The Journal Of Small Business And Entrepreneurship Is The Journal Of The Canadian Council

Description
The Journal Of Small Business And Entrepreneurship Is The Journal Of The Canadian Council For Small Business And Entrepreneurship

The Journal of Small Business and Entrepreneurship is the journal of the Canadian
Council for Small Business and Entrepreneurship/Conseil canadien des PME et de
l’entrepreneuriat (CCSBE/CCPME) and published by the Faculty of
Administration of the Universit y of Regina
Managing Editor/
Directeur de rédaction
Robert Anderson
Faculty of Administration
University of Regina
Associate Editors
Rédacteurs adjoints
Denis J. Garand
Faculté des sciences de l'administration
Université Laval

Teresa Menzies
Faculty of Business
Brock University

Eric Morse
Richard Ivey School of Business
University of Western Ontario

Peter Robinson
School of Business
Utah Valley State College

Christopher Ross
J ohn Molson School of Business
Concordia University
Founding Editor
Rédacteur-fondateur
Raymond W.Y. Kao
McMaster University
Printed by/imprimé par Canadian Plains Research Center, University of Regina
© Canadian Council for Small Business and Entrepreneurship/Conseil canadien
des PME et de l’entrepreneuriat (CCSBE/CCPME) and th e Faculty of
Administration of the University of Regina
ISSN 0827-6331
The Journal of Small Business and Entrepreneurship
Faculty of Administration, University of Regina
Regina, Saskatchewan, Canada S4S 0A2
(306) 585-4728, Fax (306) 585-4805, [email protected]

The Journal of Small Business and Entrepreneurship is covered by the following abstracting and
indexing services: J ournal of Economic Literature (on-line and CD), EconLit, Cabells Directory,
ProQuest, and CBCA Business.
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Editorial Review Board

Thomas A. Bryant Nicholls State University USA
Camille Carrier Université du Québec à Trois -Rivières Canada
David Crick University of Central England in Birmingham United Kingdom
Chew Soon Beng Nanyang Technological University Singapore
Leo Paul Dana University of Canterbury New Zealand
Monica Diochon Saint Francis Xavier University Canada
Erwin Dreessen Industry Canada Canada
Alain Fayolle Institut National Polytechnique de Grenoble France
Louis J acques Filion HEC Montréal Canada
Eileen Fischer York University Canada
Fock Siew Tong Nanyang Technological University Singapore
Howard H. Frederick New Zealand Centre for Innovation and
Entrepreneurship
New Zealand
Craig Galbraith University of North Carolina at Wilmington USA
Denis J . Garand Université Laval Canada
Yvon Gasse Université Laval Canada
Allan A. Gibb DurhamUniversity United Kingdom
J udy H. Gray Monash University Australia
Patricia G. Greene Babson College USA
GrahamHall University of Manchester United Kingdom
Kevin Hindle Swinburne University of Technology Australia
Benson Honig Wilfrid Laurier University Canada
Pierre-André J ulien Université du Québec à Trois -Rivières Canada
Norris Krueger INRA/Boise State USA
Rolland LeBrasseur Laurentian University Canada
Reg Litz University of Manitoba Canada
Colin Mason University of Strathclyde United Kingdom
Edward McMullan University of Calgary Canada
Teresa Menzies Brock University Canada
Michael Morris Syracuse University USA
Eric A. Morse University of Western Ontario Canada
WillemA. Naudé PotchefstroomUniversity South Africa
Barbara Orser University of Ottawa Canada
J . Hanns Pichler Vienna University of Economics Austria
Rebecca Reuber University of Toronto Canada
Allan Riding Carleton University Canada
Peter Robinson Utah Valley State College USA
Christopher Ross Concordia University Canada
Pramodita Sharma Wilfrid Laurier University Canada
Louise St-Cyr HEC Montreal Canada
David J . Storey University of Warwick United Kingdom
Howard E. Van Auken Iowa State University USA
Thierry Verstraete Université Montesquieu Bordeaux France
K. Mark Weaver Rowan University USA

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Sustaining the Momentum
This edition of the Journal of Small Business and Entrepreneurship presents a show-
case of primarily Canadian papers focusing on gender, training and entrepreneurship. This
initiative is motivated, in part, by observations that Canada is a leader in women’s entre-
preneurship (Global Entrepreneurship Monitor, 2000). And while policies such as mater-
nity leave, pay equity, and universal health care provide fundamental social, medical and
legal rights for Canadian women, challenges remain with respect to their economic self-
sufficiency and business performance. For example, in this issue Industry Canada docu-
ments that women-owned firms are significantly smaller, newer and less profitable than
SMEs owned by men. Canadian women are also significantly more likely to perceive
themselves as involuntary self-employed or “force entrepreneurs” (Hughes, 2006). There
remains the need therefore to understand factors associated with gender differences in
enterprise creation and performance.
The foundations of this issue follow two Canadian initiatives: the Prime Minister’s
Task Force on Women Entrepreneur (National Liberal Caucus Research Bureau, 2003)
and a 2004 conference titled “Sustaining the Momentum: An Economic Forum on Women
Entrepreneurs.” The two-day conference, chaired by Industry Canada and Carleton
University, brought together 120 management researchers, women and family studies
experts, economists, federal and provincial policy makers, small business service
providers and women entrepreneurs. The purposes of the conference were to share
research, examine government support for women business owners, and identify gaps in
research and public policy. Delegates were also asked to consider two questions: “What are
the implications of the research findings for public policy?” and “What are the priorities
for action?” The Priorities for Action articulated by delegates are presented in Table 1
(Orser and Connell, 2004).
Four important themes emerged from the conference: the significant and increasing
contribution of women business owners to the Canadian and global economy; the ongo-
ing absence of data about the participation rates and impact of women business owners in
local, provincial and federal programs; the need to undertake and communicate research
about women entrepreneurs; and a desire for better co-coordinated services, research and
policy to support women entrepreneurs. Many readers know that these observations are
not uniquely Canadian. The need for quality research about gender differences in business
practices, an absence of related policy co-ordination across governments; unfounded
assumptions about women’s participation in training programs, and a lack of gender-
focused and/or gender-sensitive SME training programs are documented in a number of
international reports.
1
And while the economic contributions of women business owners are increasingly
recognized, significant change in public support of and policy about women business
owners is not anticipated. This is for four reasons. First, women’s economic self-suffi-
ciency and business growth are not political or bureaucratic priorities within most OECD
Journal of Small Business and Entrepreneurship 19, no. 2 (2006): pp. iii–x iii
_________________________
1. See Good Practices in the Promotion of Female Entrepreneurship. Examples for Europe and other OECD
Countries (2002), Austrian Institute for Small Business Research on behalf of the European Commission,
Enterprise Directorate-General; Best Practices in Supporting Women’s Entrepreneurship in the United States.
A Compendium of Public and Private Sector Organizations and Initiatives (2004), Washington: The National
Women’s Business Council; Promoting Entrepreneurship Amongst Women, Best Report, No. 2 (2004),
Enterprise Directorate-General, European Commission; The Keys for Successful Women Entrepreneurs. The
Strength of Networks, A Lever for Progress (2002), The OECD Bologna Process.
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countries, including Canada. Most often, the championing women entrepreneurs is left to
individual initiative and/or junior government staff. There have been few public state-
ments by politicians about women business owners in the recent Canadian federal elec-
tion. Without a top down federal or political policy agenda, support programs remain vul-
nerable to funding cuts, staff turnover and competing program demands. This has been
witnessed in Canada with associated program cuts within agencies such as Foreign Affairs
and International Trade, Status of Women Canada and Canadian International
Development Agency (Prime Minister’s Task Force on Women Entrepreneurs; Orser,
2003). Second, there are few visible or well understood mechanisms that support women
business owners’ input or advisement in federal or provincial programs and/or policies.
