Does the height to entrepreneurship nexus have two stages? New evidence from 27 nations

Understanding the effect of an individual’s height on the likelihood of being involved in entrepreneurship has recently become an important aspect of research on the determinants of entrepreneurship in both developed and developing countries (Case & Paxson, 2008; Vogl, 2014; Bargain & Zeidan, 2017; LaFave & Thomas, 2017). The existing literature suggests some explanations regarding why increased height could have a positive influence on being involved in entrepreneurship. For example, the occupational choice theory puts forth that if the outcome (such as earnings, social status and work satisfaction) gained from entrepreneurship is greater than that which is gained from wage employment, then logically, people would choose to embark upon entrepreneurship (Parker, 2009). The talent and abilities of the potential entrepreneur are thus crucial among the conditions that could determine their success (Rietveld et al., 2015). In general, the compensation for abilities is higher in entrepreneurship than in wage work, and because of this, more capable individuals are more likely to achieve high socio-economic status through entrepreneurship than through wage employment (Parker & Van Praag, 2010). Furthermore, height is a significant precursor of social skills and intelligence, which are required for many types of entrepreneurial occupations such as accounting, law and medicine (Bargain & Zeidan, 2017; Case & Paxson, 2008a). As such, more capable individuals have a higher likelihood of enjoying greater levels of autonomy such as making their own decisions regarding tasks and working hours, factors that are more predictably associated with entrepreneurship than with wage employment (Benz & Frey, 2008; Patzelt & Shepherd, 2011). Moreover, height is positively associated with the emergence of leadership and leadership effectiveness, which are both qualities that are necessary for running one’s own business (Lindqvist, 2012; Stulp et al., 2013, 2015). Height is also associated with a higher level of physical power and strength, both of which are required for many types of entrepreneurship, for instance, within the field of agriculture (Sohn, 2015; Thomas & Strauss, 1997). In addition, the taste-based discrimination theory postulates that customers may consciously favour taller individuals and discriminate against shorter individuals simply because they have a taste for attractive individuals (Becker, 1971; Cinnirella & Winter, 2009; Mavisakalyan, 2018). For example, taller individuals are judged to be more persuasive and capable (Hensley, 1993; Young & French, 1996; Zebrowitz, 1994). Finally, the statistical theory of discrimination suggests that employers and customers sometimes deliberately discriminate against shorter workers because they do not have appropriate knowledge about the productivity of employees and so “statistically discriminate” against shorter employees because of apparent physical characteristics such as height (Hübler, 2009; Magnusson et al., 2006).

In spite of several plausible theoretical explanations, the results of empirical studies are far from conclusive, and the generalizability of their findings is fairly low since most of the existing studies have focused on a single country developed country or on a subsection of a country’s population (e.g. a specific island or urban population of the country only). As such, focusing on Germany, Rietveld et al. (2015) reported that height is positively associated with the likelihood of being self-employed. In contrast, through their analysis of a sample of developed European countries, Cinnirella and Winter (2009) did not find any association between height and involvement in entrepreneurship. LaFave and Thomas (2017) also did not report any effect of height on entrepreneurship in rural Central Java, Indonesia. In contrast, Djankov et al. (2006) focused on the determinants of entrepreneurship in Brazil, China and Russia and found that height did positively influence the probability of being an entrepreneur in Brazil but that the effects were not significant in China and Russia. Finally, Vogl (2014) reported that height is negatively associated with the likelihood of being self-employed in Mexico.

In light of the above-discussed evidence, the present study is the first attempt to empirically investigate the relationship between height and entrepreneurship across a diverse sample of 27 post-communist countries in Eastern Europe, Central Asia and the Caucasus. Consequently, our study makes two unique contributions. First, because of the multi-country coverage that the survey employed, this study offers a rigorous test with respect to the universality of the relationship between height and participation in entrepreneurship across a range of socio-economic contexts. Second, because of its concentration on post-communist countries, we are able to study the effects of height in a setting that has not been previously studied. On the one hand, for many years during the communist era, entrepreneurship was strongly discouraged (Ageev et al., 1995; Gurov & Carstensen, 1983; Habibov, Auchynnikava, et al., 2020a; Rietveld et al., 2015; Welter, 2012). On the other hand, the entrepreneurship that exists in post-communist countries today is characterized by weak institutional accommodations and economic and political instability (Aidis et al., 2008). Furthermore, in post-communist countries, entrepreneurship has become a prestigious occupation that is associated with higher levels of income and social status (Habibov, Afandi, & Cheung, 2017a; Habibov, Cheung, & Auchynnikava, 2017b). At the same time, it is important to gain a greater understanding of entrepreneurship in transitional countries. This includes developing a more thorough understanding of the effects of height since, in contrast to state-owned or privatized companies, new businesses need to be more market-oriented and efficient in terms of management in order to be competitive under the new conditions (McMillan & Christopher, 2002). Entrepreneurship in the private sector provides a vital buffer against economic shocks during transition since it generates employment and alternative sources of income (George et al., 2012).

Examining the association between height and likelihood of involvement in entrepreneurship, this study attempts to address the following research questions:

Answering these four questions allows us to examine a whole range of possible situations related to involvement in entrepreneurship.

