Do You Have the Entrepreneurial Gene?
Kenneth Nowack, Ph.D.
Why do People become Entrepreneurs?
It appears that it might actually be in your genes.
It is already well established that there is substantial heritability for the “Big Five” personality factors (Extraversion, Openness to Experience, Emotional Stability, Agreeableness and Conscientiousness) with approximately 50% of the variance accounted for by genetic factors (Shane et al., 2010).
Genetic factors also seem to account for a significant proportion of variance in who becomes an entrepreneur and personality might actually be one of the many factors through which genetics might exert their influence (of course, there may be others and even some more important such as hormones, activity levels etc.). How can such a claim be made? Research with twins allows for the examination of “nature” versus “nurture” factors to be teased out.
In a new study of 3,412 twins from the UK and 1,300 twins from the US, researchers examined whether genetic factors were associated with the “Big Five” personality characteristics ) and the tendency to become an entrepreneur (defined as self-employed, starting a new business, being an owner, or engaging in a start-up process). The researchers found that common genes influenced the correlations between only two personality factors and the tendency to become an entrepreneur (Shane, S. et al. (2010). Genetics, the Big Five and the tendency to be self-employed. Journal of Applied Psychology, 6, 1154-1162). These included:
1. Openness to Experience
2. Extraversion
These findings are interesting in light of earlier meta-analytic research findings exploring personality and entrepreneurial intentions (includes individuals who have not yet started a venture) that found correlations of .16 between Extroversion and intentions, .09 between Extroversion and performance, .24 between Openness to Experience and intentions and .21 between Openness to Experience and performance (Zhao, H. et al. (2010). The relationship of personality to entrepreneurial intentions and performance: A meta analytics review. Journal of Management, 36, 381-404). These significant associations, although modest, do support the relationship between having high energy and being outgoing (Extroversion) and risk taking (Openness to Experience) and entrepreneurial interests as well as performance.
Earlier research by Hao Zhao of the University of Illinois at Chicago and Scott E. Seibert of the Melbourne Business School analyzed and combined the results of twenty-three independent research studies (Zhao, J. & Siebert, S. (2006). The Big Five personality dimensions and entrepreneurial status: A meta-analytical review. Journal of Applied Psychology, 91, 259-271). The twenty-three studies included in the meta-analysis compared entrepreneurs to a group of managers on the five factor personality (FFM) traits. Statistical differences between entrepreneurs and managers were found on four out of the five personality traits. Entrepreneurs scored significantly higher than managers on the scales of Openness to Experience and Conscientiousness.
In general, entrepreneurs can be characterized as more creative, more innovative, and more likely to embrace new ideas than their manager counterparts (Openness to Experience). Second, the results indicated that entrepreneurs were higher than managers on Conscientiousness (i.e., drive and work ethic). Further analysis indicated that the differences were due to the entrepreneurs having a higher achievement orientation as compared to managers. Entrepreneurs and managers did not differ on other aspects of the Conscientiousness factor such as dependability, reliability, planning and organizational skills.
The second key set of results showed entrepreneurs to be significantly lower than managers on Neuroticism and Agreeableness. In general, entrepreneurs appear to be more self-confident, resilient, and stress-tolerant than non-entrepreneurial managers. These results are logical given the highly stressful, demanding, and changing work environments which entrepreneurs usually find themselves. Entrepreneurs are able to tolerate a greater amount of stress without anxiety, tension and psychological distress. This may help entrepreneurs handle ambiguity, take risks and feel greater comfort with failure.
With regard to lower scores on Agreeableness, entrepreneurs were found to be tougher, more demanding, and more likely to use more negotiation and influence skills than managers. Finally, no significant differences were found between the two groups on Extroversion in this earlier analysis but it still appears to genetically be associated with the selection of entrepreneurial careers.
People become entrepreneurs in part because of the “fit” of their genetically influenced personalities to the job of running their own businesses. On the other hand, a careful reading of the current research suggests that the Big Five personality factors have only a modest effect on the tendency to become an entrepreneur.
From a teaching and coaching perspective, helping students and talent develop interpersonal competence and skills associated with Extroversion might actually have a greater impact on entrepreneurial success than trying to increase Openness to Experience. Why? The association between Extroversion and the tendency to become an entrepreneur appears to depend less on genetic factors than does the association between Openness to Experience and the tendency to become an entrepreneur.
I’m neither very extroverted or extremely high in risk taking and sensation seeking but I sure love being my own boss….I wonder what the researchers would say about that….Be well….