Childhood Adversity Theory of Entrepreneurship
Another biological theory is the childhood adversity theory. While researchers have looked at resilience in adults, few have examined the how childhood adversity may affect entrepreneurial intentions.
Using a variant of the underdog theory, which looks at how negative experience shape an individual's resilience. Recent research has looked at samples of entrepreneurs from the Great Chinese Famine of 1959–1961 and war-torn Vietnam. Both studies find that individuals who endured childhood adversity are more likely to become entrepreneurs.
Both paper use the ‘underdog’ theory of entrepreneurship proposed by Miller and Le Breton-Miller (2017). The gist of the underdog theory is that "negative personal circumstances of an economic, sociocultural, cognitive, and physical/emotional nature may have a … powerful role to play in getting people to become effective entrepreneurs" (p. 3). The theory suggest that life challenges require the development of coping and adaptive skills that make individuals more likely to become entrepreneurs.
Churchill et al. find that "a 10% increase in bombing intensity generates a 4.8 percentage point increase in the probability of being self-employed". Similarly, Cheng et al. find that "those who survived greater hardship during the Famine are more likely to become entrepreneurs".
This theory could be criticized on the grounds that most traumatic childhood experiences are likely to have lifelong negative effects that counter-balance any benefit of being "an entrepreneur". Moreover, the empirical studies cited here do not distinguish between necessity and opportunity entrepreneurship, making it difficult to know if the type of entrepreneurship that hardship brings about is good for society or the economy, or not.
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