Risky business: Understanding intergenerational persistence in entrepreneurship

Entrepreneurship is often viewed as a driver of economic growth, employment creation, and social mobility. Policymakers advocate support for entrepreneurship as a way forward for socioeconomic development at regional and national level (HM Government, 2017), therefore helping new firms to form is key to prosperity. Encouraging a thriving entrepreneurial culture to drive economic growth is even more important in light of the UK's imminent departure from the EU single market, and the economic shock resulting from the pandemic.

Although a positive societal value is often attributed to entrepreneurial activity, the individuals taking the initiative face a high degree of uncertainty, as business start-ups often end in failure. Entrepreneurship can be a difficult, challenging and stressful activity, with significant personal and social costs. Despite government support through subsidies, tax credits and infrastructure to help with the challenges and mitigate the risks, the stress burden often falls on the entrepreneurs and their families.

The importance of family in perpetuating entrepreneurialism is well known in the literature: entrepreneurs are often children of entrepreneurs. We know much less, however, about the mechanisms underlying this intergenerational persistence, and the effects of parental entrepreneurial behaviours on their children. This is what our project will address, identifying new ways in which policy can encourage and support entrepreneurialism.

The emergence of entrepreneurial preferences and behaviours in the family context is a complex process. Entrepreneurial parents offer positive role models and can inspire the career choices of their children. At the same time, the negative emotions that entrepreneurial parents experience because of burnout and business failures may strongly affect the children, slanting future preferences away from an entrepreneurial career. Building on a new conceptual framework, this project will investigate three sources of intergenerational persistence in entrepreneurship: i) transmission effects: the direct impact on child career intentions of parents providing role models and sources of learning, ii) framing effects: the indirect impacts on child risk perception, following parents who themselves took the risk of starting a company; and iii) collateral effects: the indirect effects on the children's wellbeing, affected by the lived experience of emotional stress in an entrepreneurial family.

To test our hypothesized decomposition of intergenerational persistence into these direct and indirect mechanisms, we will draw upon and extend data from the Avon Longitudinal Study of Parents and Children (ALSPAC): a UK birth cohort study set up in 1991 that has followed and collected a wide range of information about the focal individuals ("the Children of the 90s") and their family members. In a first phase, we will analyse the existing multi-generational and longitudinal data to address the question of how children respond in their risk perception and emotional stress to being part of an entrepreneurial family. In a second phase, we will enhance the existing data by collecting a new survey to measure the entrepreneurial intentions and behaviour of the focal individuals, now approaching 30 years of age.

By adding new entrepreneurship data to the ALSPAC information on health, development and socio-economic characteristics of children and parents, this project will broaden our understanding of family influences on career choice. By making available to the academic community the new data integrated with the ALSPAC unique resources, the project will create novel opportunities for multi-disciplinary research in entrepreneurship, accounting for biological, psychological and socio-economic factors. The findings will inform policymakers about the role of the family as part of a larger supporting infrastructure for entrepreneurs, a dimension still lacking in the policy debate.