© Nina Rosenbusch – Friedrich-Schiller-University Jena Human Capital, Gender, and Entrepreneurial Success: Empirical Evidence from China and Germany Nina

© Nina Rosenbusch – Friedrich-Schiller-University Jena

Human Capital, Gender, and Entrepreneurial Success:Empirical Evidence from China and Germany

Nina Rosenbusch, Friedrich-Schiller-University Jena, GermanyAndreas Rauch, RSM Erasmus University, The Netherlands

Simon C. Parker, University of Western Ontario, CanadaJens M. Unger, University of Giessen, Germany

World Bank Conference „Female Entrepreneurship: Constraints and Opportunities“2 June, 2009


Introduction and Research Questions

Research Questions:

(1) Do gender differences in human capital depend on the cultural context ?

(2) Do male- and female-owned firms benefit from the same or different sets of human capital-related factors?

(3) Does the gender effect on the relationship between human capital and business performance depend on the cultural context?

Importance of female entrepreneurship for job creation and economic growth

Gender gap has narrowed, but rate of female entrepreneurship is still low in many countries

Gender differences exist with respect to venture creation, growth aspirations and venture performance

Shortage of resources is a prominent explanation for gender gaps

Role expectations can lead to gender differences in human capital

Because role expectations vary between cultures gender effects may depend on the cultural context


Some Facts about China and Germany (1/3)

Female Labor Force Participation – An International Comparison

Rank Country Female Labor Force Participation Rate

(2005)

1 Burundi 92.81 %

2 Tanzania 88.24 %

…

15 China 75.79 %

…

34 United States 70.07 %

…

43 Germany 67.36 %(West and East)

…

77 Japan 60.45 %


West Germany East Germany

Female Labor ForceParticipation Rate 72 % 62 %

Female Part TimeEmployment Ratio 42 % 23 %

Managerial PositionRatio (Men) 20.3 % 14.4 %

Managerial PositionRation (Women) 10.5 % 12.2 %

Women’s Wages Relativeto Men’s 75 % 94 %

Women’s Share in Self-Employment(businesses with at least 1 employee) 22 % 30 %

Source: Bundesministerium für Familie, Senioren, Frauen und Jugend


Gender Issues in Germany – Differences between West and East


Communist leaders of the PRC considered women as an important economic resource

Idea of the Cultural Revolution (1966-1976): “Whatever a man can do, a woman can do” (Turner, 2006)

High participation rates of women in the labor force

Reform of the educational system decreased gender discrimination in education

Economic reforms partially reversed prior efforts to decrease discrimination against women- gender wage gap is rising- significant differences between urban and rural areas- discrimination severely affects less educated women

‘Women’s Commissions ‘ in state-owned enterprises help to prevent discrimination

Emergence of a new female entrepreneur class (Oksoy, 1999): large increase in women entrepreneurship after 1996 (Qingqi, 2005)

Example: Cheung Yan, entrepreneur and head of Nine Dragons Paper, has become the richest self-made woman in the world


Gender Issues in China


Hypothesis 1: Female entrepreneurs have a lower level of specific human capital than

male entrepreneurs.

Hypothesis 2: The gender difference in specific human capital is lower in China than in

Germany.

Previous studies have looked at gender differences in human capital, but have come to inconsistent conclusions.

In many industrialized countries women are disadvantaged in the work, but not in the educational system. Gender differences should mainly refer to specific human capital.

Different role expectancies could explain variations in research results.

In cultures where women are expected to fulfill a domestic role gender differences with respect to human capital should be more severe than in cultures where women actively participate in the workforce.

In such cultures, women have less opportunities to acquire human capital that is task-specific in the entrepreneurial context.

In particular, their access to managerial experience is limited.