Third, few governments have established performance benchmarks and policy standards
to ensure existing policies and programs include participation of women or reflect women
business owners’ needs (e.g., innovation agendas, trade missions and export training pro-
grams, micro-lending, unemployment retaining for the self-employed). Fourth, confound-
ing these challenges is the observation that advocacy on behalf of women business owner
is not well co-ordinated. Unlike the US, Canada has no dedicated lobby organization to
voice the concerns and needs of women entrepreneurs to policy makers and politicians.
As a result, women’s associations do not speak with one voice. Finally, there are few
incentives or mechanisms for academic researchers to consult with entrepreneurs, associ-
ations and governments. Research that is undertaken is rarely communicated across stake-
holder groups. It is our hope therefore that this issue will provide a step in closing the
research, policy and program gaps.
The issue opens with three large-scale studies that profile Canadian entrepreneurs. The
introductory report by Industry Canada provides an important synopsis about the per-
formance, distribution, capitalization and obstacles to the growth of majority women- and
male-owned firms. The paper also documents significant gender differences in key
aspects of business ownership such as performance and profitability and provides impor-
tant data for understanding the incidence and economic contributions of Canadian women
entrepreneurs.
The second paper by Karen Hughes then profiles self-employment in Canada.
Examining the association between motives and economic outcomes of business owner-
ship, the author presents a typology of self-employment. Her model describes: “classic
entrepreneurs,” those driven by a desire for independence, freedom, own boss, challenge,
creativity, success, control, responsibility, decisions, more money, less tax, and opportu-
nities relating to a family business; “forced entrepreneurs” individuals who perceive
themselves as lacking suitable job opportunities; and “work-family entrepreneurs.” This
latter group are more likely to cite work-family balance, flexible hours, and ability to work
from home as motives of self-employment. Important gender differences are again docu-
mented including the incidence rates among those who perceive themselves as classic
entrepreneurs compared to “forced entrepreneurs” and an association between these
motives and financial outcomes.
The third paper, authored by J udith Madill, Allan Riding and George Haines, exam-
ines a key concern for women entrepreneurs—access to capital. The study helps to dispel
a number of Canadian myths, documenting that gender of the SME ownership team does
not affect either loan turndown rates or rates of loan application. The study also reports
that women business owners apply less frequently for business loans than male owners
and that gender differences are most often attributable to systemic differences in the char-
iv ORSER andMADILL
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acteristics of the enterprises (particularly, age of firm, investment in R&D, growth rate,
experience of the business owner and whether or not the firm is home-based or an
exporter).
From profiles to programs, the next group of papers describe the structure, challenges
and outcomes of two gender-specific training initiatives. Barbara Orser and Allan Riding
examine the Women Enterprise Initiative, a Western Canadian training program; Nan
Langowitz, Norean Sharpe and Mary Godwyn review the US Women’s Business Center
Initiative. These papers help to further inform readers about arguments to support and crit-
icise gender-based training, training pedagogy, program strengths and weaknesses and
research and policy recommendations. In both case studies, the research teams conclude
that the programs appear effective in supporting nascent and early-stage women-owned
firms.
The final two papers examine different learning environments. Pat Thomas and Susan
Moisey employ multiple research techniques to examine the on-line learning and social
experiences of four Canadian women business owners. A taxonomy of women entrepre-
neurs’ informal learning is presented, one that reflects a continuum of self-direction
reflecting “autonomous,” “relational,” “incidental” and “social (tacit)” learning. The study
also reports that the women embraced the Internet to access informational capital via the
Web and value the broad range of social capital. From on-line learning, the research trav-
els into the Canadian post-secondary classroom, where Teresa Menzies and Heather
Tatroff describe low enrolments of female students in entrepreneurship courses. The
exploratory study suggests the disparity reflects traditional gender patterns in enrolment
for the various faculties. However, even within program such as business faculties where
there are no gender differences in enrolment, the majority of entrepreneurship students
were male.
The work of our authors contributes to the Priorities for Action in several ways. The
studies document the heterogeneous nature of women’s entrepreneurship, including the
diversity in start-up motives, firm size, structure, capitalization, performance and learning.
These studies also exemplify a range of topics, methods and writing styles that can be used
to understand the lives, contributions and needs of women business owners. Much remains
to be done. We hope that this issue will further motivate: researchers to undertake studies
about gender, entrepreneurship and public policy; business owners to continue to voice
concerns to private and service providers; and policy makers to ensure programs and poli-
cies include the participation in and development needs of women entrepreneurs.
We close by thanking our project partners and reviewers for their time, support and
efforts to ensure that all papers included in this issue are of outstanding quality.
Barbara Orser
Deloitte Chair in the Management of Growth Enterprises
School of Management, University of Ottawa
[email protected]
J udith Madill
Professor of Marketing
Sprott School of Business, Carleton University
[email protected]
SUSTAINING THE MOMENTUM v
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Table 1
Sustaining the Momentum: An Economic Forum on Women Entrepreneurs
Summary Report
Priorities for Action
Research Recommendations
1. Collect data on women’s participation in all federal SME programs
The lack of reliable data about women’s knowledge and use of SME programs was
identified early in the Forum. Currently, there is little information regarding the number
of women using federal SME support programs, owner and firm characteristics, and sat-
isfaction with existing programs. Because of this lack of data, there is little evidence about
the incremental impacts of existing policies and programs on women’s entrepreneurship.
It was recommended that data on program use be collected on the basis of gender using a
consistent definition of a “woman-owned business.” This information should be made
available by all federal departments and agencies with SME programs to facilitate com-
parable gender-based research.
2. Data must reflect the heterogeneous nature of women’s entrepreneurship
Women business owners are not a homogeneous group. The assumption cannot be
made that women’s needs are identical and that all women benefit equally from existing
SME policies and programs. Consequently, program evaluations should reflect the diverse
nature of women’s entrepreneurship. To do so, data should be disaggregated by owner
characteristics (e.g., gender, visible minority, First Nations, recent immigrant, age) and
business characteristics (e.g., sector, stage of maturation or growth, size, location). In
many instances, these characteristics significantly influence the experience of business
owners in SME training programs.
3. Identify and report on studies about women business owners
Sustaining the Momentum afforded policy makers, researchers, women business own-
ers and service providers the opportunity to meet and share information. Many partici-
pants expressed surprise about the amount and breadth of Canadian research on women
entrepreneurs. The suggestion was made that an inventory of current and ongoing research
be compiled.
4. Undertake more rigorous research on women business owners
Much of the existing research on women entrepreneurs is descriptive, short-term or
cross-sectional, and/or based on small, convenience samples. Although descriptive
research is often a necessary first step to identify challenges and gaps, more rigorous
research is now required. Without first knowing the “what” (through descriptive research),
one cannot undertake to explore the “why” (through hypothesis-testing research).
Research that uses women-only samples cannot draw conclusions about gender dif-
ferences or the reasons behind them. Hence, many important questions remain unan-
swered. For example, it is not clear why the incidence rate of women’s participation in
business ownership has increased significantly over the last 20 years, yet there remain sig-
nificant age differences in male- and female-owned firms. Potential gender differences in
vi ORSER andMADILL
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exiting the entrepreneurial process have not been examined (e.g., length of survival, rea-
son for exit [forced or voluntary], earnings after exit). These and other questions require
rigorous, longitudinal study. If researchers and policy makers are to better understand the
interaction between gender and firm performance, changes to current research approach-
es are required.
