Female entrepreneurs and productivity around the world: Rule of law, network, culture, and gender equality

Abstract

We use worldwide firm-level data to study how women-led firms differ from male-led firms in productivity, and investigate potential explanations for these differences. Women-led firms are more prevalent in countries with better rule of law, gender equality, and stronger individualistic culture, and in small firms and services industries. Relative to men-led firms, women-led ones have lower levels and growth of labor productivity, but similar levels of total factor productivity. The disadvantage is mainly in manufacturing firms, nonexistent in service firms, and only in small firms. Furthermore, the disadvantage in performance for women-led firms is smaller for countries with higher gender equality and lower burdens of household chores and domestic care for women. Finally, it is smaller where there is less emphasis on personal networks, less competition from informal firms, and the culture is more collective. The study does not find that the female leader disadvantage is amplified in corrupt environments.