Are entrepreneurs born or made?

Are entrepreneurs born or made?
By Ian Mount

When Bill Gates's children become adults, they'll probably launch their own businesses.

And not just because of their father's example. Entrepreneurial tendencies -- including the ability to recognize business opportunities -- are heavily influenced by genetic factors, according to a study co-directed by Scott Shane, a professor of entrepreneurial studies at Case Western Reserve University.
Shane and his fellow researchers compared the entrepreneurial activity of 870 pairs of identical twins -- who share 100% of their genes -- and 857 pairs of same-sex fraternal twins -- who share 50% -- to see how much of entrepreneurial behavior is genetic and how much is environmental.

The mathematics behind quantitative genetic modeling are rather complicated, but the upshot was fairly straightforward: Entrepreneurs, the researchers concluded, are about 40% born and 60% made. Ten to 15 years from now, genetically advantaged entrepreneurs might be identified through DNA testing or psychological surveys, Shane says.

Some academics go further: University of Cambridge clinical neuropsychology professor Barbara Sahakian, lead author of a recent study on entrepreneurial risk taking published in Nature, says that drugs used to manipulate dopamine levels might be employed to enhance entrepreneurship.

"Nature" theories like these don't sit well with professionals in the booming "nurture" field of entrepreneurship education. (The number of undergraduate majors, minors and certificates offered in entrepreneurship rose from 104 in 1975 to more than 500 in 2006, according to the Ewing Marion Kauffman Foundation, a Kansas City, Mo., think tank.)

For Heidi Neck, a professor of entrepreneurial studies at Babson College, nature studies hinder the democratization of entrepreneurship.
"If entrepreneurship is the path to economic development, to the American dream and out of recession, I think it's dangerous to say it's hereditary," Neck says.
Others are even more adamant in their distaste.

"Even if you were able to identify specific genes, then what would you do -- inject them into people who lack them?" asks Donald F. Kuratko, executive director of the Johnson Center for Entrepreneurship & Innovation at Indiana University. The very idea, Kuratko says, is reminiscent of the Nazis' World War II eugenics program.
There is more than academic turf at stake. Startups are responsible for more than a third of all new jobs created in the U.S., and firms less than five years old accounted for all net job growth between 1980 and 2005, according to the Kauffman Foundation.

For Bo Fishback, vice president of entrepreneurship at the foundation, entrepreneur gene studies are largely curiosities. What's most important for Fishback is opening the possibility of entrepreneurship to more people. Shane himself suggests that psychological surveys based on his findings could be used to identify potential entrepreneurs at a young age so they could be exposed to opportunity early, helping, for example, to turn a future entrepreneurial gang leader into a budding business founder.

Exposure seems to have an effect: A recent study at Munich's Ludwig Maximilians University found that a compulsory entrepreneurship course led about 18% of students who hadn't planned to launch a company to reconsider. The class also vastly increased the students' confidence that they knew what was necessary to start a business.

This confidence seems warranted in light of a 2006 study led by Yale University economics professor Dean Karlan, which focused on a banking program for female microentrepreneurs in a Peruvian village and determined that the women who took business-training classes had 16% higher sales than those who didn't.
Educators are not surprised by such findings. "I do believe that you can teach entrepreneurship skills," says Randy Komisar, a partner at Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers, who teaches at Stanford University. Classes, he observes, give students basic tools and reinforce the desire to take risks and question the status quo.

But he doesn't totally dismiss nature's role. "For someone without aptitude, I don't think those things can be taught," he says. "I can't make a librarian into a Broadway performer."

The debate will probably heat up soon. A book by Shane and his colleagues, Born Entrepreneurs, Born Leaders: How Your Genes Affect Your Work Life, is due from Oxford University Press in March 2010.