Description
In this such a detailed information amplify review of research literature on womens entrepreneurship in the information technology.
1
NATI ONAL CENTER FOR WOMEN & I NFORMATI ON TECHNOLOGY
ENTREPRENEURI AL REPORT SERI ES
Gender Differences in Firm Size, Growth, and Persistence:
A Review of Research Literature on Women’s Entrepreneurship in the Information
Technology Field
William Aspray and J. McGrath Cohoon
Are there differences in the success of firms started by men and women?
1
The answer seems to be yes,
although it depends to some extent on how “success” is defined. Is “success” faster growth, larger size, and
greater persistence, as researchers thought in the 1970s and 1980s? Or is “success” how well performance
matches the entrepreneur’s objectives, as more recent research argues? Even when using the same definition
of success, research offers little consensus about gender differences in entrepreneurial success.
Many people believe that women-led firms under-perform firms led by men, but empirical evidence offers only
weak support for this conclusion. The studies listed in the following chart all used reasonably large samples,
but produced disparate results. Some conclude that women-owned firms employ fewer workers, others found
no difference. Some conclude that women-owned firms take in less revenue, others found no difference.
Conclusions about profitability of women’s firms range from less to more than men-owned firms, as do
conclusions about failure rates. None of the studies listed found that women have more desire than men to
grow their business, but some found no gender difference. The contradictory results could stem from
differences over time and across industries and nations, but whatever produces them, they leave us unable to
deduce confidently whether founder’s sex plays a substantial role in the success of a business.
Women-Owned Businesses (as compared to Men-Owned Businesses)
[US studies unless otherwise noted]
Type Study Finding about Women Firms
Employment Rosa et al. 1996 Employ fewer workers; less likely to have at
least 20 employees after 12 months of
operation
Industry Canada 1994 Fewer employees
Menzies et al. 2004 No difference in Canadian firms
Coleman 2005 No fewer employees when controlled for sales
level and industry sector
Revenues Rosa et al. 1996 Lower
Johnson and Storey
1993
Lower
Brush et al. 2003 Low, with only 16% having annual revenues
1
The social science literature considers comparative success of firms founded by men and women, and possible causes
for differences between the two. See, for example, Carter 2000; Buttner 2001; Gundry et al. 2002; Schmidt and Parker
2003; Menzies et al. 2004; and Still 2005.
2
(based on CWBR
data)
over $500K
Cliff 1998 Lower
Menzies et al. 2004 Similar rates of economic performance in
Canadian firms
Kalleberg and Light
1991
No difference in economic performance in 400
businesses in Indiana
Hisrich et al. 1997 Similar revenue level
Cuba, DeCenzo, and
Anish 1983
Lower revenue
DuRietz and
Henrekson 2000
Comparable economic performance in
Sweden
Profitability Industry Canada 1994 Less profitable
Hisrich et al. 1997 Number of years to break-even point is similar
Coleman 2005 Significantly more profitable in return on sales
Business failure rate NFWBO 2001 Lower
Johnson and Storey
1993
Lower
Carter, Williams, and
Reynolds 1997
Higher
Robb 2002 Higher
Srinivasan, Woo, and
Cooper 1993
Higher
Boden and Nucci 2000 Higher
Chell and Baines
(1998)
No statistical difference when take into
consideration industry, age of firm, etc.
Perry 2002 No statistical difference
Desire to grow the
business
Kolvereid 1992 No difference between male and female
entrepreneurs in Norway
Morris et al. (2006)
based on NWBC data
Weak, with expectation of five-year revenue
goals under $1 million
Rosa, Carter, and
Hamilton (1994)
Less likely than men (43% to 34%)
If gender differences in firm success do exist, they may be a product of differential access to resources or of
founder intentions. The effects of human, social, and financial capital are discussed in other reviews by these
authors and will not be discussed in detail here.
2
Let us simply assert that differences in education and
experience, effective business networks, and access to financing all might be partial explanations.
