Are entrepreneurs wired differently than managers? Are they better equipped to make decisions about risk and innovation?
I recently participated in an interdisciplinary collaboration between neuroscientists and management faculty in which we tackled these questions and found that entrepreneurs actually do use their brains in a different and more complete way when it comes to certain types of decisions. This was the first attempt to apply techniques from neuroscience to understand the differences in the ways actual managers and entrepreneurs use their brains to make decisions.
In our study, we used an fMRI to map brain activity in 25 entrepreneurs and managers while they performed simple tasks that replicated what we call exploitation and exploration type of innovation decisions. Exploitation tasks are ones associated with finding new ways to optimize the performance of current tasks based on refinements of existing practices. Explorative tasks are ones involving disengagement from the current task to search for alternative courses of action and new things to do to achieve overarching goals, rather than doing current things better. In those processes, individuals need to forgo immediate gratification and engage in experimentation with untried approaches.
We found that when entrepreneurs performed explorative tasks, they used both the left and right sides of the frontal parts of their brains, the entire so-called pre-frontal cortex. In comparison, managers tended to use primarily the left sides of the frontal part of their brains. This is an important difference, as the right side of the pre-frontal cortex is associated with creative functions involving high-level thinking (like poetry, arts, etc.), whereas the left side is associated with rational decision-making and logical thinking. So, in a way, we found that entrepreneurs seem to be capable of using the entirety of their high-level thinking capacities (“executive functions”), while managers were more narrowly focused on rational and logical reasoning.
This doesn’t mean entrepreneurs are smarter or even that they explore more than managers. But when they do explore, they use their brains in a more complete way.
This might explain the capacity of entrepreneurs to take more risks given their ability to reason with both the rational and emotional/creative parts of their brains. However, it also raises the interesting question of nature versus nurture. Do entrepreneurs’ brains work differently as a result of their work experiences, which might have conditioned their brains in a certain way? Or were they born this way and consequently self-select to undertake entrepreneurial careers?
Our study was not designed to answer that question, but we do know that brains can be incredibly plastic and so both explanations might be equally valid. The ability of the brain to adapt itself in quite profound ways as it learns new skills based on prior experience, connected with emotion and strong will, could explain why some individuals’ brains act differently from others when undertaking the same type of tasks.
A sub-result of our study actually provides support for this hypothesis. We found that a sub-group of managers, whose jobs involved more innovative tasks within their firms, performed on average in the middle between managers and entrepreneurs during explorative tasks. There may be a continuum in the way that businesspeople engage with exploration/exploitation decision-making where the more they are involved in entrepreneurial tasks, the more they develop certain patterns in their brains.
Regardless of whether the cause turns out to be nature or nurture, our findings may help explain why certain people become entrepreneurs, and why some people are more successful at entrepreneurial activities than others. Startups may fail or succeed for a variety of reasons, but one of them may be the natural endowment, or the development through experience and learning of the neurocognitive capacities required to generate the appropriate decisions and related behavior.
Prof. Maurizio Zollo is visiting MIT Sloan from Bocconi University in Milan, Italy. He collaborated with neuroscientists at Vita-Salute San Raffaele University (Stefano Cappa and Nicola Canessa) and management faculty from ETH Zurich (Daniella Laureiro-Martinez and Stefano Brusoni), coauthoring papers on the topic, including “An Ambidextrous Mind: An fMRI Study of Attentional Control, Exploration-Exploitation Decisions and Performance.”