NEW YORK (MainStreet) — At first glance, it seems like Ross Levine and Yona Rubinstein don’t like entrepreneurs very much.
It part that’s because they say successful business owners have something in common: They were more likely than corporate executives to get in trouble as teenagers.
Levine is a professor at the University of California’s Hass School of Business and Rubinstein is a professor at the London School of Economics. In a study, Does Entrepreneurship Pay?, they note previous research telling us entrepreneurs don’t earn any more money that their peers in the salaried sector, and that some business owners, especially retail business owners, turn to entrepreneurship only because they couldn’t cut it in the corporate world:
“Not only are the median earnings of the self-employed comparatively low, they have similar traits to those of salaried workers. ... they have similar education, score similarly on learning aptitude tests and self-esteem evaluations as teenagers, and have parents with similar education and income. If the self-employed are a good proxy for “growth-creating innovators,” it is puzzling both that their cognitive abilities and non-cognitive traits are similar to those of their salaried counterparts and that they earn less.”
But when you do some splicing and dicing, as Levine and Rubinstein do, in turns out entrepreneurs really do earn more than that their salaried counterparts. In fact, as much as 50% more.
The trick is in separating unincorporated business owners from incorporated business owners.
“Many previous studies broadly define entrepreneurship, including people who are self-employed such as an accountant or a plumber. In this study, an entrepreneur is defined as a person who undertakes a novel, risk-taking activity,” says Levine, who uses as examples New York City Mayor Michael Bloomberg, who built a business data and news empire, and Microsoft founder Bill Gates.
Business legends such as Bloomberg and Gates were more likely to possess traits, even as teenagers, that separated them from the pack, he says.