The Genetics of Entrepreneurism

“I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. 26 times I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life and that is why I succeed.”­

Michael Jordan

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 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. Extroversion

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. 

The Personality Factors Associated with Being and Entrepreneur

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).  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 Agreeableness but higher on Emotional Stability.  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 analysis.

People become entrepreneurs in part because of the “fit” of their genetically influenced personalities to the job of running their own businesses. 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. 

New research by Li, Barrick, M. R., Zimmerman, R. D. & Chiaburi, D. S. (2014) explored  the role of personality with both performance and withdrawal behaviors (organizational citizenship, absenteeism and turnover) in the largest meta-analysis study done to date.  Their findings suggests that out of all of the “big five personality factors”, agreeableness had the strongest unique effect out of all of the FFM personality traits on withdrawal behaviors ((Li, Barrick, Zimmerman & Chiaburi (2014). Retaining the Productive Employee. The Academy of Management Annals, 8, 347-395)).  This suggests that agreeableness is the new “g” of withdrawal predictors supporting the entrepreneurial findings that people who want to be their own boss may not have the tolerance for organizational politics and want to march to their own rules, rather than, adhere to those of others.

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….

Ken Nowack

Kenneth Nowack, Ph.D. is a licensed psychologist (PSY13758) and President & Chief Research Officer/Co-Founder of Envisia Learning, is a member of the Consortium for Research on Emotional Intelligence in Organizations. Ken also serves as the Associate Editor of Consulting Psychology Journal: Practice and Research. His recent book Clueless: Coaching People Who Just Don’t Get It is available for free for a limited time by signing up for free blog updates (Learn more at our website)