ENTREPRENEURSHIP AND THE BIG FIVE PERSONALITY TRAITS: A BEHAVIORAL ...

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ENTREPRENEURSHIP AND THE BIG FIVE PERSONALITY TRAITS: A BEHAVIORAL
GENETICS PERSPECTIVE



INTRODUCTION
Why do people become entrepreneurs? Recent research has indicated that some of the
variance in who becomes an entrepreneur is accounted for by genetic factors (Nicolaou, Shane,
Cherkas, Hunkin and Spector, 2008). Unfortunately, to date research says little about how genetic
factors might influence this tendency.
Because we are unlikely to have specific genes for entrepreneurship, the influence of
genetic factors on the likelihood of becoming an entrepreneur likely operates through mediating
mechanisms. One plausible mechanism is through personality. Empirical research shows that
some of the variance in personality traits across people is accounted for by their genetic
endowment (Loehlin, 1992; Jang et al., 1996; Plomin et al., 2008). People with different variants
of certain genes face different probabilities of developing certain personality traits (Comings et al,
2000; Ebstein et al, 2002). These genetically-influenced personality traits, in turn, affect the odds
that a person will become an entrepreneur (Zhao and Seibert, 2006; Rauch and Frese, 2006).
While this argument is logical, and we have empirical evidence for pieces of it, the
overall model is untested. This study seeks to fill this void by examining whether genetic factors
influence the odds that people will become entrepreneurs by affecting the odds that people will
develop the big five personality traits found to be conducive to entrepreneurship. Specifically, we
apply multivariate genetics techniques to examine the cross-trait-cross-twin correlations between
the big five personality traits and the odds of being an entrepreneur for a sample of 1740
monozygotic (MZ) and 1714 same-sex dizygotic (DZ) from the United Kingdom to determine if
part of the covariance between the big five personality traits and the tendency to be an
entrepreneur is accounted for by a common genetic factor.

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As long as MZ and DZ twins face similar environments to their co-twins, (an assumption
we are careful to show is robust), greater cross-trait-cross-twin correlations between the big five
and the tendency to be an entrepreneur of MZ twins than of DZ twins would imply that genetic
factors contribute to the phenotypic correlation between the two attributes. Because personality
traits and occupational choices cannot change an individual’s genetic make-up, greater MZ than
DZ cross-trait-cross-twin correlations would indicate that the same genetic factors are the cause
of both the tendency to have the personality traits and the tendency to be an entrepreneur. If, on
the other hand, the same genetic factors do not influence the big five personality dimensions and
entrepreneurship, then there would be no difference in the cross-trait-cross-twin correlations
between MZ and DZ twins.
Identifying the source of beneficial personality traits and the causal mechanism through
which they influence the odds of becoming an entrepreneur is important if we are to go beyond
the descriptive observation that personality traits are correlated with the tendency to become an
entrepreneur, and evaluate whether interventions, such as training, can be used to increase the
odds that people become entrepreneurs. Many people, including policy makers, believe that
entrepreneurship is desirable and seek to increase it. Increasing the amount of entrepreneurship
depends on the identification of non-genetic sources of the tendency of people to become
entrepreneurs that can be influenced by a known intervention. If most of the variance in the
tendency to become an entrepreneur and the personality traits associated with that tendency is
largely accounted for by a common genetic factor, then increasing the number of entrepreneurs
by encouraging the development of the associated personality traits would be ineffective. If,
however, most of the variance in who becomes an entrepreneur and the personality traits
associated with becoming an entrepreneur are not accounted for by a common genetic factor, then
interventions (such as training) that help people to develop the personality traits that increase the
odds of becoming an entrepreneur would be possible. Thus, identifying the genetic covariance

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between the big five personality traits and the tendency to become an entrepreneur is of central
importance to anyone seeking to be normative about entrepreneurship.


THEORETICAL DEVELOPMENT
A significant portion of the variance in who becomes an entrepreneur is accounted for by
genetic factors (Nicolaou, Shane, Cherkas, Hunkin and Spector, 2008). Because we are unlikely
to have genes for “entrepreneurship,” the effect of our genes on our tendency to become
entrepreneurs is likely to operate through a mediating mechanism. While there are a variety of
possible mediating mechanisms, from temperament (Rief and Lesch, 2003) to hormones (Dabbs,
1992) to activity levels (Rutter, 2006), one plausible mechanism is through personality.1
Empirical research shows that a significant portion of the variance in personality traits
across people is accounted for by their genetic endowment (Loehlin, 1992; Jang et al., 1996;
Plomin et al., 2008). People with different variants of certain genes face different probabilities of
developing certain personality traits (Comings et al, 2000; Ebstein et al, 2002). A long line of
research shows that these genetically-influenced personality traits, in turn, affect the odds that a
person will become an entrepreneur (Knight, 1921; Schumpeter, 1935; McClelland, 1961; Baron,
2007).
The big five model of personality is one of the most comprehensive and parsimonious
personality taxonomies (Costa and McCrae, 1992). Although scholars have used somewhat
different labels for the five personality traits making up this taxonomy, the five factors are
extraversion, openness to experience, agreeableness, conscientiousness and emotional stability
(Barrick and Mount, 1991).
The big five model provides a general framework for examining the effects of personality
traits on the tendency to become an entrepreneur. Recent meta-analytic evidence has shown that

