Abstract
This paper identifies a set of factors associated with the decision to become an entrepreneur and the variables that account for the gender gap in entrepreneurial activity in Latin America. We estimate logit models for entrepreneurial activity under three different definitions of an entrepreneur. We also estimate the gender gap by using Fairlie’s decomposition method. Depending on the definition of entrepreneur used, the overall gender gap varies from 4 to 13 % points. Differences in observable characteristics explain between 23 and 38 % of the total gender gap. The factors that explain both entrepreneurial activity and gender gap are: education, risk tolerance; own car as primary means of transportation; work satisfaction; and parent business ownership. Variables such as age, access to loans, and need for achievement are significantly associated with entrepreneurial activity, but they play a negligible role in explaining the gender gap.
This is a preview of subscription content, log in via an institution to check access.
Source: CAF household survey, 2012
Similar content being viewed by others
Notes
For a recent literature review see Simoes et al. (2013).
The answers are provided using a 5-level Likert-type scale.
Table 10 in “Appendix” shows the percentage of information lost for each definition of entrepreneur.
In gender analysis, since females are considered a minority or disadvantaged group, it is a common practice to calculate the explained part using male coefficients as it is assumed that males have a “non-discriminatory” coefficient structure. Since the phenomena studied here may not be strictly due to discrimination, we use pooled coefficients in our estimations.
Yun (2004) presents a review of other detailed decomposition proposed in literature including his own method. Given that the specification of our models depends on the use of many categorical variables, in the present analysis we chose to present results using Fairlie’s decomposition.
We thank an anonymous referee for suggesting this possible explanation.
We are not able to perform estimations for separate countries due to the small size of the employer entrepreneur group.
We thank an anonymous referee for suggesting these possible explanations.
Results using male coefficients are reported in Table 8 in “Appendix.”
References
Afandi, E., & Kermani, M. (2014). Bridging the gender gap in entrepreneurship: Evidence from Europe. 1074. William Davidson Institute working paper.
Allen, E., Elam, A., Langowitz, N., & Dean, M. (2008). Global entrepreneurship monitor 2007: Report on women and entrepreneurship. Babson Park, MA and London: Babson College and London Business School.
Bengtsson, O., Sanandaji, T., & Johannesson, M. (2012). The psychology of the entrepreneur and the gender gap in entrepreneurship. 944. IFN working paper, Institute of Industrial Economics. Stockholm, Sweden.
Blanchflower, D. G., (2004). Self-employment: More may not be better. 10286. NBER working paper series.
Blanchflower, D. G., & Oswald, A. J. (1998). What makes an entrepreneur? Journal of Labor Economics, 16(1), 26–60.
Blinder, A. S. (1973). Wage discrimination: Reduced form and structural estimates. Journal of Human Resources 8(4), 436–455. http://www.jstor.org/stable/144855.
Bönte, W., & Piegeler, M. (2013). Gender gap in latent and nascent entrepreneurship: Driven by competitiveness. Small Business Economics, 41(4), 961–987. doi:10.1007/s11187-012-9459-3.
Caliendo, M., Fossen, F. M., Kritikos, A., & Wetter, M. (2014). The gender gap in entrepreneurship: Not just a matter of personality. CESifo Economic Studies,. doi:10.1093/cesifo/ifu023.
Caliendo, M., Kritikos, A. & Fossen, F. (2011). Personality characteristics and the decision to become and stay self-employed. 5566. IZA discussion paper series.
Elam, A., & Terjesen, S. (2010). Gendered institutions and cross-national patterns of business creation for men and women. European Journal of Development Research, 22(3), 331–348. doi:10.1057/ejdr.2010.19.
Evans, B., Jovanovic, D. (1989). An estimated model of entrepreneurial choice under liquidity constraints. Journal of Political Economy 97(4), 808–27. doi:10.1086/261629.
Fairlie, R.W. (2003). An extension of the Blinder–Oaxaca decomposition technique to logit and probit models. 873. Economic growth center discussion paper series. Center discussion paper. http://www.econ.yale.edu/~egcenter/.
Fairlie, R.W. (2014). An extension of the Blinder–Oaxaca decomposition technique to logit and probit models. Journal of Economic and Social Measurement. https://escholarship.org/uc/item/7j86n5q3.
