Who Becomes a Business Owner in High-Inequality Regimes?

• In Event: 4255 - Section on Economic Sociology Roundtables (1 hour)
  In Refereed Roundtable 60min: 1. Entrepreneurship and Innovation

Abstract

Research has shown that individual educational and financial endowment are key indicators of an individual’s potential for entrepreneurial entry and success. In the same vein, scholars have shown that economic inequality undermines educational development while increasing financial precarity. Yet, we know little about the extent to which economic inequality may condition how education and income affect an individual’s entrepreneurial experience, a gap in the literature that is filled by this study. Mixed-effect analysis using data from 58 countries shows that economic inequality diminishes the salience of an individual’s education and income for entrepreneurial entry. This hindering effect of economic inequality on the influence of education and income on entrepreneurial entry is larger for high education and income individuals than those in the bottom of education and income strata. In addition, economic inequality increases the likelihood that an individual would undertake entrepreneurial activities as a last resort, an effect that is greater for low education and income strata than their high education and income counterpart. These results suggest that under high-economic inequality regimes, entrepreneurship may be a sign of economic insecurity and inefficiency. Thus, this analysis highlights the need for scholars to pay greater attention to understanding the structural forces that facilitate entrepreneurship development, as opposed to the disproportionate focus on the characteristics of those who have become entrepreneurs and business owners.

Author

• Daniel Auguste, University of North Carolina at Charlotte