There are strong theoretical reasons to believe that height has a positive impact on entrepreneurship. However, the results of empirical studies are far from consistent, with some studies confirming a positive effect, while others reporting no effect at all or even a negative effect. In addition, the generalizability of findings is low since most of the extant studies have focused on a single country or subsection of a country’s population (e.g. a specific part of the country or only on a specific subgroup of the population). At the same time, the literature stresses that future research should extend to more countries where the status of entrepreneurs differ (Rietveld et al., 2015). Against this background, the focus of this study is on the influence of height on the probability of being an entrepreneur in a diverse sample of 27 post-communist countries.

Answering the series of posted research questions about the association between height and involvement in entrepreneurship, we found that height is positively associated with the likelihood of having tried to set up one’s own business and the likelihood of having succeeded in setting up one’s own business. Height is also positively associated with having set up one’s own business that is currently operational. In contrast, height is negatively associated with the likelihood of not having tried to set up one’s own business. The strong positive effect of height is stable against a comprehensive set of covariates such as gender, experience, education, health status, number of children and country-level characteristics, which are usually used to determine entry into entrepreneurship. Our results are robust to a different specification of predictor, height and a different set of covariates, as well as a different statistical specification in terms of direction and significance.

This study contributes to the expanding literature on height and entrepreneurship by demonstrating that a consistent height premium exists across a large and diverse sample of 27 post-communist countries of Eastern Europe, Central Asia and the Caucasus. The results of our study convey that overall, the effect of height on entrepreneurship in the emerging post-communist economies is not fundamentally different from the situation in developed and developing countries such as Germany and Brazil, where height is associated with entrepreneurship (Djakonov et al., 2006; Rietveld et al., 2015). At the same time, we found that the effect of height is stronger in magnitude than the effects of gender, health and university education. This finding is remarkable insofar as gender, health and university education are considered to be the main determinants of entrepreneurship (Habibov, Afandi, & Cheung, 2017a; Habibov, Cheung, & Auchynnikava, 2017b).

This study also contributes to the expanding literature on height and entrepreneurship by showing that height has the strongest effect on the probability of becoming an entrepreneur and a much lower effect on the probability of becoming successful as an entrepreneur. Our findings suggest that relatively taller individuals are more likely to try to become entrepreneurs when compared with shorter individuals (1.5 percentage points for each additional 10 cm in height). Thus, taller workers self-select themselves into entrepreneurship, which can generate higher returns, better working conditions and higher life satisfaction. At the same time, height is also correlated with a higher demand for physical capacity, abilities and human and social capital, as well as prestige and life satisfaction (Habibov, Luo, et al., 2020b; Sohn, 2015; Vogl, 2014).

In comparison, height has a much lower effect on the next steps in entrepreneurship, namely, (i) trying to set up a business but not succeeding in setting it up (about 0.5 percentage points for each additional 10 cm in height); (ii) having been successful in setting up a business in the past but no longer being involved in it or the business no longer being operational (about 0.5 percentage points for each additional 10 cm in height); (iii) having set up a business that is currently operational (approximately 1 percentage points for each additional 10 cm in height).

Our finding that height is an important predictor of involvement in entrepreneurship and the effect of height is stronger in magnitude than the effects of other well-known characteristics such as gender, health and university education have also significance from a policy standpoint. Thus, not reaching full height is translated to the significantly lower probability to be involved in entrepreneurship, while being an entrepreneur is associated with a wide range of positive outcomes such as higher earning and social status, greater levels of autonomy, better working conditions and higher work satisfaction. In turn, the literature repeatedly demonstrated that the main obstacles for attaining full potential height are the lack of investments into hygiene, sanitation, nutrition, health, education and positive environmental condition at earlier ages of child development (Bozzoli et al., 2009; Case & Paxson, 2008b, 2011). Consequently, investments in the abovementioned areas are required to help individuals to reach their full height and increase the probability to be involved in entrepreneurship.

Several limitations of this study should be highlighted. First, relatively small country samples prevent us from conducting country-by-country analysis. Future studies may wish to take a more comparative approach in order to uncover possible country differences in the effects of height. Second, due to the limitations of secondary data analysis, we were not able to control for cognitive and non-cognitive abilities. Thus, future studies may wish to control for these measures, which correlate with height and consequently may explain the height premiums. Third, our data is cross sectional so we cannot identify cause and effect. Although reverse causality (e.g. from entrepreneurship to height) is unlikely, the influence of unobservable variables on both height and entrepreneurship could be plausible. Unfortunately, the lack of good instruments (e.g. the height of parents) prevents us from constructing an instrumental variable analysis for exploring the problem of unobservable variables.

To summarize, our findings allow us to theorize that the effect of height on becoming an entrepreneur can be considered to be a two-stage process. During the first stage, the individual decides whether to try to set up his or her own business. At this stage, the effect of height is stronger, indicating that relatively taller individuals are more likely to try to become entrepreneurs in comparison to shorter individuals. In other words, relatively shorter individuals, on average, are less likely to try to become entrepreneurs since entrepreneurship may require higher levels of abilities, intelligence, social skills and physical strength. During the second stage, after the decision to become an entrepreneur has already been taken, entrepreneurs could either attain success or failure in setting up and remaining active in their business. At this stage, although taller individuals are still more successful than their shorter counterparts, the effect of height is much weaker.