When corporate boards pick out new CEOs, they scrutinize candidates’ qualifications, studying their performance in previous jobs and vetting their academic credentials. But a recent study suggests they might want to look even further back in the histories of corporate hopefuls: CEOs’ experiences in childhood seem to shape what kind of leaders they grow up to be.
The study—co-authored by the University of Chicago’s Todd Henderson and Florida State University’s Irena Hutton—looked at more than 650 CEOs’ birth order, family size, and history of childhood trauma, as well as their parents’ occupations and socioeconomic standing. This information covered a range of CEOs who held their positions in the ’90s, ’00s, and ’10s, and was assembled from a smattering of sources, including newspapers, biographies, trade publications, and alumni magazines.
Not every element of family history seemed to be linked to CEOs’ later-in-life job performance, but many were relevant. “If I were a board member and I was in an interview with a [potential] CEO, I would ask them, ‘Tell me about your family history,’” Henderson told me. (The study has been submitted to an academic journal but has not yet been peer-reviewed.)
One pattern that emerged from Henderson and Hutton’s data was that firstborn and only children seemed to have better odds of becoming CEOs than latter-borns did: Nearly half of the CEOs they studied were the oldest sibling or an only child, which is, the researchers note, higher than this group’s share of the population born between 1920 and 1959, when most of these CEOs entered the world. (The CEOs were also overwhelmingly male and white.)
Other research has also found firstborns to have a professional edge: They’re more likely to hold managerial positions, and they tend to make more money. There’s some evidence that this has to do with household dynamics. “Firstborns are more likely to have college degrees, and even before that get lots of mom-and-dad time early on, which might make them more successful later,” Henderson said. “That explains why more firstborns are CEOs—they get a bigger investment in their human capital.”
Once hired, CEOs—firstborns or not—tend to run companies in ways consistent with their upbringing. Children with higher socioeconomic backgrounds have been shown to be more risk-averse, and indeed, Henderson and Hutton find that CEOs who grew up well-off seem to be more cautious executives, investing less money in higher-payoff corporate initiatives and spending less on research and development. Meanwhile, CEOs from less affluent backgrounds were more willing to take risks with company spending.
Researchers aren’t certain why this dynamic exists, but they have some guesses. “CEOs who grew up with successful parents may feel that they have access to winning formulas; therefore they may feel less need to alter their blueprint for success,” Sharna Olfman, a developmental psychologist at Point Park University, wrote to me in an email. “CEOs who are the first in their family to achieve significant economic success are by definition charting their own paths and do not have a surefire path to follow, freeing them up to be more original and creative in their approach.”
Henderson, who specializes in corporate and securities regulation, noted that from the perspective of maximizing a company’s value, making bigger gambles leads to higher payouts. “If what you’re interested in is stock returns, you want to take risks,” he said.
Socioeconomic background was the strongest determinant of executives’ risk-aversion that the researchers found, but it wasn’t the only one. “Trauma” is a catchall category the study used to refer to adverse events in CEOs’ childhoods, from the genuinely traumatic (having a serious illness or abusive parents) to the merely difficult and disorienting (moving to a new city). The former types of experiences were linked to more conservative corporate leadership, while the latter seemed to induce an amount of risk-taking that was good for the bottom line.
Previous social-science research has suggested that being a firstborn might also give one less of an appetite for risk. But Henderson and Hutton found that this largely does not extend to corner offices—except when CEOs were selected to run their own family’s business. In these cases, the researchers write, “firstborns, relative to the laterborns, prefer more cautious policies that lower firm value.”
Henderson thinks that corporations owned by a particular family might pick the oldest child to run things because firstborns’ personalities tend to resemble those of their parents more closely. “The parents are more likely to choose the person that’s like them—the firstborn—to run the firm, and that firstborn person may not be the best choice,” Henderson said. “Businesses like IBM, they’re not subject to this kind of family dynamic. They just choose the best person for the job”—and therefore they may be less likely to install overly cautious firstborns as leaders.
Why the obsession with uncovering any variable that might affect corporate executives’ job performance? Perhaps overeager parents will sift through the results of studies like this in search of things they can do to prepare their children for success in the business world. But the most attentive audience of research like this is the people tasked with hiring CEOs.
Other researchers in the past have examined how CEOs’ behavior is tied to their personalities, their experience with industry turmoil early in their careers, and even the terms of their mortgages, so family history is just another cache of potentially useful information. Everyone’s upbringing probably seeps into their working life in one way or another—it’s just the case that with CEOs, companies care a whole lot more about the consequences of that seeping.