Events

Prof. Olenka Kacperczyk
Professor of Strategy and Entrepreneurship
London Business School 

Women remain underrepresented not only as startup founders but also as joiners. However, limited understanding persists regarding the sources of this disparity. Traditional explanations that focus on individuals and their preferences fail to fully account for the emergence of the gender gap. Shifting focus to institutions, we examine the regulatory origins of women underrepresentation among new venture recruits. Specifically, we theorize that stringent employment protection laws that rachet up termination costs, will diminish women’s chances because startups, compared to incumbents, are less willing to take risks on women. However, when institutional protection becomes less restrictive, allowing for low-cost probationary trials, women’s likelihood of being hired by a startup rather than an incumbent increases more than men’s, potentially narrowing the startup gender gap. Through an analysis of Portuguese registry data from 2009 to 2013 and the application of the Regression in Time Discontinuity Design, we provide support for our assertions. Following the implementation of a reform that reduces the cost of terminating employees, women’s relative chances to join startups relative to joining incumbents increase, especially when firms are provided with scant informational cues for evaluating prospective hires. Overall, our study documents institutional origins of gender disparities in startup hires, while also emphasizing how institutional change can help increase women’s representation among startup hires.