Founder intention might also differ by sex. This possibility is the key issue distinguishing between past and
current research into gendered success outcomes. For example, the smaller size of women-owned firms
2
We will make one exception, to consider a recent study that compares male- and female-owned businesses’ access to
bank funding and specifically links this access to firm growth. Examining a large Australian sample of entrepreneurs,
Watson (2006) finds lower levels of bank funding in female-owned compared to male-owned firms. He attributes this
difference not to bank discrimination, but instead to the fact that women business owners are more risk averse and have a
greater need to feel in control of their business. This gender difference in external funding is more prevalent in older than
more recent firms. Growth, he finds, is not significantly correlated with a firm’s level of bank funding. Growth is positively
correlated, however, with profitability of the firm. For younger firms, there is no difference in growth rates by sex of the
owner; but for more established firms, growth rates for female firms are significantly greater than for male firms. The
author hypothesizes the stronger growth rate in mature, women-led funds may be because these firms have more internal
funds to reinvest in the business than the mature, male-led firms.
3
seems to be an outcome of the lower thresholds women founders set on the size of their business (Cliff, 1998).
There are many possible reasons women set lower thresholds than men. Perceived risks of high-rate growth or
desire to balance work and career both concern women more than men and lead them to limit firm size (Cliff,
1998). Women may also intentionally keep their business small in order to lessen the chance they will lose
control, e.g. through dilution of power from equity investment (Still, 2005, Cliff, 1998), or to avoid conflict with
family responsibilities (England and McCreary 1987). Other reasons for women’s deliberate size restrictions
could be that women’s socialization affects the process they use when making business growth decisions, or
leads them to weigh risks and rewards differently from men (Orser and Hogarth-Scott, 2002). Thus, although
there are many similarities in the motivations of men and women entrepreneurs,
3
there also appear to be
differences that produce gendered outcomes.
The remainder of this review examines three studies that speak to the issue of growth, and one study that
speaks to business survival rates. The first study finds that firm growth is a matter of rational choices between
financial and non-financial factors. Orser and Hogarth-Scott interviewed 139 people (including 33 women)
entrepreneurs in five Canadian cities concerning their reasons for deciding to pursue or not pursue a growth
strategy. They considered seven kinds of influences on growth decisions: (1) recognition and accomplishment
(including employment creation, heightened employee morale, industry and product recognition, community
contribution), (2) personal costs of growth (including personal stress, work-family balance, time for the
business, time for family), (3) resources for growth (including capital, staff, and administrative assistance,
time), (4) support services (including accounting assistance, staff support, and support from spouse), (5)
opinions of “salient others” (including business partners, spouse, and clients), (6) tensions that arise from
growth (including personal stress, the need to monitor employee’s work more closely, and the influence of the
external banker on the business), and (7) the ability of the entrepreneur to maintain control. There were
statistically significant gender differences in only three of these factors: (1) recognition/accomplishment, (2)
personal costs, and (5) opinions of others. The authors conclude that women owners more than men are
inhibited by personal demands such as “family time, personal balance, and the additional stress would have.”
They also find that both men and women are affected by “financial and non-financial outcomes, the opinions of
referent others, and the need for life balance.” Thus, decisions about firm growth are gendered because the
circumstances of men’s and women’s lives make some considerations more important for women than for
men.
The second of these studies compares women entrepreneurs based on the growth strategies they have in
mind for their business. Gundry and Welsch (2001) surveyed a random sample of 832 women business
owners in the United States and found striking differences between business owners who had a high-growth
orientation and those who did not
4
. They found that:
“High-growth-oriented entrepreneurs were significantly more likely to pursue (in order of
importance) market expansion (e.g., adding a new product or service and expanding advertising
and promotion, etc.); technological change (e.g., acquiring new equipment or service and
computerizing current operations); search for financing (e.g., seeking professional advice and
applying for loans); operations planning (e.g., expanding current facilities); and organizational
development (e.g., off-site training of employees). Further, our findings suggest that key
strategic success factors perceived by high-growth-oriented entrepreneurs are the reputation
(image) of their firms, a strong focus on the quality of the product or service, available cash to
grow the business, and effective leadership. …
3
Both male and female entrepreneurs express interest in owning their own business because of the desire for
independence, self-achievement, and internal locus of control. (Morris et al. 2006 cites Sarri and Trihopoulou 2005;
Orhan and Scott 2001; Littunen 2000; Birley 1989; Scott 1986). Sonfield, Lussier, Corman, and McKinney (2001) found
men and women similarly distributed in their willingness to take risk in their business.
4
Their findings contradict earlier work by Birley and Westhead (1994), which studied 405 business owners in Britain and
found that the stated reason for starting a business has no correlation to the subsequent growth and size of the business.
