week by the end of 2017 and it still hasn’t (Wong, 2018). Grandiosity and telling lies are common features of
psychopathy (Hare, 2006; Ekman, 2009).
Elon Musk seems to care about humanity in aggregate, but not about the individuals
traits of secondary psychopathy such as substance abuse, impulsive crime, lack of long-term goals and physically violent outbursts in response to frustration (Lykken, 1995; Lilienfeld et al., 2012, Hare, 2006).
Martin Shkreli is the first of the two cases of malevolent entrepreneurs. Shkreli’s decision to drastically increase the price of an AIDS medication reached the news in the US and Europe. His case exemplifies how business can be seen as ‘evil’, following the ‘greed is good’ mentality and ‘profit over people’. Psychopathy has a two-faced nature and so does business. In that sense, it’s interesting to explore ‘dark side’ personality traits and their effects on business that deals both with prosocial and antisocial practices. This would give a more comprehensive insight into how psychopathy and entrepreneurship are related, as the traits of psychopathy can be used in both constructive and destructive ways. Martin Shkreli’s endeavours reflect what kind of negative results can emerge when entrepreneurs with psychopathic tendencies are active in business.
4.3: Martin Shkreli
Some traits of psychopathy could enable entrepreneurs to be more successful but this success might only be for their own benefit. An individual who is immune to stress, superficially charming and persistent through adversity may have an edge over one who doesn’t. However, if this person is also cold-hearted and concerned only about his or her own benefit, several problems may arise. An entrepreneur with a truly psychopathic
personality has no reason whatsoever to care about anyone else apart from him or herself.
Martin Shkreli is an American entrepreneur who gained notoriety for raising the price of Daraprim (pyrimethamine), a drug used for protozoal infections mainly for AIDS patients and babies, from $13.50 per tablet to $750 per tablet after he acquired the rights to that drug through his privately owned startup Turing Pharmaceuticals (Raymond, 2018). The primary reason for the extreme rise of the price was to make big profits in a short period of time, thereby threatening the lives of all patients dependent on this drug. This sharp rise of the price ignited a public outcry against these kind of practices in the pharmaceutical industry and against Martin Shkreli himself. This incident happened in 2015.
Shkreli also owned several other businesses. He was co-founder of the hedge funds MSMD Healthcare, Elea Capital and MSMD Capital Management. He was also the co-founder and former CEO of biotech company Retrophin and founder/CEO of the infamous Turing
Shkreli is not only a convicted felon and guilty of putting lives in danger, he sparked
controversy in other ways as well. He offered his facebook followers $5000 for each strand of hair they could pull out of Hillary Clinton’s head during her presidential campaign
(Mangan, 2018). For this reason, among others, Judge Kiyo Matsumoto considered Shkreli a danger to society and revoked his bail.
With regards to psychopathic personality traits related to Martin Shkreli, several comments can be made. Shkreli never showed remorse for his misconduct until he was about to
receive his prison sentence. As CNN news stated: “..Shkreli was known for his cocky attitude and always maintained a smirk on his face. This once defiant defendant changed to an
apologetic tone, as he pleaded to the judge asking for leniency.” He was quoted to say in
court: “I look back and I’m embarrassed and ashamed”. However, his behavior was most likely a final attempt at manipulation to receive the lowest prison sentence possible.
Deception, shamelessness, a lack of guilt or remorse and telling lies are all features that are common to psychopathy (Dutton, 2012; Ekman, 2009; Hare, 2006). Shkreli exhibited all of these traits during the 3 years since he rose to public attention. Furthermore, Shkreli spent countless hours livestreaming himself in his room on YouTube (Shkreli, 2015). This behavior proves Shkreli feels no shame, but it also indicates that Shkreli is looking for attention and it might be indicative of a grandiose sense of self. As mentioned before, a grandiose sense of self is also indicative of psychopathy.
Akhtar et al., 2013 and Hmieleski & Lerner, 2016, found that psychopathy is related to negative forms of entrepreneurship, a result further supported by O’Boyle et al., 2012. Martin Shkreli appears to be a good example of an antisocial, value appropriating entrepreneur. His remorselessness, shamelessness, risk taking, criminal behavior and complete disregard for others are all indicators of psychopathy. For this reason, the case of Martin Shkreli is indicative of the destructive effects that psychopathy can have in entrepreneurship.
Bernard Madoff is the second of the malevolent entrepreneurs chosen for this dissertation. He is guilty of the most severe white collar crime in U.S. history. Because of this, a large amount of secondary data about him is available. Like Martin Shkreli, Bernard Madoff is suspected to have traits of psychopathy. However, the nature of his crimes were different. Madoff was guilty of a long-term fraud which was legally detected decades later than when the fraud was first started. Shkreli was incarcerated rather quickly.
4.4: Bernard Madoff
Corporation in London (Schwartz et al., 2005). Considering Madoff’s status as an
entrepreneur, note again the definition of entrepreneurship given earlier in this dissertation: “entrepreneurship is the process by which opportunities to create future goods and services are discovered, evaluated, and exploited”. Entrepreneurship depends on two factors: the presence of business opportunities and individuals with entrepreneurial intentions (Shane & Venkataraman, 2000).
Madoff founded his own business, helped the founding of other businesses, and was instrumental in starting a number of innovations. In addition, Madoff discovered and
exploited business opportunities throughout his career. For these reasons, he is considered an entrepreneur in this dissertation.
