2.3: Female Entrepreneurship

Question 1

Summarize the study Koellinger, Minniti and Schade (2013).

Answer 1

1. 17 Countries were found to have a universal effect when considering differences in gender for entrepreneurial activities
2. Women had a lower propensity to start a business, rather than a difference in the survival rates of the companies

Question 2

What was the motivation for Koellinger, Minniti and Schade (2013)?

Answer 2

1. Although the number of self employed women has increased, there are less female than male business owners - regardless of the failure rates
2. Looking for gender gap based causes, specifically with propensity to start a business

Question 3

Explain the theoretical background behind the paper Koellinger, Minniti and Schade (2013) with regard to economic and behavioral factors.

Answer 3

1. Attempts to understand the factors of the gender gap when looking at the significant variance in self-employment rates between men and women
2. Economic: opportunity costs and discrimination/cultural factors
3. Behavioral: different attitudes towards competition, degrees of confidence/optimism, attitudes towards risk, and work preferences
4. Thus: gender specific differences in perceptions may affect entrepreneurial propensity

Question 4

What are some characteristics of the data used in the study Koellinger, Minniti and Schade (2013)?

Answer 4

1. Randomly drawn representative sample
2. Individuals classified as nascent (a good measure of propensity), newly entered, or established, not-entrepreneurs
3. Participants surveyed about: their belief in themselves, opportunities, fear of failure, as well as indirect triggers (relation to other entrepreneurs and closing of a business)
4. Thus: examining gender gap along entrepreneurial process

Question 5

What are the most important descriptive findings with regards to personality variables and level of entrepreneurial involvement in the study Koellinger, Minniti and Schade (2013)?

Answer 5

1. Among nascent entrepreneurs, there are 1.9 men for every woman
2. The ratio of nascent entrepreneurs to established business owners is much more equal - two to one over the sample for each gender
3. All variables (belief in themselves, opportunities, fear of failure, as well as indirect triggers) are significant, and except for fear have a greater impact on men
4. The effect of believing in oneself is variable across countries, but always lower for women

Question 6

What was the modeling structure of the analysis in Koellinger, Minniti and Schade (2013)?

Answer 6

Three probit models: one just on gender; one on gender, income, education, work status and age; as well as a third on all prior variables including belief in self, opportunities, fear of failure, and indirect triggers.

Question 7

What is an endogenous explanatory variable? Does the model in Koellinger, Minniti and Schade (2013) have an endogeneity problem?

Answer 7

1. If 𝑥𝑗 is correlated with 𝑢(error term) for any reason, then 𝑥𝑗 is said to be an endogenous explanatory variable (Wooldridge, 2004)
2. Yes, the belief in their own skill (suskill) is correlated with the error term

Question 8

How was the endogeneity problem solved in Koellinger, Minniti and Schade (2013)?

Answer 8

1. Using the method of instrumental variables
2. Z uncorrelated with u(error term) but correlated with x -> z instrumental variable
3. Knowing an entrepreneur and closing a business serve as IVs for their perception of their own skill

Question 9

What are the results of the probit models in Koellinger, Minniti and Schade (2013)?

Answer 9

1. Direction of causality - Women and men have very different perceptions but whether their perceptions influence the decision, or the other way around, is unclear
2. Women are found to be less confident in their entrepreneurial skills after controlling for unobserved heterogeneity and endogeneity of suskill
3. Gender gap occurs because women are less likely to start a business (underconfident and more fearful of failure), not because of survival rates

Question 10

Explain the typology of a female entrepreneur in accordance with Koellinger, Minniti and Schade (2013).

Answer 10

1. Women are more educated and older (due to higher entry barriers)
2. Determined to an extent by willingness to accept conventional gender roles
3. Women: conventional, domestic, innovative, radical