4
Ambitious entrepreneurs were significantly more motivated to do whatever it takes to
grow their enterprises and to make the necessary sacrifices to ensure the success of their
businesses. …
The high-growth entrepreneurs were significantly more willing to incur opportunity costs
associated with venture growth. They desired to own and grow their businesses despite
earning less than they could elsewhere and would readily give up a more promising career for
business ownership. … High-growth entrepreneurs, therefore, would put aside some of their
personal or family goals and incur sacrifices and penalties, pursuing a “delayed gratification”
model of behavior because they are committed to the growth of their ventures. However,
neither group in our study perceived owning business as more important than spending time
with their families.”
Gundry and Welsch’s study did not consider men, so it is impossible to tell how women entrepreneurs are
similar to and different from male entrepreneurs with respect to growth intentions and related characteristics.
Another note about this study is that the authors apparently consider growth an absolute measure of success;
they never indicate that business owners might be successful by achieving some other goal with their
entrepreneurship than growth. For example, in their literature review they contrast “high-growth companies
and their less successful competitors” as though these are necessarily antonyms. Nevertheless, this study
documents variation in women’s orientation toward the growth of their businesses and shows that the variation
is positively associated with actual growth.
The third study, by Morris et al. (2006), also includes only women and reiterates Gundry and Welsch’s findings
that women entrepreneurs make conscious choices about growth and they understand the trade-offs involved
with a growth strategy. Morris et al. surveyed 103 women entrepreneurs in the United States and conducted
in-depth interviews with 50 of them. The authors found strong distinguishing characteristics between women
with a high-growth strategy as compared to those with a modest-growth strategy. A sample of their findings is
encapsulated in the following table.
Differences Between High-Growth-Oriented and Moderate-Growth-Oriented
Entrepreneurs (from Morris et al. 2006)
Characteristic High-growth Moderate-growth
Growth motivations Desire to be rich, challenge,
prove self, happiness,
satisfaction, more profits
Sustainable income, family
financial security
Characteristics of growth
aspirations
Motivated by the challenge,
competitive, goal-oriented
Control growth at levels
consistent with life styles and
family needs
Personal implications Satisfaction of work in their
life, strongly identify business
as extension of one’s self-
concept
A tool for income substitution,
financial security, and
accommodating other life
priorities
Attitude toward debt Tool to achieving their end
goal
Avoid external funding to grow
the business, assume debt
only when necessary
Obstacles to strategy Gaining access to Old Boys
Club, difficult business
environment, competitors,
personal managerial skills,
inability to hire qualified
employees
Personal background and
training, family responsibilities,
access to bank financing
5
Role of family in business none Hire family members as
employees to keep the family
together
Morris et al. also reported findings for the entire set of respondents, not broken out by level of growth
aspiration. They found the most common motive for starting the business was “the ability to do what I want,”
followed in order by “personal expression,” “making a living,” and “helping people.” Only a few answered
“getting rich,” “hitting the corporate glass ceiling,” or “prejudice or discrimination.” The most commonly
mentioned goals were “loyal customers” and “sales growth,” with very few respondents mentioning “growth in
employees,” “personal wealth creation” or “contribution to the community.” There was only weak agreement
when the respondents were asked if women face unique obstacles in being entrepreneurs, and when they
mentioned any particular obstacles they were overwhelmingly related to access to financial capital. In sum, this
study also measured variation among female founders’ intentions regarding growth of their firms, and it
confirmed the relationship between founder intention to grow and actual growth, both in terms of number of
employees and rates of sales increases.
The fourth and last study we will consider in depth concerns the survival rates of women- versus men-owned
businesses in the United States. Robb (2002) linked microdata on business survival with longitudinal Census
data on women-owned businesses.
5
The large sample of almost 45,000 firms tracks companies that survived
for four years beginning in 1992. Robb found that in a given year, women-owned businesses were 5% more
likely to fail than male-owned businesses; and more generally, even after controlling for industry, number of
employees, legal form (e.g. sole proprietorships were more likely to close than S corporations or partnerships),
organizational structure, location (e.g. single location firms more likely to close than businesses with multiple
locations), and business age (young firms more likely to close than older firms), women-owned firms were still
less likely to survive than firms owned by men. This study provides strong evidence that firm failure is
gendered, but it contradicts the results of another large and recent study (NFWBO, 2001), which found that
failure rates for women-owned firms were lower than for men-owned firms. Methodologies may account for the
disparate conclusions, but the evidence leaves us unable to determine where reality lies. Furthermore, if the
Robb study is correct, the gendered failure rates found cannot be explained as a difference in founder
intention. Unequal access to human, social, and financial capital would be more likely explanations.
