Emerging Trends in The Social and Behavioral Sciences

Youth Entrepreneurship

Item

Title

Youth Entrepreneurship

Author

Damon, William

Bronk, Kendall Cotton

Porter, Tenelle

Research Area

Development

Topic

Skills and Talent Development

Abstract

Entrepreneurship is critical to job creation and economic growth in the United States and abroad; however, interest in pursuing entrepreneurial careers is on the decline among young people today. As a means of designing programs that effectively encourage and prepare young people to pursue entrepreneurial careers, this essay calls for increased focus on how entrepreneurs develop. An understanding of the experiences, opportunities, and interests that lead to successful entrepreneurship is needed. To that end, this essay, in addition to addressing leading process‐oriented definitions of entrepreneurship and briefly reviewing relevant empirical studies, outlines three promising areas of research on youth entrepreneurship. First, researchers have becoming increasingly interested in entrepreneurial purposes. Recent research finds that at least some young people seek out entrepreneurial careers as a means of applying their skills and talents to create organizations or businesses that solve personally meaningful problems in the broader world. This leads to the second emerging area of interest in youth entrepreneurship: the distinction between social and business entrepreneurship. The growth of new businesses and organizations that are at once highly profitable and at the same time exist to address social problems has blurred this distinction. Third, researchers are increasingly interested in identifying ways of effectively fostering entrepreneurial interests. This essay highlights key issues regarding the role that educational experiences and institutional support play in supporting the development of successful entrepreneurs.

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Identifier

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extracted text

Youth Entrepreneurship
WILLIAM DAMON, KENDALL COTTON BRONK, and TENELLE PORTER

Abstract
Entrepreneurship is critical to job creation and economic growth in the United States
and abroad; however, interest in pursuing entrepreneurial careers is on the decline
among young people today. As a means of designing programs that effectively
encourage and prepare young people to pursue entrepreneurial careers, this essay
calls for increased focus on how entrepreneurs develop. An understanding of the
experiences, opportunities, and interests that lead to successful entrepreneurship is
needed. To that end, this essay, in addition to addressing leading process-oriented
definitions of entrepreneurship and briefly reviewing relevant empirical studies,
outlines three promising areas of research on youth entrepreneurship. First,
researchers have becoming increasingly interested in entrepreneurial purposes.
Recent research finds that at least some young people seek out entrepreneurial
careers as a means of applying their skills and talents to create organizations
or businesses that solve personally meaningful problems in the broader world.
This leads to the second emerging area of interest in youth entrepreneurship: the
distinction between social and business entrepreneurship. The growth of new
businesses and organizations that are at once highly profitable and at the same time
exist to address social problems has blurred this distinction. Third, researchers are
increasingly interested in identifying ways of effectively fostering entrepreneurial
interests. This essay highlights key issues regarding the role that educational
experiences and institutional support play in supporting the development of
successful entrepreneurs.

For much of human history, entrepreneurship has been seen as a vocational
choice that offers resourceful people the chance to gain financial independence and, for a few, great wealth. During the Industrial Revolution,
entrepreneurs made fortunes in manufacturing, commerce, and travel;
during the twentieth century, entrepreneurs found opportunities in communications, computing, and medicine. Such entrepreneurs were seen as a
special class of people who created businesses, took risks, and either failed
or succeeded in their attempts to build wealth.
More recently, entrepreneurship has taken on a new significance, increasingly viewed as a pathway appropriate (or even necessary) for all who wish
Emerging Trends in the Social and Behavioral Sciences. Edited by Robert Scott and Stephen Kosslyn.
© 2015 John Wiley & Sons, Inc. ISBN 978-1-118-90077-2.

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

to succeed in the competitive world of work. New York Times columnist
Thomas Friedman quoted a labor expert as saying that today’s successful
job candidates “are inventors and solution-finders who are relentlessly
entrepreneurial because they understand that many employers today don’t
care about your résumé, degree or how you got your knowledge, but
only what you can do and what you can continuously reinvent yourself
to do” (Friedman, 2013, p. A23). In the same vein, another economist has
awarded today’s young the label “Generation E,” writing that the entire
working population of the twenty-first century will by necessity become
entrepreneurial (Kuratco, 2003).
But there is a serious question, yet to be addressed, regarding how far this
“worldwide phenomenon” can spread, given the distribution of abilities and
behavioral dispositions across the youth population. Even the most optimistic accounts of today’s rising tide of entrepreneurial activity report only a
small minority of the population now engaged in such opportunities: some
estimates range as low as 9–11% (Neck, Zacharakis, Bygrave, & Reynolds,
2003; Reynolds, Bygrave, & Autio, 2004). Will future young people have the
interests, skills, and/or personality characteristics suited for entrepreneurial
pursuits?
Indeed, there are some signs that large sectors of the current US population,
including the young, actually might be turning away from entrepreneurship
as a vocational choice. A June 2, 2013 Wall Street Journal article, “Risk-Averse
Culture Infects U.S. Workers, Entrepreneurs,” reported that, with the exception of people in a few “hotbeds” such as Silicon Valley and Boston, the
vast majority of US workers have chosen to avoid entrepreneurial pursuits
because of their riskiness (Casselman, 2013, p. A1). John Haltiwanger, a
University of Maryland economist who has studied the decline in American
entrepreneurship stated, “The pessimistic view is we’ve lost our mojo”
(Casselman, 2013, p. A1). The economic implications of such a decline in
entrepreneurial aspirations could be grim, according to this economist: “The
U.S. has succeeded in part because of its dynamism, its high pace of job
creation and destruction, and its high pace of churning out workers,” all
products of entrepreneurial choices made by individuals, usually when they
are young.
To understand and assess the extent to which future generations will seek
entrepreneurial careers, as well as the extent to which they are likely to do
so successfully, it will be important to identify the psychological ingredients
of successful entrepreneurs and to determine how such ingredients develop
during youth and beyond. Are there specific capacities that provide certain
young people advantages over their peers; or do all youngsters have a
decent chance of pursuing an entrepreneurial career? What must a young
person learn in order to prepare for such a career? Which abilities, personal

Youth Entrepreneurship

3

characteristics, or interests must be cultivated? Which experiences are likely
to motivate a young person to consider an entrepreneurial career? Is there
a particular set of abilities required for entrepreneurship of all kinds, or do
certain entrepreneurial engagements draw from particular sets of interests
and skills? These are timely questions important for assessing both the
future prospects of the economy and the future vocational pathways of the
young.
FOUNDATIONAL RESEARCH
The study of youth entrepreneurship draws on research in business economics and social, personality, and developmental psychology. As with
any emerging area of research, definitions of the main construct vary, a
problem exacerbated in this case by the variety in entrepreneurial activities
(Gartner, 1985). A limited list of entrepreneurial enterprises might include
starting a restaurant, a counseling practice, an e-commerce Web site, a corner
store, a mobile app, a nonprofit organization, or innovation in an existing
organization (Shane & Venkataraman, 2000).
Although the definitional issue is not fully settled, a consensus has developed around the notion that entrepreneurship should be considered a process,
subject to learning and change, that revolves around goals such as organizing
a venture. Three such frequently used definitions are: (i) “the process of creating
something new with value by devoting the necessary time and effort, assuming the
accompanying financial, psychic, personal and social risk, and receiving the resulting rewards” (Hisrich, Langan-Fox, & Grant, 2007); (ii); “the process whereby
individuals become aware of business ownership as an option or viable alternative,
(and) develop ideas for business, learn the process of becoming an entrepreneur and
undertake the initiation and development of a business”(Stevenson, 1989); and
(iii) “the practical application of enterprising qualities, such as initiative, innovation, creativity, and risk-taking in the work environment (either in self-employment
or employment in small start-up firms), using the appropriate skills necessary for
success in that environment and culture” (Schnurr & Newing, 1997).
Most existing scholarship on the process of entrepreneurship has focused
on adults who have become successful entrepreneurs. One such line of
research attempts to identify personal qualities that contribute to success.
This line of work began with McClelland’s research program on relations
between “need achievement” and entrepreneurship (McClelland, 1965).
McClelland reported positive but low correlations between achievement
motivation and entrepreneurship––a finding only replicated in some, but not
all, further research (much of which failed to find any association at all) (Frey,
1984). More recent studies have examined personal characteristics such as
risk-taking, self-efficacy, innovativeness, autonomy, and “Big Five” traits of