1 We do not argue that personality is the only mediating mechanism or even that it is the most important
one. We merely argue that it is one of many possible mechanisms. We do not have the data to examine
other mediating mechanisms in this study.

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the big five personality traits affect the odds of becoming an entrepreneur (Zhao and Seibert,
2006; Rauch and Frese, 2007).

Empirical research on the big five personality traits also shows that they have a
significant genetic component (Comings et al, 2000; Ebstein et al, 2002; Jang et al, 1996), which
provides the basis for the development of the hypotheses that follow. We argue that genetic
variation affects the development of several neurotransmitters. The genetically-influenced
variation in neurotransmitter production, in turn, influences the probability that a person will
develop particular personality traits and not others. Finally, those personality traits affect the
odds that people will become entrepreneurs. As a result, genetic variation in the odds that people
will become entrepreneurs will be observed and a common genetic factor will account for both
the development of the personality traits and the tendency to become an entrepreneur. Below we
develop specific hypotheses for each of the big five personality traits.

Extraversion

Extraversion is an aspect of personality that includes characteristics such as sociability,
talkativeness, assertiveness, and ambition (Barrick and Mount, 1991). It is a valuable trait for
entrepreneurs because they need to spend a lot of time interacting with investors, employees, and
customers, and have to sell all of them on the value of the business (Shane, 2003).
Empirical research indicates that people who score high on extraversion are more likely
than others to become entrepreneurs (Shane, 2003). In fact, a study of a cohort of people who
were all born in one week in March 1958 in Great Britain who were given a psychological test
measuring extraversion at age 11 indicated that those who went into business themselves in
adulthood had higher extraversion scores when they were children (Burke et al, 2000). Similarly,
a study that used data from the National Longitudinal Survey of Youth in the United States
showed that being outgoing as a child predicts working for one’s self in adulthood. (Van Praag
and Ophem, 1995).

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Behavioral genetics research has shown that the heritability of extraversion ranges from
0.49 (Waller, 1999) to 0.56 (Riemann et al., 1997). Moreover, there is some evidence that the
genes that control the development of neurotransmitters, such as dopamine and serotonin,
influence the odds of developing the personality trait of extraversion. A particular version of one
of the dopamine receptor genes, DRD2, which influences the speed with which dopamine is
processed in the brain, is associated with the development of social relationships (Farde and
Gustavson, 1997). This may be because the gene variant gives people a stronger physiological
reaction to social interaction.
Because genetic factors influence the odds that people will become entrepreneurs
(Nicolaou et al., 2008) and that they will be extraverted (Loehlin, 1992), and because extraversion
is associated with the tendency to become an entrepreneur, it is possible that part of the
covariation between extraversion and the tendency to become an entrepreneur is accounted for by
a common genetic factor. This leads to our first hypothesis:
H1: A common genetic factor accounts for some of the covariance between
extraversion and the tendency of people to be entrepreneurs.

Openness to experience

Genetic factors may also account for some of the covariance between openness to
experience and entrepreneurship. Openness to experience characterizes someone who is open to
novel experiences and ideas and who is imaginative, innovative and reflective (McCrae, 1987;
Costa and McCrae, 1992). Such attributes are important for entrepreneurs as they need to explore
new ideas and take innovative approaches to the development of products and the organization of
businesses (Zhao and Seibert, 2006). Empirical research confirms the positive association
between openness to experience and the odds of being an entrepreneur (Zhao and Seibert, 2006).
Studies have shown that openness to experience has a genetic predisposition, with
heritability estimates of between 0.45 (Loehlin, 1992) and 0.56 (Loehlin et al., 1998) and.

