The effect of birth order on entrepreneurship: evidence from China

Abstract

ABSTRACT Recent studies on the determinants of entrepreneurship have shown that later-born children are more likely to become entrepreneurs. However, research has not addressed the questions of how birth order influences entrepreneurship. Based on the Chinese context, we propose two competing hypotheses to explore the potential mechanisms (risk taking vs. educational attainment) that explain the effect of birth order on entrepreneurship. We further argue that the effect of birth order on entrepreneurship is moderated by birth spacing and family financial status. Using data from the 2008 and 2013 Chinese Household Income Project, we find that in the case of China the impacts of birth order on two types of entrepreneurship (i.e. solo entrepreneurship and employer entrepreneurship) are overall positive, which implies that the risk-taking mechanism is more dominant than the educational attainment mechanism. Birth order shows a more pronounced impact for solo entrepreneurship but a weak impact for employer entrepreneurship. We also find that the positive birth-order effect on entrepreneurship is more evident in families with low financial status. Overall, this paper casts light on how birth order shapes the propensity for entrepreneurship.