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

extraversion, conscientiousness, openness to experience, neuroticism, and
agreeableness (Gartner, 1989; Zhao & Seibert, 2006). Although some such
qualities have been shown to be weakly associated with entrepreneurship,
scholars have concluded that personality trait theory has not accounted
for much of the variance in entrepreneurial achievements, mainly because
entrepreneurs are a heterogeneous group with respect to personality type
(Lerner & Damon, 2012).
In contrast to personality theory, other psychological research in
entrepreneurship has focused on how beliefs, attitudes, stereotypes,
biases, and attributions influence entrepreneurial behavior (Shaver, 2007).
Some of this research focuses on factors that are primarily cognitive in
nature, such as what are known in the entrepreneurship literature as
“KSAs”––knowledge, skills, and abilities (Baron, 2004). One prominent
recent study of 5000 business innovators identified five “mental habits” of
successful entrepreneurs––questioning, experimenting, observing, associating (that is, making connections among disparate ideas), and networking.
They reported strong levels of association between these habits and success
(Dyer, Gregersen, & Christensen, 2011).
THE EMERGING STUDY OF YOUTH ENTREPRENEURSHIP
As recently as 2002, one leading entrepreneurship investigator wrote: “there
has been no systematic attempt to look at entrepreneurship from a youth
angle” (Chigunta, 2002). This situation is now improving, with a small but
growing number of researchers becoming interested in the development
of entrepreneurial interests and skills in youth (e.g., Hisrich et al., 2007;
Lerner & Damon, 2012; Obschonka, Silbereisen, & Schmitt-Rodermund,
2011; Schmitt-Rodermund, 2004, 2007; Schoon & Duckworth, 2012; Williams,
2004; Zhang & Arvey, 2009).
Schmitt-Rodermund and her colleagues studied students and small business founders in East Germany during the decade following the reunification of Germany (Obschonka et al., 2011; Schmitt-Rodermund, 2004, 2007).
Despite the uniqueness of these samples, the studies yielded some informative results concerning developmental pathways to entrepreneurship. In
her study of 10th grade East German students, Schmitt-Rodermund found
that authoritative parenting was associated with entrepreneurial interests
and skills (Schmitt-Rodermund, 2004). Parental modeling also played a role:
the students who had observed parents engaging in entrepreneurial activity were the ones more likely to show entrepreneurial competence. Students
then engaged in entrepreneurial activities planned to pursue entrepreneurial
careers by age 40, whereas those who not involved in entrepreneurial activities in adolescence planned to pursue conventional labor-force careers in

Youth Entrepreneurship

5

government, in the independent nonprofit sector, or in companies run by
others. This finding clearly demonstrates the importance of an early start.
Additional evidence that parents may play a role in entrepreneurial development comes from a large British longitudinal study, which found that having
a self-employed parent was a significant predictor of future entrepreneurship
for men (Schoon & Duckworth, 2012).
Schmitt-Rodermund and her colleagues also reanalyzed data from the Terman study of gifted children (Schmitt-Rodermund, 2007). Examining a large
group of boys (N = 718) within the dataset, they found that boys who had
demonstrated interests linked to entrepreneurship when they were 12 or 13
were the ones mostly likely to become entrepreneurs later in life. In addition,
boys who were raised by authoritative parents were especially likely to be
engaged in entrepreneurial activities during their adult years.
Beyond the studies by Schmitt-Rodermund and colleagues, there have
been only a small number of youth entrepreneurship studies that use
time-ordered, multi-occasion data; and these other studies had methodological limitations and indeterminate results. For example, reanalyzing
data from the National Longitudinal Study of Youth (NLSY), Schiller and
Crewson (1997) examined the self-employment patterns of youth in relation
to later-life success in business and found no way of predicting which young
people would succeed as adult entrepreneurs. Indeed, when young, the
participants showed high levels of self-employment, but entrepreneurship
activity in adolescence was linked to low success rates in adulthood. Another
study using the NLSY data found positive and negative associations (both
low) between youth self-employment and adult entrepreneurship (Williams,
2004). These NLSY-based studies used only two measurement times, and the
investigators made no attempt to explore intra-individual change in any of
the variables assessed in relation to self-employment. Accordingly, the longitudinal features of the NLSY dataset were not exploited for developmental
aims in either study.
Other studies of youth entrepreneurship have focused on attitudes rather
than activities. Such studies indicate a general youth population that is
sharply divided in its orientation toward entrepreneurial pursuits. For
example, a national survey of youth attitudes in Australia found that most
young people do not see themselves as possessing the personal attributes
necessary for entrepreneurship; accordingly, only 10% were engaging in
entrepreneurial activities (Sergeant & Crawford, 2001). In a study of the
long-term goals among American youth, Damon found that only a small
minority were motivated by ambitions such as starting a business (Damon,
2008). Among this minority were a few youngsters who had accomplished
extraordinary entrepreneurial achievements during their teenage years.
Some had acquired, by as young as 11 or 12 years of age, “entrepreneurial

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

capacities such as resourcefulness, persistence, know-how, and a tolerance
of risk and temporary set-backs” (Damon, 2008, p. 114).
Emerging research suggests that having a clear purpose in life may be a
predictor of entrepreneurship. An emerging trend with regard to the study
of entrepreneurship is a focus on the role of purpose in entrepreneurial pursuits. Some young people have purposeful aims that require them to launch
businesses or found organizations. For example, the Stanford Youth Purpose project profiled a young man committed to enhancing Internet security (Bronk, 2008). He proposed novel solutions to emerging technological
problems, and to enact his solutions and get them to the marketplace, he
decided to launch his own (ultimately highly successful) Internet security
firm. Similarly, a young man concerned with the lack of progress in providing clean drinking water to people in third world countries founded a
nonprofit organization to fund critical water projects around the world. In
each of these cases, entrepreneurial purposes were evident. But, early results
from the Young Entrepreneurs Study suggest that while some young people find purpose in their entrepreneurial aims, others do not. Some wish to
become entrepreneurs, not because it represents a particularly meaningful
path, but instead because it seems likely to yield an exciting, lucrative, and
independent lifestyle (Bronk, Weiner, Hunt, & Geldhof, 2013).
The presence or lack of entrepreneurial purposes points to the different
motivational patterns of aspiring entrepreneurs. A related split exists
between social entrepreneurship, which is attracting increased interest
among the young, and business entrepreneurship. On the surface, the
distinction between the two is clear: social entrepreneurship is motivated by
aims of social improvement, whereas business entrepreneurship is motivated
by a desire for monetary gains. According to Bill Drayton (2007), a leading
social entrepreneur, this approach seeks to generate “social value” rather
than profits. However, in practice, the differences between these two groups
are often blurred. Many successful businesses address social needs. At the
same time, social–entrepreneurial ventures (such as Bridgespan, a consulting
firm for nonprofit organizations) can be highly profitable. Both business
and social entrepreneurs can spur change; both regularly access funding
streams; and both rely on innovation. The distinction between the two
may have more to do with the industries in which they function. According to Bornstein (2007), for example, business entrepreneurs transform
industries such as transportation, finance, and communication, whereas
social entrepreneurs typically transform industries such as health care,
environmental protection, and education. Still, business entrepreneurs such
as Apple have transformed education, whereas some social–entrepreneurial
ventures, such as automobiles that feature energy-saving technology,

Youth Entrepreneurship

7

are transforming transportation––so, once again, the distinction appears
fuzzy.
Preliminary data from the Young Entrepreneurs Study (YES) suggest that
at least some social entrepreneurs differ in important ways from business
entrepreneurs. A small cluster of social entrepreneurs reported that they
were strongly committed to working toward social aims, and they remained
open to the possibility of launching their own companies or organizations if
this turned out to be the most effective way of achieving their aims. However,
this cluster of youth was not particularly interested in entrepreneurship for
the sake of entrepreneurship. In fact, several young adults in this cluster
expressed concern with the ethics behind some entrepreneurial pursuits,
especially entrepreneurial pursuits that lacked a clear social focus. Further
studies are needed to better identify how social and business entrepreneurs
differ in their aims as well as in their development.
RECOMMENDATIONS FOR FUTURE RESEARCH
In an influential review of literature on the psychology of entrepreneurship
in general, Hisrich and colleagues offered a number of recommendations
regarding the necessary research agenda for future scholarship (Hisrich
et al., 2007). In theirstudy, Hisrich and colleagues point to the importance
of assessing the personality characteristics of entrepreneurs; improving
the design and measurement of personality characteristics by matching
predictor and criterion variables, enhancing construct operationalization,
using reliable and valid measures, and differentiating between mediating
and moderating variables; assessing psychopathological issues pertinent
to entrepreneurship; studying the cognition of entrepreneurs; assessing
entrepreneurship as a global phenomenon; appraising the links between
culture and entrepreneurship, including the influence of religion on this
relation; and attending to the link between policy and entrepreneurship.
We concur with these recommendations, but note that they do not pay sufficient attention to developmental questions, such as how entrepreneurial
capacities are learned in youth and what kinds of experiences serve as the
developmental antecedents of successful entrepreneurship.
For an understanding of how entrepreneurship develops over the life
span, and especially during youth, longitudinal research will be essential. It
is especially important to examine the crucial transitions that occur from one
life period to the next (Baron, 2004). In particular, the transition from late
adolescence to adulthood is formative with respect to every aspect of career
choice, and as such it must be of central concern to anyone who wishes
to understand how entrepreneurial capacities and interests are acquired.
Other than the Schmitt-Rodermund (e.g., 2004, 2007; Obschonka et al., 2011)