5. Undertake research about gender and small business financing
Much of the research presented at the Forum disputed common perceptions about the
capitalization of women-owned firms. In-depth research to better understand the effect of
gender in the context of firm financing was recommended. Furthermore, much of the
existing research has focused on debt financing. Research is required to examine other
aspects of financing, including bootstrapping, informal equity and venture capital. The
influence of fiscal policies and small business support programs on access to capital also
requires study. Participants called for greater private sector participation in research about
SME financing. Hence, there was considerable interest in undertaking collaborative
research related to the financing of small businesses and women’s banking experiences.
Suggestions were also made about the need for researchers to consider new research
paradigms.
6. Establish a fund for research about women entrepreneurs
Community–University Research Alliances (CURAs) are partnerships between com-
munity organizations and universities intended to foster innovative research, training and
the creation of new knowledge in areas of importance for Canadian social, cultural or eco-
nomic development. CURAs receive research funding of up to $200,000 annually, for up
to five years. It was suggested that two CURAs be established, one for research on women
entrepreneurs and one for self-employment.
Policy and Program Recommendations
1. Establish program evaluation criteria at the inception of policies and programs
It was suggested that program evaluation criteria be established at the inception of
policies and programs. Such information would include program objectives, program
reach and measures of program effectiveness. The result would be evidence-based deci-
sion making and greater accountability for public spending. A related recommendation
was to benchmark Canadian SME programs against those identified as international “best
practices” to determine where improvements could be made.
2. Policy makers must recognize that a one-size-fits-all approach to small business
development is insufficient
Several research presentations dealt with business owners’ perceptions of success,
growth intentions and decision making. The results suggest that many women-owned
businesses define success and pursue growth differently than do their male counterparts.
Policy makers may be unaware of such differences and therefore assume that owners’ pri-
orities are economic development objectives (e.g., job and wealth creation). Existing poli-
cies and training programs do not necessarily correspond to women business owners’
motives. Consequently, it was recommended that the policy community recognize that a
one-size-fits-all approach to small business and entrepreneurship development may be
insufficient.
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3. Improve the coordination of federal initiatives on women’s entrepreneurship
Delegates expressed concern about the piecemeal approach (based on individual
department and agency mandates) to developing women’s entrepreneurship. This was
seen as less than optimal. Participants recommended that a mechanism be put in place to
provide horizontal coordination of federal policy and program development. It was also
suggested that such a process would help eliminate duplication and overlap. An interde-
partmental oversight committee should therefore be tasked with developing a compre-
hensive framework for women entrepreneurs. Subcommittees could be created to deal
with firms at different stages of development and their attendant needs. These committees
should communicate and consult often with women business owners, researchers, all
orders of government and service providers. Increased federal communication and coor-
dination could help identify where the need for government action is greatest and the
scope of the challenges. Issues could then be addressed on a priority basis.
4. Create an Office of Women’s Business Ownership
It was suggested that an office of women’s business ownership be created to oversee
the federal women’s entrepreneurship file. It was also suggested this agency be granted
sufficient power to reach into different federal agencies to ensure that initiatives are
implemented.
5. Create an Advisory Council on Women’s Entrepreneurship
It was proposed that an ongoing women’s advisory council be created to advise the
federal government on issues related to women entrepreneurs and to advocate on their
behalf. It was also recommended that this advisory council report directly to the Prime
Minister.
6. Establish Women’s Enterprise Centres in Ontario
Participants noted that there is currently no women’s enterprise centre in Ontario. It
was suggested that consideration be given to establishing one outside of the Greater
Toronto Area. It was also suggested that an Aboriginal Women’s Business Centre be cre-
ated. In doing so, it was recommended that these centres be established using existing
SME support infrastructure and women business owner associations.
7. Make delivery agencies accountable for women’s participation in their programs
In discussing program delivery broadly, some participants felt that specific targets
should be established for program delivery and that these targets should recognize the
diversity of women business owners, and specifically disadvantaged women. Some par-
ticipants also suggested that each government department be required to develop a
women’s entrepreneurship strategy and be held accountable for its implementation.
Views were also expressed that the current federal approach of general application
programs works well and that the issue lies more in ensuring that existing programs are
better promoted to women entrepreneurs. There is a need to use more direct communica-
tion channels to reach women business owners. This led to the recommendations that fed-
eral departments and agencies establish strategies for communicating program offerings
to women entrepreneurs and set tangible program awareness objectives.
8. Develop gender-based programs to support women business owners
There were several specific suggestions, including the creation a national program for
women exporters. In implementing such a program, policy makers should consider
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existing programs and services offered by the Export Development Canada (EDC) and
[then] International Trade Canada (ITC). Another policy recommendation called for the
development of a national framework for skills development for women entrepreneurs.
Again, this would require a consideration of work already under way by federal and
provincial departments and agencies. Finally, it was suggested that the federal government
allocate resources for micro-credit and lending circles.
9. Establish more supportive family policies and benefits for self-employed women
The issue of better support for the self-employed generated several recommendations.
The overall message was that benefits provided under the current Employment Insurance
program (specifically, maternity, disability and compassion care benefits) be extended to
self-employed women. This would ensure that self-employed women have access to the
same benefits as do other workers. Given that women remain the primary caregivers for
children, a recommendation was put forward that the federal government develop a
national early learning and early childhood strategy that would provide high-quality,
affordable and accessible child care.
10. Establish a procurement program for women business owners
Two recommendations were put forward related to procurement. One is that the fed-
eral government report on the number and amount of procurement contracts granted to
SMEs, women-owned businesses and Aboriginal businesses. Presumably, this would
allow agencies to measure the effectiveness of outreach programs for these target groups
run by Public Works and Government Services Canada. The second recommendation was
to create a set-aside procurement program for women business owners similar to that
operating in the United States.
Communications and Partnerships
1. Establish a portal or clearinghouse of information of interest for women business
owners
Participants noted that the challenge for policy makers lies not only in policy and pro-
gram development, but also in ensuring that women business owners are aware of existing
assistance. In this regard, it was suggested that the federal government make better use of
Web technologies.
2
Several participants recommended the creation of a Web portal exclu-
sively on women entrepreneurs that could be housed on Strategis, an Industry Canada Web
site containing business and consumer information (http://strategis.gc.ca). Other partici-
pants sought the creation of a clearinghouse of information on women entrepreneurs that
would include research, data and information on women’s business organizations.
Also of interest was information on alternative sources of financing and support on the
Web sites of banks, credit unions and business associations. The Web site “Sources of
Financing” housed on Strategis may be the answer to this recommendation, as it current-
ly provides information on topics related to financing, ranging from micro-credit to ven-
ture capital.
SUSTAINING THE MOMENTUM ix
_________________________
2. Web sites such as Business Gateway (http://businessgateway.ca) and that of the Canada Business Services
Centres (http://cbsc.org ) currently present a wide array of business information for small business owners,
including information about programs and resources for women entrepreneurs.
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2. Disseminate research on women’s entrepreneurship
It was recommended that all federal departments disseminate their existing research
on women entrepreneurs, as Industry Canada’s Small Business Policy Branch does so
through the Strategis Web site.
3. Showcase the diverse nature of women’s entrepreneurship
Delegates suggested that federal publications and marketing tools use show positive
female role models working in non-traditional areas.
