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Study: CEOs who are younger siblings take more business risks

(University of Georgia illustration)

(University of Georgia illustration)

Chief executives who grew up as younger siblings take more risks than firstborn executives, according to research from the University of Georgia.

“CEOs with older siblings tend to take more risks as CEOs because they’re used to doing that to get the things they want,” said research co-author Scott Graffin of the university’s Terry College of Business, in a statement announcing the publication of the research. “They have to compete with siblings just to get their parents to spend time with them and to spend money on them.

For their study, the researchers analyzed data, including birth order, gender and age of each sibling and the size of the family, from 71 CEOs of 67 family-controlled, South Korean business groups, including Samsung, LG Corp. and Hyundai, from 1999 to 2015.

They measured risk-taking as a composite of how much firms spend on mergers and acquisitions, research and development, and capital expenditures.

The later in birth order someone is born, the higher the associated level of risk-taking, the researchers found. They found 19% more risk for the second-oldest and up to 38 percent more risk for the third-oldest. Risk-taking also increased as the age gap between a CEO and the closest-born sibling narrowed, because siblings who are closer in age tend to have more intense rivalries, Graffin said. If a CEO’s sibling is also a CEO, the effect is even stronger, the researchers found.

Older siblings tend to be the first recipients of attention from parents and have an advantage because they are bigger and more physically developed, Graffin said. Sibling rivalry instilled in many younger children that they must take risks to get the same things that may come more easily to older children. Other research has shown younger siblings are more likely to participate in high-contact sports, pursue risky behaviors such as stealing, and make risky investment decisions, according to the researchers.

“Born to Take Risk? The Effect of CEO Birth Order on Strategic Risk Taking” by Graffin, Seung-Hwan Jeong and Robert J. Campbell was published in the Academy of Management Journal.

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