Entrepreneurship blood runs in the family

According to a UK survery, last-born children have the greatest entrepreneurial streak with the youngest children of parents who were not themselves self-employed almost 50 per cent more likely to become entrepreneurs.

Aly Rahimtoola, the managing director of Harmony Cosmetics, does not agree with the research on birth order and its influence on entrepreneurial tendencies. Alex Atack for The National

According to research, last-born children have the greatest entrepreneurial streak.

Researchers from the UK universities of Birmingham and Reading carried out a long-term survey of 17,000 children born in 1970, checking in with them again almost four decades later as they turned 38.

They found that the youngest children of parents who were not themselves self-employed were almost 50 per cent more likely to become entrepreneurs.

But when a family already had a business, things changed dramatically, the research showed. Last-borns were no more likely to be self-employed than their siblings.

They were, in fact, 18 per cent less likely to follow their parents into business – instead it was the first and middle children who had the highest propensity, at 151 per cent and 118 per cent respectively.

Overall, the study, published in Science Direct in July, found that younger siblings were more “exploratory, unconventional and tolerant of risk”.

Is the theory borne out in the UAE? Aly Rahimtoola, 45, is the managing director of Harmony Cosmetics, the company behind the home-grown Herbal Essentials range of natural beauty products.

He is the youngest of three children: his sister, who is six years older, works in Washington DC for the World Bank; his brother is 50 and runs the family business.

Mr Rahimtoola grew up in London and moved to the UAE 20 years ago to work in the family shipping business, founding his own company a decade later.

“I don’t agree with the research on birth order,” he says.

“I don’t think it’s correct to say someone is a born entrepreneur and I don’t think there is a specific age or moment where one becomes an entrepreneur.”

Instead Mr Rahimtoola says that being innovative and creative is what really drives entrepreneurship and he believes everyone has that within themselves. “It’s a mindset,” he says. “It is having a belief that what you want or what you dream can come true – and that has nothing to do with birth order.”

The entrepreneur comes from a business family – his father, he says, created and built a successful shipping business from hard work, something which made going into business himself a natural path to follow.

“In our case, I think it’s fair to say that we are all successful in what we do. My sister is the clever one in the family. My elder brother is my business partner; he is a very good trader with the rare ability to trade in difficult market conditions.”

However, Professor Francis Greene of the University of Birmingham says researchers have known for a long time that entrepreneurship runs in families.

“The most surprising finding in this study was, if your parents had no entrepreneurial experience and you were a last-born, you were more likely to be self-employed than your siblings. This suggests that last-borns are more likely to be risk-takers.”

It all seems to be a case of the youngest being born to rebel. "Children naturally wish to make their own way in life," says Alex Davda, business psychologist and The National's Workplace Doctor.

“The youngest child may have learnt to view risk in a different way, as they have seen their parents and siblings get stuck in the grind of 9-to-5 routines. They may be more open to alternatives and the opportunities that being self-employed allow for.

“Equally, the fact this same birth-order effect changes dramatically when families are already entrepreneurial could be due to children wanting to step outside of the ‘norm’ of going into entrepreneurship, away from the family business, and instead follow another profession or corporate career.”

Family-owned firms represent 90 per cent of the business community in UAE and contribute 75 to 90 per cent of the country’s US$500 billion trading activity, the Ras Al Khaimah Chamber of Commerce calculated last year.

And about 70 per cent of the GCC’s 20,000 family businesses are still thought to be managed by their founding fathers.

This new research should provide food for thought for them as they look ahead to their succession planning, says Dr Liang Han of the University of Reading. “One implication of our findings is that family business owners need to think hard about how they use birth order to make decisions about family successions,” he says.

“First- and middle-borns may be more comfortable with taking on a family business because it is more familiar but it might be that the last-born child has traits better suited to being in a business.”

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