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

research program, there has not been any attempt to study entrepreneurship
development in the context of this, or any other, key transition; nor has there
been a recognition that it is necessary to study entrepreneurship through
the lens of known features of life span development such as the evolving
interactions between people and their contexts (Damon & Lerner, 2006;
Lerner & Damon, 2012).
Another essential topic for future research will be the study of how institutional policies affect young people’s pathways to entrepreneurship. This is
a particularly timely topic, as many governments recently have developed
programs to promote youth entrepreneurship. For example, in Spring of
2011, the Obama Administration hosted the Youth Entrepreneurs Summit to
(i) hear from young entrepreneurs about how the Administration could support their entrepreneurial activities, and (ii) tell youth how to take advantage
of government programs designed to support them (Modi, 2011). Similarly,
the Canadian government implemented a program that gave young adults
access to capital, business advice, and entrepreneurial training (Gardner,
2004), and there are numerous European and African initiatives as well (Halabisky, 2012). Although some evaluations of these government programs are
promising (Gardner, 2004), many young entrepreneur programs have not
been rigorously tested. There is an urgent need to strengthen the evidence
base of these programs and to understand their effectiveness in supporting
young entrepreneurs. To what extent do young people know about these
initiatives, and how often do they take advantage of them? Which programs
are effective and what are the mechanisms that make them effective? What
is the long-term effect of such programs on labor markets and individuals?
Another topic is the role of schooling in general, apart from programs specially dedicated to entrepreneurial education. Does formal education help or
hinder entrepreneurship? One pole in this debate sees formal education as a
waste of time for aspiring entrepreneurs, arguing that students are better off
investing time and money in their own businesses rather than educational
credentials. Peter Thiel has suggested that too much formal education
even impedes entrepreneurship (NRO, 2011). Although the cases of a few
prominent entrepreneurs (e.g., Bill Gates, Mark Zuckerberg) demonstrate
that it is possible to succeed in business without a college degree, the effect
of dropping out of college on young entrepreneurs in general has never been
studied.
An alternative perspective has claimed that an undergraduate liberal arts
education, when integrated with business instruction, is highly valuable for
young entrepreneurs (Colby, Ehrlich, Sullivan, & Dolle, 2011). Drawing on
research in psychology, business, and education, Colby and colleagues (2011)
have described how undergraduate liberal arts training can teach students
to think entrepreneurially. Gaining a richer contextual understanding of the

Youth Entrepreneurship

9

world by studying art, sociopolitical phenomena, and science can increase
many entrepreneurially relevant skills, including creativity, analytical ability, pattern recognition, innovation, and problem framing. Understanding
how formal education shapes young entrepreneurs, their entrepreneurial
pursuits, and the entrepreneurial market more broadly is an important area
for future research.
CONCLUSION
Given the vital economic role of entrepreneurship, it is promising to see
that researchers are increasingly interested in understanding the pathways to such careers. Developmental and longitudinal studies of youth
entrepreneurship, explorations of entrepreneurial purpose, and research
focused on gaining a deeper understanding of the differences between social
and business entrepreneurship represent promising and important lines of
inquiry. While we still believe that more longitudinal research is needed, we
are heartened to see that a small but growing number of researchers are examining the antecedents to entrepreneurship along with the role of education
and institutional support in fostering entrepreneurial intentions. Continuing
to grow these promising areas of research will arm educators and business
leaders with information about how to effectively prepare diverse groups
of young people for entrepreneurship, allowing us to encourage increasing
numbers of young people to consider this economically critical career path.

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WILLIAM DAMON SHORT BIOGRAPHY
William Damon is Professor of Education at Stanford University and Director of the Stanford Center on Adolescence. Damon has written widely on
ethical and moral commitment at all ages of human life. Damon’s books
include Some Do Care: Contemporary Lives of Moral Commitment (1992) (with
Anne Colby); Greater Expectations (1995); The Youth Charter (1997); Good Work:
When Excellence and Ethics Meet (2001) (with Howard Gardner and Mihaly
Csikszentmihalyi); The Moral Advantage: How to Succeed in Business by Doing
the Right Thing (2004); Taking Philanthropy Seriously: Beyond Noble Intentions to
Responsible Giving (2006); The Path to Purpose (2008); and Failing Liberty 101
(2011).
At the present time, Damon is working on projects aimed at promoting purpose, good work, and a dedication to citizenship. Damon has
received awards and grants from the John D. and Catherine T. MacArthur
Foundation, the Pew Charitable Trusts, The Spencer Foundation, the
Carnegie Corporation of New York, the William and Flora Hewlett Foundation, the Thrive Foundation for Youth, the Atlantic Philanthropies, the John

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

Templeton Foundation, and the S.D. Bechtel Foundation. He is a fellow of the
American Educational Research Association and an elected member of the
National Academy of Education. Damon’s Web site is williamdamon.com.
KENDALL COTTON BRONK SHORT BIOGRAPHY
Kendall Cotton Bronk is an Associate Professor of developmental psychology in the Division of Behavioral and Social Sciences at Claremont Graduate
University. She conducts research on positive youth development and the
moral growth of young people. For the past 10 years, she has been investigating these topics through the lens of young people’s purposes in life.
Her research has explored the relationship between purpose and healthy
growth, the ways young people discover purpose, and the developmental
trajectory of youth with strong commitments to various purposes. In 2013,
she published a book on the topic called Purpose in Life: A Critical Component of Optimal Youth Development (Springer). Bronk is currently engaged in a
study examining the role of purpose in prospection.
A surprising finding has emerged from her research on purpose; many
of the young people with particularly strong commitments to personally
meaningful aims ultimately start their own businesses or nonprofit organizations to address social problems. Consequently, Bronk’s research has more
recently focused on the development of effective young business and social
entrepreneurs.
TENELLE PORTER SHORT BIOGRAPHY
Tenelle Porter is a doctoral candidate in Developmental and Psychological
Sciences at Stanford University. Her research focuses on ways to promote
positive development among adolescents and young adults. Specific research
interests include youth civic engagement, youth entrepreneurship, purpose,
growth mindset, and intellectual humility. Before Stanford, Tenelle worked
on a cross-national study of youth character development at Oxford’s Centre
for Cognition and Culture. Tenelle has a BA from the University of Kansas
and an MSc in Evidence-Based Social Intervention from the University of
Oxford.
RELATED ESSAYS
Identity Fusion (Psychology), Michael D. Burhmester and William B. Swann
Jr.
Peers and Adolescent Risk Taking (Psychology), Jason Chein
Four Psychological Perspectives on Creativity (Psychology), Rodica Ioana
Damian and Dean Keith Simonton

Youth Entrepreneurship

13

Resilience (Psychology), Erica D. Diminich and George A. Bonanno
Understanding the Adaptive Functions of Morality from a Cognitive Psychological Perspective (Psychology), James Dungan and Liane Young
Insight (Psychology), Brian Erickson and John Kounios
Controlling the Influence of Stereotypes on One’s Thoughts (Psychology),
Patrick S. Forscher and Patricia G. Devine
State of the Art in Competition Research (Psychology), Márta Fülöp and
Gábor Orosz
Evolutionary Approaches to Understanding Children’s Academic Achievement (Psychology), David C. Geary and Daniel B. Berch
Family Relationships and Development (Psychology), Joan E. Grusec
Positive Development among Diverse Youth (Psychology), Richard M. Lerner
et al.
The Role of School-Related Peers and Social Networks in Human Development (Psychology), Chandra Muller
Identity-Based Motivation (Psychology), Daphna Oyserman
Ethical Decision-Making: Contemporary Research on the Role of the Self
(Psychology), Lisa L. Shu and Daniel A. Effron
Taking Personality to the Next Level: What Does It Mean to Know a Person?
(Psychology), Simine Vazire and Robert Wilson



Youth Entrepreneurship
WILLIAM DAMON, KENDALL COTTON BRONK, and TENELLE PORTER

Abstract
Entrepreneurship is critical to job creation and economic growth in the United States
and abroad; however, interest in pursuing entrepreneurial careers is on the decline
among young people today. As a means of designing programs that effectively
encourage and prepare young people to pursue entrepreneurial careers, this essay
calls for increased focus on how entrepreneurs develop. An understanding of the
experiences, opportunities, and interests that lead to successful entrepreneurship is
needed. To that end, this essay, in addition to addressing leading process-oriented
definitions of entrepreneurship and briefly reviewing relevant empirical studies,
outlines three promising areas of research on youth entrepreneurship. First,
researchers have becoming increasingly interested in entrepreneurial purposes.
Recent research finds that at least some young people seek out entrepreneurial
careers as a means of applying their skills and talents to create organizations
or businesses that solve personally meaningful problems in the broader world.
This leads to the second emerging area of interest in youth entrepreneurship: the
distinction between social and business entrepreneurship. The growth of new
businesses and organizations that are at once highly profitable and at the same time
exist to address social problems has blurred this distinction. Third, researchers are
increasingly interested in identifying ways of effectively fostering entrepreneurial
interests. This essay highlights key issues regarding the role that educational
experiences and institutional support play in supporting the development of
successful entrepreneurs.

