Gender inequality and entrepreneurial choice: untangling the roots for sustainable growth

Purpose The relationship between gender inequality/equality and entrepreneurial choice (EC) has been acknowledged in existing literature but with conflicting views; whether the latter leads to the former or vice-versa is debated. This study aims to untangle these contrasting findings by resolving the endogeneity and present a clearer view. It explores the role of entrepreneurship in advancing women’s empowerment and reducing gender inequalities by examining the potential of entrepreneurial activities as a vehicle for enhancing women’s socio-economic status and contributing to a gender-equitable world. Design/methodology/approach Using a data set of 159 countries spread across a decade from 2010 to 2019, the study investigates the effect of gender inequality on the choice to be self-employed/EC. Instrumental variable analysis is used to resolve the simultaneity that is observed, and the regression results have been obtained through STATA. The empirical analysis has been done using secondary data from the United Nations Development Program and the World Bank. Findings Contrary to existing literature, the findings reveal that higher gender equality correlates with an increase in women’s entrepreneurial activities. The results also underscore the influence of socio-economic factors and contextual nuances in shaping the landscape of women’s entrepreneurship. Significant gender-based differences could be observed, with women being less active and working with smaller investments in comparison to men. However, the alleviation of gender inequality and its effect on EC is different for developed nations vis-à-vis emerging economies. Also, women’s entrepreneurship and its success are found to vary circumstantially across nations. Research limitations/implications The sample size is restricted to 159 countries by data availability and the choice of statistical analysis. Similar tests can be conducted with other data sets and different variables for better understanding. Practical implications The paper highlights the need for and importance of building the entrepreneurial capacity of women while taking into cognizance the socio-economic contexts of particular nations for both developed as well as emerging economies. Insights from this study could inform the development of targeted policies and interventions to support female entrepreneurs, thereby fostering sustainable growth and advancing gender parity. Social implications A redefinition of entrepreneurship and entrepreneurial success is found necessary in the context of women’s entrepreneurship, along with a fresh perspective to understand and comprehend its contribution in establishing a gender balanced society and a more sustainable future. Originality/value The paper attempts to resolve conflicting views in existing literature by analysing the unexplored endogeneity and studying the effect of gender inequality on EC using instrumental variable analysis. The research challenges prevailing assumptions and offers a novel interpretation of the relationship between gender inequality and EC. It provides fresh insights into policy formulation, support mechanisms and the broader discourse on sustainable development through gender equality.