Gender Differences in Entrepreneurial Propensity*
| Author | Maria Minniti,Christian Schade,Philipp Koellinger |
| DOI | http://doi.org/10.1111/j.1468-0084.2011.00689.x |
| Published date | 01 April 2013 |
| Date | 01 April 2013 |
213
©Blackwell Publishing Ltd and the Department of Economics, University of Oxford 2011. Published by Blackwell Publishing Ltd,
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OXFORD BULLETIN OF ECONOMICS AND STATISTICS, 75, 2 (2013) 0305-9049
doi: 10.1111/j.1468-0084.2011.00689.x
Gender Differences in Entrepreneurial PropensityÅ
Philipp Koellinger†, Maria Minniti‡ and Christian Schade§
†Department of Applied Economics, Erasmus University Rotterdam,
P.O. Box 1738, 3000 DR Rotterdam, The Netherlands (e-mail: koellinger@ese.eur.nl)
‡Department of Strategy and Entrepreneurship, Southern Methodist University,
P.O. Box 750333, Dallas, TX, 75275 USA (e-mail: mminniti@cox.smu.edu)
§Institute for Entrepreneurship and Innovation Management, School of
Business and Economics, Humboldt-Universität zu Berlin, Unter den
Linden 6, 10099 Berlin, Germany (e-mail: cds@wiwi.hu-berlin.de)
Abstract
Using data from representative population surveys in 17 countries, we find that the lower
rate of female business ownership is primarily due to women’s lower propensity to start
businesses rather than to differences in survival rates across genders. We show that women
are less confident in their entrepreneurial skills, have different social networks and exhibit
higher fear of failure than men. After controlling for endogeneity, we find that these vari-
ables explain a substantial part of the gender gap in entrepreneurial activity. Although, of
course, their relative importance varies significantly across countries, these factors appear
to have a universal effect.
I. Introduction
The number of self-employed women in the US has increased significantly (Devine, 1994a,
1994b; Fairlie, 2004). Similar trends are shown in many other developed and developing
countries (Brush, 2006), although female self-employment rates vary considerably across
them (Cowling, 2000). Yet, across countries, women own significantly fewer businesses
than men (Blanchflower, 2004; Minniti and Nardone, 2007). Interestingly, evidence shows
that, after correcting for various factors such as size and sectoral distribution, women’s
failure rates are not significantly different from those of men (Perry, 2002; Kepler and
Shane, 2007). Thus, at least a portion of the difference between genders must be due to the
fact that fewer women than men start businesses.
Ample data exist about self-employed individuals (e.g. see Blanchflower, 2004). Such
data allow the analysis of people’s actual employment situations. They do not allow, how-
ever, the important distinction between entry decisions and survival, and do not yield
accurate explanations of possible differences in startup propensity. Thus, previous studies
ÅWe thank the editor and an anonymous reviewer for helpful comments and suggestions.All errors are ours.
JEL Classification numbers: L26, J24, J16.
214 Bulletin
on gender differences in entrepreneurial propensity failed to consider the proper popu-
lation of individuals involved in the actual process of starting a business. Using a large
cross-country data set particularly well-suited to study startup propensity, we fill this gap
in the literature.
Our study substantiates the role of perceptions in explaining the gender gap using an
econometric approach that controls simultaneously for unobserved heterogeneity and for
the endogeneity of perceptions in the decision to start a business. Although we recognize
the existence and importance of country specific differences influencing the size and causes
of the observed gender gap, we show that the lack of confidence among women in their
own entrepreneurial skills is a major reason for the gender gap in all countries in our sam-
ple. We see three possible explanations for this finding. Either, men and women perceive
their own skills differently, or they perceive entrepreneurial opportunities differently. Or,
they have objectively different skills and circumstances. Our results suggest that all three
explanations might be correct to some extent. In addition, we find some evidence that men
and women have different social networks and different attitudes towards failure, factors
that also explain a substantial part of the gender gap in business start-ups.
II. Theoretical background and related literature
Using a large sample of 30 developed and developing OECD countries, Blanchflower
(2004) showed the decision to start a business or become self-employed, for both men and
women, to correlate to several variables such as age, education, work status, and house-
hold income. However, even after correcting for differences in the distribution of these
characteristics, as well as country characteristics, the rates of self-employment have been
shown to differ significantly across gender for a sample of 37 countries in various stages
of development (Minniti and Nardone, 2007). Thus, other factors are at play.
A sizeable amount of literature suggests that, when considering new business creation
and self-employment, women face higher opportunity costs then men, primarily because
of the role they play in the family. Several works provide evidence for the United States.
Devine (1994a, 1994b), for example, found that being married with a spouse present and
being covered by someone else’s health insurance increases the likelihood of self-employ-
ment for women. Similarly, Lombard (2001) found that a woman is more likely to choose
self-employment if her husband has health insurance, and the greater her relative earnings
potential as self-employed and her demand for flexibility are. Finally, Edwards and Field-
Hendrey (2002) found that self-employment is a more likely choice for women whose
fixed costs of work are high, such as women who have small children.
Several studies have confirmed that the gender asymmetry in opportunity costs of
self-employment is not a US specific phenomenon. Using UK data, Cowling and Taylor
(2001), among others, suggested that decisions about employment and marriage, house-
hold production and child-rearing are interdependent. Rosti and Chelli (2005) showed that,
in Italy, women are more likely to enter self-employment from inactivity or unemployment
whereas men tend to enter to improve their long term career options. Georgellis and Wall
(2005) found that, for German women, self-employment is a closer substitute for part-time
work and labour-market inactivity than it is for men, and attribute such differences to the
different labour market opportunities and occupational strategies of women.
©Blackwell Publishing Ltd and the Department of Economics, University of Oxford 2011
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