Theoretical Background and Hypotheses (1/2)

Gender Differences in Human Capital


Unique resources are crucial for firm success

Women are disadvantaged regarding the accumulation of financial resources necessary to start a business due to career interruptions

A lack of financial capital can be partially compensated by human capital

Women in entrepreneurial roles violate role expectations

A high level of human capital increases their legitimacy and, thus, enhances their access to crucial resources

Especially in environments with domestic role expectations for women female entrepreneurs benefit above average from human capital.

Hypothesis 3: Female entrepreneurs benefit more from human capital than

male entrepreneurs.

Hypothesis 4: The gender effect on the human capital-performance relationship is lower in

China than in Germany.

Theoretical Background and Hypotheses (2/2)

Relationship between Human Capital and Firm Performance


Method

Data Collection and Sample Structured Interviews and questionnaires with owners / managers of small businesses

in Germany and China Lists of businesses were provided by local Chamber of Commerce 290 businesses in Germany, 298 businesses in China Share of female entrepreneurs in the sample: 19.0 % in Germany, 12.1 % in China 4 industries: Car and Machinery Components, Software, Hospitality, Building and

Construction

Measures Business Performance: Employment Growth between 2001 and 2003 General human capital: Number of years spent in education Specific human capital: number of years with industry experience

previous managerial position Control variables: industry, firm age


Results (1/3)

Female Entrepreneurs Male Entrepreneurs Z-Value p-Value

Mean SD Mean SD

Years in Education 15.840 6.944 14.090 6.276 .773 .439

Industry Experience 3.278 4.805 5.272 6.386 1.530 .126

Managerial Experience 1.800 1.243 2.102 1.128 1.261 .207

Mean Differences in the Chinese Sub-Sample

Mean Differences in the German Sub-Sample

Female Entrepreneurs Male Entrepreneurs Z-Value p-Value

Mean SD Mean SD

Years in Education 16.198 3.411 16.172 3.400 .153 .879

Industry Experience 16.576 11.950 16.229 11.673 .308 .758

Managerial Experience 1.125 1.064 1.859 0.980 4.302 .000


Results (2/3)

Women-Owned Businesses Men-Owned Businesses

Software Industry .286 .140 .144** .095

Hospitality Industry .067 -.066 -.031 -.067

Car and Machinery Components Industry

.237 .320* .307*** .276***

Firm Age -.256 -.011 -.216*** -.128**

Years in Education -.045 .004

Industry Experience -.609*** -.286***

Managerial Experience .348** -.005

F-Value 1.802 8.577 11.579 19.783

Adjusted R² 0.074 0.375 .130 .193

Significance of R² Change .150 .001 .000 .000


Results (3/3)

Chinese Businesses German Businesses

Software Industry .003 .006 .228*** .228***

Hospitality Industry -.288** -.294** .031 .017Car and Machinery Industry

.162 .152 .133* .130*

Firm Age -.146 -.148 -.079 -.072Years in Education .085 .337 -.098 .091Industry Experience .063 -.333 -.268*** .298Managerial Experience -.248*** -.380 .108 -.480**

Gender .205** .378* -.016 .211**

Years in Education x Gender

-.289 -.224

Industry Experience x Gender

.465 -.627***

Managerial Exp. x Gender

.145 .683***

F-Value 9.579 10.062 10.901 14.711Adjusted R² .111 .098 .139 .176Significance of R² Change

.000 .695 .000 .011


Conclusion

Role expectancies shape gender gaps

There are no gender differences in terms of education in China and Germany

A gender difference exists regarding managerial experience in the German context, but not in China

Women benefit more from managerial experience as one type of specific human capital than men, especially when role expectations in favor of a domestic role of women exist

A limitation of the study is the focus on two countries only; future research in other cultural contexts could increase the generalizability of results

Policy-makers should not exclusively focus on financial support, but also on providing an environment where women can gain task-specific experience which help them to start and run a business successfully

Documents

© Nina Rosenbusch – Friedrich-Schiller-University Jena Human Capital, Gender, and Entrepreneurial Success: Empirical Evidence from China and Germany Nina