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

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.