In conclusion, it seems that for most measures of success, women’s firms are at least no more successful than
men’s. It remains unclear, however, whether these measures of success are relevant, because women and
men entrepreneurs may have different intentions. More importantly for our purpose, the research leaves us
unable to discern whether findings apply to entrepreneurship in IT because few studies examine high-tech
fields, much less IT.
5
The study also provides data on minority-owned businesses.
6
Bibliography
Birley, Sue (1989). Female Entrepreneurs: Are They Really Any Different? Journal of Small Business Management vol. 27, no. 1, pp.
32-37.
Birley, Sue and Paul Westhead (1994). A Taxonomy of Business Start-Up Reasons and Their Impact on Firm Growth and Size, Journal
of Business Venturing vol. 9, pp. 7-31.
Boden, R. and A. Nucci (2000). On the Survival Prospects of Men’s and Women’s New Business Ventures, Journal of Business
Venturing vol. 15, no. 4, pp. 347-362.
Brush, C.G., N.M. Carter, E. Gatewood, P.G. Greene, and M. Hart (2003). Venture Capital Access: Is Gender an Issue? pp. 141-154 in
D. Hart, ed., The Emergence of Entrepreneurship Policy: Governance, Start-ups and Growth in the U.S. Knowledge Economy London:
Cambridge University Press.
Buttner, E. Holly (2001). Examining Female Entrepreneurs’ Management Style: An Application of a Relational Frame, Journal of
Business Ethics vol. 29, pp. 253-269.
Carter, Sara (2000). Improving the Numbers and Performance of Women-Owned Businesses: Some Implications for Training and
Advisory Services, Education + Training vol. 42 pp. 326-333.
Carter, N.M., M. Williams, and P.D. Reynolds (1997). Discontinuance Among New Firms in Retail: The Influence of Initial Resources,
Strategy, and Gender, Journal of Business Venturing vol. 12, pp. 125-145.
Chell, Elizabeth and Susan Baines (1998). Does Gender Affect Business ‘Performance’? A Study of Microbusinesses in Business
Services in the UK, Entrepreneurship and Regional Development vol. 10, pp. 117-135.
Cliff, Jennifer E. (1998). Does One Size Fit All? Exploring Relationships Between Attitudes Towards Growth, Gender, and Business
Size, Journal of Business Venturing vol. 13, no. 6, pp. 523-542.
Coleman, Susan (2005). The Impact of Human Capital Measures on the Performance of Small, Women-Owned Firms, manuscript,
University of Hartford.
Cuba, R., D. DeCenzo, and A. Anish (1983). Management Practices of Successful Female Business Owners, American Journal of
Small Business vol. 8, no. 2, pp. 40-45.
DuRietz, A. and M. Henrekson (2000). Testing the Female Underperformance Hypothesis, Small Business Economics vol. 14, no. 1,
pp. 1-10.
Gundry, Lisa K. and Harold P. Welsch (2001). The Ambitious Entrepreneur: High Growth Strategies of Women-Owned Businesses,
Journal of Business Venturing vol. 16, pp. 453-470.
Gundry, Lisa K., Miriam Ben-Yoseph, and Margaret Posig (2002). Contemporary Perspectives on Women’s Entrepreneurship: A
Review and Strategic Recommendations, Journal of Enterprising Culture vol. 10, number 1, pp. 67-86.
Hisrich, R., C. Brush, D. Good, and G. DeSouza (1997). Performance in Entrepreneurial Ventures: Does Gender Matter? Proceedings
of the Babson-Kauffman Frontiers in Entrepreneurial Research Conference Wellesley, MA: Babson College, pp. 238-255.
Johnson, S. and D. Storey (1993). Male and Female Entrepreneurs and Their Businesses, in S. Allen and C. Truman, eds. Women in
Business: Perspectives on Women Entrepreneurs London: Routledge.
Kalleberg, A. and K.T. Light (1991). Gender and Organizational Performance: Determinants of Small Business Survival and Success,
Academy of Management Journal vol. 34, no. 1, pp. 136-161.
Kolvereid, L. (1992). Growth Aspirations Among Norwegian Entrepreneurs, Journal of Business Venturing vol. 5, pp. 209-222.
Littunen, H. (2000). Entrepreneurship and the Characteristics of the Entrepreneurial Personality, International Journal of Entrepreneurial
Behavior and Research vol. 6, no. 6, pp. 295-310.
