Influence of genetic factors and institutional environment on entrepreneurial activity: evidence from a twin study in Italy

Abstract

Abstract Genetic factors influence entrepreneurial activity, but we know little about how genetic factors influence entrepreneurial activity when the institutional environment is favorable. Two theories from behavioral genetics explain the gene–environment interaction. One theory argues that a favorable environment favors the development of genetic factors and their influence. An alternative theory posits that unfavorable environment triggers the development of genetic factors and their influence. I test these two competing theories with a twin study based in Italy. I compare the influence of genetic factors in provinces where the institutional environment favors entrepreneurial activity with provinces where the institutional environment is unfavorable to entrepreneurial activity. I found consistent evidence that genetic factors exert a larger influence in favorable institutional environments, suggesting that favorable institutional environments complement genetic factors.