4. Facilitate communication across business women’s associations
Several speakers emphasized the importance of a concerted voice when advocating for
women entrepreneurs. To this end, it was recommended that mechanisms be put in place
to facilitate and promote communication across business women’s associations with a
view to create more provincial and national organizations.
And finally, the structure and content of Sustaining the Momentum was well received
by the participants, some of whom suggested that a research and policy forum on women
entrepreneurs be held every year.
References
Orser, B. 2003. A Pilot Study About Federal SME Policies to Support Women Business Owners and Trade.
Ottawa: Status of Women Canada and The Department of Foreign Affairs and International Trade.
Orser, B. and J . Connell. 2004. Sustaining the Momentum: An Economic Forum on Women Entrepreneurs.
Summary Report. Seehttp://strategis.ic.gc.ca/epic/internet/insbrp-rppe.nsf/en/rd01308e.html andhttp://sprott.carleton.ca/forum.
Prime Minister’s Task Force on Women Entrepreneur. Report and Recommendations. 2003. Ottawa: National
Liberal Caucus Research Bureau, Information Management. Previously available throughhttp://www.liberal.parl.gc.ca/entrepreneur.
Reynolds, Paul, M. Hays, W. Bygrave, M. Camp and E. Autio (eds.). 2000. Global Entrepreneurship
Monitor.See www.entreworld.org.
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Women Entrepreneurs
Christine Carrington, Industry Canada
Women entrepreneurs have been the topic of many research studies throughout
the last decade. These studies have predominantly focused on women entrepre-
neurs’ access to capital, often suggesting that women lack experience and net-
works, that women have poor credit ratings, or that Canada’s financial institu-
tions have rigid lending policies or even inherent gender biases.
Using the most comprehensive database on small business financing available
through the SME Financing Data Initiative, this article examines the unique
characteristics of women entrepreneurs and investigates whether these qualities
influence the financing of women-owned businesses.
Strength in Numbers
Women are taking on the risks and rewards of entrepreneurship in ever-increasing
numbers. Over the past two decades, Canada witnessed an increase in women’s entrepre-
neurship of over 200%.
1
Since 1997, on average, women entered the small and medium-
sized enterprise (SME) marketplace at twice the rate per year as men. Figure 1 shows the
percentage of businesses operating in 2002 by the year of their establishment (for exam-
ple, 8.5% of majority female-owned businesses operating in 2002 were established in
1997).
Women entrepreneurs outpaced men in new business start-ups, although this rate has
converged since 2000. This means that women are operating newer businesses, with 39%
of majority women-owned small or medium-sized enterprises having entered the market
within the past five years.
By 2001, nearly half of all SMEs in Canada had at least one female owner (see Figure
2).
2
Women held majority ownership (51–100% equity in the firm) in 18% of SMEs, up
from a 15% share the previous year. It is these women entrepreneurs in a majority
ownership position that this article will focus on in order that comparisons can be made
with majority male-owned businesses.
Journal of Small Business and Entrepreneurship 19, no. 2 (2006): pp. 83–94 83
_________________________
1. Statistics Canada 2001 Census. Between 1981 and 2001, the number of women entrepreneurs grew by 208%
compared with a 38% increase for men.
2. Based on the definition of an SME used in Statistics Canada’s Survey on Financing of Small and Medium
Enterprises, which includes businesses with fewer than 500 employees and less than $50 million in annual
revenues and excludes non-profit and government organizations, schools, hospitals, subsidiaries, co-opera-
tives, and financing and leasing companies, there were more than 715,500 SMEs in Canada with at least one
female owner in 2001.
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Economic Impact
Women’s presence within the business landscape has had a noticeable impact on the
Canadian economy. Almost 570,000 people were employed by majority women-owned
businesses in 2001, and an additional 404,000 people were hired on contract.
3
Majority
women-owned SMEs brought in combined annual revenues of $72 billion in 2000, repre-
senting approximately 8% of all revenues from Canada’s SMEs.
84 CARRINGTON
_________________________
3. Statistics Canada’s Survey on Financing of Small and Medium Enterprises defines contract workers as those
who are paid on a contractual basis rather than as a paid employee.
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The effect of this contribution has been felt across Canada, especially in Quebec,
where majority women-owned SMEs accounted for 21% of the province’s SMEs in 2001.
The proportion drops to a 9% low in Manitoba and Saskatchewan. Throughout the
Prairies, however, women’s relative absence in majority ownership of firms is more than
offset by the relatively higher proportion of male/female partnerships within the agricul-
tural sector. In remaining regions of the country, women’s majority ownership of firms
hovers around 18% on average.
Profile: Women Entrepreneurs in 2001
•32% are under the age of 40 (compared with 21% of men)
•62% speak English, 25% speak French and 13% speak a non-official language
•1% are Aboriginal
•8% are members of a visible minority
•3% have a disability
•54% have a graduate or post-graduate education (compared with 47% of men)
•70% have more than 10 years of management experience in their business’ industry
(compared with 86% of men)
•56% operate their business out of their home (same as men)
•18% operate their business out of rural areas (compared with 27% of men)
•7% export their products or services outside of Canada (compared with 13% of men)
Source: Statistics Canada, Survey on Financing of Small and Medium Enterprises, 2001.
Smaller Scale of Operations
Research has shown that size of business is one of the strongest indicators of the level
of sophistication of a firm’s financial and ownership structures (Baldwin, Gellatly and
Gaudreault, 2002). Business size can be measured in various ways, but is most often eval-
uated in terms of employment size, sales or revenues, and organizational structure. In all
three measures, women entrepreneurs are found to operate their businesses on a smaller
scale than those owned by men:
•85% of women-owned firms are micro-businesses, employing fewer than five employ-
ees (compared with only 79% for men) (see Figure 3);
•women averaged $318 000 in sales in 2000 (compared with $680,000 for men)
4
; and
• nearly half of women-owned businesses are sole proprietorships (compared with
39% for men).
A substantial number of women are also found operating the smallest, albeit most
numerous, of Canada’s businesses—the self-employed. Of the 2.3 million Canadians
identified by Statistics Canada’s Labour Force Survey as self-employed, more than
780,000 are women.
5
WOMEN ENTREPRENEURS 85
_________________________
4. Sales figures average results for all SMEs. As such, the substantial sales discrepancy between women and men
is likely the result of the tendency of women-owned businesses to be smaller, newer and more concentrated
in low profit margin service industries than those owned by men. However, the extent to which these factors
contribute to the sales gap has not yet been fully tested.
5. The Labour Force Survey is a survey of Canadian households, with the exclusion of people living in the
Northwest Territories and Nunavut or residents of reservations, hospitals, penitentiaries and long-termfacili-
ties. This means the target population is much larger than that of the Survey on Financing of Small and
Medium Enterprises, which only surveys enterprises listed in Statistics Canada’s Business Register. (Statistics
Canada, Labour Force Survey, 2001)
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Although in absolute numbers there are fewer self-employed women, women have
experienced faster growth in this category than men throughout the past decade. From
1991 to 2001, self-employment among women expanded by 43%, more than double the
21% growth in self-employment among men.
This surge in self-employment could be attributed to several factors (Brown et al.,
2002); two in particular are:
•the opportunity for women to better balance family obligations and working life; and
•the emerging “enterprising culture” in Canada, sparking women’s interest in starting
their own business.
Some have suggested that women have been forced into self-employment due to a lack
of viable work alternatives. However, recent research has found that unemployment has
not played a role in the growth rate of self-employed women.
