Female Leaders and Employee Effort: A Multi-method Study of Entrepreneurial Firms

Ample research has documented that female founders are disadvantaged in entrepreneurship, but few theories explain how their disadvantage carries over into later stages of the entrepreneurial process. We combine evidence from longitudinal matched employer-employee data covering all founders of new ventures with personnel in Portugal between 2002 and 2012 with two online experiments to document a novel source of disadvantage for female founders: employee labor imbalance. We propose that female-founded ventures receive a lower amount of employee labor for equal pay because employees are more likely to decline requests for additional labor by female founders. First, using observational data, we confirm that full-time employees contribute fewer regular hours and less overtime work to female-founded firms. Second, using a series of online experiments, we show that this variation in employee labor across female and male-founded firms is partly motivated by a difference in the employee’s expectations of work demands. Specifically, employees perceive female founders’ requests for additional labor to be unfair and more difficult than expected, and both of these perceptions explain the lower amount of employee labor supplied in female-founded ventures. Overall, our findings uncover a novel mechanism that helps explain the existence of a gender gap in entrepreneurship beyond the entry stage.