Fairlie, R. W., & Meyer, B. D. (1996). Ethnic and racial self-employment differences and possible explanations. Journal of Human Resources 31(4), 757–93. http://www.scopus.com/inward/record.url?eid=2-s2.0-0030427228&partnerID=40&md5=b6b9e83867528330d880c4919017e70d.
Fairlie, R. W., & Robb, A. (2007). Families, human capital, and small business: Evidence from the characteristics of business owners survey. Industrial and Labor Relations Review, 60(2), 225–245.
Farber, H. S. (1990). The decline of unionization in the what can be learned United States: From recent experience? Journal of Labor Economics, 8(1, Part 2: Essays in Honor of Albert Rees), S75–S105. http://www.jstor.org/stable/2535208.
Fossen, F. M. (2012). Gender differences in entrepreneurial choice and risk aversion—A decomposition based on a microeconometric model. Applied Economics, 44(14), 1795–1812. doi:10.1080/00036846.2011.554377.
Furdas, M., & Kohn, K. (2010). What’s the difference?! Gender, personality, and the propensity to start a business. 4778. IZA discussion paper series. IZA discussion papers. Bonn. https://ideas.repec.org/p/iza/izadps/dp4778.html.
Goldberg, L. R. (1990). An alternative ‘description of personality’: The big-five factor structure. Journal of Personality and Social Psychology, 59(6), 1216–1229. doi:10.1037/0022-3514.59.6.1216.
Greene, P. G., Hart, M., Gatewood, E. J., Candida, B., Carter, N. M. (2003). Women entrepreneurs: Moving front and center: An overview of research and theory. http://www.researchgate.net/publication/253659404_Women_Entrepreneurs_Moving_Front_and_Center_An_Overview_of_Research_and_Theory/links/00b49529dd3a369d38000000.
Hamilton, B. H. (2000). Does entrepreneurship pay? An empirical analysis of the returns to self-employment. Journal of Political Economy, 108, 604–631.
Hausmann, R., Tyson, L. D., & Zahidi, S. (2012). The global gender gap report 2012. Geneva: World Economic Forum.
Hisrich, R., & O’Brien, M. (1981). The woman entrepreneur from a business and sociological perspective. In K. H. Vesper (Ed.), Frontiers of Entrepreneurship Research (pp. 21–39). Wellesley, MA: Babson College.
International Labor Organization (2015). World employment and social outlook: The changing nature of jobs. Geneva. http://www.ilo.org/wcmsp5/groups/public/—dgreports/—dcomm/—publ/documents/publication/wcms_368626.pdf.
Kelley, D. J., Brush, C. G., Greene, P. G., & Litovsky, Y. (2013). Global entrepreneurship monitor: 2012 women’s report. Boston: The Center for Women’s Leadership at Babson College and London Business School.
Kihlstrom, R.E., & Laffont, J.J. (1979). A general equilibrium entrepreneurial theory of firm formation based on risk aversion. The Journal of Political Economy 87(4), 719–748. http://www.jstor.org/stable/1831005.
Knight, F. H. (1921). Risk, uncertainty, and profit. Boston and New York: Houghton Mifflin.
Koellinger, P., Minniti, M., & Schade, C. (2013). Gender differences in entrepreneurial propensity. Oxford Bulletin of Economics and Statistics, 75(2), 213–234. doi:10.1111/j.1468-0084.2011.00689.x.
Lévesque, M., & Minniti, M. (2006). The effect of aging on entrepreneurial behavior. Journal of Business Venturing, 21(2), 177–194. doi:10.1016/j.jbusvent.2005.04.003.
Liang, J., Wang, H. & Lazear, E. P. (2004) Demographics and entrepreneurship. NBER working paper no. w20506.
Llussá, F. (2010). Determinants of entrepreneurship: Are women different? Universidade de Sao Paulo. http://www.ead.fea.usp.br/semead/12semead/resultado/trabalhosPDF/595.pdf.
Menzies, T. V., Diochon, M., & Gasse, Y. (2004). Examining venture-related myths concerning women entrepreneurs. Journal of Developmental Entrepreneurship, 9(2), 89–107.
