Who Benefits from Entrepreneurship Opportunities? Check the Norms!

Many nations want more entrepreneurship to grow the economy. Many individuals want public support of their entrepreneurship efforts, or at least removal of barriers. When policies to make entry into entrepreneurship easier are introduced, a common logic is that they should benefit the economically weaker people because the privileged have the necessary resources to enter entrepreneurship. This logic has a problem, though: researchers have found that it is sometimes right and sometimes wrong.

Understanding the reasons for the inconsistency was the motivation behind research by Grady W. Raines, Peter S. Polhill, Shon R. Hiatt, and Ryan S. Coles published in Administrative Science Quarterly. Their underlying idea was that most support for entrepreneurship is about reducing financial barriers or friction in the form of difficult business registration requirements. Barriers against entrepreneurship don’t just come in the form of time and money, however, so these types of changes may not be enough. Other barriers exist in the mind: who in society think of themselves as potential entrepreneurs and are thought of by others as potential entrepreneurs? And another barrier resides in social relations and norms: who does a society believe should be entrepreneurs?

Why do these distinctions matter? Well, let’s imagine a society in which men are thought of as more natural entrepreneurs and where norms see men as those who should lead anything, including businesses. We don’t need to imagine it, of course, because many societies are patriarchal like that. In this research, the authors focused on reforms in Mexico that were intended to make entrepreneurship easier by reducing required procedures and office visits and thereby speeding up the business registration process by a lot – from a month to a day and a half.

So, what happened?  Mexico got more entrepreneurs, as we would expect. Male entrepreneurs. For women, there was no increase in the number of entrepreneurs following this reform, suggesting that the norms disfavored them. And remarkably, this lack of change was the best news from the perspective of women. Now for the really bad news: Fewer women had paid employment following this reform. Why? Because more of them did unpaid labor in the entrepreneurial enterprises of their male relatives. So, in this patriarchal society at least, easier entrepreneurship meant more male entrepreneurs and more unpaid women workers.

Is this a reason to be wary of entrepreneurship or of policies supporting entrepreneurship? Probably not. Is it one more reason to think that norms of inequality, such as patriarchy, find many ways to hurt society? Yes. And it is not clear that we have a good solution for this.

Raines, G.W., P.S. Polhill, S.R. Hiatt, R.S. Coles. 2024. Cultural Norms and the Gendered Impact of Entrepreneurship Policy in Mexico. Administrative Science Quarterly forthcoming.