Practically Improving the World Through Public Policy and Entrepreneurship

Discovering a research path abroad

In 2017, Grady Raines took a leave of absence from his undergraduate program at Brigham Young University to travel to the Czech Republic, where he lived for two years, engaging in volunteer work. There, the Chicago native interacted with a wide range of people from different backgrounds and income levels. For Raines, it was a brand-new experience and one that sparked his curiosity in the social differences across demographic groups, prompting questions about the roles of government and business in addressing them. Back in the academic world, Raines turned to economics, believing it would be a good framework to help him understand social and income differences and how we could practically improve the world. He became interested in research and in pursuing a PhD, which led him to Cornell, where he is now a third-year PhD student in management and organizations at the Samuel Curtis Johnson Graduate School of Management at the Cornell SC Johnson College of Business.

Coming to the Johnson School, Raines knew immediately that he wanted to work with Wesley (Wes) Sine, PhD ’01, John and Dyan Smith Professor of Management and Family Business and academic director of the Smith Family Business Initiative (SFBI); Raines was already familiar with Sine’s research in entrepreneurship and innovation.

With Sine as his PhD advisor, Raines’s research focus lies at the intersection of public policy and entrepreneurship. He probes questions such as: Why are governments around the world encouraging people to be entrepreneurs? When do the policies work? When do they help to improve society? Through his research, Raines has uncovered many findings and a recurring theme is that families and family businesses play a critical role in these questions.

Examining entrepreneurship policies in Mexico and the role of cultural norms and family

One of Raines’s recent research projects, which is part of his dissertation, examines how policies in Mexico aimed at reducing barriers to entrepreneurship affect underrepresented groups differently, depending on local social norms. Specifically, it asked the question: When does public policy increase female entrepreneurship?

In Mexico, a large government program rolled out beginning in the early 2000s sought to encourage entrepreneurship by lowering entry barriers and opportunity cost. Prior research indicates that these types of policies have been effective in the U.S. and Europe in promoting entrepreneurship among women and marginalized groups who potentially face significant barriers to starting a business. But Raines wanted to ask the same question in Mexico, where social and family dynamics are different. Using large-scale survey data, Raines found (to his surprise) that women were no more likely to start a business under this program in Mexico, but men were much more likely. So the policy actually increased the gender gap.

Why did this happen?

Raines discovered that women were indeed becoming involved in entrepreneurship—but as unpaid workers. This is because in Mexico, it is considered much more normal for men than women to start a formal business. After the men start a business, they often bring in female family members to help. According to Raines’ research, this effect is especially pronounced in areas with higher levels of patriarchy and among married women. Raines also found that once women became unpaid laborers in a family business, they were less likely to engage in paid employment, even after six months. The underlying issue is that in Mexico’s entrepreneurial environment, and especially among family businesses, hidden inequalities propelled and sustained by local societal norms may be exacerbated by well-intentioned policies that disregard these norms.

Shaping effective public policies: A vision for the future

In his conclusion, Raines suggests that future policies designed to promote entrepreneurship among women and marginalized groups should consider gender norms and family cultural norms. How do you encourage women to start their own family business, instead of becoming passively absorbed into one? In the future, policies may need to target the informal institutions—cultural and other norms—instead of the formal ones. Research on changing gender norms across generations shows, for example, that children born after a policy that encouraged more fathers to take a longer paternity leave were much more likely to hold gender-egalitarian beliefs later in their lives. Or legislators could implement targeted policies making it easier for women to leave their jobs to start a business. Research on how the Affordable Care Act effected the gender gap in STEM entrepreneurship shows that access to healthcare is another important factor in the equation.

“What I want to do next,” says Raines, “is try to understand when polices that aim to increase entrepreneurship actually work and what governments can really do to help decrease the gaps in entrepreneurship between minorities and in gender.”

Raines’s paper on this research, “Policy and Patriarchy: Lowering Barriers to Entry and the Entrepreneurial Gender Gap in Mexico,” was recently accepted by the Administrative Science Quarterly, a peer-reviewed journal owned and managed by the Johnson School.

Upon graduation, Raines hopes to remain in academia and continue pursuing his current research direction. And although there is no one-fits-all solution for any problem, the insights from Raines’ research will certainly contribute to a better understanding of how legislators can take social norms into account before defining and enacting public policies aimed at improving people’s lives.

Other Johnson School PhD spotlights:

Research at the Crossroads of Entrepreneurship, Innovation, and Network Theory

PhD Spotlight: Johnson School PhD candidate Andrew Foley talks about his research on family business and entrepreneurship.