For much of human history, entrepreneurship has been seen as a vocational
choice that offers resourceful people the chance to gain financial independence and, for a few, great wealth. During the Industrial Revolution,
entrepreneurs made fortunes in manufacturing, commerce, and travel;
during the twentieth century, entrepreneurs found opportunities in communications, computing, and medicine. Such entrepreneurs were seen as a
special class of people who created businesses, took risks, and either failed
or succeeded in their attempts to build wealth.
More recently, entrepreneurship has taken on a new significance, increasingly viewed as a pathway appropriate (or even necessary) for all who wish
Emerging Trends in the Social and Behavioral Sciences. Edited by Robert Scott and Stephen Kosslyn.
© 2015 John Wiley & Sons, Inc. ISBN 978-1-118-90077-2.

1

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

to succeed in the competitive world of work. New York Times columnist
Thomas Friedman quoted a labor expert as saying that today’s successful
job candidates “are inventors and solution-finders who are relentlessly
entrepreneurial because they understand that many employers today don’t
care about your résumé, degree or how you got your knowledge, but
only what you can do and what you can continuously reinvent yourself
to do” (Friedman, 2013, p. A23). In the same vein, another economist has
awarded today’s young the label “Generation E,” writing that the entire
working population of the twenty-first century will by necessity become
entrepreneurial (Kuratco, 2003).
But there is a serious question, yet to be addressed, regarding how far this
“worldwide phenomenon” can spread, given the distribution of abilities and
behavioral dispositions across the youth population. Even the most optimistic accounts of today’s rising tide of entrepreneurial activity report only a
small minority of the population now engaged in such opportunities: some
estimates range as low as 9–11% (Neck, Zacharakis, Bygrave, & Reynolds,
2003; Reynolds, Bygrave, & Autio, 2004). Will future young people have the
interests, skills, and/or personality characteristics suited for entrepreneurial
pursuits?
Indeed, there are some signs that large sectors of the current US population,
including the young, actually might be turning away from entrepreneurship
as a vocational choice. A June 2, 2013 Wall Street Journal article, “Risk-Averse
Culture Infects U.S. Workers, Entrepreneurs,” reported that, with the exception of people in a few “hotbeds” such as Silicon Valley and Boston, the
vast majority of US workers have chosen to avoid entrepreneurial pursuits
because of their riskiness (Casselman, 2013, p. A1). John Haltiwanger, a
University of Maryland economist who has studied the decline in American
entrepreneurship stated, “The pessimistic view is we’ve lost our mojo”
(Casselman, 2013, p. A1). The economic implications of such a decline in
entrepreneurial aspirations could be grim, according to this economist: “The
U.S. has succeeded in part because of its dynamism, its high pace of job
creation and destruction, and its high pace of churning out workers,” all
products of entrepreneurial choices made by individuals, usually when they
are young.
To understand and assess the extent to which future generations will seek
entrepreneurial careers, as well as the extent to which they are likely to do
so successfully, it will be important to identify the psychological ingredients
of successful entrepreneurs and to determine how such ingredients develop
during youth and beyond. Are there specific capacities that provide certain
young people advantages over their peers; or do all youngsters have a
decent chance of pursuing an entrepreneurial career? What must a young
person learn in order to prepare for such a career? Which abilities, personal

Youth Entrepreneurship

3

characteristics, or interests must be cultivated? Which experiences are likely
to motivate a young person to consider an entrepreneurial career? Is there
a particular set of abilities required for entrepreneurship of all kinds, or do
certain entrepreneurial engagements draw from particular sets of interests
and skills? These are timely questions important for assessing both the
future prospects of the economy and the future vocational pathways of the
young.
FOUNDATIONAL RESEARCH
The study of youth entrepreneurship draws on research in business economics and social, personality, and developmental psychology. As with
any emerging area of research, definitions of the main construct vary, a
problem exacerbated in this case by the variety in entrepreneurial activities
(Gartner, 1985). A limited list of entrepreneurial enterprises might include
starting a restaurant, a counseling practice, an e-commerce Web site, a corner
store, a mobile app, a nonprofit organization, or innovation in an existing
organization (Shane & Venkataraman, 2000).
Although the definitional issue is not fully settled, a consensus has developed around the notion that entrepreneurship should be considered a process,
subject to learning and change, that revolves around goals such as organizing
a venture. Three such frequently used definitions are: (i) “the process of creating
something new with value by devoting the necessary time and effort, assuming the
accompanying financial, psychic, personal and social risk, and receiving the resulting rewards” (Hisrich, Langan-Fox, & Grant, 2007); (ii); “the process whereby
individuals become aware of business ownership as an option or viable alternative,
(and) develop ideas for business, learn the process of becoming an entrepreneur and
undertake the initiation and development of a business”(Stevenson, 1989); and
(iii) “the practical application of enterprising qualities, such as initiative, innovation, creativity, and risk-taking in the work environment (either in self-employment
or employment in small start-up firms), using the appropriate skills necessary for
success in that environment and culture” (Schnurr & Newing, 1997).
Most existing scholarship on the process of entrepreneurship has focused
on adults who have become successful entrepreneurs. One such line of
research attempts to identify personal qualities that contribute to success.
This line of work began with McClelland’s research program on relations
between “need achievement” and entrepreneurship (McClelland, 1965).
McClelland reported positive but low correlations between achievement
motivation and entrepreneurship––a finding only replicated in some, but not
all, further research (much of which failed to find any association at all) (Frey,
1984). More recent studies have examined personal characteristics such as
risk-taking, self-efficacy, innovativeness, autonomy, and “Big Five” traits of

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

extraversion, conscientiousness, openness to experience, neuroticism, and
agreeableness (Gartner, 1989; Zhao & Seibert, 2006). Although some such
qualities have been shown to be weakly associated with entrepreneurship,
scholars have concluded that personality trait theory has not accounted
for much of the variance in entrepreneurial achievements, mainly because
entrepreneurs are a heterogeneous group with respect to personality type
(Lerner & Damon, 2012).
In contrast to personality theory, other psychological research in
entrepreneurship has focused on how beliefs, attitudes, stereotypes,
biases, and attributions influence entrepreneurial behavior (Shaver, 2007).
Some of this research focuses on factors that are primarily cognitive in
nature, such as what are known in the entrepreneurship literature as
“KSAs”––knowledge, skills, and abilities (Baron, 2004). One prominent
recent study of 5000 business innovators identified five “mental habits” of
successful entrepreneurs––questioning, experimenting, observing, associating (that is, making connections among disparate ideas), and networking.
They reported strong levels of association between these habits and success
(Dyer, Gregersen, & Christensen, 2011).
THE EMERGING STUDY OF YOUTH ENTREPRENEURSHIP
As recently as 2002, one leading entrepreneurship investigator wrote: “there
has been no systematic attempt to look at entrepreneurship from a youth
angle” (Chigunta, 2002). This situation is now improving, with a small but
growing number of researchers becoming interested in the development
of entrepreneurial interests and skills in youth (e.g., Hisrich et al., 2007;
Lerner & Damon, 2012; Obschonka, Silbereisen, & Schmitt-Rodermund,
2011; Schmitt-Rodermund, 2004, 2007; Schoon & Duckworth, 2012; Williams,
2004; Zhang & Arvey, 2009).
Schmitt-Rodermund and her colleagues studied students and small business founders in East Germany during the decade following the reunification of Germany (Obschonka et al., 2011; Schmitt-Rodermund, 2004, 2007).
Despite the uniqueness of these samples, the studies yielded some informative results concerning developmental pathways to entrepreneurship. In
her study of 10th grade East German students, Schmitt-Rodermund found
that authoritative parenting was associated with entrepreneurial interests
and skills (Schmitt-Rodermund, 2004). Parental modeling also played a role:
the students who had observed parents engaging in entrepreneurial activity were the ones more likely to show entrepreneurial competence. Students
then engaged in entrepreneurial activities planned to pursue entrepreneurial
careers by age 40, whereas those who not involved in entrepreneurial activities in adolescence planned to pursue conventional labor-force careers in

Youth Entrepreneurship

5

government, in the independent nonprofit sector, or in companies run by
others. This finding clearly demonstrates the importance of an early start.
Additional evidence that parents may play a role in entrepreneurial development comes from a large British longitudinal study, which found that having
a self-employed parent was a significant predictor of future entrepreneurship
for men (Schoon & Duckworth, 2012).
Schmitt-Rodermund and her colleagues also reanalyzed data from the Terman study of gifted children (Schmitt-Rodermund, 2007). Examining a large
group of boys (N = 718) within the dataset, they found that boys who had
demonstrated interests linked to entrepreneurship when they were 12 or 13
were the ones mostly likely to become entrepreneurs later in life. In addition,
boys who were raised by authoritative parents were especially likely to be
engaged in entrepreneurial activities during their adult years.
Beyond the studies by Schmitt-Rodermund and colleagues, there have
been only a small number of youth entrepreneurship studies that use
time-ordered, multi-occasion data; and these other studies had methodological limitations and indeterminate results. For example, reanalyzing
data from the National Longitudinal Study of Youth (NLSY), Schiller and
Crewson (1997) examined the self-employment patterns of youth in relation
to later-life success in business and found no way of predicting which young
people would succeed as adult entrepreneurs. Indeed, when young, the
participants showed high levels of self-employment, but entrepreneurship
activity in adolescence was linked to low success rates in adulthood. Another
study using the NLSY data found positive and negative associations (both
low) between youth self-employment and adult entrepreneurship (Williams,
2004). These NLSY-based studies used only two measurement times, and the
investigators made no attempt to explore intra-individual change in any of
the variables assessed in relation to self-employment. Accordingly, the longitudinal features of the NLSY dataset were not exploited for developmental
aims in either study.
Other studies of youth entrepreneurship have focused on attitudes rather
than activities. Such studies indicate a general youth population that is
sharply divided in its orientation toward entrepreneurial pursuits. For
example, a national survey of youth attitudes in Australia found that most
young people do not see themselves as possessing the personal attributes
necessary for entrepreneurship; accordingly, only 10% were engaging in
entrepreneurial activities (Sergeant & Crawford, 2001). In a study of the
long-term goals among American youth, Damon found that only a small
minority were motivated by ambitions such as starting a business (Damon,
2008). Among this minority were a few youngsters who had accomplished
extraordinary entrepreneurial achievements during their teenage years.
Some had acquired, by as young as 11 or 12 years of age, “entrepreneurial