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Research also shows an association between variants of specific genes and openness to
experience, most notably the DRD4 gene, which affects the development of dopamine receptors
in the brain (Comings et al, 1999). Thus, the development of this personality trait is affected by a
person’s genetic endowment.
Because genetic factors influence the odds that people will become entrepreneurs
(Nicolaou et al., 2008) and that they will be open to experience (Loehlin, 1992), and because
openness to experience is associated with the tendency to become an entrepreneur, it is possible
that part of the covariation between openness to experience and the tendency to become an
entrepreneur is accounted for by a common genetic factor. This leads to our second hypothesis:
H2: A common genetic factor accounts for some of the covariance between
openness to experience and the tendency of people to be entrepreneurs.

Agreeableness
Genetic factors may account for some of the covariance between agreeableness and
entrepreneurship. Agreeableness characterizes someone who is cooperative, trusting, forgiving,
tolerant, courteous and soft-hearted (Barrick and Mount, 1991). Agreeable people are less likely
to start businesses because people with this trait are less likely to pursue their own self-interest,
drive difficult bargains, or use others to achieve their objectives (Zhao and Siebert, 2006). Less
agreeable people also are more skeptical than others (Costa and McCrae, 1992) which makes
them more likely to have a critical approach to assessing business information (Shane, 2003).
Empirical research confirms the negative association between agreeableness and the odds
of being an entrepreneur (Zhao and Seibert, 2006). One study showed that people who started
businesses after being laid off and going through outplacement were more “tough minded” and
more “suspecting” than those who went back to traditional employment through outplacement
(Wooten et al., 1999; Fraboni and Saltstone, 1990). Moreover, a meta-analysis of several studies

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showed that entrepreneurs scored lower than managers on agreeableness (Zhao and Seibert,
2006).
Research has shown that heritability estimates for agreeableness range from 0.33 (Waller,
1999) to 0.42 (Riemann et al., 1997). Researchers also have identified variants of specific genes
that are associated with agreeableness, most of which affect neurotransmitters, including DRD4,
5-HTTLPR, 5HT2C, DAT1, SPB, PNMT, GABRAA6, OXYR, CYP19, NMDAR1, and CNRA4
(Comings et al, 1999; 2000; Lesch et al, 1996; Hamer et al, 1999). For instance, the 5HT2C
gene, which helps to regulate ACTH, oxytocin and prolactin in the brain, and the 5-HTTLPR
gene, which, controls the formation of serotonin transporters, together account for 10 percent of
the genetic similarity between people in measures of agreeableness (Jang et al 2001; Greenberg et
al, 2000). Thus, the development of the personality trait of agreeableness is affected by a person’s
genetic endowment.
Because genetic factors influence the odds that people will become entrepreneurs
(Nicolaou et al., 2008) and that they will be agreeable (Loehlin, 1992), and because agreeableness
is associated with the tendency to become an entrepreneur, it is possible that part of the
covariation between agreeableness and the tendency to become an entrepreneur is accounted for
by a common genetic factor. This leads to our third hypothesis:
H3: A common genetic factor accounts for some of the covariance between
agreeableness and the tendency of people to be entrepreneurs.

Conscientiousness

The heritability of entrepreneurship (Nicolaou et al. 2008) may also be partly mediated
by conscientiousness. This trait is associated with dependability, hard work and perseverance
(Barrick and Mount, 1991). Entrepreneurs need to be high on conscientiousness since they need
to be organized and deliberate to achieve their goals. They also need to be persistent and put in
the hard work necessary to overcome obstacles, like the failure to obtain financing or cost

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overruns, associated with the venturing process (Locke and Baum, 2007; MacMillan et al., 1985;
Timmons, 1989). Empirical research confirms the positive association between conscientiousness
and the tendency to be an entrepreneur. A meta-analysis of several studies showed that this was
the largest of the big five dimensions on which entrepreneurs and managers differ (Zhao and
Siebert, 2006).
Research has shown that conscientiousness has a genetic component to it (Plomin et al.,
2008), with heritable estimates ranging from 0.29 (Bergeman et al., 1993) to 0.44 (Jang et al.,
1996). Moreover, studies show the association between variants of a number of genes and
conscientiousness, including versions of the DRD2, DRD4, CNRA4, ADOR2A, 5-HTTPLR,
HTR2C, HTR2A, COMT, VMAT, and 5HT2C genes (Noble et al, 1998; Benjamin et al, 1996;
Comings et al 2000; Hamer, 2004; Hamer et al, 1999; Reif and Lesch, 2003; Ebstein et al, 1997,
2002; Plomin and Caspi, 1998).
Because genetic factors influence the odds that people will become entrepreneurs
(Nicolaou et al., 2008) and that they will be conscientious (Loehlin, 1992), and because
conscientiousness is associated with the tendency to become an entrepreneur, it is possible that
part of the covariation between conscientiousness and the tendency to become an entrepreneur is
accounted for by a common genetic factor. This leads to our fourth hypothesis:
H4: A common genetic factor accounts for some of the covariance between
agreeableness and the tendency of people to be entrepreneurs.