6
Concentrated in Service Sectors
Women entrepreneurs are found in every sector of the Canadian economy, but are
largely concentrated in service industries. In 2001, four in five majority women-owned
SMEs were found in service-based industries, compared with only 59% of SMEs owned
by men. Figure 4 indicates that the most common service sectors for women entrepreneurs
were wholesale/retail, professional services and information/culture/real estate, account-
ing for 18%, 16% and 16% respectively.
86 CARRINGTON
_________________________
6. There is no evidence to suggest that unemployment has an impact on the growth rate of self-employed women
at the national level, but not necessarily at the regional level. See Brown, Doyle, Lewis, Mallette, Purcell and
Young, “Women Entrepreneurs in Canada in the ’90s.” Prepared by Mount Saint Vincent University for the
Business Development Bank of Canada (2002).
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Knowledge-based industries (KBI) and manufacturing were two sectors that did not
appear to attract as many women entrepreneurs. These two sectors, which are key sectors
driving Canada’s growth and innovation, attracted only 6% of all women entrepreneurs in
2001.
Financial Performance
Majority women-owned SMEs generally exhibit solid financial performance, but on a
smaller scale than SMEs owned by men. Table 1 presents key financial statement figures
for an average women-owned business in 2000, compared with an average business
owned by a man. In 2000, a woman entrepreneur’s average net profit before taxes was
approximately $34,000 per business, compared with $65,000 for the average male-owned
SME. The extent to which this gender-based income gap remains after sector, size and age
WOMEN ENTREPRENEURS 87
Table 1. Financial Statement Figures for Majority Female -Owned and Majority Male -Owned SMEs
(average $), 2000
Female Male
Sales 318,000 680,000 Revenues
Total Revenue 335,000 706,000
Expenses 301,000 641,000
Net Profit (loss) Before Tax 34,000 65,000
Current Assets 117,000 250,000
Fixed Assets 152,000 337,000
Assets
Total Assets 269,000 587,000
Liabilities 152,000 351,000
Equity Owners’ Equity 58,000 142,000
Total Equity 117,000 236,000
Source: Statistics Canada, Survey on Financing of Sma ll and Medium Enterprises , 2000.
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of business are taken into account has not yet been determined. However, it is likely that
women’s more modest profits are consistent with the profile of newer, smaller firms in
service industries.
Perceived Obstacles to Growth
Women entrepreneurs are clearly not homogenous. Women own businesses of all
sizes, in all sectors and in all stages of development. As illustrated, however, the profile
of a typical female-owned business does contrast with the average characteristics of a
male-owned firm. These differences have an effect on the financial performance of
women-owned firms. However, profiles alone do not tell the complete picture unless one
assumes that both women and men exhibit the same expectations for their business and
perceive similar obstacles to reaching those goals.
Perceived Obstacles to Business Growth and Development
Ranking for Female Entrepreneurs
1. Finding Qualified Labour 45%
2. Levels of Taxation 40%
3. Instability of Demand 33%
4. Low Profitability 23%
5. Insufficient Financing 22%
6. Government Regulations 21%
7. Equipment Depreciation 13%
8. Managerial Skills 7%
Ranking for Male Entrepreneurs
1. Finding Qualified Labour 39%
2. Levels of Taxation 38%
3. Instability of Demand 32%
4. Low Profitability 32%
5. Government Regulations 28%
6. Insufficient Financing 27%
7. Equipment Depreciation 18%
8. Managerial Skills 10%
Source: Research Institute for SMEs, Université du Québec à Trois-Rivières. 2002. “Financing SMEs:
Satisfaction, Access, Knowledge and Needs, 2001.” Commissioned by Industry Canada.
Research suggests this is not the case. In an examination of business owners’ percep-
tions of success, it has been found that “women business owners accord higher value to
maintaining customer and personal relationships, spiritual well-being and work-life bal-
ance” (Orser and Riding, 2004).
This finding does not appear to impact the growth expectations of women entrepre-
neurs for their businesses. Nearly half of women entrepreneurs anticipated more than 50%
sales growth in their firm over the 2001–2002 period, compared with only 40% of men.
These more ambitious growth intentions are likely correlated with the fact that women
entrepreneurs generally own newer businesses, rather than any significant attitudinal dif-
ference between men and women.
To achieve their business growth objectives, both women and men face similar road-
blocks. Finding qualified labour, taxation levels and instability of consumer demand were
88 CARRINGTON
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the top three obstacles identified by both men and women entrepreneurs. Although financ-
ing did not rank near the top of the list of concerns of business owners, it was still a prob-
lem identified by 22% of women entrepreneurs and 27% of men entrepreneurs.
Financing Activity
Financing is a challenge facing any entrepreneur. Without sufficient levels of capital,
new firms are unlikely to establish themselves in the marketplace or reach their full
growth potential. Past research suggested that there has been differential treatment of
women entrepreneurs by financial providers, either in respect of access to financing or
terms and conditions thereof.
7
The following section examines the financing activity of
women- versus men-owned SMEs, concluding that characteristics such as business size,
sector and age are likely stronger determinants of access to financing than gender.
Less Demand for Financing
Table 2 indicates that women business owners were less likely to make a request for
debt than men. Women’s lower request rates were not a matter of access so much as need.
Of those women entrepreneurs who did not apply for financing in 2000, 86% said it was
because external financing was not needed. Only 7% of women business owners avoided
approaching financial institutions because they thought their application would be reject-
ed. Chartered banks received the majority of requests for debt (68% of women’s requests
in 2000), similar to male business owners.
The most common intended purpose of debt financing sought by women entrepreneurs
was working capital, similar to men entrepreneurs. New lines of credit, term loans and
mortgages were the most sought-after forms of debt for women business owners. No sta-
tistically significant difference was found between women and men in their leasing and
equity financing activities.
But Similar Approval Rates
Women business owners are just as likely as men to have their financing applications
approved. In 2000, 82% of women entrepreneurs were approved for debt compared with
80% of men. In 2001, there was a noticeable drop in women’s approval rates; however, it
is not certain whether this decline is a factor of smaller survey sampling in 2001 or a
change in the lending behaviour of financial institutions.
WOMEN ENTREPRENEURS 89
_________________________
7. Prime Minister’s Task Force on Women Entrepreneurs. 2003. “Report and Recommendations.” Submission
to Task Force by Louise St. Cyr et al. on their review of academic studies on women entrepreneurs and their
difficulty in accessing financing.
Table 2. Financing Request and Approval Rates for Majority Female -Owned and Majority Male -
Owned SMEs, 2000 –2001
Type of Financing Female Male
2000 2001 2000 2001
Request 17% 15% 23% 18% Debt
Approval 82% 75% 80% 81%
Request 7% 6% 9% 8% Lease
Approval 99% 100% 97% 93%
Request 2% 1% 2% 1% Equity
Approval 87% n/a 70% 83%
* 2001 data areless statistically reliabledue to smaller survey sampling.
Source: Statistics Canada, Survey on Financing of Small and Medium Enterprises , 2000
and 2001.
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Credit Conditions for Women Entrepreneurs in 2000
•Lines of credit (34%), term loans (25%) and mortgages (13%) were the most sought-
after forms of debt for women.
•Women, on average, requested term loans of $181,000 and were authorized $194,000
(compared with $137,000 requested by men and $144,000 authorized for men).
•For mortgages, women requested $194,000 and were authorized $196,000 (compared
with $572,000 requested by men and $645,000 authorized for men).
•38% of women requesting financing were required to pledge personal assets as security
(same as men).
•35% of women were required to pledge business assets (compared with 40% of men).