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

capacities such as resourcefulness, persistence, know-how, and a tolerance
of risk and temporary set-backs” (Damon, 2008, p. 114).
Emerging research suggests that having a clear purpose in life may be a
predictor of entrepreneurship. An emerging trend with regard to the study
of entrepreneurship is a focus on the role of purpose in entrepreneurial pursuits. Some young people have purposeful aims that require them to launch
businesses or found organizations. For example, the Stanford Youth Purpose project profiled a young man committed to enhancing Internet security (Bronk, 2008). He proposed novel solutions to emerging technological
problems, and to enact his solutions and get them to the marketplace, he
decided to launch his own (ultimately highly successful) Internet security
firm. Similarly, a young man concerned with the lack of progress in providing clean drinking water to people in third world countries founded a
nonprofit organization to fund critical water projects around the world. In
each of these cases, entrepreneurial purposes were evident. But, early results
from the Young Entrepreneurs Study suggest that while some young people find purpose in their entrepreneurial aims, others do not. Some wish to
become entrepreneurs, not because it represents a particularly meaningful
path, but instead because it seems likely to yield an exciting, lucrative, and
independent lifestyle (Bronk, Weiner, Hunt, & Geldhof, 2013).
The presence or lack of entrepreneurial purposes points to the different
motivational patterns of aspiring entrepreneurs. A related split exists
between social entrepreneurship, which is attracting increased interest
among the young, and business entrepreneurship. On the surface, the
distinction between the two is clear: social entrepreneurship is motivated by
aims of social improvement, whereas business entrepreneurship is motivated
by a desire for monetary gains. According to Bill Drayton (2007), a leading
social entrepreneur, this approach seeks to generate “social value” rather
than profits. However, in practice, the differences between these two groups
are often blurred. Many successful businesses address social needs. At the
same time, social–entrepreneurial ventures (such as Bridgespan, a consulting
firm for nonprofit organizations) can be highly profitable. Both business
and social entrepreneurs can spur change; both regularly access funding
streams; and both rely on innovation. The distinction between the two
may have more to do with the industries in which they function. According to Bornstein (2007), for example, business entrepreneurs transform
industries such as transportation, finance, and communication, whereas
social entrepreneurs typically transform industries such as health care,
environmental protection, and education. Still, business entrepreneurs such
as Apple have transformed education, whereas some social–entrepreneurial
ventures, such as automobiles that feature energy-saving technology,

Youth Entrepreneurship

7

are transforming transportation––so, once again, the distinction appears
fuzzy.
Preliminary data from the Young Entrepreneurs Study (YES) suggest that
at least some social entrepreneurs differ in important ways from business
entrepreneurs. A small cluster of social entrepreneurs reported that they
were strongly committed to working toward social aims, and they remained
open to the possibility of launching their own companies or organizations if
this turned out to be the most effective way of achieving their aims. However,
this cluster of youth was not particularly interested in entrepreneurship for
the sake of entrepreneurship. In fact, several young adults in this cluster
expressed concern with the ethics behind some entrepreneurial pursuits,
especially entrepreneurial pursuits that lacked a clear social focus. Further
studies are needed to better identify how social and business entrepreneurs
differ in their aims as well as in their development.
RECOMMENDATIONS FOR FUTURE RESEARCH
In an influential review of literature on the psychology of entrepreneurship
in general, Hisrich and colleagues offered a number of recommendations
regarding the necessary research agenda for future scholarship (Hisrich
et al., 2007). In theirstudy, Hisrich and colleagues point to the importance
of assessing the personality characteristics of entrepreneurs; improving
the design and measurement of personality characteristics by matching
predictor and criterion variables, enhancing construct operationalization,
using reliable and valid measures, and differentiating between mediating
and moderating variables; assessing psychopathological issues pertinent
to entrepreneurship; studying the cognition of entrepreneurs; assessing
entrepreneurship as a global phenomenon; appraising the links between
culture and entrepreneurship, including the influence of religion on this
relation; and attending to the link between policy and entrepreneurship.
We concur with these recommendations, but note that they do not pay sufficient attention to developmental questions, such as how entrepreneurial
capacities are learned in youth and what kinds of experiences serve as the
developmental antecedents of successful entrepreneurship.
For an understanding of how entrepreneurship develops over the life
span, and especially during youth, longitudinal research will be essential. It
is especially important to examine the crucial transitions that occur from one
life period to the next (Baron, 2004). In particular, the transition from late
adolescence to adulthood is formative with respect to every aspect of career
choice, and as such it must be of central concern to anyone who wishes
to understand how entrepreneurial capacities and interests are acquired.
Other than the Schmitt-Rodermund (e.g., 2004, 2007; Obschonka et al., 2011)

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

research program, there has not been any attempt to study entrepreneurship
development in the context of this, or any other, key transition; nor has there
been a recognition that it is necessary to study entrepreneurship through
the lens of known features of life span development such as the evolving
interactions between people and their contexts (Damon & Lerner, 2006;
Lerner & Damon, 2012).
Another essential topic for future research will be the study of how institutional policies affect young people’s pathways to entrepreneurship. This is
a particularly timely topic, as many governments recently have developed
programs to promote youth entrepreneurship. For example, in Spring of
2011, the Obama Administration hosted the Youth Entrepreneurs Summit to
(i) hear from young entrepreneurs about how the Administration could support their entrepreneurial activities, and (ii) tell youth how to take advantage
of government programs designed to support them (Modi, 2011). Similarly,
the Canadian government implemented a program that gave young adults
access to capital, business advice, and entrepreneurial training (Gardner,
2004), and there are numerous European and African initiatives as well (Halabisky, 2012). Although some evaluations of these government programs are
promising (Gardner, 2004), many young entrepreneur programs have not
been rigorously tested. There is an urgent need to strengthen the evidence
base of these programs and to understand their effectiveness in supporting
young entrepreneurs. To what extent do young people know about these
initiatives, and how often do they take advantage of them? Which programs
are effective and what are the mechanisms that make them effective? What
is the long-term effect of such programs on labor markets and individuals?
Another topic is the role of schooling in general, apart from programs specially dedicated to entrepreneurial education. Does formal education help or
hinder entrepreneurship? One pole in this debate sees formal education as a
waste of time for aspiring entrepreneurs, arguing that students are better off
investing time and money in their own businesses rather than educational
credentials. Peter Thiel has suggested that too much formal education
even impedes entrepreneurship (NRO, 2011). Although the cases of a few
prominent entrepreneurs (e.g., Bill Gates, Mark Zuckerberg) demonstrate
that it is possible to succeed in business without a college degree, the effect
of dropping out of college on young entrepreneurs in general has never been
studied.
An alternative perspective has claimed that an undergraduate liberal arts
education, when integrated with business instruction, is highly valuable for
young entrepreneurs (Colby, Ehrlich, Sullivan, & Dolle, 2011). Drawing on
research in psychology, business, and education, Colby and colleagues (2011)
have described how undergraduate liberal arts training can teach students
to think entrepreneurially. Gaining a richer contextual understanding of the

Youth Entrepreneurship

9

world by studying art, sociopolitical phenomena, and science can increase
many entrepreneurially relevant skills, including creativity, analytical ability, pattern recognition, innovation, and problem framing. Understanding
how formal education shapes young entrepreneurs, their entrepreneurial
pursuits, and the entrepreneurial market more broadly is an important area
for future research.
CONCLUSION
Given the vital economic role of entrepreneurship, it is promising to see
that researchers are increasingly interested in understanding the pathways to such careers. Developmental and longitudinal studies of youth
entrepreneurship, explorations of entrepreneurial purpose, and research
focused on gaining a deeper understanding of the differences between social
and business entrepreneurship represent promising and important lines of
inquiry. While we still believe that more longitudinal research is needed, we
are heartened to see that a small but growing number of researchers are examining the antecedents to entrepreneurship along with the role of education
and institutional support in fostering entrepreneurial intentions. Continuing
to grow these promising areas of research will arm educators and business
leaders with information about how to effectively prepare diverse groups
of young people for entrepreneurship, allowing us to encourage increasing
numbers of young people to consider this economically critical career path.

