The mediating role of dynamic capabilities in the relationship between big five personality traits and innovation performance of startup businesses: Evidence from Saudi Arabia

In today's competitive corporate environment, startups are pivotal for economic development and innovation. Understanding the factors influencing startup performance, particularly in terms of innovation, is crucial. This thesis investigates if startup founders' Big Five personality traits are related to the innovation performance of their businesses, along with the mediating role of dynamic capabilities in this relationship. Specifically, this study explores how the Big Five personality traits (i.e., conscientiousness, extraversion, openness to experience, agreeableness, and neuroticism) potentially affect startup innovation performance. The study posits that these traits might influence founders' approaches to challenges, identification of opportunities, and engagement with their environment, thereby impacting their firms' innovative performance. Additionally, the study introduces dynamic capabilities as a mediator, proposing that founders' personality traits influence the development of dynamic capabilities within their startups, which in turn affects innovation performance. Total of 11 hypotheses were developed to examine the posited arguments. To investigate these hypotheses, questionnaires were sent to 185 startup owners or executives. 128 responses were received from the sampling frame. Data were analyzed by SPSS 29 and Smart-PLS 4 statistical software packages. The results indicated that the measurement scales used were not neither reliable nor valid, suggesting that hypothesis testing through formal procedures (e.g., by using multiple regression analysis or structural equation modeling) was not doable. Examination of the correlations among the study's variables indicated that there were no statistically significant relationships among big five personality traits, dynamic capabilities and innovation performance, suggesting that none of the proposed hypotheses were supported. Possible reasons for the lack of reliability and validity of the scales used in this current study is discussed. The lack of reliability and validity of the measurement scales prompt further exploration and refinement of measurement tools to comprehensively examine the intricate interplay between founders' personality traits, organizational capabilities, and innovation performance in the startup context, in particular in the context of Saudia Arabia.