• Business financial statements, formal applications and personal financial statements
were most commonly requested by the credit supplier. Nearly a quarter of women
report not having to provide any documentation (compared with 16% for men).
Source: Statistics Canada, Survey on Financing of Small and Medium Enterprises, 2000.
Capital Structure
Financing sought from financial institutions is only one source of capital for women
business owners. Examining the capital, debt and ownership structures of their business-
es provides a more complete picture.
Figures 5 and 6 list the top ten sources of financing used by women entrepreneurs at
the time they started their business and in 2000 respectively. Similar to men, women
entrepreneurs rely on internal financing sources to get their business up and running. A
woman business owner’s personal savings and credit instruments are the most used
sources of financing at this stage. Loans from family and friends, known as “love
money,” are also more prevalent for women during start-up. Given the high exit rate of
newer firms, this places a substantial amount of personal financial risk on women wish-
ing to start a company.
90 CARRINGTON
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As businesses mature, owners turn toward external sources of financing in the form
of commercial loans, lines of credit and credit cards. Unlike men, however, women
entrepreneurs continue to rely on their savings and personal credit beyond their start-up
stage of development. This is consistent with the financing of relatively newer and small-
er businesses.
There is a particular disparity between men and women in their use of commercial
loans and lines of credit, and trade credit from suppliers. In 2000, 50% of SMEs owned
by men held a commercial loan or line of credit, compared with only 42% of SMEs owned
by women. Women similarly lagged behind men in trade credit usage (30% compared
with 41%).
In both cases, the variation is likely a result of sector influences. The agricultural sec-
tor is the leading user of commercial credit (72% usage) and manufacturing leads in the
usage of trade credit from suppliers (58% usage). Women are not as prominent in these
sectors as men entrepreneurs (see Figure 4).
Debt Structure
Women entrepreneurs owed almost $33 billion in debt in 2000. Table 3 shows the dis-
tribution of debt owed by women and men entrepreneurs by source in 2000. With the
exception of trade credit from suppliers and individual loans, there are few gender differ-
ences in debt structures.
WOMEN ENTREPRENEURS 91
Table 3. Debt by Source, 2000
Type of Supplier Majority Female -Owned Majority Male -Owned
Chartered Banks 31% 30%
Credit Unions/Caisse populaires 6% 5%
Credit Cards 1% 1%
Government Programs 4% 4%
Leases 2% 1%
Individual Loans 20% 17%
Trade Credit 15% 21%
Other 21% 21%
Total Debt 100% 100%
Source: Statistics Canada, Survey on Financing of Small and Medium Enterprises , 2000.
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Ownership Structure
Risk capital and early-stage equity financing typically form part of the financing strat-
egy used by newer, high-growth potential firms. Women entrepreneurs appear less likely
to adopt this strategy. Of majority women-owned SMEs, 81% say they are not willing to
share ownership equity to raise capital for firm growth, whereas only 66% of men entre-
preneurs are unwilling to share more equity (Research Institute for SMEs, 2002).
Women-owned SMEs combined held $12.5 billion in total owner’s equity in 2000,
94% of which was retained by the business owner, compared with 78% for men entrepre-
neurs. Ownership held by venture capital funds, angels, or friends and relatives is so small
a portion of women’s ownership structure that reliable data are not available for women-
owned SMEs.
Summary and Discussion
Academic studies in both Canada and the United States have tested the impact of gen-
der on access to financing and terms of credit (Riding and Swift, 1990; Fabowle et al.,
1995; Coleman, 2000). With the exception of one study conducted by the Canadian
Federation of Independent Business, which found higher financing refusal rates for
women-owned businesses (Marleau 1995), no significant differences were found between
women-owned businesses and men-owned businesses of similar size, sector and age in
respect of access to financing.
The financing activity of women and men entrepreneurs in 2000 and 2001 supports
these conclusions. Although women entrepreneurs were found to be less likely to
approach financial institutions for financing during this period, it was most often due to
the fact that they judged that external financing was not needed. Of those women entre-
preneurs that did apply for financing, they were just as likely as men to be approved.
Terms and conditions attached to the financing received were also similar for both women
and men entrepreneurs.
At the same time, there are clear differences observed in the profile of women- and
men-owned SMEs. Women-owned firms are smaller, newer, more concentrated in servic-
es industries and, on average, less profitable than SMEs owned by men. Although not
impacting on access to financing, these differences do appear to influence the capital and
ownership structures of SMEs owned by women. Women entrepreneurs use personal sav-
ings and personal credit more than men, even beyond the initial start-up of their business.
Understanding the causes and ramifications of these differences on the growth and devel-
opment of women-owned businesses is an area for further research.
SME Financing Data Initiative
Small Business Financing Profiles is an ongoing series of articles on specific segments
of the marketplace and a component of Industry Canada’s reporting efforts on SME
financing. Other profile articles have examined Canada’s visible minority entrepreneurs,
young entrepreneurs and high-growth SMEs.
Consistent with recommendations in 1999 from the Task Force on the Future of the
Canadian Financial Services Sector, the SME Financing Data Initiative is a comprehensive
data collection program on SME financing in Canada. In partnership with Statistics Canada
and Finance Canada, Industry Canada reports on the supply of, and demand for, small and
medium-sized business financing to provide a complete picture of SME financing.
For further information on the SME Financing Data Initiative and access to statistical
92 CARRINGTON
Journal19-2-FINAL.qxd 3/1/2006 10:04 AM Page 92
findings and reports, visit www.strategis.gc.ca/fdi. For information regarding the method-
ology of the Survey on Financing of SMEs, contact Klaus Kostenbauer at 613-951-0691
with the Small Business and Special Survey Division at Statistics Canada or visit Statistics
Canada’s website at www.statcan.ca
Contact Information
For further information on this article, contact
Christine Carrington, Small Business Policy Branch, Industry Canada, Ottawa, Ontario, K1A 0H5
Telephone: (613) 957-7903
Fax: (613) 954-5492
Email: [email protected]
References
Baldwin, J ., G. Gellatly and V. Gaudreault. 2002. “Financing Innovation in New Small Firms: New Evidence
fromCanada.” Statistics Canada.
Brown, Doyle, Lewis, Mallette, Purcell and Young. 2002. “Women Entrepreneurs in Canada in the ’90s.”
Prepared by Mount Saint Vincent University for the Business Development Bank of Canada.
Coleman, S. 2000. “Access to Capital and Terms of Credit: A Comparison of Men- and Women-owned Small
Businesses.”
Fabowle, B. Orser, A. Riding and C. Swift. 1995. “Gender, Structural Factors, and Credit Terms Between
Canadian Small Businesses and Financial Institutions.”
Marleau, M. 1995. “Double Standard: Financing Problems Faced by Women Business Owners.” Canadian
Federation of Independent Business.
Orser, B. and A. Riding. 2004. “Examining Canadian Business Owners’ Perceptions of Success.” Submission to
the Canadian Council for Small Business and Entrepreneurship Conference, J une 2004.
Research Institute for SMEs, Université du Québec à Trois-Rivières. 2002. “Financing SMEs: Satisfaction,
Access, Knowledge and Needs, 2001.” Commissioned by Industry Canada.
Riding, A. and C. Swift. 1990. “Women Business Owners and Terms of Credit: Some Empirical Findings of the
Canadian Experience.”
WOMEN ENTREPRENEURS 93
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L’entrepreneuriat au féminin
Christine Carrington, Industrie Canada
Depuis dix ans, les femmes entrepreneurs ont fait l’objet de nombreuses études.
