1 Introduction
2 Theoretical development and hypotheses
2.1 Employment growth ambitions of female versus male entrepreneurs
2.2 Regulatory efficiency
2.3 Business freedom
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Hypothesis 1a: Higher business freedom decreases entrepreneurs’ employment growth ambitions.
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Hypothesis 1b: The negative effect of business freedom on entrepreneurs’ employment growth ambitions is stronger for female than for male entrepreneurs.
2.4 Labor freedom
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Hypothesis 2a: Higher labor freedom increases entrepreneurs’ employment growth ambitions.
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Hypothesis 2b: The positive effect of labor freedom on entrepreneurs’ employment growth ambitions is weaker for female than for male entrepreneurs.
2.5 Monetary freedom
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Hypothesis 3a: Higher monetary freedom increases entrepreneurs’ employment growth ambitions.
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Hypothesis 3b: The positive effect of monetary freedom on employment growth ambitions of entrepreneurs is weaker for female than for male entrepreneurs.
3 Data and methodology
3.1 Data collection and variables
Variable | Definition/justification | Measurement | Sources of data | Justification (prior studies) |
---|---|---|---|---|
Business freedom (lagged with 1 year) | A country’s freedom from the burden of regulations on starting, operating, and closing business, given factors such as time, cost and number of procedures, and efficiency of government in the regulatory process | The score is based on 10 factors, all weighted equally: Starting a business: procedures (number); starting a business: time (days); starting a business: cost (% income per capita); starting a business: minimum capital (% income per capita); obtaining a license: procedures (number); obtaining a license: time (days); obtaining a license: cost (% income per capita); closing a business: time (years); closing a business: cost (% of estate); and closing a business: recovery rate (cents on the dollar) | World Bank Doing Business | |
Labor freedom (lagged 1 year) | A country’s freedom from legal regulation on the labor market, including those relating to minimum wages, hiring and firing, hours of work, and severance requirements | Six quantitative factors equally weighted at one-sixth: Ratio of minimum wage to the average value added per worker; hindrance to hiring additional workers; rigidity of hours; difficulty of firing redundant employees; legally mandated notice period; and mandatory severance pay | In order of priority: World Bank Doing Business; Economist Intelligence Unit, Country Commerce (2009)—2012; U.S. Dept. of Commerce, Country Commercial Guide (2009)—2012; and each country’s official government publications | |
Monetary freedom (lagged 1 year) | A country’s freedom from price controls, and includes a measure of price stability. Both inflation and price controls distort market activity | The weighted average inflation rate for the most recent 3 years serves as the primary input into an equation that generates the base score for monetary freedom. The extent of price controls is then assessed as a penalty of up to 20 points subtracted from the base score | In order of priority: International Monetary Fund (IMF), International Financial Statistics Online; IMF, World Economic Outlook, 2012; Economist Intelligence Unit, ViewsWire; and each country’s official government publications | Bjornskov and Foss (2008); Nystrom (2008); Aidis et al. (2012); Kuckertz et al. (2014) |
GDP per capita | GDP per capita indicates a country’s level of economic development | GDP per capita | World Bank Development Indicators (WBDI) | |
GDP growth rate | GDP growth rate indicates economic growth and the creation of opportunities at the macro-level | GDP growth rate | WBDI | |
