GLASS CEILING OR HIGHER HURDLES? • 15
This raises a number of questions that are the subject of current academic and policy debates. What influences the choice between becoming an entrepreneur versus taking up a paid job, and to what extent is this choice affected by the discrimination in the capital market? Are women more successful in business than men in identical circumstances? If yes, is the reason behind this difference the fact that in a discriminating world a woman must have entrepreneurial skills superior to that of a man in order to achieve the same level of indicators of business performance? Does this pattern differ across countries with different institutions and regulations and at different stages of development?
than the marginal man owner (or manager). Therefore, the conditional average entrepreneurial skill of women business owners and women managers is higher than that of their male counterparts. If entrepreneurial skill contributes to the business success, then in the identical circumstances firms owned or run by women should perform better than the firms owned or run by men. The model was tested using a detailed firm-level survey of businesses in Central and Eastern Europe and the former Soviet Union, conducted by the EBRD and the World Bank4. The empirical findings support the model assumptions and predictions. There is evidence in the data of discrimination of female entrepreneurs in the capital market. After controlling for the usual factors that determine business performance, including access to finance (captured by prohibitively high interest rates and the size of the collateral), the firms with female owners and/ or female top managers perform better than the firms with male owners and/or male top managers. The findings suggest that, indeed, women entrepreneurs need to demonstrate higher skill than men to achieve the same career success, and that a masked discrimination in the capital market might be behind the distortion of occupational choice and waste of talent. The same may well be taking place in many other countries, including the UK. Policy makers should do more towards monitoring equality and elimination of open and hidden gender discrimination to allow aspiring female entrepreneurs to fully realise their potential.
To address some of these questions, Professor Hashimzade and colleagues conducted a theoretical and empirical investigation of the links across gender bias in lending, occupational choice and business performance3. They constructed a theoretical model where lenders’ discrimination against female entrepreneurs results in a distorted occupational choice. An unequal access to finance leads to different distributions of entrepreneurial skill for men and women conditional on the choice of owning a business or entering paid high-skilled employment, such as a managerial job. In the pool of potential entrepreneurs, the marginal woman owner (or manager) has higher entrepreneurial skill
1
https://www.fawcettsociety.org.uk/news uk-sex-and-power-index-reveals-men-dominate-in-every-sector
2
https://gender.bitc.org.uk/all-resources/factsheets/ women-and-work-facts
3
Nelli S. Gazanchyan, Nigar Hashimzade, Yulia Rodionova, and Natalia Vershinina (2017). “Gender, Access to Finance, Occupational Choice, and Business Performance”, CESifo Working Paper No. 6353.
4
https://openknowledge.worldbank.org/handle/10986/9393
