Entrepreneurs and evolutionary biology: The relationship between testosterone and new venture creation

The Cocksure Conundrum: How Evolution Created a Gendered Currency of Corporate Overconfidence

Biological differences between men and women mandate that women’s obligatory investment in reproduction is significantly greater than that of men. As a result, women have evolved to be the “choosier” of the two sexes and men have evolved to compete for female choice. To the degree that overconfidence is an effective tool for attracting mates and driving away competitors, greater competition among men suggests that they should express more overconfidence than women. Thus, sexual selection may be the primary reason why overconfidence is typically more pronounced in men than it is in women. Sexual selection may also be a distal, causal factor in what we describe as a cult of overconfidence pervading modern organizations and institutions. Whereas overconfidence was once regulated and constrained by features of ancestral life, levels of social mobility and accountability in contemporary society and modern organizations make it increasingly difficult to keep this gendered bias in check.

A Bayesian Modeling Approach to Examine the Role of Testosterone Administration on the Endowment Effect and Risk-Taking

Financial risk-taking and loss aversion are multifaceted phenomena that are the focus of neuroscience, psychology, and economics research. A growing number of studies highlighted the role of hormones (particularly of testosterone) on socio-economic decision-making. However, the effects of testosterone on risk-taking under framing and consumer-based choices and preferences are inconclusive. We investigated the effects of 100 mg testosterone administration on aspects of decision-making within the Prospect Theory framework which is the most used descriptive model of decision-making under risk. We assessed risk-taking under framing and the endowment effect (effect of possession) using Bayesian modeling. Forty men participated in this double-blind placebo-controlled fully-randomized cross-over experiment and performed two tasks. One was a risk-taking task with binary choices under positive and negative framing associated with different probabilities. In the second task participants had to bid money for hedonic and utilitarian items. We observed a significant increase in serum testosterone concentrations after transdermal application. Compared to placebo, testosterone administration increased risk-taking under the positive framing (very large effect size) and decreased under the negative framing (moderate to small). The sensitivity to gain was positive in each framing. Our model showed that decision-making is jointly influenced by testosterone and the trade-off between gains and losses. However, while the endowment effect was more pronounced for hedonic than for utilitarian items, the effect was independent of testosterone. The findings provide novel information on the complex modulatory role of testosterone on risk-taking within the framework of prospect theory and shed light on mechanisms of behavioral economic biases. The proposed models of effects of individual differences in testosterone on risk-taking could be used as predictive models for reference-depended behavior under positive and negative framing with low and high probabilities.

Towards a Global Entrepreneurial Culture: A Systematic Review of the Effectiveness of Entrepreneurship Education Programs

The number of entrepreneurship education programs (EEP) has increased exponentially over the past two decades. However, a systematic review has not yet been carried out to confirm the effectiveness of EEPs and their presence in the current global world. The main objective of this study was to provide a systematic synthesis of EEP, exploring their characteristics and effectiveness. The search was carried out in the following databases: Scopus, Web of Science, ProQuest, and ERIC. Twenty-nine articles were included, with programs developed mainly in European (n = 15), Asian (n = 6), and American (n = 5) countries. The programs were primarily aimed at higher education students (n = 17), addressing business plans and the development of entrepreneurial skills. However, greater attention is paid to entrepreneurial skills in both primary and secondary education. The development of the programs under analysis varied between one week and two years. The studies showed the effectiveness of most of these programs in promoting entrepreneurial skills at all levels of education. In turn, there was no verified increase in the intention to start a business since this intention is determined by predisposition, namely socio-cultural and family aspects. This systematic review of the EEP points to the need for this type of program to be preferentially developed in the early school years, since it is at that time that predispositions are created for the development of entrepreneurial skills and intentions. This condition is corroborated by the global geography of the EEP, which demonstrates that, where there is currently an entrepreneurial culture, countries have made a long educational journey, with strategic options from the perspective of educational policies defending entrepreneurship among the younger generations.

