April 18, 2006

Much of entrepreneurial drive is genetic, new study finds

Paper co-authored by professor from Weatherhead School of Management shows genetic predisposition toward entrepreneurism

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Scott Shane

Entrepreneurs are considered vital to the health of a region's or nation's economy, since they create wealth and jobs. And while governments and business groups are always on the lookout for ways to spark entrepreneurship, no one knows precisely what leads people to start their own business. But a new study suggests that a substantial part of the answer can be found in an individual's genetic makeup.

Scott Shane, the Mixon Professor of Entrepreneurial Studies at Case Western Reserve University's Weatherhead School of Management; Nicos Nicolaou, a lecturer in entrepreneurship at the Tanaka School of Business of Imperial College, London; and Janice Hunkin, Lynn Cherkas, and Tim Spector of the Twin Research & Genetic Epidemiology Unit at St Thomas' Hospital in London, compared rates of entrepreneurship between and among more than 1,200 pairs of identical and fraternal twins in the U.K. They conclude that nearly half—48 percent—of an individual's propensity to become self-employed is genetic.

The authors studied the self-employment among 609 pairs of identical twins, and compared it to self-employment among 657 pairs of same-sex fraternal twins in the U.K. Identical twins share 100% of their genetic composition, while fraternal twins share about 50%, on average. Thus differences in the rates at which pairs of identical twins both become entrepreneurs and the rates at which both members of fraternal twins both become entrepreneurs are attributable to genetics. "One can look at the patterns of concordance (the numbers of pairs of twins in which both members are or are not entrepreneurs) and reasonably infer that genetic factors account for the differences," says Shane.

The authors suggest several methods by which genetic factors might influence people's tendency to become entrepreneurs. For example, genes may predispose an individual to develop traits such as being sociable and extroverted, which in turn facilitate skills such as salesmanship, which are vital to entrepreneurial success.

In addition, genes have been shown to affect the level of education an individual receives, and more highly educated people are likelier to become entrepreneurs because they are better able to recognize new business opportunities when they arise.

The authors emphasize that while a predisposition toward entrepreneurship can be shown to be based in genetics, they have not identified specific genes associated with a tendency towards entrepreneurship.

Shane and Nicolaou believe their research has a number of important implications for education and public policy. It will help to improve research into entrepreneurship generally, and help determine whether current approaches to entrepreneurship education focus too heavily on training and not enough on selection. Finally, it suggests to policy makers interested in encouraging entrepreneurial activity the value "of developing policies that trigger those genetic propensities, as opposed to the current blunter approach of employing policy instruments designed to affect the behavior of the whole population."

The Case Western Reserve University Weatherhead School of Management is an international center of management scholarship, committed to preparing and enhancing organizational leadership. The Weatherhead School is dedicated to making discoveries of enduring consequence, developing innovative educational programs, fostering strategic partnerships with students and organizations, and providing services to multiple communities.

Posted by: Heidi Cool, April 18, 2006 06:11 PM | News Topics: Research, Weatherhead School of Management

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