Saturday, July 20, 2013

Raising Entrepreneurial Children: Folklore and Fact

A Wall Street Journal article offers some advice for parents who want their children to become entrepreneurs, and who are wondering how to raise them. Advice on raising children is not frequent in the Wall Street Journal, so it caught my attention. The advisors are Arthur Blank, co-founder of Home Depot, Pierre Omidyar, founder of eBay, and Jim Koch, founder of Boston Beers. All are very successful entrepreneurs. Let's take a look at how they fare as child-raising advisors.

The full list of advice is to make the children, adventurous, dependable and stable, observant, and team players. Not all of those can be validated by evidence, but team player can be, so let's focus on that one. The advice is to get children involved in team sports at an early age order to instill the values and lessons from winning and losing, as well as that of working together as a team. OK, this sounds intuitive. But many intuitive ideas are wrong, and we know that this advice comes from entrepreneurs who draw from their own experience, as well as observation from others. But of course their own experience is much more powerful. So, if we view the background of their advice scientifically, it is based on a small number of observations, and they weight one (their own upbringing and venture) much more heavily than others. Any social scientist would say that it would take luck for them to be right in their advice.

Were they lucky? I currently do research with Marc-David Seidel and Dennis Ma that answers the question. We have data on what activities youth were engaged in at early ages (10-11 years) as well as later on (15), including sports. We can distinguish team sports and sports without a team structure. The distinction is interesting because sports offer different experiences: risk taking, winning and losing, working together as a team, taking instructions from a coach. We were interested in team sports because our intuition was the opposite of that of the entrepreneurs: Because team sports involve coaching, they are mini organizations that may prepare children better for employment than for entrepreneurship.

The evidence was interesting. Involving children in team sports early reduces their wish to become entrepreneurs. As we expected, it makes them comfortable working with others, which is what they would do in a job, as a paid employee. The entrepreneur, at least initially, needs to be comfortable working alone. But children who were involved in team sports at the age of 15 were more likely to aspire to entrepreneurship. We suspect that the age difference has to do with the shift in decision making between 10 and 15: the youth who is involved in team sports at age 15 has probably decided to do so on his or her own, so it is a result of some personal characteristics related to entrepreneurship. The child who does team sports at the age of 10 is probably put there by the parents. When tracing these children forward to adulthood we found that in the early 20's, those who were involved in team sports at ages 10-11 had no more or less entrepreneurial income than others, but those involved in sports at age 15 had more entrepreneurial income (barely measureable, but enough to prove a relation). And what about non-team sports at age 10-11? No relation to entrepreneurship.

I don’t usually give advice on how to raise children, but I can summarize the evidence. Getting your child into a sports team at an early age puts him or her on path to become an employee. Letting children do some non-team sport (skateboarding, anyone?) has no effect. Make your own call on whether you want your child to become an entrepreneur, please, but this is what to do or not to do.

Haislip, B. 2013.7.13. “How to Raise an Entrepreneur.” Wall Street Journal, Asia Edition.
Seidel, M-D, Greve, H.R., Ma, D.G. 2013. “Leaving the Herd. The Deviant Roots of Entrepreneurship.” Working paper, University of British Columbia and INSEAD.