Childhood Roots of Entrepreneurship: Parental Divorce, Entrepreneurial Entry and Performance

We examine the roots of entrepreneurship in childhood by studying how parental divorce affects entrepreneurial entry and performance in adulthood. Drawing on life course theory, we theorize that parental divorce impairs children’s socialization and accumulation of human capital in consequence to deprived family resources, which affects children’s likelihood to become entrepreneurs and their performance in entrepreneurship. Based on data from the United States from the 1979-2016 waves of the National Longitudinal Survey of Youth (NLSY79) and applying a quasi-experimental design, we find that parental divorce in childhood increases the odds of entrepreneurial entry while at the same time negatively affecting entrepreneurial performance in adulthood. We also find that the impact of parental divorce on entrepreneurial entry and performance strengthens with increasing family socio-economic status, suggesting that entering entrepreneurship can constitute a path of downward social mobility for individuals from high socio-economic status families who experienced parental divorce in their childhood.