Entrepreneurs and Evolutionary Biology: The Relationship of Testosterone to New Venture Creation


This paper is interesting because it attempts to look at entrepreneurship through a biological lens. It flirts with the question "are entrepreneurs born or made?" Here is what the study found.

The results of our research support the primary hypothesis that individuals with higher salivary testosterone levels are more likely to behave entrepreneurially. More specifically, T is positively related to risk propensity (Hypothesis 1). There is also a positive relationship between risk propensity and the likelihood of an entrepreneurial experience (Hypothesis 2). The data indicate that risk propensity partially mediates the relationship between T and E (Hypothesis 3).

Entrepreneurship involves the interaction of individuals and opportunities. In this
research we attempt to explain a portion of the variance on the individual side of the entrepreneurship equation. There are a wide array of social influences, learned behaviors, and other factors resulting in individual differences that affect entrepreneurial behavior. We focused upon an innate, heritable biological attribute, T level. Our findings indicate risk-taking propensity is related to this heritable physiological attribute; it is in part innate. More specifically, individual innate biological differences in testosterone are associated with differences in risk-taking propensity, and thus with entrepreneurial behavior.

I don't find this surprising at all, but I think it is misleading. It is more a reflection of the poor overall state of entrepreneurial education in this country than anything else.

The authors note later in the paper that their work is only relevant to attempts at new venture creation and says nothing about success rates. All they have shown is that those people most likely to enter the realm of entrepreneurship are more likely, all else being equal, to have higher testosterone levels. But just as there are biological propensities to pursue certain courses of action in life, there are environmental propensities too. My assumption is that low levels of testosterone coupled with an environment that encouraged calculated risk taking would have a similar effect on entrance into the field of entrepreneurship. Since I recall reading somewhere that too much testosterone could actually lead to poor decision making, I wouldn't be surprised to find out that:

  • Of those that start new ventures, there will be a correlation between long-term success and lower testosterone
  • The correlation between education and entrepreneurial success is stronger than the biological correlation.

In other words the mental model in my head based on my own experiences and interaction says that biology determines whether or not you have the base set of requirements to pursue entrepreneurship (high energy, drive, risk acceptance, etc.) but education/environment determine more or less whether you are successful. And don't forget than when you are talking about something that contains a million possible variables, luck, chance, and timing all play a part as well. Ultimately I think this research doesn't have much practical value, other than to help people realize that further research should be done to understand more about entrepreneurs. Or perhaps this will result in a Silicon Valley drug scandal similar to what we've seen in baseball recently as VCs start lacing the lunches of entrepreneurs with testosterone.