Menzies, Teresa V., Monica Diochon, and Yvon Gasse (2004). Examining Venture-related Myths Concerning Women Entrepreneurs,
Journal of Developmental Entrepreneurship vol. 9, pp. 89-107.
7
Morris, Michael H., Nola N. Miyasaki, Craig E. Watters, and Susan M. Coombes (2006). The Dilemma of Growth: Understanding
Venture Size Choices of Women Entrepreneurs, Journal of Small Business Management vol. 44, no. 2, pp. 221-244.
National Foundation for Women Business Owners (2001). Entrepreneurial Vision in Action: Exploring Growth Among Women- and
Men-Owned Firms Washington, DC; NFWBO.
Orhan, M. and D. Scott (2001). Why Women Enter Into Entrepreneurship: an Explanatory Model. Women in Management Review vol.
16, no. 5, pp. 232-243.
Orser, Barbara and Sandra Hogarth-Scott (2002). Opting for Growth: Gender Dimensions of Choosing Enterprise Development,
Canadian Journal of Administrative Sciences vol. 19, pp. 284-300.
Perry, Stephen C. (2002). A Comparison of Failed and Non-failed Small Businesses in the United States: Do Men and Women Use
Different Planning and Decision Making Strategies? Journal of Developmental Entrepreneurship vol. 7, pp. 415-428.
Robb, Alice M. (2002). Entrepreneurial Performance by Women and Minorities: The Case of New Firms, Journal of Developmental
Entrepreneurship vol. 7 (December), pp. 383-397.
Rosa, P., S. Carter, and D. Hamilton (1996). Gender As a Determinant of Small Business Performance: Insights From a British Study,
Small Business Economics vol. 8, pp. 463-478.
Sarri, K. and A. Trihopoulou (2005). Female Entrepreneurs’ Personal Characteristics and Motivation: A Review of the Greek Situation,
Women in Management Review vol. 20, no. 1, pp. 24-36.
Schmidt, Ruth Anne and Cathy Parker (2003). Diversity in Independent Retailing: Barriers and Benefits – The Impact of Gender,
International Journal of Retail & Distribution Management vol 31, pp. 428-439.
Scott, C.E. (1986). Why More Women are Becoming Entrepreneurs, Journal of Small Business Management vol. 24, no. 4, pp. 37-44.
Sonfield, M., R. Lussier, J. Corman, and M. McKinney (2001). Gender Comparisons in Strategic Decision-Making: An Empirical
Analysis of the Entrepreneurial Strategy Mix, Journal of Small Business Management vol. 39, no. 2, pp. 165-173.
Srinivasan, R., C. Woo, and A. Cooper (1993). Performance Determinants for Male and Female Entrepreneurs, pp. 43-55 in W.D.
Bygrave et al, eds. Frontiers of Entrepreneurship Research Boston: Babson College.
Still, Leonie (2005). The Constraints Facing Women Entering Small Business Entrepreneurship, pp. 55-65 in Sandra Fielden and
Marilyn Davidson, International Handbook of Women & Small Business Entrepreneurship.
Watson, John (2006). External Funding and Firm Growth: Comparing Female- and Male-Controlled SMEs, Venture Capital vol. 8, no. 1,
pp. 33-49.
This paper was produced in 2007 on behalf of the National Center for Women & Information
Technology with generous support from the Ewing Marion Kauffman Foundation.
NATI ONAL CENTER FOR WOMEN & I NFORMATI ON TECHNOLOGY
Revolutionizing the Face of Technology
SM
doc_801556644.pdf
In this such a detailed information amplify review of research literature on womens entrepreneurship in the information technology.
1
NATI ONAL CENTER FOR WOMEN & I NFORMATI ON TECHNOLOGY
ENTREPRENEURI AL REPORT SERI ES
Gender Differences in Firm Size, Growth, and Persistence:
A Review of Research Literature on Women’s Entrepreneurship in the Information
Technology Field
William Aspray and J. McGrath Cohoon
Are there differences in the success of firms started by men and women?
1
The answer seems to be yes,
although it depends to some extent on how “success” is defined. Is “success” faster growth, larger size, and
greater persistence, as researchers thought in the 1970s and 1980s? Or is “success” how well performance
matches the entrepreneur’s objectives, as more recent research argues? Even when using the same definition
of success, research offers little consensus about gender differences in entrepreneurial success.
