Accepted Articles

Abstract:

This research focuses on the role of uncertainty in explaining gender disparities in entrepreneurship by testing a behavioral decision model. It examines how misperceptions and ambiguity affect men’s and women’s decisions on founding startups or maintaining established firms in developed and developing countries. It starts from the theoretical assumption that entrepreneurial decision-making follows cumulative prospect theory, the Ellsberg paradox, and loss aversion as in the Allais paradox. Data from the Global Entrepreneurship Monitor in 46 countries/territories over 2013 – 2019 was used for a panel data econometric analysis using fixed-effects and Generalized Least Squares (GLS) models. Findings indicate that there are clear gender differences in behavioral characteristics of entrepreneurs in the face of varying uncertainty levels according to three business development stages. During the startup stage, confidence in ability and confidence from knowing an entrepreneur is positively associated with entrepreneurial prevalence, whereas fearing the worst is negatively associated. Gender-bias “discount factors” progressively hinder women as the business develops, particularly in developing countries. During the established business stage, fearing the worst, confidence, and high reference points are positively associated, especially for women’s entrepreneurship. Due to a self-selection effect, once women can enter the scale-up stage, they are more likely than men to continue to the established business stage. Effective policies should consider the specific needs of women and the barriers that they face when setting up and sustaining businesses. 

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