Axées pour la plupart sur l’accès des femmes aux capitaux, plusieurs de ces
études ont montré les lacunes des femmes entrepreneurs du point de vue de l’ex-
périence et du réseautage, d’autres encore ont mis en évidence la médiocrité de
leurs cotes de crédit, ou enfin la rigidité, voire le sexisme, des politiques de prêt
des institutions financières canadiennes.
Dans cet article, rédigé en se fondant sur la base de données la plus exhaustive
qui soit sur le financement des petites entreprises, à savoir celle du Programme
de recherche sur le financement des PME, nous examinons les caractéristiques
particulières des femmes entrepreneurs et tâchons de déterminer si ces carac-
téristiques influent sur le financement des entreprises appartenant à des
femmes.
Sans cesse plus nombreuses
De plus en plus de femmes se lancent en affaires : elles assument les risques de
l’entrepreneuriat et elles en récoltent les fruits. Depuis vingt ans, le nombre de femmes
entrepreneurs au Canada a progressé de plus de 200 %
1
et, depuis 1997, deux fois plus de
femmes que d’hommes ont créé une petite ou moyenne entreprise (PME). La figure 1
montre le pourcentage d’entreprises en activité en 2002, selon l’année de leur création (p.
ex., 8,5 % des entreprises actives en 2002 dans lesquelles les femmes ont une participation
majoritaire ont été créées en 1997).
Les créations d’entreprises ont été plus nombreuses chez les femmes, mais depuis
2000 cet écart s’est réduit et un certain parallélisme s’est établi. Cela veut donc dire que
les femmes sont à la tête d’entreprises plus jeunes. De fait, 39 % des PME dans lesquelles
les femmes détiennent une participation majoritaire ont été créées il y a cinq ans ou moins.
En 2001, dans près de la moitié des PME canadiennes, au moins un des propriétaires
était une femme (voir la figure 2)
2
Les femmes détenaient une participation majoritaire (au
moins 51 % des capitaux propres dans l’entreprise) dans 18 % des PME, comparativement
Journal of Small Business and Entrepreneurship 19, no. 2 (2006): pp. 95–106 95
_________________________
1. Statistique Canada, recensement du Canada, 2001. Entre 1981 et 2001, le nombre d’entrepreneurs a crû de
208 % chez les femmes, mais de 38 % seulement chez les hommes.
2. Chiffre établi en se fondant sur la définition donnée au terme « PME » dans l’Enquête sur le financement des
petites et moyennes entreprises de Statistique Canada, à savoir : entreprises comptant moins de 500 employés
et ayant des recettes annuelles de moins de 50 millions de dollars. En 2001, le nombre de PME dont au moins
un des propriétaires était une femme s’établissait à 715 5000 (l’univers des PME ne comprend pas les organ-
ismes à but non lucratif, les organismes publics, les établissements d'enseignement, les hôpitaux, les filiales,
les coopératives et les sociétés de financement et de location).
Journal19-2-FINAL.qxd 3/1/2006 10:04 AM Page 95
à 15 % en 2000. C’est sur ces femmes entrepreneurs détenant une position majoritaire que
le présent article centre son attention. Des comparaisons pourront ainsi être établies avec
les entreprises où les hommes détiennent une position majoritaire.
Impact économique
L’entrepreneuriat féminin a un effet considérable sur l’économie canadienne. En 2001,
près de 570 000 personnes occupaient un emploi dans une entreprise où les femmes
détenaient une position majoritaire et 404 000 personnes travaillaient à contrat pour ces
96 CARRINGTON
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entreprises.
3
En 2000, les PME où les femmes détenaient une position majoritaire ont, au
total, généré des recettes annuelles de 72 milliards de dollars, ce qui correspond à 8 %
environ de l’ensemble des recettes des PME canadiennes.
La progression de l’entrepreneuriat féminin s’est effectuée dans l’ensemble du
Canada, mais elle a été plus marquée au Québec, où, en 2001, 21 % des PME étaient des
entreprises dans lesquelles les femmes détenaient une participation majoritaire. Au
Manitoba et en Saskatchewan, la proportion correspondante n’était que de 9 %. Dans les
Prairies, la très faible proportion d’entreprises dans lesquelles les femmes détiennent une
participation majoritaire est largement compensée par le pourcentage relativement plus
élevé de partenariats homme-femme dans l’industrie agricole. Dans les autres régions, la
proportion d’entreprises dans lesquelles les femmes détiennent une participation majori-
taire se situe aux alentours de 18 % en moyenne.
Profil : Les femmes entrepreneurs en 2001
•32 % avaient moins de 40 ans (comparativement à 21 % des hommes)
•62 % étaient anglophones, 25 % étaient francophones et 13 % s’exprimaient dans une
langue autre que l’anglais ou le français
•1 % étaient Autochtones
•8 % faisaient partie d’une minorité visible
•3 % souffraient d’une incapacité
•54 % avaient fait des études de deuxième ou de troisième cycle universitaire (contre 47
% des hommes)
•70 % avaient plus de 10 années d’expérience en gestion dans la branche d’activité dans
laquelle était établie leur entreprise (contre 86 % des hommes)
•56 % exerçaient leur activité à domicile (même pourcentage que chez les hommes)
•18 % avaient établi leur entreprise en région rurale (contre 27 % des hommes)
•7 % avaient une entreprise exportatrice (comparativement à 13 % des hommes)
Source : Statistique Canada, Enquête sur le financement des petites et moyennes entre-
prises, 2001.
Des entreprises plus petites
Diverses études ont montré que la taille d’une entreprise est l’un des indicateurs les
plus probants de la complexité de sa structure financière et de la structure de son capital
social (Baldwin, Gellatly et Gaudreault, 2002). Mais cette taille peut être mesurée de
diverses façons. La plupart du temps, on se fonde sur la taille de l’effectif, sur les ventes
ou les recettes, ou sur la structure organisationnelle. Pour chacune de ces trois mesures,
les femmes entrepreneurs affichent des chiffres inférieurs à ceux des hommes :
•85 % des entreprises appartenant à des femmes sont des micro-entreprises comptant
moins de cinq employés (chez les entreprises appartenant à des hommes, la fraction
correspondante est de 79 %).
L’ENTREPRENEURIAT AU FÉMININ 97
_________________________
3. Statistique Canada (2001). Enquête sur le financement des petites et moyennes entreprises définit un tra-
vailleur contractuel comme une personne qui est payée en vertu d’une entente contractuelle plutôt qu’à titre
d’employé rémunéré.
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•En 2000, les femmes et les hommes entrepreneurs affichaient des chiffres de ventes de
318 000 $ et de 680 000 $, respectivement.
4
• Près de la moitié des entreprises appartenant à des femmes sont des entreprises à
propriétaire unique (contre 39 % de celles appartenant à des hommes).
Un nombre considérable de femmes appartiennent à la catégorie d’entreprises la plus
petite, à savoir celle des travailleurs indépendants, qui réunit par ailleurs le plus grand
nombre d’entreprises canadiennes. Parmi les 2,3 millions de travailleurs indépendants
recensés par Statistique Canada dans l’Enquête sur la population active, plus de 780 000
sont des femmes.
5
Bien qu’en chiffres absolus on compte moins de travailleurs indépendants chez les
femmes que chez les hommes, on voit, depuis dix ans, que la proportion de ces travailleurs
s’accroît plus rapidement chez les femmes. Entre 1991 et 2001, le nombre de travailleurs
indépendants chez les femmes s’est accru de 43 %, soit à un rythme plus de deux fois plus
rapide que chez les hommes (21 %).
