Social determinants of entrepreneurship

You've heard about social determinants of health, right? Researchers believe social determinants drive more than 80 percent of health outcomes. Medical care alone is insufficient to improve health as it is estimated to account for only 10-20 percent of the modifiable contributors to improved health outcomes. “The other 80 to 90 percent are sometimes broadly called the SDoH: health-related behaviors, socioeconomic factors and environmental factors.

But, what about the social and other determinants of entrepreneurship outcomes? What are the social and other determinants of entrepreneurial success? Entrepreneurship researchers have been asking and trying to answer this question for many years.

Where do the founders or unicorns come from?

Here are the top insights:

▶ In the US, 55% were immigrants or second-generation immigrants.I suspect diverse perspectives and resilience made them effective founders.

▶ 61% majored in a science or engineering field.A technical background in the founding team can go a long way.

▶ The average founder had 10 years of work experience.Unicorns harness years of learning from failures and success.

▶ 80% previously worked at an enterprise or founded one.Having first-hand experience is nearly a must to build a unicorn.

▶ Only 32% studied at an elite university.

Immigrant entrepreneurs are a driving force behind many of the world's largest VC ecosystems, creating some of the most well-known names in tech. According to research by the National Foundation for American Policy, over half of US unicorns were founded by immigrants and nearly two-thirds were founded or co-founded by immigrants or their children. Examples of these include Stripe, SpaceX and Instacart.

It's long been known that children with entrepreneurial parents are more likely to become entrepreneurs themselves. But new research quantifies that effect—and goes a step further by suggesting why exactly that might be.

Adopted children, they found, were 20% more likely to become entrepreneurs if their biological parents were also entrepreneurs. But if it was their adoptive parents who were entrepreneurs, it was 45% more likely children would follow suit.

 More than half of the most valuable startups in America were founded by immigrants, according to a new analysis by the National Foundation for American Policy. 

This analyses revealed that immigrants do start companies at higher levels than native-born Americans—and that this is true for both small companies and very large ones. This led the researchers to an intriguing conclusion.

“Immigrants actually create more jobs than they take,” says Jones.

Here's my experiential take:

While most of the research shows correlations with these variables, they are not causative and certainly do not mean that you can't be a successful entrepreneur if your mother was not an entrepreneur, your family has been in the US since the Revolutionary War and you never had a job as a kid.

While there is no clear link between birth order and success, some studies have found that oldest children may be more likely to achieve higher levels of education and income. This could be due to a variety of factors, including the increased attention and resources they receive from their parents or the leadership skills they develop as the first-born.

However, it's worth noting that younger siblings can also achieve great success, and birth order is just one of many factors that can influence a person's future achievements.While there is no clear link between birth order and success, some studies have found that oldest children may be more likely to achieve higher levels of education and income. This could be due to a variety of factors, including the increased attention and resources they receive from their parents or the leadership skills they develop as the first-born.

However, it's worth noting that younger siblings can also achieve great success, and birth order is just one of many factors that can influence a person's future achievements.

 Using longitudinal data from the Panel Study of Income Dynamics (PSID), these social entrepreneurs find that, as past work suggests, Black-owned businesses are less likely to remain open 4 years later, compared to white-owned businesses, and that, due to this disparity, Black business owners are more likely to experience downward economic mobility and less likely to experience upward mobility, compared to their white counterparts. These results suggest that improving the rate at which Black entrepreneurs succeed, rather than increasing the rate at which Black people become entrepreneurs, should be the target of efforts to leverage business ownership to reduce the racial wealth gap.” 

Is medical specialty a determinant of entrepreneurship?

According to the data -- but not media exposure -- the average business founder in the U.S. is 42 years old. If you hold off until you've had more experience, you're more likely to succeed as an entrepreneur for three reasons:

1. You've developed relevant skills.

2. You've learned from your mistakes.

3. You've built a network.

However, addressing the determinants of entrepreneurial success have significant policy and economic consequences that result from:

1. immigration policy
2. ecosystem creation
3. public education reform
4. student success initiatives
5. student debt
6. child care
7. diversity, equity and inclusion
8. sustainability
9. reskilling and job training
10. capital access

Expecting entrepreneurial success without addressing the intrinsic, extrinsic, social and economic determinants is wishful thinking, any more than expecting favorable health outcomes by just following the data. Sorry, Google.

Arlen Meyers, MD, MBA is the President and CEO of the Society of Physician Entrepreneurs on Substack and Editor of Digital Health Entrepreneurship