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Zhang, Z., & Arvey, R. D. (2009). Rule breaking in adolescence and entrepreneurial
status: An empirical investigation. Journal of Business Venturing, 24(5), 436–447.
Zhao, H., & Seibert, S. (2006). The big five personality dimensions and entrepreneurial status: A meta-analytic review. Journal of Applied Psychology, 9, 250–270.

WILLIAM DAMON SHORT BIOGRAPHY
William Damon is Professor of Education at Stanford University and Director of the Stanford Center on Adolescence. Damon has written widely on
ethical and moral commitment at all ages of human life. Damon’s books
include Some Do Care: Contemporary Lives of Moral Commitment (1992) (with
Anne Colby); Greater Expectations (1995); The Youth Charter (1997); Good Work:
When Excellence and Ethics Meet (2001) (with Howard Gardner and Mihaly
Csikszentmihalyi); The Moral Advantage: How to Succeed in Business by Doing
the Right Thing (2004); Taking Philanthropy Seriously: Beyond Noble Intentions to
Responsible Giving (2006); The Path to Purpose (2008); and Failing Liberty 101
(2011).
At the present time, Damon is working on projects aimed at promoting purpose, good work, and a dedication to citizenship. Damon has
received awards and grants from the John D. and Catherine T. MacArthur
Foundation, the Pew Charitable Trusts, The Spencer Foundation, the
Carnegie Corporation of New York, the William and Flora Hewlett Foundation, the Thrive Foundation for Youth, the Atlantic Philanthropies, the John

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

Templeton Foundation, and the S.D. Bechtel Foundation. He is a fellow of the
American Educational Research Association and an elected member of the
National Academy of Education. Damon’s Web site is williamdamon.com.
KENDALL COTTON BRONK SHORT BIOGRAPHY
Kendall Cotton Bronk is an Associate Professor of developmental psychology in the Division of Behavioral and Social Sciences at Claremont Graduate
University. She conducts research on positive youth development and the
moral growth of young people. For the past 10 years, she has been investigating these topics through the lens of young people’s purposes in life.
Her research has explored the relationship between purpose and healthy
growth, the ways young people discover purpose, and the developmental
trajectory of youth with strong commitments to various purposes. In 2013,
she published a book on the topic called Purpose in Life: A Critical Component of Optimal Youth Development (Springer). Bronk is currently engaged in a
study examining the role of purpose in prospection.
A surprising finding has emerged from her research on purpose; many
of the young people with particularly strong commitments to personally
meaningful aims ultimately start their own businesses or nonprofit organizations to address social problems. Consequently, Bronk’s research has more
recently focused on the development of effective young business and social
entrepreneurs.
TENELLE PORTER SHORT BIOGRAPHY
Tenelle Porter is a doctoral candidate in Developmental and Psychological
Sciences at Stanford University. Her research focuses on ways to promote
positive development among adolescents and young adults. Specific research
interests include youth civic engagement, youth entrepreneurship, purpose,
growth mindset, and intellectual humility. Before Stanford, Tenelle worked
on a cross-national study of youth character development at Oxford’s Centre
for Cognition and Culture. Tenelle has a BA from the University of Kansas
and an MSc in Evidence-Based Social Intervention from the University of
Oxford.
RELATED ESSAYS
Identity Fusion (Psychology), Michael D. Burhmester and William B. Swann
Jr.
Peers and Adolescent Risk Taking (Psychology), Jason Chein
Four Psychological Perspectives on Creativity (Psychology), Rodica Ioana
Damian and Dean Keith Simonton

Youth Entrepreneurship

13

Resilience (Psychology), Erica D. Diminich and George A. Bonanno
Understanding the Adaptive Functions of Morality from a Cognitive Psychological Perspective (Psychology), James Dungan and Liane Young
Insight (Psychology), Brian Erickson and John Kounios
Controlling the Influence of Stereotypes on One’s Thoughts (Psychology),
Patrick S. Forscher and Patricia G. Devine
State of the Art in Competition Research (Psychology), Márta Fülöp and
Gábor Orosz
Evolutionary Approaches to Understanding Children’s Academic Achievement (Psychology), David C. Geary and Daniel B. Berch
Family Relationships and Development (Psychology), Joan E. Grusec
Positive Development among Diverse Youth (Psychology), Richard M. Lerner
et al.
The Role of School-Related Peers and Social Networks in Human Development (Psychology), Chandra Muller
Identity-Based Motivation (Psychology), Daphna Oyserman
Ethical Decision-Making: Contemporary Research on the Role of the Self
(Psychology), Lisa L. Shu and Daniel A. Effron
Taking Personality to the Next Level: What Does It Mean to Know a Person?
(Psychology), Simine Vazire and Robert Wilson


Youth Entrepreneurship
WILLIAM DAMON, KENDALL COTTON BRONK, and TENELLE PORTER

Abstract
Entrepreneurship is critical to job creation and economic growth in the United States
and abroad; however, interest in pursuing entrepreneurial careers is on the decline
among young people today. As a means of designing programs that effectively
encourage and prepare young people to pursue entrepreneurial careers, this essay
calls for increased focus on how entrepreneurs develop. An understanding of the
experiences, opportunities, and interests that lead to successful entrepreneurship is
needed. To that end, this essay, in addition to addressing leading process-oriented
definitions of entrepreneurship and briefly reviewing relevant empirical studies,
outlines three promising areas of research on youth entrepreneurship. First,
researchers have becoming increasingly interested in entrepreneurial purposes.
Recent research finds that at least some young people seek out entrepreneurial
careers as a means of applying their skills and talents to create organizations
or businesses that solve personally meaningful problems in the broader world.
This leads to the second emerging area of interest in youth entrepreneurship: the
distinction between social and business entrepreneurship. The growth of new
businesses and organizations that are at once highly profitable and at the same time
exist to address social problems has blurred this distinction. Third, researchers are
increasingly interested in identifying ways of effectively fostering entrepreneurial
interests. This essay highlights key issues regarding the role that educational
experiences and institutional support play in supporting the development of
successful entrepreneurs.

For much of human history, entrepreneurship has been seen as a vocational
choice that offers resourceful people the chance to gain financial independence and, for a few, great wealth. During the Industrial Revolution,
entrepreneurs made fortunes in manufacturing, commerce, and travel;
during the twentieth century, entrepreneurs found opportunities in communications, computing, and medicine. Such entrepreneurs were seen as a
special class of people who created businesses, took risks, and either failed
or succeeded in their attempts to build wealth.
More recently, entrepreneurship has taken on a new significance, increasingly viewed as a pathway appropriate (or even necessary) for all who wish
Emerging Trends in the Social and Behavioral Sciences. Edited by Robert Scott and Stephen Kosslyn.
© 2015 John Wiley & Sons, Inc. ISBN 978-1-118-90077-2.

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

to succeed in the competitive world of work. New York Times columnist
Thomas Friedman quoted a labor expert as saying that today’s successful
job candidates “are inventors and solution-finders who are relentlessly
entrepreneurial because they understand that many employers today don’t
care about your résumé, degree or how you got your knowledge, but
only what you can do and what you can continuously reinvent yourself
to do” (Friedman, 2013, p. A23). In the same vein, another economist has
awarded today’s young the label “Generation E,” writing that the entire
working population of the twenty-first century will by necessity become
entrepreneurial (Kuratco, 2003).
But there is a serious question, yet to be addressed, regarding how far this
“worldwide phenomenon” can spread, given the distribution of abilities and
behavioral dispositions across the youth population. Even the most optimistic accounts of today’s rising tide of entrepreneurial activity report only a
small minority of the population now engaged in such opportunities: some
estimates range as low as 9–11% (Neck, Zacharakis, Bygrave, & Reynolds,
2003; Reynolds, Bygrave, & Autio, 2004). Will future young people have the
interests, skills, and/or personality characteristics suited for entrepreneurial
pursuits?
Indeed, there are some signs that large sectors of the current US population,
including the young, actually might be turning away from entrepreneurship
as a vocational choice. A June 2, 2013 Wall Street Journal article, “Risk-Averse
Culture Infects U.S. Workers, Entrepreneurs,” reported that, with the exception of people in a few “hotbeds” such as Silicon Valley and Boston, the
vast majority of US workers have chosen to avoid entrepreneurial pursuits
because of their riskiness (Casselman, 2013, p. A1). John Haltiwanger, a
University of Maryland economist who has studied the decline in American
entrepreneurship stated, “The pessimistic view is we’ve lost our mojo”
(Casselman, 2013, p. A1). The economic implications of such a decline in
entrepreneurial aspirations could be grim, according to this economist: “The
U.S. has succeeded in part because of its dynamism, its high pace of job
creation and destruction, and its high pace of churning out workers,” all
products of entrepreneurial choices made by individuals, usually when they
are young.
To understand and assess the extent to which future generations will seek
entrepreneurial careers, as well as the extent to which they are likely to do
so successfully, it will be important to identify the psychological ingredients
of successful entrepreneurs and to determine how such ingredients develop
during youth and beyond. Are there specific capacities that provide certain
young people advantages over their peers; or do all youngsters have a
decent chance of pursuing an entrepreneurial career? What must a young
person learn in order to prepare for such a career? Which abilities, personal

