Taggert Brooks Economics Consulting
Taggert Brooks - Economic Consulting

How To Make An Entrepreneur

Two different views on how entrepreneurs are made.

Tyler Cowen:

A Brazilian entrepreneur, that is. First and foremost, entrepreneurship is predicted by family characteristics, most of all having other entrepreneurs in the family and coming from a large family. What predicts finding a successful entrepreneur?: “the individual’s smartness and higher education in the family.” Entrepreneurs are not more self-confident than non-entrepreneurs and overconfidence is a big danger. Social networks predict who becomes an entrepreneur but not who becomes a successful entrepreneur. Entrepreneurs in Brazil exhibit more trust but this result does not seem to generalize across countries.

Here is the paper, from the World Bank. I thank Russ Roberts for the pointer.

Chris Dillow:

In other words, what makes an entrepreneur is access to capital – the sort of access that comes from having a wealthy background. This is consistent with two other papers. David Blanchflower suggests here that lack of access to credit explains African-Americans low rate of entrepreneurship, whilst he and Andrew Oswald say here (pdf) that:
Now, why do I stress this whilst Tyler picks out “family characteristics”? The difference between us, I suspect, reflects a widespread difference between supporters and critics of capitalism. Whereas supporters of capitalism look for personality-based explanations of differences in people’s behaviour, critics look instead for more impersonal, structural factors – though of course these influence (determine?) personality.

And funnily enough, we can both easily find what we’re looking for.

Posted: February 16th, 2008
Categories: Entrepreneurship
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