Many people believe that women-led firms under-perform firms led by men, but empirical evidence offers only
weak support for this conclusion. The studies listed in the following chart all used reasonably large samples,
but produced disparate results. Some conclude that women-owned firms employ fewer workers, others found
no difference. Some conclude that women-owned firms take in less revenue, others found no difference.
Conclusions about profitability of women’s firms range from less to more than men-owned firms, as do
conclusions about failure rates. None of the studies listed found that women have more desire than men to
grow their business, but some found no gender difference. The contradictory results could stem from
differences over time and across industries and nations, but whatever produces them, they leave us unable to
deduce confidently whether founder’s sex plays a substantial role in the success of a business.
Women-Owned Businesses (as compared to Men-Owned Businesses)
[US studies unless otherwise noted]
Type Study Finding about Women Firms
Employment Rosa et al. 1996 Employ fewer workers; less likely to have at
least 20 employees after 12 months of
operation
Industry Canada 1994 Fewer employees
Menzies et al. 2004 No difference in Canadian firms
Coleman 2005 No fewer employees when controlled for sales
level and industry sector
Revenues Rosa et al. 1996 Lower
Johnson and Storey
1993
Lower
Brush et al. 2003 Low, with only 16% having annual revenues
1
The social science literature considers comparative success of firms founded by men and women, and possible causes
for differences between the two. See, for example, Carter 2000; Buttner 2001; Gundry et al. 2002; Schmidt and Parker
2003; Menzies et al. 2004; and Still 2005.
2
(based on CWBR
data)
over $500K
Cliff 1998 Lower
Menzies et al. 2004 Similar rates of economic performance in
Canadian firms
Kalleberg and Light
1991
No difference in economic performance in 400
businesses in Indiana
Hisrich et al. 1997 Similar revenue level
Cuba, DeCenzo, and
Anish 1983
Lower revenue
DuRietz and
Henrekson 2000
Comparable economic performance in
Sweden
Profitability Industry Canada 1994 Less profitable
Hisrich et al. 1997 Number of years to break-even point is similar
Coleman 2005 Significantly more profitable in return on sales
Business failure rate NFWBO 2001 Lower
Johnson and Storey
1993
Lower
Carter, Williams, and
Reynolds 1997
Higher
Robb 2002 Higher
Srinivasan, Woo, and
Cooper 1993
Higher
Boden and Nucci 2000 Higher
Chell and Baines
(1998)
No statistical difference when take into
consideration industry, age of firm, etc.
Perry 2002 No statistical difference
Desire to grow the
business
Kolvereid 1992 No difference between male and female
entrepreneurs in Norway
Morris et al. (2006)
based on NWBC data
Weak, with expectation of five-year revenue
goals under $1 million
Rosa, Carter, and
Hamilton (1994)
Less likely than men (43% to 34%)
If gender differences in firm success do exist, they may be a product of differential access to resources or of
founder intentions. The effects of human, social, and financial capital are discussed in other reviews by these
authors and will not be discussed in detail here.
2
Let us simply assert that differences in education and
experience, effective business networks, and access to financing all might be partial explanations.
Founder intention might also differ by sex. This possibility is the key issue distinguishing between past and
current research into gendered success outcomes. For example, the smaller size of women-owned firms
2
We will make one exception, to consider a recent study that compares male- and female-owned businesses’ access to
bank funding and specifically links this access to firm growth. Examining a large Australian sample of entrepreneurs,
Watson (2006) finds lower levels of bank funding in female-owned compared to male-owned firms. He attributes this
difference not to bank discrimination, but instead to the fact that women business owners are more risk averse and have a
greater need to feel in control of their business. This gender difference in external funding is more prevalent in older than
more recent firms. Growth, he finds, is not significantly correlated with a firm’s level of bank funding. Growth is positively
correlated, however, with profitability of the firm. For younger firms, there is no difference in growth rates by sex of the
owner; but for more established firms, growth rates for female firms are significantly greater than for male firms. The
author hypothesizes the stronger growth rate in mature, women-led funds may be because these firms have more internal
funds to reinvest in the business than the mature, male-led firms.
3
seems to be an outcome of the lower thresholds women founders set on the size of their business (Cliff, 1998).
