James V. Koch
Old Dominion University
I think my view, being an academic, was that we can teach [entrepreneurship] and do it well. I was a bit surprised at the scientific literature that suggested heredity has a good deal to do with personality and behavior. When I began to look at the literature, virtually every reputable scientist sees it as interaction of heredity and environment.
Some personalities are much more favorable for entrepreneurship. It is an important thing, and it really constrains and influences outcomes. As a consequence, if you want to know who's most likely to be an entrepreneur, don't go to a business school and see who has taken entrepreneurship courses. The more important thing is to look at someone's personality and ability to bear risks. I would stress that I'm not saying genetics is the whole thing--I do think experience and knowledge and observation and environment count. But I'm not sure you can teach somebody to love to take risks. It seems hard-wired in the individual.
If entrepreneurship comes from an interaction of heredity and environment, how much of it do you think is truly genetic?
Let me use a metaphor. Short people don't make it often in the NBA, just like certain kinds of genetically hard-wired individuals don't make it as entrepreneurs, and others do. In reading the genetic literature, we found that up to 60 percent of critical personality characteristics are heritable. Significant portions of personality traits critical to entrepreneurs, like the willingness to take risks and the ability to tolerate ambiguity and uncertainty, are heritable.
I was particularly impressed by twin studies and what happens when you observe their behavior when they're raised together vs. being raised apart. It's pretty persuasive stuff. A good deal of entrepreneurial behavior is genetically determined.
Have you done your own research?
We went out and looked at a very large number of entrepreneurs to get a handle on their environments, characteristics and personalities. Then we had a control group of non-entrepreneurial businesspeople and another group that was not involved in business at all, like nuns and government workers. We saw significant differences among these groups.
What are the characteristics of entrepreneurs?
The first sentence of my book says, "Entrepreneurs are different." They have the ability to deal with uncertainty, to take risks and tolerate ambiguity. They usually have a personality that is mercurial, and they have highs that are really high and lows that are really low. There's good evidence that they have strong self-confidence but also tend to be overoptimistic. They rely extensively on their own intuition.
All these things aren't positive. A very large proportion of entrepreneurs fail. They tend not to be as devoted to consensus decision-making. They violate the status quo more often. Many don't accept defeat or losses gracefully. They are energetic, and a higher percentage tend to be loners and work long hours. All of these things appear in other segments of the population, but they appear more commonly among entrepreneurs. Research shows there's heritability in these traits, and some genetic determinants of these personality characteristics.
Is business school valuable for entrepreneurs?
Since I teach MBA students, I believe that knowing more about economics and accounting is always valuable to an entrepre-neur. But I don't know whether we can bring someone into the classroom and change their appetite for risk. Maybe in very small doses. But you're really running uphill to change someone's personality.
So is entrepreneurship education worthwhile?
I think [co-author] Jim Fisher and I would argue that a lot of entrepreneurship programs are superfluous and can't deliver what they say. Education can make people better accountants, economists and better at tax law, but it can't effectively change risk preferences, and it can't change
genetics.
Has the research changed since your book came out?
The evidence has become stronger in the genetic realm. Now that more people are doing fundamental genetic research into personality traits, this lends more credibility and credence to what we're saying. Recent research clearly indicates that in some cases, environment triggers genetic tendencies, that certain situations trigger genes that would otherwise lie dormant. These are interesting findings that give our particular conclusion added weight.
Can we learn to trigger dormant entrepreneurship genes?
The truth is we don't know what triggers genes. Right now biologists and geneticists are working on things like how temperature affects the genes of fruit flies. We don't have any direct evidence on entrepreneurs. But basic biological evidence suggests that there are things that can trigger someone to be an entrepreneur. In the next 10, 20 or 30 years, people will really drill down into what makes some people actively become entrepreneurs and go off and take risks. All you have to do is look around. The types of people who become elementary-school teachers are not the same people who join the Marines and go to Afghanistan. Research over the next decades will isolate personality types and isolate the triggers that cause their genetics to come into play.
Some say education can be one of those triggers.
I regard as dubious claims that going into a college classroom is one of the things that triggers entrepreneur genes. Those who go into entrepreneurship programs are self-selected to begin with in terms of traits and genetics. It would be interesting to have a control group and see if there are things in that environment that alter their risk-taking behavior. I think these are exciting avenues of research.
Is there a place for people who are interested in entrepreneurship but don't have the right personality?
Yes, of course. Take myself: I am a consultant, advisor and investor, but not an individual who typically puts it all on the line. We need accountants, economists and marketing people. There are all kinds of roles to be filled in entrepreneurial enterprises, but someone has to lay it on the line, be the risk-taker and say, "I'm going to take this chance." People usually sort themselves out in society into occupations they choose based on personality. They tend to do things that make them most comfortable. The notion that I can add 6 inches to someone's height and that will make them an NBA player is bankrupt. So why do we think we can send someone to a business school and change their risk-taking preference?
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