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3

characteristics, or interests must be cultivated? Which experiences are likely
to motivate a young person to consider an entrepreneurial career? Is there
a particular set of abilities required for entrepreneurship of all kinds, or do
certain entrepreneurial engagements draw from particular sets of interests
and skills? These are timely questions important for assessing both the
future prospects of the economy and the future vocational pathways of the
young.
FOUNDATIONAL RESEARCH
The study of youth entrepreneurship draws on research in business economics and social, personality, and developmental psychology. As with
any emerging area of research, definitions of the main construct vary, a
problem exacerbated in this case by the variety in entrepreneurial activities
(Gartner, 1985). A limited list of entrepreneurial enterprises might include
starting a restaurant, a counseling practice, an e-commerce Web site, a corner
store, a mobile app, a nonprofit organization, or innovation in an existing
organization (Shane & Venkataraman, 2000).
Although the definitional issue is not fully settled, a consensus has developed around the notion that entrepreneurship should be considered a process,
subject to learning and change, that revolves around goals such as organizing
a venture. Three such frequently used definitions are: (i) “the process of creating
something new with value by devoting the necessary time and effort, assuming the
accompanying financial, psychic, personal and social risk, and receiving the resulting rewards” (Hisrich, Langan-Fox, & Grant, 2007); (ii); “the process whereby
individuals become aware of business ownership as an option or viable alternative,
(and) develop ideas for business, learn the process of becoming an entrepreneur and
undertake the initiation and development of a business”(Stevenson, 1989); and
(iii) “the practical application of enterprising qualities, such as initiative, innovation, creativity, and risk-taking in the work environment (either in self-employment
or employment in small start-up firms), using the appropriate skills necessary for
success in that environment and culture” (Schnurr & Newing, 1997).
Most existing scholarship on the process of entrepreneurship has focused
on adults who have become successful entrepreneurs. One such line of
research attempts to identify personal qualities that contribute to success.
This line of work began with McClelland’s research program on relations
between “need achievement” and entrepreneurship (McClelland, 1965).
McClelland reported positive but low correlations between achievement
motivation and entrepreneurship––a finding only replicated in some, but not
all, further research (much of which failed to find any association at all) (Frey,
1984). More recent studies have examined personal characteristics such as
risk-taking, self-efficacy, innovativeness, autonomy, and “Big Five” traits of

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

extraversion, conscientiousness, openness to experience, neuroticism, and
agreeableness (Gartner, 1989; Zhao & Seibert, 2006). Although some such
qualities have been shown to be weakly associated with entrepreneurship,
scholars have concluded that personality trait theory has not accounted
for much of the variance in entrepreneurial achievements, mainly because
entrepreneurs are a heterogeneous group with respect to personality type
(Lerner & Damon, 2012).
In contrast to personality theory, other psychological research in
entrepreneurship has focused on how beliefs, attitudes, stereotypes,
biases, and attributions influence entrepreneurial behavior (Shaver, 2007).
Some of this research focuses on factors that are primarily cognitive in
nature, such as what are known in the entrepreneurship literature as
“KSAs”––knowledge, skills, and abilities (Baron, 2004). One prominent
recent study of 5000 business innovators identified five “mental habits” of
successful entrepreneurs––questioning, experimenting, observing, associating (that is, making connections among disparate ideas), and networking.
They reported strong levels of association between these habits and success
(Dyer, Gregersen, & Christensen, 2011).
THE EMERGING STUDY OF YOUTH ENTREPRENEURSHIP
As recently as 2002, one leading entrepreneurship investigator wrote: “there
has been no systematic attempt to look at entrepreneurship from a youth
angle” (Chigunta, 2002). This situation is now improving, with a small but
growing number of researchers becoming interested in the development
of entrepreneurial interests and skills in youth (e.g., Hisrich et al., 2007;
Lerner & Damon, 2012; Obschonka, Silbereisen, & Schmitt-Rodermund,
2011; Schmitt-Rodermund, 2004, 2007; Schoon & Duckworth, 2012; Williams,
2004; Zhang & Arvey, 2009).
Schmitt-Rodermund and her colleagues studied students and small business founders in East Germany during the decade following the reunification of Germany (Obschonka et al., 2011; Schmitt-Rodermund, 2004, 2007).
Despite the uniqueness of these samples, the studies yielded some informative results concerning developmental pathways to entrepreneurship. In
her study of 10th grade East German students, Schmitt-Rodermund found
that authoritative parenting was associated with entrepreneurial interests
and skills (Schmitt-Rodermund, 2004). Parental modeling also played a role:
the students who had observed parents engaging in entrepreneurial activity were the ones more likely to show entrepreneurial competence. Students
then engaged in entrepreneurial activities planned to pursue entrepreneurial
careers by age 40, whereas those who not involved in entrepreneurial activities in adolescence planned to pursue conventional labor-force careers in

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5

government, in the independent nonprofit sector, or in companies run by
others. This finding clearly demonstrates the importance of an early start.
Additional evidence that parents may play a role in entrepreneurial development comes from a large British longitudinal study, which found that having
a self-employed parent was a significant predictor of future entrepreneurship
for men (Schoon & Duckworth, 2012).
Schmitt-Rodermund and her colleagues also reanalyzed data from the Terman study of gifted children (Schmitt-Rodermund, 2007). Examining a large
group of boys (N = 718) within the dataset, they found that boys who had
demonstrated interests linked to entrepreneurship when they were 12 or 13
were the ones mostly likely to become entrepreneurs later in life. In addition,
boys who were raised by authoritative parents were especially likely to be
engaged in entrepreneurial activities during their adult years.
Beyond the studies by Schmitt-Rodermund and colleagues, there have
been only a small number of youth entrepreneurship studies that use
time-ordered, multi-occasion data; and these other studies had methodological limitations and indeterminate results. For example, reanalyzing
data from the National Longitudinal Study of Youth (NLSY), Schiller and
Crewson (1997) examined the self-employment patterns of youth in relation
to later-life success in business and found no way of predicting which young
people would succeed as adult entrepreneurs. Indeed, when young, the
participants showed high levels of self-employment, but entrepreneurship
activity in adolescence was linked to low success rates in adulthood. Another
study using the NLSY data found positive and negative associations (both
low) between youth self-employment and adult entrepreneurship (Williams,
2004). These NLSY-based studies used only two measurement times, and the
investigators made no attempt to explore intra-individual change in any of
the variables assessed in relation to self-employment. Accordingly, the longitudinal features of the NLSY dataset were not exploited for developmental
aims in either study.
Other studies of youth entrepreneurship have focused on attitudes rather
than activities. Such studies indicate a general youth population that is
sharply divided in its orientation toward entrepreneurial pursuits. For
example, a national survey of youth attitudes in Australia found that most
young people do not see themselves as possessing the personal attributes
necessary for entrepreneurship; accordingly, only 10% were engaging in
entrepreneurial activities (Sergeant & Crawford, 2001). In a study of the
long-term goals among American youth, Damon found that only a small
minority were motivated by ambitions such as starting a business (Damon,
2008). Among this minority were a few youngsters who had accomplished
extraordinary entrepreneurial achievements during their teenage years.
Some had acquired, by as young as 11 or 12 years of age, “entrepreneurial

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

capacities such as resourcefulness, persistence, know-how, and a tolerance
of risk and temporary set-backs” (Damon, 2008, p. 114).
Emerging research suggests that having a clear purpose in life may be a
predictor of entrepreneurship. An emerging trend with regard to the study
of entrepreneurship is a focus on the role of purpose in entrepreneurial pursuits. Some young people have purposeful aims that require them to launch
businesses or found organizations. For example, the Stanford Youth Purpose project profiled a young man committed to enhancing Internet security (Bronk, 2008). He proposed novel solutions to emerging technological
problems, and to enact his solutions and get them to the marketplace, he
decided to launch his own (ultimately highly successful) Internet security
firm. Similarly, a young man concerned with the lack of progress in providing clean drinking water to people in third world countries founded a
nonprofit organization to fund critical water projects around the world. In
each of these cases, entrepreneurial purposes were evident. But, early results
from the Young Entrepreneurs Study suggest that while some young people find purpose in their entrepreneurial aims, others do not. Some wish to
become entrepreneurs, not because it represents a particularly meaningful
path, but instead because it seems likely to yield an exciting, lucrative, and
independent lifestyle (Bronk, Weiner, Hunt, & Geldhof, 2013).
The presence or lack of entrepreneurial purposes points to the different
motivational patterns of aspiring entrepreneurs. A related split exists
between social entrepreneurship, which is attracting increased interest
among the young, and business entrepreneurship. On the surface, the
distinction between the two is clear: social entrepreneurship is motivated by
aims of social improvement, whereas business entrepreneurship is motivated
by a desire for monetary gains. According to Bill Drayton (2007), a leading
social entrepreneur, this approach seeks to generate “social value” rather
than profits. However, in practice, the differences between these two groups
are often blurred. Many successful businesses address social needs. At the
same time, social–entrepreneurial ventures (such as Bridgespan, a consulting
firm for nonprofit organizations) can be highly profitable. Both business
and social entrepreneurs can spur change; both regularly access funding
streams; and both rely on innovation. The distinction between the two
may have more to do with the industries in which they function. According to Bornstein (2007), for example, business entrepreneurs transform
industries such as transportation, finance, and communication, whereas
social entrepreneurs typically transform industries such as health care,
environmental protection, and education. Still, business entrepreneurs such
as Apple have transformed education, whereas some social–entrepreneurial
ventures, such as automobiles that feature energy-saving technology,

