Does leadership personality affect business risks? New evidence from Vietnamese small and medium-sized enterprises

Abstract

The current study contributes to our body of knowledge by evaluating for the first time how a leader’s personality affects risk for small and medium-sized enterprises (SMEs) in Vietnam. According to the findings, managers with a strong aptitude for innovation are more likely to lower business risk by boosting labor productivity and revenue, enhancing inter-firm communication, and lowering stakeholder risks, such as corruption. In contrast to the influence of a manager with a risk-taking attitude, a leader’s external locus of control is inversely related to firm risk. The results show that training owners and managers in business skills can help human resource professionals create the best environment for leadership behaviors that improve firm performance and lower risk in SMEs.