None of the major derivatives firms wanted to trade with Madoff because they suspected Madoff’s numbers were fraudulent. In addition, none of the major firms on Wall Street wanted to trade with him (CBS, 2009). During the first week of December 2008, Madoff was struggling to repay 7 billion dollars in redemptions. As the struggling for repayments
continued, it became increasingly clear that Madoff wouldn’t be able to fulfill financial obligations. On December 3 he told his long-time assistant Frank DiPascali that he was finished, on December 9 he told his brother about the fraud. Soon after, Madoff’s sons got to know about the ‘’big lie’’ which were their father’s business activities and they turned their father in to federal authorities. Bernie Madoff was subsequently arrested for securities fraud on the 11th of December, 2008. Judge Denny Chin revoked his bail because it was believed that Madoff was a flight risk. The size of the fraud was estimated to be 65 billion dollars at the beginning of the investigation, though different researchers have stated different
numbers since 2009. For instance, former SEC chairman Harvey Pitt estimated the net fraud to be between 10 and 17 billion dollars (Hays, Neumeister and Shamir, 2009) while Erin Arvedlund estimated the net fraud to be between 12 and 20 billion dollars (Arvedlund, 2009). Madoff pleaded guilty to 11 federal felonies which included mail fraud, money laundering, securities fraud, wire fraud and theft from employees. Madoff’s ponzi scheme lasted at least 20 years, although some sources believe the fraudulent behavior started as early as the 1970’s. Madoff himself stated that he started the Ponzi scheme in 1991.
Judge Chin said: "I have a sense Mr. Madoff has not done all that he could do or told all that
he knows," Judge Chin called the fraud "extraordinarily evil", "unprecedented", and
"staggering" (Zuckerman et al., 2009). Judge Chin, like the prosecutors, thought that that the fraud began somewhere in the 1980s. He noted that Madoff's crimes were "off the charts" since federal laws for fraud only go up to $400 million in losses. Although Madoff apologized to his victims, Judge Chin never received any mitigating factor letters from friends and family. It appears that nobody considered Bernard Madoff to be a good person, even his wife who stated she didn’t know the man who committed the fraud. Madoff’s son Mark committed suicide by hanging on the 11th of December 2010, exactly two years after Bernie’s arrest.
psychopathy, including the glib and superficial charm, was present in Madoff which is how he could dupe so many of his business partners (Business Insider, 2016). Madoff’s charming and charismatic nature allowed him to make business partners fall for his schemes even when numbers didn’t seem to add up. Madoff himself was quite aware that he was running a ponzi scheme, though he didn’t feel any guilt or remorse about running such a scheme. He couldn’t have felt bad about the crimes he was committing, or else he wouldn’t have been able to continue his crimes for such a long period of time. A callous disregard for the rights and feelings of others is also a trait typical of psychopathy. Although Bernie Madoff’s son Mark committed suicide by hanging, Bernie himself stated that he doesn’t think about suicide anymore and functions quite well in prison. In this regard, he has more traits typical of
primary psychopathy than secondary psychopathy. Secondary psychopathy is associated with impulsive antisociality, substance abuse and suicidal ideations. Madoff’s crimes were far from impulsive, they were meticulously planned and calculated. Bernie Madoff didn’t have a substance abuse disorder, as far as is known.
It is interesting to provide quotes from Bernie Madoff that were found on a youtube video on which he spoke (Business Insider, 2016):
“Having a mindset where you feel like you can accomplish anything….I built my confidence up to a level where I felt there was nothing that I couldn’t attain…I rationalized that was I was doing was OK. It wasn’t going to hurt anyone, it was a temporary thing. And because of the success that I had and the money I was making for people, it would be a temporary situation
and acceptable”.
First order codes
sub themes
main
themes
Figure 1. Data structure
5. Findings:
Each of the four cases were analyzed individually to give as complete a picture as possible on the entrepreneurs involved. It was noted in the methodology that hypotheses will be presented based on themes that emerged from an analysis across all the cases discussed in this dissertation. This means that commonalities of behavioral patterns between the four cases had to be found in order to uncover the themes that could emerge from the data. The main research question to be answered was: ‘’how do psychopathic personality traits relate to the behavior of entrepreneurs?”
Since this study is exploratory in nature, the main research question will not be conclusively answered. In addition, the use of exclusively secondary data limits the scope of the research to a more exploratory nature as well.However, since this field is underexplored, it is
important to ask the right questions in order to find good answers. For this reason, it was decided that an exploratory approach using qualitative research methods was appropriate to uncover the hypotheses that will be presented.
As shown in figure 1, four sub-themes emerged from the data analysis: antisociality, deception, reward orientation and audaciousness. Each sub-theme will be explained by discussing the representative examplesand discussing the literature on psychopathy. To limit the length of this section, two representative examples will be presented per sub-theme. One example from a benevolent entrepreneur and one example from a malevolent
entrepreneur will be shown. This will show the underlying logic that led to the discovery of these sub-themes. The thought processes and logic that led to uncovering the emerging main themes will be explained in a similar fashion.
The fist sub-theme to be discussed is antisociality. Antisociality is a core feature of psychopathy. Indeed, psychopathy is grouped under antisocial personality disorder. In essence, psychopathy is a form in which antisocial personality disorder can express itself and it is often regarded as a severe form of antisocial personality disorder (Lykken,1995). Examples of antisocial behavior were found in all four cases. Antisocial behavior is defined as covert or overt behavior that causes harm to or lacks consideration for the well-being of others
Representative example #1 (from the Donald Trump case):
“In 1980,Trump demolished the Bonwit Teller flagship store. Several valuable Art-Deco sculptures which were promised by Trump himself to the Metropolitan museum of Art were destroyed (Gray, 2014). Furthermore, undocumented Polish immigrant workers were suspected to be involved in the destroying of these structures. Trump denied that he was
aware of the activities of these Polish immigrant workers.”