Population | Country population indicates size and possibilities for innovation and entrepreneurship at the macro-level | Population | WBDI | |
Current number of created jobs | Current firm size is an important driver of firm growth and survival. | Current venture size by number of employees who work (full-time and part-time) | Global Entrepreneurship Monitor (GEM) | |
Entrepreneur’s university education | Formal education, as a proxy of investment in human capital, is a driver of entrepreneurs’ performance and success | Dummy: 1 if university education and 0 otherwise | GEM | |
Fear of failure | Fear of failure, as a proxy of the risk-taking attitude, is a driver of entrepreneurs’ ambitions and attitude toward growth | Dummy: 1 if yes and 0 if otherwise response to “fear of failure would prevent you from starting a business” | GEM | Sternberg and Wennekers (2005) |
Entrepreneur’s age | Men and women start entrepreneurial activity at different life stages | Respondent age in years | GEM | |
Entrepreneur’s gender | Biological sex | Dummy: 1 if male and 0 if female | GEM |
3.2 Empirical strategy
4 Results
Variables | Mean | SD | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Individual-level variables | |||||||||||||
1. Entrepreneurs’ growth ambition | 10.17 | 428.85 | |||||||||||
2. Current number of created jobs | 5.29 | 40.31 | − 0.45 | ||||||||||
3. Entrepreneurs’ university education | 0.42 | 0.49 | 0.04 | 0.02 | |||||||||
4. Fear of failure | 0.41 | 0.62 | 0.03 | 0.05 | 0.01 | ||||||||
5. Age of entrepreneur | 41.92 | 14.71 | 0.02 | 0.03 | 0.07 | 0.04 | |||||||
6. Gender of entrepreneur (male) | 0.54 | 0.45 | 0.08 | − 0.01 | 0.03 | − 0.06 | − 0.01 | ||||||
Country-level variables | |||||||||||||
7. Lagged business freedom | 66.37 | 14.91 | − 0.08 | − 0.04 | 0.19 | 0.01 | 0.20 | 0.02 | |||||
8. Lagged labor freedom | 62.73 | 15.70 | 0.10 | 0.05 | 0.11 | − 0.02 | 0.09 | 0.01 | 0.33 | ||||
9. Lagged monetary freedom | 74.24 | 7.63 | 0.04 | 0.04 | 0.08 | 0.02 | 0.12 | − 0.01 | 0.44 | 0.28 | |||
10. Population (log) | 17.25 | 1.60 | 0.00 | 0.01 | − 0.05 | 0.02 | − 0.03 | − 0.03 | − 0.32 | 0.16 | − 0.06 | ||
11. GDP per capita (log) | 9.57 | 1.12 | 0.00 | 0.04 | 0.25 | 0.03 | 0.25 | 0.06 | 0.35 | 0.11 | 0.39 | − 0.18 | |
12. GDP growth rate | 2.25 | 3.78 | 0.03 | − 0.03 | − 0.12 | − 0.05 | − 0.12 | − 0.03 | − 0.34 | 0.03 | − 0.12 | 0.21 | − 0.46 |
Variables | Model I | Model II | Model III |
---|---|---|---|
Individual level | |||
Entrepreneur’s university education | 0.195** (0.010) | 0.193** (0.010) | 0.192** (0.010) |
Entrepreneur’s fear of failure | − 0.036** (0.007) | − 0.037** (0.007) | − 0.037** (0.007) |
Entrepreneur’s gender (male) | 0.226** (0.009) | 0.227** (0.010) | 0.022 (0.104) |
Entrepreneur’s age | − 0.002 (0.002) | − 0.003 (0.002) | − 0.003 (0.002) |
Age square | − 0.00001 (0.00002) | − 0.00001 (0.00002) | − 0.00001 (0.00002) |
Current number of created jobs | 0.001** (0.0001) | 0.001** (0.0001) | 0.001** (0.0001) |
Year dummies | Yes | Yes | Yes |
Country characteristics | |||
GDP per capita (log) | − 0.024 (0.020) | − 0.025 (0.027) | − 0.023 (0.027) |
GDP growth rate | − 0.008** (0.002) | − 0.007** (0.002) | − 0.007** (0.003) |
Population (log) | − 0.024 (0.020) | − 0.023 (0.021) | − 0.022 (0.021) |
Lagged business freedom (H1a) | − 0.002** (0.0008) | 0.0003 (0.009) | |
Lagged labor freedom (H2a) | 0.003** (0.0007) | 0.0002 (0.0008) | |
Lagged monetary freedom (H3a) | 0.005** (0.001) | 0.003 (0.002) | |
Lagged business freedom * male entrepreneurship (H1b) | − 0.003** (0.0007) | ||
Lagged labor freedom * male entrepreneurship (H2b) | 0.003** (0.0006) | ||
Lagged monetary freedom* male entrepreneurship (H3b) | 0.003* (0.001) | ||
Number of countries | 68 | 68 | 68 |
Number of entrepreneurs | 47,386 | 47,386 | 47,386 |
Country-level ICC | 0.076 | 0.078 | 0.079 |
LR tests | ** | ** | ** |