Emotional stability
The genetic effect on the tendency to be an entrepreneur may also be partly mediated by
emotional stability. Common characteristics associated with people scoring low on this factor
include being anxious, worried, insecure, embarrassed and emotional (Barrick and Mount, 1991).
People who are emotionally stable are more likely to start their own businesses than people who
are neurotic because entrepreneurs need a high tolerance to stress to cope with the hard work,

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significant risks, social isolation, pressure, insecurity, and personal financial difficulties that come
from starting their own businesses (Rauch and Freese, 2007). Entrepreneurs cannot worry
excessively, and need to be resilient in the face of set backs when building a company (Zhao and
Siebert, 2006). Moreover, they need to work in stressful and highly unstructured environments
where the separation between family life and work life is often fuzzy.
A variety of studies show that people high on emotional stability are more likely than
others to engage in entrepreneurship (Zhao and Seibert, 2006). For instance, one study showed
that people who were laid off and went to an outplacement service from which they started a
business were more emotionally stable than those who went back to traditional employment
through outplacement (Wooten and Folger, 1997). Research even has shown that a child’s score
on a measure of anxiety acceptance and hostility – two dimensions of neuroticism – taken at age
11 predicts the odds that the person will be self-employed at age 33 (Blanchflower and Oswald,
1998). Another study showed that people who had founded their own businesses were more
emotionally stable as measured by Catell’s 16PF than those who inherited their businesses or had
taken them over through marriage (Brandstetter, 1997). And a meta analysis showed that lack of
neuroticism, as measured by the 16 personality adjective scale and the 16 personality factor scale,
is associated with being an entrepreneur rather than a manager (Zhao and Siebert, 2006).
Twin and adoption studies from a variety of countries show heritabilities of between 27
and 68 percent for neuroticism across a variety of different ways to measure it (Viken et al, 1994;
Jang et al, 1996; Saudino et al, 1999; Loehlin and Martin, 2001; Loehlin et al, 1998; Zuckerman,
2005; Carey, 2003). Moreover, several studies have identified specific genes that affect our level
of neuroticism: 5-HTTPLR, 5-HT1A, 5HT2C, CNRA4, ADOR2A, GABRB3, TPH, ADRA2A,
and DRD4 (Comings et al, 2003; Ebstein et al, 2002; Benjamin et al, 1998; Hamer et al, 1999;
Lesch et al, 1996; Stroebel et al, 2003). Many of these genes affect neuroticism by influencing
the production of and release of serotonin – a hormone which influences reaction to stress – in
the body, just as the drug Prozac does (Hamer and Copeland, 1999; Winterer and Goldman,

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2003). For instance, a version of the 5HTTLPR gene leads to the production of more of the
serotonin transporter than other versions of the gene, thus increasing the degree to which people
are neurotic, unassertive, shy and impulsive (Hamer and Copeland, 1999). This gene variant
accounts for between three and four percent of the difference between people in neuroticism, and
between 7 and 9 percent of their genetic difference in these characteristics across a variety of
different measures of neuroticism (Lesch et al, 1996).
Other neurotransmitter-related genes also appear to affect neuroticism, including a
version of the 5-HT1A gene, the 5HT2C gene, which helps to regulate ACTH, oxytocin and
prolactin in the brain, a variant of the gene that governs tyrosine hydroxylase, which affects the
nonadrenergic neurotransmitters, CNRA4, ADOR2A, GABRB3, TPH, ADRA2A, DRD4, and
COMT (Comings et al, 2000).
Because genetic factors influence the odds that people will become entrepreneurs
(Nicolaou et al., 2008) and that they will be emotionally stable (Loehlin, 1992), and because
emotional stability is associated with the tendency to become an entrepreneur, it is possible that
part of the covariation between emotional stability and the tendency to become an entrepreneur is
accounted for by a common genetic factor. This leads to our fifth hypothesis:
H5: A common genetic factor accounts for some of the covariance between
emotional stability and the tendency of people to be entrepreneurs.

METHODOLOGY

Modeling of twin data enables us to discriminate between phenotypic variance and
covariance due to genetic and environmental factors. The variance of any variable can be
disentangled into three (potential) components: a genetic component (A), a shared environmental
component (C), and a unique environmental component (E). Because MZ and DZ twins share
different degrees of genetic relatedness, but similar degrees of shared and unshared environment,

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