Here's a New Theory About Why People Become Entrepreneurs
It's long been known that children with entrepreneurial parents are more likely to become entrepreneurs themselves. But new research quantifies that effect—and goes a step further by suggesting why exactly that might be.
The study, published in the latest Journal of Labor Economics, found that upbringing, rather than genetics, seems to have the biggest effect on the offspring of self-started business owners. The researchers did something prior studies (which mainly focused on twins) hadn't: They examined the career choices of thousands of Swedish children raised by either adoptive or biological parents to compare the relative effects of nature and nurture on the entrepreneurial impulse.
Adopted children, they found, were 20% more likely to become entrepreneurs if their biological parents were also entrepreneurs. But if it was their adoptive parents who were entrepreneurs, it was 45% more likely children would follow suit.
"The importance of adoptive parents is twice as large as the influence of biological parents," wrote authors Joeri Sol and Mirjam Van Praag of the University of Amsterdam, and Matthew Lindquist of Stockholm University.
The authors controlled for the possibility that kids might just be inheriting the family business (or money to start a new business) and continued to find the same effect—which suggests that kids were simply seeing their parents as role models. That would also explain why gender had a big impact on children: Daughters in the study were most likely to become entrepreneurs if their mothers were—and sons if their fathers were.
These findings may also have implications for educators and policymakers who care about growing small businesses. The greater the effect of nurture on career choices, the authors wrote, "the larger the potential benefit of programs aimed at fostering entrepreneurship."
The biggest takeaway for parents? If you want your kids to become start-up success stories, you should first try to become one yourself.