Male and female entrepreneurs’ employment growth ambitions: the contingent role of regulatory efficiency

Abstract

Entrepreneurs start and grow their ventures in a widely varying set of institutional contexts. One differentiator is a country’s regulatory efficiency which encompasses the freedom to start and to run a business without excessive government interventions around registering, hiring, and firing employees, and price controls on currency. The efficiency of regulations varies substantially among countries and imposes additional costs and risks on entrepreneurs’ activities. We integrate insights from institutional theory and recent literature on gender and entrepreneurship to better understand how a country’s regulatory efficiency affects male and female entrepreneurs’ employment growth ambitions. We explore three aspects of regulatory efficiency: business freedom (e.g., to start, operate, and close a venture), labor freedom (e.g., laws around minimum wage, layoffs, severance), and monetary freedom (e.g., price stability) using data from over 47,000 entrepreneurs in 68 countries. We find that entrepreneurs’ growth ambitions are higher in countries with more efficient regulations, particularly those countries characterized by fewer labor law restrictions and greater monetary freedoms. These findings are further exacerbated by gender by such that, relative to their female counterparts, male entrepreneurs have significantly greater venture growth ambitions. Our paper contributes to the discussion on how formal institutions influence women and men entrepreneurs in distinct ways.

Women’s Economic Empowerment in Vietnam: Performance and Constraints of Female-Led Manufacturing SMEs

“…In the case of Vietnam, we show a tendency of women to lead medium-size firms with better performance in the formal sector. Some cross-country studies show male entrepreneurs have significantly greater venture employment growth ambitions than their female peers (Darnihamedani and Terjesen 2020) and male-owned firms are often in large size than those owned by women. Amin ( 2011) looks specifically at the informal sector of unregistered firms in Argentina and Peru and confirmed the female-owned firms under-performance hypothesis within various sub-samples of firms with different magnitudes of difference.…”

Economic freedom and formal entrepreneurial activity: A longitudinal analysis between the period 2013-2018

“…To explore the relationship between economic freedom and the establishment of formal business, we have generated panel data based on the intersection of available information from (1) the Fraser Institute Freedom Index (Díaz-Casero et al, 2012;Gwartney et al, 2021;Nyström, 2008), (2) The World Bank entrepreneurship survey (Ajide, 2021;Goel & Saunoris, 2020), and (3) The World Bank indicators (Angulo-Guerrero et al, 2017;Darnihamedani & Terjesen, 2020;Fuentelsaz et al, 2015b;Kosi & Bojnec, 2013;McMullen et al, 2008;Nyström, 2008;Özkul, 2020). The final sample included information of 107 countries over six years, 2013 to 2018.…”

Cross-country differences in drivers of female necessity entrepreneurship

“…The hiring expectations of solo entrepreneurs have been studied by Van Stel et al (2020), who concluded that solo entrepreneurs with high educational levels tend to have low hiring intentions and that these low intentions are due to the need for autonomy and self-expression or self-realization. Darnihamedani and Terjesen (2020) analyzed the hiring expectations of entrepreneurs from the perspective of regulatory efficiency, composed of business freedom, labor freedom, and monetary freedom. After analyzing 68 countries, they concluded that entrepreneurs in countries with fewer labor restrictions and greater monetary freedom have higher growth ambitions.…”