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Small Business Economics

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01-12-2013

Gender gap in latent and nascent entrepreneurship: driven by competitiveness

Authors: Werner Bönte, Monika Piegeler

Published in: Small Business Economics | Issue 4/2013

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Abstract

This study highlights the relevance of gender differences in competitiveness for the gender gap in latent and nascent entrepreneurship. Using data obtained from a recent large-scale survey conducted in 36 countries, we find that individuals who like situations in which they compete with others are more likely to have a preference for being self-employed (latent entrepreneurs) and are also more likely to take steps to start new businesses (nascent entrepreneurs). Moreover, our results suggest that women are less competitively inclined than men in almost all countries in our sample and are also less willing to take risks. The results of a decomposition analysis suggest that gender differences in competitiveness and risk taking contribute significantly to the gender gap in latent and nascent entrepreneurship. Gender differences in competitiveness seem to be relevant, especially for the gender gap in nascent entrepreneurship.

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Of course, the concept of entrepreneurship is multifaceted and is surely not synonymous with self-employment. However, it is common in the entrepreneurship literature to call individuals having a preference for being self-employed “latent entrepreneurs” (Blanchflower et al. 2001; Gohmann 2012) and to call individuals who are taking steps to start a new business 'nascent entrepreneurs” (Davidsson 2006).

A related strand of empirical research compares male and female entrepreneurs, where the female self-employed or business owners are compared to their male counterpart with respect to their individual psychological and non-psychological characteristics (see e.g. Sexton and Bowman-Upton 1990; Birley 1989; Cromie 1987).

However, empirical results reported by Caliendo et al. (2009) also suggest that unemployed and inactive people differ from employed people with respect to the influence of risk taking.

Competitive aggressiveness is an important dimension of Entrepreneurial Orientation construct introduced by Covin and Slevin (1989). However, empirical studies on EO focus on the firm level, whereas our study strictly focuses on the individual level.

Of course, job satisfaction is not only determined by non-monetary benefits but also by monetary benefits of self-employment. Results of empirical studies suggest, however, that self-employment offers significant non-monetary benefits, whereas Hamilton (2000) provides empirical evidence that monetary benefits themselves seem to be relatively low.

Hofstede (1980) initially suggested four dimensions of culture, which are masculinity, power distance, uncertainty avoidance and individualism.

More information about the method of the survey can be obtained from the Analytical Report of the Flash EB Entrepreneurship 2009 (http://ec.europa.eu/enterprise/policies/sme/facts-figuresanalysis/eurobarometer/fl283_en.pdf).

Helmreich and Spence (1978) report that factor analysis produced similar factors for men and women.

Need for achievement is understood as the drive to do something better because of the intrinsic desire to do so (McClelland 1961). The concept has been frequently related to entrepreneurship. Stewart and Roth (2001), for instance, provide a meta-analysis of studies comparing entrepreneurs to managers with respect to their need for achievement motivation.

Rauch and Frese (2007) further point to the relevance of the need for achievement motivation. Although this construct is frequently related to entrepreneurship, there is no consensus how to measure it. According to Stewart and Roth (2001, p. 404) “more than 20 different instruments have been used to measure achievement motivation.” Consequently, it can hardly be measured by a single item and we therefore did not include a statement measuring need for achievement in the questionnaire.

The total Flash EB Entrepreneurship 2009 sample (26,168 observations) consists of 15,239 women (58 %) and 10,929 men (42 %).

In order to check for potential multicollinearity problems we compute variance inflation factors (VIFs). Although not reported here, the values of VIFs suggest that multicollinearity is a not severe problem.

The observations used in gender-specific regressions do not add up to the number of observations used for the pooled regression because some countries had to be excluded from gender-specific regressions since certain country dummy variables perfectly predict the outcome.

In order to check for potential multicollinearity problems we again compute variance inflation factors (VIFs). Although not reported here, the values of VIFs suggest that multicollinearity is not a severe problem.

Coefficient estimates obtained from the pooled sample regression are used as weights for the decomposition. Alternatively, we also calculated decomposition using alternative weights (Fairlie 2005) but our results suggest that the decomposition is hardly affected by the choice of weights.

The characteristics effect is computed as the sum of contributions of all explanatory variables. The contribution of each variable to the gender gap in latent entrepreneurship equals the change in the average predicted probability replacing the distribution of the respective variable of women by the distribution of the respective variable of men holding the distribution of the other variables constant (see Fairlie 2005).

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Title: Gender gap in latent and nascent entrepreneurship: driven by competitiveness
Authors: Werner Bönte
Monika Piegeler
Publication date: 01-12-2013
Publisher: Springer US
Published in: Small Business Economics / Issue 4/2013
Print ISSN: 0921-898X
Electronic ISSN: 1573-0913
DOI: https://doi.org/10.1007/s11187-012-9459-3

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