Entrepreneurial Skills to Be Successful in the Global and Digital World: Proposal for a Frame of Reference for Entrepreneurial Education

For most professionals to succeed in the current job market, they need some entrepreneurial skills (ES). This study aimed to describe and systematize these skills, considering the current globalization and digital transformation phenomena. The documental analysis and the critical reflection on the collected data allowed us to identify the socio-economic and socio-cultural reasons for the relevance of this problem. Consequently, to elaborate a frame of reference intended to be adequate to the needs of the professionals of the current global and digital era. The results pointed to a tripartite ES model—to be open to novelty, to create solutions to emerging problems, and to communicate effectively—which integrates the following skills: Creativity and innovation, the spirit of initiative, self-efficacy and resilience, strategic planning, and evaluation, resolution of problems and decision-making, transformational leadership, clear and visual communication, teamwork and networking, and digital communication. In the continuation of this study, an ES scale will be created and validated according to this model, which will make it possible to measure the degree of development of these competencies.

Hormonal responses in gambling versus alcohol abuse: A review of human studies

The endocrine system plays an essential role in communication between various organs of the body to maintain homeostasis. Both substance use disorders (SUDs) and non-substance abuse disrupt this system and lead to hormonal dysregulations. Here, we focus on the comparison between the function of the endocrine system in gambling disorders and alcohol addiction to understand the commonalities and differences in their neurobiological and psychological underpinnings. We review human research to compare findings on gambling addiction and alcohol dependence pertaining to the dynamic interplay between testosterone and cortisol. Understanding and classifying similarities in hormonal responses between behavioural addiction and SUDs may facilitate development of treatments and therapeutic interventions across different types of addictive disorders, while describing differences may shed light on therapeutic interventions for specific disorders. Although research on gambling addiction is in its infancy, such evaluation may still have a positive effect for addiction research, thereby stimulating discovery of "crossover" pharmacotherapies with benefits for both SUDs and nonsubstance addictions.

The 2D:4D ratio does not always correlate with economic behavior: A field experiment with African-Americans

Several studies present evidence of correlations between prenatal testosterone exposure measured with the 2D:4D ratio and behaviors such as pro-social behavior, risk and patient attitudes, and self-employment. Individuals exposed prenatally to higher levels of testosterone have lower levels of risk aversion, higher levels of patience and invest more in others, and in themselves, therefore have higher individual financial wellbeing. We test these hypotheses with a sample of 115 African-Americans who live in a low-income urban area in the U.S. The 2D:4D ratio in our sample of males and females does not have a consistent and robust correlation with risk, patient attitudes, pro-social behavior and self-employment in contrast to previous studies.

Testosterone, Cortisol and Financial Risk-Taking

Both testosterone and cortisol have major actions on financial decision-making closely related to their primary biological functions, reproductive success and response to stress, respectively. Financial risk-taking represents a particular example of strategic decisions made in the context of choice under conditions of uncertainty. Such decisions have multiple components, and this article considers how much we know of how either hormone affects risk-appetite, reward value, information processing and estimation of the costs and benefits of potential success or failure, both personal and social. It also considers how far we can map these actions on neural mechanisms underlying risk appetite and decision-making, with particular reference to areas of the brain concerned in either cognitive or emotional functions.

The role of testosterone and estrogen in consumer behavior and social & economic decision making: A review

A contribution to a special issue on Hormones and Human Competition.This manuscript reviews the current literature on the actions of the steroid hormones testosterone and estradiol in shaping humans' behavior within two applied contexts, specifically consumer behavior and decision making (both social and economic). The theoretical argument put forth is that steroids shape these everyday behaviors and choices in service to being more competitive in achieving long-term goals related to resource acquisition, mating success, and social dominance. In addition, a discussion of the increased research focus on the role of steroids in other applied business domains will highlight the relevant applications of basic science discoveries in behavioral endocrinology.

