Local industrial structures and female entrepreneurship in India

Abstract

We analyze the spatial determinants of female entrepreneurship in India in the manufacturing and services sectors. We focus on the presence of incumbent female-owned businesses and their role in promoting higher subsequent female entrepreneurship relative to male entrepreneurship. We find evidence of agglomeration economies in both sectors, where higher female ownership among incumbent businesses within a district-industry predicts that a greater share of subsequent entrepreneurs will be female. Moreover, higher female ownership of local businesses in related industries (e.g. those sharing similar labor needs and industries related via input–output markets) predict greater relative female entry rates even after controlling for the focal district-industry’s conditions. The core patterns hold when using local industrial conditions in 1994 to instrument for incumbent conditions in 2000 and 2005. The results highlight that the traits of business owners in incumbent industrial structures influence the types of entrepreneurs supported.

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