Youth Entrepreneurship

7

are transforming transportation––so, once again, the distinction appears
fuzzy.
Preliminary data from the Young Entrepreneurs Study (YES) suggest that
at least some social entrepreneurs differ in important ways from business
entrepreneurs. A small cluster of social entrepreneurs reported that they
were strongly committed to working toward social aims, and they remained
open to the possibility of launching their own companies or organizations if
this turned out to be the most effective way of achieving their aims. However,
this cluster of youth was not particularly interested in entrepreneurship for
the sake of entrepreneurship. In fact, several young adults in this cluster
expressed concern with the ethics behind some entrepreneurial pursuits,
especially entrepreneurial pursuits that lacked a clear social focus. Further
studies are needed to better identify how social and business entrepreneurs
differ in their aims as well as in their development.
RECOMMENDATIONS FOR FUTURE RESEARCH
In an influential review of literature on the psychology of entrepreneurship
in general, Hisrich and colleagues offered a number of recommendations
regarding the necessary research agenda for future scholarship (Hisrich
et al., 2007). In theirstudy, Hisrich and colleagues point to the importance
of assessing the personality characteristics of entrepreneurs; improving
the design and measurement of personality characteristics by matching
predictor and criterion variables, enhancing construct operationalization,
using reliable and valid measures, and differentiating between mediating
and moderating variables; assessing psychopathological issues pertinent
to entrepreneurship; studying the cognition of entrepreneurs; assessing
entrepreneurship as a global phenomenon; appraising the links between
culture and entrepreneurship, including the influence of religion on this
relation; and attending to the link between policy and entrepreneurship.
We concur with these recommendations, but note that they do not pay sufficient attention to developmental questions, such as how entrepreneurial
capacities are learned in youth and what kinds of experiences serve as the
developmental antecedents of successful entrepreneurship.
For an understanding of how entrepreneurship develops over the life
span, and especially during youth, longitudinal research will be essential. It
is especially important to examine the crucial transitions that occur from one
life period to the next (Baron, 2004). In particular, the transition from late
adolescence to adulthood is formative with respect to every aspect of career
choice, and as such it must be of central concern to anyone who wishes
to understand how entrepreneurial capacities and interests are acquired.
Other than the Schmitt-Rodermund (e.g., 2004, 2007; Obschonka et al., 2011)

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

research program, there has not been any attempt to study entrepreneurship
development in the context of this, or any other, key transition; nor has there
been a recognition that it is necessary to study entrepreneurship through
the lens of known features of life span development such as the evolving
interactions between people and their contexts (Damon & Lerner, 2006;
Lerner & Damon, 2012).
Another essential topic for future research will be the study of how institutional policies affect young people’s pathways to entrepreneurship. This is
a particularly timely topic, as many governments recently have developed
programs to promote youth entrepreneurship. For example, in Spring of
2011, the Obama Administration hosted the Youth Entrepreneurs Summit to
(i) hear from young entrepreneurs about how the Administration could support their entrepreneurial activities, and (ii) tell youth how to take advantage
of government programs designed to support them (Modi, 2011). Similarly,
the Canadian government implemented a program that gave young adults
access to capital, business advice, and entrepreneurial training (Gardner,
2004), and there are numerous European and African initiatives as well (Halabisky, 2012). Although some evaluations of these government programs are
promising (Gardner, 2004), many young entrepreneur programs have not
been rigorously tested. There is an urgent need to strengthen the evidence
base of these programs and to understand their effectiveness in supporting
young entrepreneurs. To what extent do young people know about these
initiatives, and how often do they take advantage of them? Which programs
are effective and what are the mechanisms that make them effective? What
is the long-term effect of such programs on labor markets and individuals?
Another topic is the role of schooling in general, apart from programs specially dedicated to entrepreneurial education. Does formal education help or
hinder entrepreneurship? One pole in this debate sees formal education as a
waste of time for aspiring entrepreneurs, arguing that students are better off
investing time and money in their own businesses rather than educational
credentials. Peter Thiel has suggested that too much formal education
even impedes entrepreneurship (NRO, 2011). Although the cases of a few
prominent entrepreneurs (e.g., Bill Gates, Mark Zuckerberg) demonstrate
that it is possible to succeed in business without a college degree, the effect
of dropping out of college on young entrepreneurs in general has never been
studied.
An alternative perspective has claimed that an undergraduate liberal arts
education, when integrated with business instruction, is highly valuable for
young entrepreneurs (Colby, Ehrlich, Sullivan, & Dolle, 2011). Drawing on
research in psychology, business, and education, Colby and colleagues (2011)
have described how undergraduate liberal arts training can teach students
to think entrepreneurially. Gaining a richer contextual understanding of the

Youth Entrepreneurship

9

world by studying art, sociopolitical phenomena, and science can increase
many entrepreneurially relevant skills, including creativity, analytical ability, pattern recognition, innovation, and problem framing. Understanding
how formal education shapes young entrepreneurs, their entrepreneurial
pursuits, and the entrepreneurial market more broadly is an important area
for future research.
CONCLUSION
Given the vital economic role of entrepreneurship, it is promising to see
that researchers are increasingly interested in understanding the pathways to such careers. Developmental and longitudinal studies of youth
entrepreneurship, explorations of entrepreneurial purpose, and research
focused on gaining a deeper understanding of the differences between social
and business entrepreneurship represent promising and important lines of
inquiry. While we still believe that more longitudinal research is needed, we
are heartened to see that a small but growing number of researchers are examining the antecedents to entrepreneurship along with the role of education
and institutional support in fostering entrepreneurial intentions. Continuing
to grow these promising areas of research will arm educators and business
leaders with information about how to effectively prepare diverse groups
of young people for entrepreneurship, allowing us to encourage increasing
numbers of young people to consider this economically critical career path.

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WILLIAM DAMON SHORT BIOGRAPHY
William Damon is Professor of Education at Stanford University and Director of the Stanford Center on Adolescence. Damon has written widely on
ethical and moral commitment at all ages of human life. Damon’s books
include Some Do Care: Contemporary Lives of Moral Commitment (1992) (with
Anne Colby); Greater Expectations (1995); The Youth Charter (1997); Good Work:
When Excellence and Ethics Meet (2001) (with Howard Gardner and Mihaly
Csikszentmihalyi); The Moral Advantage: How to Succeed in Business by Doing
the Right Thing (2004); Taking Philanthropy Seriously: Beyond Noble Intentions to
Responsible Giving (2006); The Path to Purpose (2008); and Failing Liberty 101
(2011).
At the present time, Damon is working on projects aimed at promoting purpose, good work, and a dedication to citizenship. Damon has
received awards and grants from the John D. and Catherine T. MacArthur
Foundation, the Pew Charitable Trusts, The Spencer Foundation, the
Carnegie Corporation of New York, the William and Flora Hewlett Foundation, the Thrive Foundation for Youth, the Atlantic Philanthropies, the John

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

Templeton Foundation, and the S.D. Bechtel Foundation. He is a fellow of the
American Educational Research Association and an elected member of the
National Academy of Education. Damon’s Web site is williamdamon.com.
KENDALL COTTON BRONK SHORT BIOGRAPHY
Kendall Cotton Bronk is an Associate Professor of developmental psychology in the Division of Behavioral and Social Sciences at Claremont Graduate
University. She conducts research on positive youth development and the
moral growth of young people. For the past 10 years, she has been investigating these topics through the lens of young people’s purposes in life.
Her research has explored the relationship between purpose and healthy
growth, the ways young people discover purpose, and the developmental
trajectory of youth with strong commitments to various purposes. In 2013,
she published a book on the topic called Purpose in Life: A Critical Component of Optimal Youth Development (Springer). Bronk is currently engaged in a
study examining the role of purpose in prospection.
A surprising finding has emerged from her research on purpose; many
of the young people with particularly strong commitments to personally
meaningful aims ultimately start their own businesses or nonprofit organizations to address social problems. Consequently, Bronk’s research has more
recently focused on the development of effective young business and social
entrepreneurs.
TENELLE PORTER SHORT BIOGRAPHY
Tenelle Porter is a doctoral candidate in Developmental and Psychological
Sciences at Stanford University. Her research focuses on ways to promote
positive development among adolescents and young adults. Specific research
interests include youth civic engagement, youth entrepreneurship, purpose,
growth mindset, and intellectual humility. Before Stanford, Tenelle worked
on a cross-national study of youth character development at Oxford’s Centre
for Cognition and Culture. Tenelle has a BA from the University of Kansas
and an MSc in Evidence-Based Social Intervention from the University of
Oxford.
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