Investigating the relationship between narcissistic personality and risk propensity

Abstract

It is a reality of today that narcissism has progressively increased over the past 30 years. With academic literature suggesting that there is no plan for this trend to slow down, the subject in question proved of particular interest to me, especially when taken in an organisational context. As we face daily constraints and situations, we as individuals, face a multitude of decisions. It was therefore interesting to study the relationship between an individual’s narcissistic traits and their risk propensity, or in other words, their willingness to take risks. Due to the requirements of this study, an empirical, quantitative approach was adopted to study the relationship between these two constructs. I have also narrowed down my investigations to address results based on their respective components separately. My test was concluded with a sample size of 203 participants. For the first part of the survey, it was decided to adopt the use of the Narcissistic Personality Inventory (NPI), which was developed by Raskin and Terry (1988). This 40-item tool measures the extent of narcissistic traits in an individual. The Domain-Specific Risk-Taking (DOSPERT) scale was selected in the second part of the survey, to measure candidates’ risk propensity. This test was developed by Weber, Blais, and Betz (2002). Both scales of measurement enjoy an esteemed reputation for their validity in the measurement of their respective constructs. The two components of narcissism, namely exhibitionism and entitlement, proved to be significant predictors for risk propensity. The research conducted has revealed a significant, medium-sized positive relationship between the extent of narcissism in an individual and their risk propensity. Further tests revealed that risk taking is positively associated with narcissistic personality. In particular, two of the components that make up narcissism namely exhibitionism and entitlement, emerged as the most significant predictors for risk propensity. The study can contribute significantly to any organisation but in particular, to those organisations trading in environments where risk propensity is of importance such as banking, finance, credit institutions and online gaming businesses etcetera. The findings of this study may prove beneficial to management for both internal and external purposes in that it can shed light on how to better understand their own employees or other stakeholders such as their client base.