MIF-IDB. (2014). WEGrow. Unlocking the growth potential of women entrepreneurs in latin America and the Caribbean. http://www.ey.com/Publication/vwLUAssets/EY-MIF-reporte-en/$FILE/EY-WeGrow-MIF-Report-en.pdf.
Minniti, M., & Nardone, C. (2007). Being in someone else’s Shoes: The role of gender in nascent entrepreneurship. Small Business Economics, 28(2–3), 223–238. doi:10.1007/s11187-006-9017-y.
Naude, W. (2013). Entrepreneurship and Economic development: Theory, evidence and policy. 7507. IZA discussion paper series. http://ftp.iza.org/dp7507.pdf.
Oaxaca, R. (1973). Male-Female Wage Differentials in Urban Labor Markets. International Economic Review, 14(3), 693–709.
Poschke, M. (2013). Who becomes an entrepreneur? Labor market prospects and occupational choice. Journal of Economic Dynamics & Control, 37, 693–710.
Sanguinetti, P., Brassiolo, P., Arreaza, A., Berniell, L., Álvarez, F., Ortega, D., & Kamiya, M. (2013). RED 2013: Emprendimientos en América Latina. Desde la subsistencia hacia la transformación productiva. Caracas. http://scioteca.caf.com/handle/123456789/168.
Scherr, F. C., Sugrue, T. F., & Ward, J. B. (1993). Financing the small firm start-up: Determinants of debt use financing the small firm start-up: Determinants of debt use. Journal of Entrepreneurial Finance, 3(1), 17–36.
Schumpeter, J. A. (1949). Economic theory and entrepreneurial history—Change and the entrepreneur., Postulates and patterns for entrepreneurial history Cambridge, M.A: Harvard University Press.
Shane, S. (2009). Why encouraging more people to become entrepreneurs is bad public policy. Small Business Economics, 33(2), 141–149. doi:10.1007/s11187-009-9215-5.
Simoes, N., Moreira, S. B., & Crespo, N. (2013). Individual determinants of self-employment entry: What do we really know? MPRA paper no. 48403, UTC. Available at http://mpra.ub.uni-muenchen.de/48403/.
Terjesen, S., & Amorós, J. E. (2010). Female entrepreneurship in Latin America and the Caribbean: Characteristics, drivers and relationship to economic development. European Journal of Development Research, 22(3), 313–330. doi:10.1057/ejdr.2010.13.
Van der Zwan, P., Verheul, I., & Thurik, A. R. (2012). The entrepreneurial ladder, gender, and regional development. Small Business Economics, 39(3), 627–643. doi:10.1007/s11187-011-9334-7.
Verheul, I., Thurik, R., Grilo, I., & van der Zwan, P. (2012). Explaining preferences and actual involvement in self-employment: Gender and the entrepreneurial personality. Journal of Economic Psychology, 33(2), 325–341. doi:10.1016/j.joep.2011.02.009.
Wagner, J. (2007). Nascent Entrepreneurs. In Simon, P. (Ed.), The life cycle of entrepreneurial ventures. Springer, pp. 15–37. http://www.springer.com/978-0-387-32156-1.
Yun, M.S. (2004). Decomposing differences in the first moment. Economics Letters, no. 877. http://www.sciencedirect.com/science/article/pii/S0165176503002866.
Acknowledgments
We would like to thank the participants at the ICSB 2014 World Entrepreneurship Conference held in Dublin, Ireland, and two anonymous referees for their valuable comments and suggestions. We acknowledge the financial support we have received from Universidad Icesi. Jose Javier Morán provided excellent research assistance. The usual disclaimer applies.
Funding
This study was funded by Universidad Icesi, Cali, Colombia.
Author information
Authors and Affiliations
Corresponding author
Ethics declarations
Conflict of interest
The authors declare that they have no conflict of interest.
Appendix
Appendix
See Tables 4, 5, 6, 7, 8, 9, and 10.
Rights and permissions
About this article
Cite this article
Bernat, L.F., Lambardi, G. & Palacios, P. Determinants of the entrepreneurial gender gap in Latin America. Small Bus Econ 48, 727–752 (2017). https://doi.org/10.1007/s11187-016-9789-7
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11187-016-9789-7