Sex Hormone/Cortisol Ratios Differentially Modulate Risk-Taking in Men and Women

The present study aimed to extend the original focus of the dual-hormone hypothesis on testosterone and cortisol involvement in risk-taking to other sex hormones: estrogen and progesterone. The study also examined two alternative models for the proposed relationship between cortisol and sex steroids and for their joint influence on risk-taking: interaction and ratio terms. In all, 40 women and 37 men were tested for circulating sex hormones and provided self-reports on risk-taking. The findings suggest that sex hormone-cortisol ratios differentially modulate risk-taking in men and women: In men, high ratios were associated with risk-taking, whereas in women the opposite pattern was found. The findings are discussed in light of evolutionary assumptions regarding sex differences in neuroendocrine mechanisms, suggesting sex differences in neural sensitivity to sex hormones in risk-taking.

Effects of gendered behavior on testosterone in women and men

Testosterone is typically understood to contribute to maleness and masculinity, although it also responds to behaviors such as competition. Competition is crucial to evolution and may increase testosterone but also is selectively discouraged for women and encouraged for men via gender norms. We conducted an experiment to test how gender norms might modulate testosterone as mediated by two possible gender→testosterone pathways. Using a novel experimental design, participants (trained actors) performed a specific type of competition (wielding power) in stereotypically masculine vs. feminine ways. We hypothesized in H1 (stereotyped behavior) that wielding power increases testosterone regardless of how it is performed, vs. H2 (stereotyped performance), that wielding power performed in masculine but not feminine ways increases testosterone. We found that wielding power increased testosterone in women compared with a control, regardless of whether it was performed in gender-stereotyped masculine or feminine ways. Results supported H1 over H2: stereotyped behavior but not performance modulated testosterone. These results also supported theory that competition modulates testosterone over masculinity. Our findings thus support a gender→testosterone pathway mediated by competitive behavior. Accordingly, cultural pushes for men to wield power and women to avoid doing so may partially explain, in addition to heritable factors, why testosterone levels tend to be higher in men than in women: A lifetime of gender socialization could contribute to "sex differences" in testosterone. Our experiment opens up new questions of gender→testosterone pathways, highlighting the potential of examining nature/nurture interactions and effects of socialization on human biology.

Testosterone and cortisol jointly modulate risk-taking

Recent theories propose that testosterone should be positively related to risk-taking, but empirical support is mixed. Building on the dual-hormone hypothesis, the present research tested whether testosterone's role in risk-taking depends on cortisol. Study 1 (N=115) tested this hypothesis in a mixed-sex sample with self and informant reports of risk-taking. Study 2 (N=165) tested this hypothesis in a male-only sample with the Balloon Analog Risk Task, a behavioral measure of risk-taking. Across both studies, there was a positive association between basal testosterone and risk-taking among individuals low in basal cortisol but not individuals high in basal cortisol. This pattern emerged in both males and females and across multiple measures of risk-taking (self reports, informant reports, behavior). These studies provide novel empirical support for the claim that testosterone and cortisol jointly regulate risk-taking. Discussion focuses on putative mechanisms as well as implications for real-world risk-taking behaviors.

Testosterone is associated with self-employment among Australian men

Testosterone has pronounced effects on men's physiological development and smaller, more nuanced, impacts on their economic behavior. In this study of 1199 Australian adult males, we investigate the relationship between the self-employed and their serum testosterone levels. Because prior studies have identified that testosterone is a hormone that is responsive to external factors (e.g. competition, risk-taking), we explicitly control for omitted variable bias and reverse causality by using an instrumental variable approach. We use insulin as our primary instrument to account for endogeneity between testosterone and self-employment. This is because prior research has identified a relationship between insulin and testosterone but not between insulin and self-employment. Our results show that there is a positive association between total testosterone and self-employment. Robustness checks using bioavailable testosterone and another similar instrument (daily alcohol consumption) confirm this positive finding.

Biology, Neuroscience, and Entrepreneurship

Neuroscience research is a welcome and overdue addition to the field of entrepreneurship. We hope that Martin de Holan’s article and the ensuing debate in this issue of the Journal of Management Inquiry will help spur further scholarship in this area.

