Family structure and entrepreneurship: Evidence from Swedish siblings

Abstract

ABSTRACT Family background matters for entrepreneurship, but why do siblings differ in their propensity to become entrepreneurs and the type of ventures they pursue? I draw on family socialization and resource allocation theories to develop hypotheses about the differential effects of family structure – comprising birth order, family size, and sibling gender – on (growth-oriented) entrepreneurship. Using firm incorporation as a marker of growth orientation, I test these hypotheses in a sample of Swedish siblings. Relative to older siblings, later born children are more likely to become unincorporated entrepreneurs, partly because they occupy family niches corresponding to lower educational attainment and higher labour market frictions. Moreover, children in very large families are less likely to pursue incorporation, with stronger effects for men and earlier born children, in line with their limited ability to develop self-efficacy due to resource dilution. Growing up with an opposite-gender sibling does not influence entrepreneurship, indicating that sibling sex composition may not foster stronger gender norms or sex-typing in this domain in Sweden. This study integrates existing findings and offers novel insights, broadening our understanding of family background in entrepreneurship.