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High school friends shape who becomes an entrepreneur, study finds
A teenage friend who builds a company may predict your own entrepreneurship decades later, new research finds. Formal ventures matter more than freelance work.
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A teenage friend who later builds a company may do more than stay in touch. New research suggests that friendship itself could predict who becomes an entrepreneur decades later.
The study, led by researcher Seok-Woo Kwon and colleagues, tracked two American cohorts born roughly four decades apart. One was a nationally representative group surveyed in the mid-1990s and followed into participants' late 30s. The other was a Wisconsin cohort followed from 1957 through age 65.
Across both groups, people whose teenage friends later built formal, incorporated companies – registered businesses with a legal identity separate from their owners – were more likely to become entrepreneurs themselves. The relationship held for both incorporated and unincorporated self-employment.
Not every entrepreneurial friend counted. Adolescent friends who worked for themselves informally, as solo contractors or freelancers, predicted nothing at all. Not even entry into the same kind of informal work they were doing.
That distinction matters, because formal and informal self-employment are essentially different populations running different kinds of ventures with different ambitions and earnings. Prior research by the same authors found that formal, growth-oriented entrepreneurship tends to produce greater economic returns.
The relationship extended beyond whether someone started a business at all. People whose teenage friends later built incorporated companies earned more from their own ventures in midlife than people whose teenage friends did not, even after accounting for whether they themselves had incorporated their businesses. The difference persisted among people running the same type of business. Two people with similar ventures could have different earnings depending on what their teenage friends had gone on to build.
How can a friendship formed at 16 still matter at 40? Several possible explanations exist.
One is that adolescence establishes a social channel through which entrepreneurial examples can continue to travel. When a former classmate registers a company, hires staff or raises capital, that achievement may reach old friends through a reunion, a mutual acquaintance or a social media post. Research suggests people are more responsive to information from those with whom they have meaningful social connections than to information from strangers.