Recent research published in the Journal of Management Studies offers a nuanced perspective on how parental leave policies—specifically their temporal and financial elements—can shape mothers’ decisions to pursue entrepreneurship. Challenging prevailing assumptions, the study reveals that more generous parental leave, particularly in terms of time rather than financial compensation, may encourage mothers to start their businesses rather than deter them.

The researchers conducted two interrelated studies to explore this phenomenon. The first drew on data from two significant policy reforms in Germany. The 2001 reform, which curtailed the duration of parental leave, was found to reduce the probability of mothers becoming self-employed. In contrast, the 2007 reform, which increased the monetary benefits associated with parental leave but did not extend its duration, did not significantly influence entrepreneurial activity. This finding suggests that time, rather than financial support, is more critical in shaping postnatal entrepreneurial decisions.

The second study employed a vignette-based experimental design in which participants—mothers or expectant mothers—were asked to evaluate their likelihood of pursuing self-employment under different hypothetical policy scenarios. These scenarios varied in the length of leave and the level of financial support. Consistently, mothers expressed greater intent to pursue entrepreneurship when leave duration was extended, irrespective of monetary benefits. This reinforces that time to recover, reflect, and plan after childbirth is a more influential driver of entrepreneurial intention than financial supplementation alone.

However, the research also highlights that financial support is not irrelevant. Further analyses revealed that the monetary component of parental leave can significantly affect certain subgroups—most notably, middle-class mothers juggling substantial domestic responsibilities. For these women, financial security during the early months of motherhood can alleviate stress and potentially free up cognitive and emotional resources that support entrepreneurial ambition.

The study’s lead author, Dr Pomme Theunissen of Maastricht University, summarised the findings succinctly: “After childbirth, giving mothers time to think and reflect will increase their likelihood of becoming self-employed.” This insight reframes the role of parental leave from a potential impediment to career ambition to a possible facilitator of new economic activity led by mothers.

These findings suggest reconsidering how policy design intersects with women’s professional trajectories. By focusing not solely on financial compensation but on the value of time itself, parental leave policies may be crafted to better support the diverse aspirations of mothers, including those who envision entrepreneurship as a viable and fulfilling path forward.

More information: Pomme Theunissen et al, What Makes Mothers Decide (Not) to Become Entrepreneurs? Unpacking the Role of Time and Money in Parental Leave Policies, Journal of Management Studies. DOI: 10.1111/joms.13215

Journal information: Journal of Management Studies Provided by Wiley