Serum testosterone levels in males are not associated with entrepreneurial behavior in two independent observational studies

Previous research has suggested a positive association between testosterone (T) and entrepreneurial behavior in males. However, this evidence was found in a study with a small sample size and has not been replicated. In the present study, we aimed to verify this association using two large, independent, population-based samples of males. We tested the association of T with entrepreneurial behavior, operationalized as self-employment, using data from the Rotterdam Study (N=587) and the Study of Health in Pomerania (N=1697). Total testosterone (TT) and sex hormone-binding globulin (SHBG) were measured in the serum. Free testosterone (FT), non-SHBG-bound T (non-SHBG-T), and the TT/SHBG ratio were calculated and used as measures of bioactive serum T, in addition to TT adjusted for SHBG. Using logistic regression models, we found no significant associations between any of the serum T measures and self-employment in either of the samples. To our knowledge, this is the first large-scale study on the relationship between serum T and entrepreneurial behavior.

Evolution and the Growth Process: Natural Selection of Entrepreneurial Traits

This research suggests that a Darwinian evolution of entrepreneurial spirit played a significant role in the process of economic development and the dynamics of inequality within and across societies. The study argues that entrepreneurial spirit evolved non-monotonically in the course of human history. In early stages of development, risk-tolerant, growth promoting traits generated an evolutionary advantage and their increased representation accelerated the pace of technological progress and the process of economic development. In mature stages of development, however, risk-averse traits gained an evolutionary advantage, diminishing the growth potential of advanced economies and contributing to convergence in economic growth across countries.

Between- and within-sex variation in hormonal responses to psychological stress in a large sample of college students

This study investigated (1) sex differences in hormonal responses to psychosocial stress; (2) the relation between variability in pre-test hormone concentrations and stress-induced hormonal changes; and (3) some possible sources of within-sex variation in pre-test hormone concentrations and in hormonal responses to the test in a large human subject population. To this end, changes in salivary concentrations of testosterone and cortisol in response to a mild psychosocial stressor (a set of computerized economic decision-making tests) were measured in a sample of over 500 MBA students. Males had higher concentrations of testosterone and cortisol than females both before and after the test. After taking effects of time of testing on hormone concentrations into account, testosterone showed a post-test decrease in males but not in females. Cortisol level increased in both sexes but the post-test increase was larger in females than in males. At the individual level, the pre-test concentrations of testosterone and cortisol predicted both the direction and the magnitude of the post-test hormone change, so that low pre-test hormone concentrations showed large post-test increases whereas high pre-test concentrations showed large post-test decreases. Within-sex variation in hormone concentrations was not accounted for by variation in 2D:4D digit length ratio, a marker of prenatal androgen exposure, but by social variables. Single males without a stable romantic partner had higher testosterone level than males with stable partners, and both males and females without a partner showed a greater cortisol response to the test than married individuals with or without children. Studies conducted with large sample sizes such as this one can help understand normative patterns of hormonal responses to psychosocial stimuli as well as identify the sources of interindividual variation in endocrine function.

Gender differences in financial risk aversion and career choices are affected by testosterone

Women are generally more risk averse than men. We investigated whether between- and within-gender variation in financial risk aversion was accounted for by variation in salivary concentrations of testosterone and in markers of prenatal testosterone exposure in a sample of >500 MBA students. Higher levels of circulating testosterone were associated with lower risk aversion among women, but not among men. At comparably low concentrations of salivary testosterone, however, the gender difference in risk aversion disappeared, suggesting that testosterone has nonlinear effects on risk aversion regardless of gender. A similar relationship between risk aversion and testosterone was also found using markers of prenatal testosterone exposure. Finally, both testosterone levels and risk aversion predicted career choices after graduation: Individuals high in testosterone and low in risk aversion were more likely to choose risky careers in finance. These results suggest that testosterone has both organizational and activational effects on risk-sensitive financial decisions and long-term career choices.