There are many possible reasons women set lower thresholds than men. Perceived risks of high-rate growth or
desire to balance work and career both concern women more than men and lead them to limit firm size (Cliff,
1998). Women may also intentionally keep their business small in order to lessen the chance they will lose
control, e.g. through dilution of power from equity investment (Still, 2005, Cliff, 1998), or to avoid conflict with
family responsibilities (England and McCreary 1987). Other reasons for women’s deliberate size restrictions
could be that women’s socialization affects the process they use when making business growth decisions, or
leads them to weigh risks and rewards differently from men (Orser and Hogarth-Scott, 2002). Thus, although
there are many similarities in the motivations of men and women entrepreneurs,
3
there also appear to be
differences that produce gendered outcomes.
The remainder of this review examines three studies that speak to the issue of growth, and one study that
speaks to business survival rates. The first study finds that firm growth is a matter of rational choices between
financial and non-financial factors. Orser and Hogarth-Scott interviewed 139 people (including 33 women)
entrepreneurs in five Canadian cities concerning their reasons for deciding to pursue or not pursue a growth
strategy. They considered seven kinds of influences on growth decisions: (1) recognition and accomplishment
(including employment creation, heightened employee morale, industry and product recognition, community
contribution), (2) personal costs of growth (including personal stress, work-family balance, time for the
business, time for family), (3) resources for growth (including capital, staff, and administrative assistance,
time), (4) support services (including accounting assistance, staff support, and support from spouse), (5)
opinions of “salient others” (including business partners, spouse, and clients), (6) tensions that arise from
growth (including personal stress, the need to monitor employee’s work more closely, and the influence of the
external banker on the business), and (7) the ability of the entrepreneur to maintain control. There were
statistically significant gender differences in only three of these factors: (1) recognition/accomplishment, (2)
personal costs, and (5) opinions of others. The authors conclude that women owners more than men are
inhibited by personal demands such as “family time, personal balance, and the additional stress would have.”
They also find that both men and women are affected by “financial and non-financial outcomes, the opinions of
referent others, and the need for life balance.” Thus, decisions about firm growth are gendered because the
circumstances of men’s and women’s lives make some considerations more important for women than for
men.
The second of these studies compares women entrepreneurs based on the growth strategies they have in
mind for their business. Gundry and Welsch (2001) surveyed a random sample of 832 women business
owners in the United States and found striking differences between business owners who had a high-growth
orientation and those who did not
4
. They found that:
“High-growth-oriented entrepreneurs were significantly more likely to pursue (in order of
importance) market expansion (e.g., adding a new product or service and expanding advertising
and promotion, etc.); technological change (e.g., acquiring new equipment or service and
computerizing current operations); search for financing (e.g., seeking professional advice and
applying for loans); operations planning (e.g., expanding current facilities); and organizational
development (e.g., off-site training of employees). Further, our findings suggest that key
strategic success factors perceived by high-growth-oriented entrepreneurs are the reputation
(image) of their firms, a strong focus on the quality of the product or service, available cash to
grow the business, and effective leadership. …
3
Both male and female entrepreneurs express interest in owning their own business because of the desire for
independence, self-achievement, and internal locus of control. (Morris et al. 2006 cites Sarri and Trihopoulou 2005;
Orhan and Scott 2001; Littunen 2000; Birley 1989; Scott 1986). Sonfield, Lussier, Corman, and McKinney (2001) found
men and women similarly distributed in their willingness to take risk in their business.
4
Their findings contradict earlier work by Birley and Westhead (1994), which studied 405 business owners in Britain and
found that the stated reason for starting a business has no correlation to the subsequent growth and size of the business.
4
Ambitious entrepreneurs were significantly more motivated to do whatever it takes to
grow their enterprises and to make the necessary sacrifices to ensure the success of their
businesses. …
The high-growth entrepreneurs were significantly more willing to incur opportunity costs
associated with venture growth. They desired to own and grow their businesses despite
earning less than they could elsewhere and would readily give up a more promising career for
business ownership. … High-growth entrepreneurs, therefore, would put aside some of their
personal or family goals and incur sacrifices and penalties, pursuing a “delayed gratification”
model of behavior because they are committed to the growth of their ventures. However,
neither group in our study perceived owning business as more important than spending time
with their families.”
Gundry and Welsch’s study did not consider men, so it is impossible to tell how women entrepreneurs are
similar to and different from male entrepreneurs with respect to growth intentions and related characteristics.
