Gender, risk aversion and remuneration policies of entrepreneurs

Jan de Kok, Ingrid Verheul () and Mirjam Praag

No H201105, Scales Research Reports from EIM Business and Policy Research

Abstract: In theory, for many small and medium-sized enterprises the introduction of performance-related pay might be beneficial: if implemented properly, it could help enterprises in selecting, hiring and motivating the right employees for the right jobs. So far, however, performance-related pay in SMEs has received little academic attention. One of the few studies that examined determinants of performance-related pay amongst SMEs found support for the presence of gender effects; not only regarding the gender of the employees, but also regarding the gender of the entrepreneur. In this paper we have further investigated these gender effects in remuneration policies. The central idea is that female and male entrepreneurs make different choices regarding their human resource management practices, including remuneration policies. Amongst others, these choices are related to the risk aversion of the entrepreneur as well as of the employees. Generally speaking, women are more risk averse than men. This may apply to entrepreneurs as well as to employees. This leads to various hypotheses that are tested empirically. Generally speaking, the results provide only limited support for our hypotheses. Our results are fairly consistent with the standard assumption that employees are risk averse (and female employees more than male employees) while employers (entrepreneurs) are not. At the same time, the support for our hypotheses is so limited that we have conducted a critical re-examination of our basic assumptions. This suggests that gender effects in remuneration policies may (also) be caused by gender differences in labour force attachment rather than in risk aversion.

Pages: 36 pages
Date: 2011-01-27
New Economics Papers: this item is included in nep-ent and nep-lab
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