Women across the globe are less likely than men to strike out on their own as entrepreneurs: across thirty-eight highly developed countries, women were only two-thirds as likely as men to launch their own companies, according to a 2021 OECD report.
Maddalena Ronchi, an assistant professor of finance at Kellogg, was drawn to the implications this statistic might have, both on gender equality and on the economy.
In a new paper, Ronchi and her coauthors—Mikkel Mertz, a research economist at the ROCKWOOL Foundation Research Unit, and Viola Salvestrini, a PhD candidate at Queen Mary University of London—explored these questions.
They found that early exposure to entrepreneurs made a difference—but only for girls. Exposure to their peers’ entrepreneur parents as a teenager seemed to alter girls’ educational and career trajectories: such girls were more likely to continue their education after compulsory school and had a lower risk of holding low-wage jobs throughout their working years.
What’s more, the researchers found that girls who had early exposure to entrepreneurs and then pursued their own entrepreneurial ambitions went on to create more successful and more women-friendly companies than the average entrepreneur.
Raised by a village (of entrepreneurs)
The researchers’ sample included 786,660 individuals who attended 1,564 different schools between 1980 and 1992. They traced these individuals’ trajectories through the age of 40 from several data sources: employer–employee registers to distinguish between non-entrepreneurs and entrepreneurs (as well as the characteristics of their firms); education registers to track the schools that people attended; and demographic registers to connect students and family members.
With this data, the researchers were able to distinguish which student cohorts contained more entrepreneur parents and then trace the long-term impact such exposure to entrepreneurship has on a career. What’s more, they were able to measure the success of the small businesses eventually launched by the girls who had more entrepreneur parents in their orbits.
The benefits of exposure
According to the researchers’ analysis, girls with early exposure to entrepreneurs were less likely to conclude their education at the end of compulsory school and were more willing to pursue vocational education—the path most conducive to entrepreneurship in this context. The girls who knew more entrepreneurs early in life were also less likely than others to be employed in low-paying jobs.
Notably, girls were only affected by the entrepreneur status of their female peers’ parents, suggesting that they formed closer friendships with peers of the same gender and interacted more with their families. In contrast, boys’ exposure to their peers’ entrepreneur parents made no noticeable difference to their career trajectories.
Ronchi and colleagues estimated that girls were 4 percent more likely to launch their own business by the age of 35 when 16.7 percent of their female classmates had entrepreneur parents, compared with when 5.3 percent of their classmates did.
In their analysis, the researchers discovered more encouraging news: the businesses of women who had early exposure to entrepreneurs outperformed those launched by men and women who did not have this early exposure. On average, this subset of small businesses had more employees and lasted longer; they also employed a much higher share of women and employees working part-time.
Seeds of a network
While the researchers’ analysis doesn’t provide specific policy recommendations, they were able to dig into their dataset for potential explanations behind the positive impact of girls’ early exposure to entrepreneurship.
For one, the researchers investigated whether girls exposed to an entrepreneur who worked in a specific sector were more likely to specialize their own businesses in that sector, too. They found this to be true, suggesting that early exposure to entrepreneur parents in a particular industry may provide girls with valuable sector-specific knowledge.
They also found evidence that greater awareness of career paths that girls tend to overlook—whether or not the career has to do with entrepreneurship—could help drive women toward that field. In fact, they observed a similar positive effect when analyzing another profession that traditionally has been dominated by men: university professor. Girls who have a higher share of female peers whose parents are university professors are more likely to become university professors themselves.
Collectively, the results suggest that early exposure helps reduce two key barriers women face in entrepreneurship. First, it can lower the barrier of entry by raising girls’ awareness of entrepreneurship as a viable career path. And second, it can reduce barriers to success by equipping girls with sector-specific knowledge and skills that might otherwise be difficult for them to access.
Read the complete article by Mikkel Mertz, Maddalena Ronchi and Viola Salvestrini / Kellogg Insight
