How institutions and gender differences in education shape entrepreneurial activity: a cross-national perspective

Abstract

Previous studies offer evidence that human capital obtained through education is a crucial explanation for cross-national differences in entrepreneurial activity. Recently, scholar attention has focused on the importance of education in subjects such as science, technology, engineering, and math (STEM) for the promotion of entrepreneurial activity. To our knowledge, empirical evidence for this link is scarce, despite the emphasis made in the literature and by policy makers on the choice of study at the tertiary level. Given that differences in STEM education are particularly large between men and women, we utilize data from the Global Entrepreneurship Monitor for 19 European countries and the USA. We study the role of these differences in STEM education at the national level for three stages of the entrepreneurial process: entrepreneurial awareness, the choice of sector for entrepreneurial activity, and entrepreneurial growth aspirations. We also test whether the effects of gender differences in education is moderated by the nature of the institutional environment in which entrepreneurs operate. Our findings show that individual-level explanations including education account for the gender differences during all three stages of early-stage entrepreneurial activity. Moreover, countries with greater gender equality in science education are characterized by higher entrepreneurial activity in knowledge-intensive sectors and high-growth aspirations. Thus, next to individual-level education, closing the gender gap in science at the national level can benefit a country as a whole by stimulating innovative entrepreneurial activity.

The Entrepreneurial Society

“…Moreover, greater private or family-based savings could increase the pool of potential business angels and other informal investors who can help entrepreneurs overcome liquidity constraints in the early stages of venture creation (Ho and Wong 2007). The entrepreneur's family can be crucial in this respect, especially in regions where family ties are strong (Dilli and Westerhuis 2018). Conversely, a lack of private wealth impedes entrepreneurial venturing; any arrangement channeling savings and asset control away from large institutional investors and back to private individuals is, therefore, likely to increase the supply of equity capital and "soft" loans in smaller ticket sizes with early-stage entrepreneurs, even if much of it will end up in lower mortgages and savings deposits at banks.…”

Taxes, start-up costs, and innovative entrepreneurship

“…First, one could investigate how such one-off versus recurring costs resulting from regulations and taxes influence the innovativeness of important sub-groups of entrepreneurs such as female entrepreneurs (Dilli and Westerhuis 2018), part-time entrepreneurs (Block and Landgraf 2016;Schulz et al 2016), and solo selfemployed (van Stel and de Vries 2015). Entrepreneurs are a very heterogeneous group, and it is valuable to study important sub-groups.…”

Financial and Institutional Reforms for an Entrepreneurial Society

“…The long-term legacy effect that emerges in their analysis indicates that the prevalence of historically rooted institutions is driving knowledge spillovers and entrepreneurship. Dilli and Westerhuis (2018) examine the role of human capital accumulation by topic and focus on the importance of Science, Technology, Engineering and Math (STEM) education and the persistent gender differences therein for a large panel of European countries and the USA. The authors find that countries with greater gender equality in STEM education are characterized by higher entrepreneurial activity in knowledgeintensive sectors and high growth aspirations.…”

“…Targeted interventions in formal institutions can be made and designed to promote a more entrepreneurial culture. And specifically, interventions in the educational system can level the playing field and unlock the potential of women, migrants, and disadvantaged groups in formal labor markets (Dilli and Westerhuis 2018). Such interventions would channel more knowledge into entrepreneurship.…”