Genetic effects on the tendency to become an entrepreneur - (Nov. 2020)

How can genes affect the decision to become an entrepreneur? 
Genes are bits of DNA that regulate protein production, thereby controlling all the important cellular processes that guide the functioning of organisms. They affect chemical mechanisms in the brain that shape people’s emotions, feelings, and sensations. For instance, they are involved in the production of hormones that enhance physiological response to overcome obstacles and increase perseverance, which are important elements of entrepreneurship. Genetic factors may also affect how people react to environmental stimuli, such as meeting somebody who has a business idea or losing a job. In addition, genetic factors influence the tendency to acquire skills and develop attributes that are relevant to entrepreneurship.

What is a trait?
A “trait” is some characteristic of a person. It could be a personality type, a behaviour or something such as eye colour.

How can one detect and measure the influence of genes on traits and behaviours?
The most popular tool of behavioural genetics is twin studies. They are based on the fact that while identical twins share 100% of their genetic make-up, fraternal twins share, on average, 50%. Consider a sample of twins raised in the same family. If identical twins show more similarity on a given trait, for instance, the decision to become an entrepreneur, compared to fraternal twins, it means that genetic factors are at work. If identical twins resemble each other as much as fraternal twins, it is likely that the trait under study is mainly influenced by the environment shared by the twins, usually, their families. The variation not explained by either genes or the family is attributed to individual life experiences of each twin.

Does heritability mean that individuals are predestined to behave in a certain way? 

No. In fact, there are no psychological traits that are 100% heritable. Heritability only indicates that people are more likely to exhibit a certain trait or behaviour compared to others that have different genes. Furthermore, twin studies show that individual life experiences constitute another substantial source of variation in traits and behaviour, reaching in some studies more than 50%. All in all, we can safely say that for most psychological traits genetic factors are as important as individual life experiences.

Going back to entrepreneurship, what do these new studies show?
An emerging literature shows that genetic factors correlate with the tendency to engage in entrepreneurship. These studies find that genetic factors account for 37% to 48% of behavioural differences between twins. In addition, some studies show that entrepreneurial behaviour shares a common genetic etiology with personality traits such as openness to experience, creativity, sensation seeking, and extroversion.

Is heritability different for male and female entrepreneurs?
The results are mixed. Some studies show no difference but in others, women’s tendency to become entrepreneurs is more heritable. Some authors explain this gender effect via the so-called diathesis-stress model. According to this model, a trait may be more heritable in an adverse environment because a strong genetic predisposition is necessary to display it.

Do these studies have limitations?
Scientific studies always have limitations. One is that the estimated measures of heritability depend on the environmental conditions of the study, and these may change across time and space. This means that the coefficients we estimate today may change in the future. Most importantly, twin studies cannot trace the effect of specific genes neither can they pin down concrete environmental factors. But there are alternative techniques that investigate the causal effects of individual alleles.

Is there evidence of these alternative techniques applied to entrepreneurship?
Yes. Several studies have found associations of specific genetic polymorphisms and the tendency to become an entrepreneur. In one study, subjects who score higher on sensation seeking and the odds of engaging in entrepreneurship carry genetic variations in a polymorphism associated with susceptibility to gambling, and obsessive-compulsive personality disorder. However, all the studies so far show that no gene alone predicts the tendency to become an entrepreneur. According to the evidence from psychology, complex traits are affected by many genes with individual infinitesimal effects (less than 1%). This gloomy prospect also holds for entrepreneurship, which is a complex trait.

Why is entrepreneurship a complex trait?
Erik Turheimer (a founding father of behaviour genetics) provided a great example to understand this matter. Consider the case of two mute individuals, one who has suffered brain damage in the Broca’s area of the left hemisphere and another who has recently joined a religious order that requires silence as a way of withdrawal from the world. The source of muteness is, in both cases, located somewhere in the brain. Yet, while the brain lesion can be detected using a brain scan, the monk’s devotion will be difficult to localize. There is probably a long chain of linkages starting from a genetic predisposition to, for example, religiosity, engagement, and asceticism leading to the monk’s actual muteness. Complex behaviours involving beliefs, intentions, and emotions do not have localized biological causes. Entrepreneurship is a coherent process at a social level of analysis, but it is utterly incoherent at a neurological level, and can hardly be traced to a small set of genes specific for entrepreneurship.

In your paper, you suggest that gene-culture evolution models can enrich the perspective on the heritability of entrepreneurial activity. How exactly?
Individuals with a genetic predisposition to entrepreneurship have a basic tendency to choose it. However, individuals also behave according to beliefs, knowledge, intentions, and goals. Some will be exposed to role models that reinforce the choice of entrepreneurship, such as learning about the involvement of others in a business project. Others will remain unexposed to the appropriate environmental stimuli, even if genetically predisposed.

Genes, behaviours, and environmental factors form part of a system guided by the forces of evolution. Over time, individual choices will affect the aggregate level of entrepreneurial activities and the pool of role models available for imitation in the next period. The rate of propagation of the corresponding memes will depend on the power of the media and the success of famous entrepreneurs. At the same time, biological reproduction will determine the gene pool that is prone to entrepreneurship. Generation after generation, two interacting processes will be at work, one affecting the pool of behaviours and the other shaping the pool of genes. You argue that occupational choices are not likely to be highly heritable. Why is this? Entrepreneurship involves risk. Evolutionary theory predicts that such traits will strongly respond to the environment. If entrepreneurship were highly heritable individuals would not be able to adjust to technological innovations, economic policies, and local conditions of labour markets, which depend on whether other individuals engage in entrepreneurship. Furthermore, genetic factors that increase the propensity to engage in entrepreneurship may lead to other careers or even preclude individuals from becoming an entrepreneur.

Do you have a final word for those who are interested in becoming an entrepreneur?
If the findings of more than a decade of replication studies in psychology can serve as a guideline, we can expect studies to confirm that entrepreneurship is heritable. However, we can also expect that studies will show that the influence of individual genes is very small and that, taken together, they are as important overall as non-genetic factors. Therefore, having a genetic predisposition is neither necessary nor sufficient to become an entrepreneur.

Further reading

Kuechle, G. The contribution of behavioral genetics to entrepreneurship research: An evolutionary perspective. Journal of Evolutionary Economics 29(4), 1263-1284.

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