Another note about this study is that the authors apparently consider growth an absolute measure of success;
they never indicate that business owners might be successful by achieving some other goal with their
entrepreneurship than growth. For example, in their literature review they contrast “high-growth companies
and their less successful competitors” as though these are necessarily antonyms. Nevertheless, this study
documents variation in women’s orientation toward the growth of their businesses and shows that the variation
is positively associated with actual growth.
The third study, by Morris et al. (2006), also includes only women and reiterates Gundry and Welsch’s findings
that women entrepreneurs make conscious choices about growth and they understand the trade-offs involved
with a growth strategy. Morris et al. surveyed 103 women entrepreneurs in the United States and conducted
in-depth interviews with 50 of them. The authors found strong distinguishing characteristics between women
with a high-growth strategy as compared to those with a modest-growth strategy. A sample of their findings is
encapsulated in the following table.
Differences Between High-Growth-Oriented and Moderate-Growth-Oriented
Entrepreneurs (from Morris et al. 2006)
Characteristic High-growth Moderate-growth
Growth motivations Desire to be rich, challenge,
prove self, happiness,
satisfaction, more profits
Sustainable income, family
financial security
Characteristics of growth
aspirations
Motivated by the challenge,
competitive, goal-oriented
Control growth at levels
consistent with life styles and
family needs
Personal implications Satisfaction of work in their
life, strongly identify business
as extension of one’s self-
concept
A tool for income substitution,
financial security, and
accommodating other life
priorities
Attitude toward debt Tool to achieving their end
goal
Avoid external funding to grow
the business, assume debt
only when necessary
Obstacles to strategy Gaining access to Old Boys
Club, difficult business
environment, competitors,
personal managerial skills,
inability to hire qualified
employees
Personal background and
training, family responsibilities,
access to bank financing
5
Role of family in business none Hire family members as
employees to keep the family
together
Morris et al. also reported findings for the entire set of respondents, not broken out by level of growth
aspiration. They found the most common motive for starting the business was “the ability to do what I want,”
followed in order by “personal expression,” “making a living,” and “helping people.” Only a few answered
“getting rich,” “hitting the corporate glass ceiling,” or “prejudice or discrimination.” The most commonly
mentioned goals were “loyal customers” and “sales growth,” with very few respondents mentioning “growth in
employees,” “personal wealth creation” or “contribution to the community.” There was only weak agreement
when the respondents were asked if women face unique obstacles in being entrepreneurs, and when they
mentioned any particular obstacles they were overwhelmingly related to access to financial capital. In sum, this
study also measured variation among female founders’ intentions regarding growth of their firms, and it
confirmed the relationship between founder intention to grow and actual growth, both in terms of number of
employees and rates of sales increases.
The fourth and last study we will consider in depth concerns the survival rates of women- versus men-owned
businesses in the United States. Robb (2002) linked microdata on business survival with longitudinal Census
data on women-owned businesses.
5
The large sample of almost 45,000 firms tracks companies that survived
for four years beginning in 1992. Robb found that in a given year, women-owned businesses were 5% more
likely to fail than male-owned businesses; and more generally, even after controlling for industry, number of
employees, legal form (e.g. sole proprietorships were more likely to close than S corporations or partnerships),
organizational structure, location (e.g. single location firms more likely to close than businesses with multiple
locations), and business age (young firms more likely to close than older firms), women-owned firms were still
less likely to survive than firms owned by men. This study provides strong evidence that firm failure is
gendered, but it contradicts the results of another large and recent study (NFWBO, 2001), which found that
failure rates for women-owned firms were lower than for men-owned firms. Methodologies may account for the
disparate conclusions, but the evidence leaves us unable to determine where reality lies. Furthermore, if the
Robb study is correct, the gendered failure rates found cannot be explained as a difference in founder
intention. Unequal access to human, social, and financial capital would be more likely explanations.
In conclusion, it seems that for most measures of success, women’s firms are at least no more successful than
men’s. It remains unclear, however, whether these measures of success are relevant, because women and
men entrepreneurs may have different intentions. More importantly for our purpose, the research leaves us
unable to discern whether findings apply to entrepreneurship in IT because few studies examine high-tech
fields, much less IT.
5
The study also provides data on minority-owned businesses.
6
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This paper was produced in 2007 on behalf of the National Center for Women & Information
Technology with generous support from the Ewing Marion Kauffman Foundation.
NATI ONAL CENTER FOR WOMEN & I NFORMATI ON TECHNOLOGY
Revolutionizing the Face of Technology
SM
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