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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