The benefits of having an entrepreneur-mother: Influence of mother's entrepreneurial status on human capital formation among children

Abstract

Prior research shows that childcare is a unique driver for female entrepreneurship, as entrepreneurship allows women to increase time allocation on child supervision. Yet, whether female entrepreneurship actually promotes childrearing outcomes remains contentious in extant literature. This study focuses on child human capital formation as a key childrearing outcome. Drawing on the occupational inheritance literature, we suggest that, in addition to supervision, entrepreneur-mothers may foster child human capital formation through value transmission—in particular, transmitting self-direction values to children. Using nationally representative data from China, we find that children with entrepreneur-mothers exhibit better human capital formation outcomes—especially when they are younger and female. We further show that both supervision and value transmission are present, with the latter being a more important mechanism. Reconciling conflicting views in the literature, our study has both theoretical and practical implications.

Executive summary

Prior female entrepreneurship research suggests that women often choose to be entrepreneurs out of family, particularly childrearing, considerations. Entrepreneurship offers work autonomy and scheduling flexibility, allowing entrepreneur-mothers to better allocate time to childrearing activities. Given that numerous studies document a positive relationship between maternal time allocation and childrearing outcomes, conceivably entrepreneur-mothers should achieve favorable childrearing outcomes. Entrepreneurial research focusing on the business-family interface, however, suggests female entrepreneurs often face unanticipated pressures that limit their ability to care for family members. In addition, some female entrepreneurs may be motivated more by career than by childcare considerations. As such, the relationship between female entrepreneurship and childrearing outcomes remains conceptually and empirically ambiguous. Given the foregoing situation, we examine this relationship both theoretically and empirically, focusing on child human capital formation as a specific and important childrearing outcome.

Examining how female entrepreneurship relates to child human capital formation is of both scholarly and practical importance. First, it brings enhanced clarity to our understanding of the family- and child-related consequences of female entrepreneurship, thus affording reconciliation of the ambiguous predictions found in extant theories. Accordingly, we advance research on female entrepreneurship. Exploring the relationship also adds to the family embeddedness perspective in the broader entrepreneurship literature, because child development is a crucial component within the family domain.

Second, our research has practical values and policy implications. Prospective female entrepreneurs may, regardless of their pre-entry intentions, be interested in learning how entering entrepreneurship could affect childrearing outcomes. Policymakers worldwide have been actively promoting entrepreneurship in the past few decades, mainly driven by economic and technological considerations. Because such efforts likely increase female participation in entrepreneurial activities, they should be evaluated to account for their family or childrearing consequences in addition to the economic and technological implications. Therefore, we provide evidence which prospective female entrepreneurs and policymakers can use to make informed decisions.

To study the effect of female entrepreneurship on child human capital formation, we note that the ambiguous predictions in extant work arise because it predominantly focuses on whether entrepreneur-mothers can allocate more time to childrearing activities, which we call “supervision”. We suggest that this supervision mechanism is not the only way in which the intergenerational impact occurs. Drawing on sociological research in occupational inheritance, we propose that entrepreneur-mothers could foster child human capital formation through transmitting self-direction values, thus promoting children's aspirations and achievements. To test these theoretical hypotheses, we use data from a nationally representative Chinese household survey, which contains separately surveyed parent and child data.

Our empirical analyses reveal that children with entrepreneur-mothers outperform those with non-entrepreneur-mothers in both cognitive and noncognitive skills. The effect is stronger for daughters and younger children. Additional analyses verify the presence of both supervision and value transmission mechanisms, with value transmission being more importantly in explaining the entrepreneur-mother effect.

Findings in this study deepen our knowledge on whether and how entrepreneur-mothers foster children's human capital formation. They highlight that—in addition to supervision—value transmission is a crucial channel through which entrepreneur-mothers exert an intergenerational impact on children. Our results also indicate that women running larger businesses—likely those with career motives and targets of policies that promote entrepreneurship—see better child human capital formation outcomes despite having potentially limited supervision capacity. Finally, our findings not only shed light on female entrepreneurship in China, a context with growing relevance in the global economy and rate of entrepreneurial activities, but also offer generalizable insights to other economies.