Genetic theory of entrepreneurship

The genetic approach to entrepreneurship looks to biological inheritance to explain the tendency for an individual to become an entrepreneur and succeed in entrepreneurial ventures.

Research on genetic links is spurred on by considerable anecdotal evidence that the children of entrepreneurs are more likely to become entrepreneurs than the children of non-entrepreneurs. Genetic research tries to tease out family and environmental factors (learning, role modeling, and resources) from genetic factors.

Nicolaou et al. (2008) conclude that when one twin becomes an entrepreneur then the other twin is more likely to, even when controlling for family upbringing and other environmental factors. They suggest that testosterone levels are inherited and related to the decision to become an entrepreneur.

Later studies have added more depth to the analysis, looking to personality traits as mediators. For instance, Shane et al. (2010) study twins (with 50% and 100% similar genes) and conclude that the personality traits (openness to experience and extroversion) associated with entrepreneurial entry are indeed inheritable. The study finds limited support though, because the effect sizes where rather small.

Genetic theories are controversial because they tend to downplay the potential for entrepreneurial preparation and education to spur individuals toward the career path with success. However, the small effect sizes suggest that nature matters, but nurture matters much more.

To date, no studies have demonstrated a genetic effect on entrepreneurial success, which seems to be the next logical step for genetic theory research.

Sources:

Shane, S., Nicolaou, N., Cherkas, L., and Spector, T. D. (2010). Genetics, the Big Five, and the tendency to be self-employed. Journal of Applied Psychology, 95(6), 1154.

Nicolaou, N., Shane, S., Cherkas, L., Hunkin, J., and Spector, T. D. (2008). Is the tendency to engage in entrepreneurship genetic?. Management Science, 54(1), 167-179.

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3 comments for this post
  1. Jessyca Rusyn

    Diallo’s study aims to determine the impact of the frequency of lactase persistence found in the body in 1,500 common era (CE) on entrepreneurship. The data from 1,500 CE was used in order to determine the origin of lactase persistence among different populations. Lactase persistence is the ability of the body to digest lactose (the main carbohydrate found in milk) (Diallo, 2019).
    The study found that lactase persistence was negatively and significantly related to entrepreneurship. A one standard deviation increase in lactase persistence decreased regional self-employment by 7%, total early-stage entrepreneurial activity (TEA) by 4%, and established business ownership (EBO) by 1.58% (Diallo, 2019).

    Reference:
    Diallo, B. (2019). Entrepreneurship and genetics: New Evidence. Journal of Business Venturing Insights, 11, e00123.
    https://www-sciencedirect-com.ezproxy.lib.ryerson.ca/science/article/pii/S2352673418301057

  2. At first glance, I would be prone to reject the idea of a genetic link to entrepreneurial activity. This is because I subscribe to the notion that your personality is just as much determined by the behaviours and lifestyle choices you’ve been exposed to as it is by your genetic tendencies. Now, of course, this does not negate the suggestion that children of entrepreneurs are much more likely to become entrepreneurs themselves. In fact, this suggestion feels appropriate because of a combination of nature and nurture theories. Firstly, children of entrepreneurs are likely to inherit some traits of their parents. If their parents harbour traits likely to drive them towards starting a business, then it’s possible their children will feel a similar drive. Additionally, children of entrepreneurs will have been exposed to the concept and lifestyle of entrepreneurs much earlier than children of non-entrepreneurs. Therefore, this activity will seem normal them, whereas this may not be the case for their peers. It’s due to this combination that I believe children of entrepreneurs are more likely to start businesses of their own down the line.

  3. Kuechle, G. The contribution of behavior genetics to entrepreneurship: An evolutionary perspective. J Evol Econ 29, 1263–1284 (2019). https://doi-org.ezproxy.lib.ryerson.ca/10.1007/s00191-019-00634-x

    Research into the genetic connection between entrepreneurship and genetics, as Kuechle writes in his 2019 examination of the subject, have the potential to embed entrepreneurial research into bioscience. This particular paper makes a number of contributions to entrepreneurial theory and therefore can improve upon this blog post in several ways. First and foremost, the study concludes that in order to determine such a genetic link, longitudinal data sets will need to be used. Essentially, this will mean monitoring subjects for long periods of time in the environment we’ve suggested prompts young people to become entrepreneurs. Furthermore, the study advocates for a perspective called Dual Inheritance Theory. This theory suggests that human behaviour is a product of both genetic evolution and cultural evolution.

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