What Makes an Entrepreneur?

by Simeon Djankov, Yingyi Qian, Gérard Roland, and Ekaterina Zhuravskaya

Abstract We test two competing hypotheses on what makes an entrepreneur: nature - attitude towards risk, I.Q., and self-confidence; or nurture - family background and social networks. The results are based on data from a new survey on entrepreneurship in Brazil, of 400 entrepreneurs and 540 non-entrepreneurs of the same age, gender, education and location in 7 Brazilian cities. We find that family characteristics have the strongest influence on becoming an entrepreneur. In contrast, success as an entrepreneur is primarily determined by the individual’s smartness and higher education in the family. Entrepreneurs are not more self-confident than non-entrepreneurs; and overconfidence is bad for business success.  

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