Cette forte croissance du travail indépendant chez les femmes pourrait être attribuée à
divers facteurs (Brown et al., 2002), mais en particulier aux deux facteurs suivants :
• le travail indépendant permet aux femmes de mieux concilier leurs responsabilités
familiales et professionnelles;
•l’apparition d’une « culture d’entreprise » au Canada a encouragé les femmes à lancer
leur entreprise.
Selon certains observateurs, les femmes ont été forcées à se rabattre sur le travail
indépendant à défaut d’autres possibilités de travail viables. Des données récentes
montrent toutefois que le chômage n’a pas joué de rôle dans la croissance du travail
indépendant chez les femmes.
6
Concentrées dans les services
Les femmes entrepreneurs exercent leur activité dans tous les secteurs d’activité
économique, mais elles sont largement concentrées dans les services. En 2001, 80 % des
PME dans lesquelles les femmes détenaient une participation majoritaire étaient concen-
trées dans les services, comparativement à 59 % seulement des PME correspondantes
chez les hommes. Comme on peut le voir à la figure 4, les secteurs des services dans
lesquelles les femmes entrepreneurs étaient les plus nombreuses étaient le commerce de
gros ou de détail (18 %), les services professionnels (16 %), et l’information, la culture et
l’immobilier (16 % également).
98 CARRINGTON
_________________________
4. Ce chiffre correspond à la moyenne pour l’ensemble des PME. Aussi, l’important écart constaté entre les
hommes et les femmes est vraisemblablement attribuable au fait que les entreprises appartenant à des femmes,
comparativement à celles appartenant à des hommes, tendent à être plus petites, plus jeunes et davantage
concentrées dans les services où les marges sont moins lucratives. Cela dit, la mesure dans laquelle ces facteurs
contribuent à cet écart de chiffres de vente n’a pas encore été parfaitement évalué.
5. L’Enquête sur la population active est une enquête sur les ménages menée dans l’ensemble du Canada. Sont
exclus les résidents du Yukon, des Territoires du Nord-Ouest et du Nunavut, les personnes vivant dans une
réserve, les personnes hospitalisées ainsi que les résidents d’établissements pénitentiaires et d’établissements
de soins de longue durée. La population visée par l’enquête est donc beaucoup plus nombreuse que ne l’est
celle de l’Enquête sur le financement des PME qui, elle, porte sur la population des entreprises inscrites dans
le registre des entreprises de Statistique Canada (Statistique Canada, Enquête sur la population active, 2001).
6. Les données montrent que le chômage est sans effet sur la croissance du travail autonome à l’échelle nationale,
mais pas nécessairement à l’échelle régionale (Brown, Doyle, Lewis, Mallette, Purcell et Young (2002)
Women Entrepreneurs in Canada in the ’90’s, étude produite par l’Université Mount Saint Vincent pour la
Banque de développement du Canada).
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Les industries du savoir et de la fabrication sont deux secteurs qui semblent peu
attractifs pour les femmes entrepreneurs. Ensemble, ces deux secteurs qui sont le moteur
de la croissance et l’innovation au Canada n’attiraient que 6 % de l’ensemble des femmes
entrepreneurs en 2001.
Résultats financiers
En général, les PME où les femmes détiennent une position majoritaire affichent de
bons résultats financiers, mais à une plus petite échelle que les PME où les hommes déti-
ennent une position majoritaire. La tableau 1 montre, pour 2000, les principaux postes des
états financiers de l’entreprise moyenne appartenant à une femme et de celle appartenant
à un homme. Ainsi, en 2000, la PME moyenne ayant pour propriétaire une femme réali-
sait un bénéfice net moyen avant impôt de 34 000 $, comparativement à 65 000 $ pour la
PME correspondante ayant pour propriétaire un homme. L’importance de l’écart de
revenu entre les entreprises appartenant à des hommes et à des femmes, après qu’il ait été
tenu compte du secteur d’activité ainsi que de la taille et de l’âge de l’entreprise, n’a pas
encore été déterminée. Cela dit, il est raisonnable de penser que les femmes entrepreneurs
réalisent des bénéfices moins élevés parce que leurs entreprises sont plus jeunes et plus
petites, et sont concentrées dans les services.
Obstacles à la croissance tels que perçus
La population des femmes entrepreneurs est loin d’être homogène. Celles-ci
exploitent des entreprises de toutes les tailles, jeunes et moins jeunes, dans tous les
secteurs d’activité économique. Toutefois, si l’on considère les caractéristiques d’une
entreprise « typique » chez les femmes et chez les hommes, on constate d’importantes dif-
férences. Si ces différences peuvent se répercuter sur les résultats financiers, elles ne per-
mettent toutefois pas, à elles seules, d’expliquer l’écart de revenu entre les femmes et les
hommes entrepreneurs, à moins d’assumer que les deux groupes ont les mêmes attentes
au niveau de leur entreprise et perçoivent les mêmes obstacles.
Obstacles à la croissance et au développement des entreprise tels que perçus
Classement, entrepreneures
1. Difficulté à trouver de la main-d’œuvre qualifiée 45 %
2. Niveaux d’imposition 40 %
3. Instabilité de la demande 33 %
4. Faible rentabilité 23%
100 CARRINGTON
Tableau 1. États financiers des PME, selon le sexe du partenaire majoritaire (moyenne en dollars),
2000
Femme Homme
Ventes 318 000 680 000 Recettes
Recettes totalles 335 000 706 000
Charges 301 000 641 000
Bénéfice net (perte nette) avant impôt 34 000 65 000
Court terme 117 000 250 000
Immobilisé 152 000 337 000
Actif
Actifs totaux 269 000 587 000
Passif 152 000 351 000
Capitaux propres Capital actions 58 000 142 000
Capitaux propres totaux 117 000 236 000
Source : Statistique Canada, Enquête sur le financement des petites et moyennes entreprises , 2000.
Journal19-2-FINAL.qxd 3/1/2006 10:05 AM Page 100
5. Insuffisance du financement 22 %
6. Réglementation 21 %
7. Dépréciation 13 %
8. Compétences en gestion 7 %
Classement, entrepreneurs
1. Difficulté à trouver de la main-d’œuvre qualifiée 39 %
2. Niveaux d’imposition 38 %
3. Instabilité de la demande 32 %
4. Faible rentabilité 32 %
5. Réglementation 28 %
6. Insuffisance du financement 27 %
7. Dépréciation 18 %
8. Compétences en gestion 10 %
Source : Institut de recherche sur les PME, Université du Québec à Trois-Rivières, Le financement des PME
canadiennes : satisfaction, accès, connaissance et besoins, 2001, commandée par Industrie Canada, 2002.
Or, divers travaux de recherche ont montré que ce n’était pas le cas. En effet, une
enquête visant à évaluer comment les propriétaires d’entreprise perçoivent la réussite a
montré que les femmes attachaient plus d’importance que les hommes aux relations avec
les clients, aux relations personnelles, au bien-être mental et à l’équilibre entre le travail
et la famille (Orser et Riding, 2004).
Cette constatation ne semble pas avoir d’incidence sur les attentes des femmes
entrepreneurs au chapitre de la croissance de leur entreprise. Près de 50 % des femmes
entrepreneurs, comparativement à 40 % des hommes, s’attendaient à ce que le chiffre des
ventes de leur entreprise augmente de 50 % au cours de la période 2001–2002. Ces
objectifs de croissance plus élevés tiennent sans doute au fait que les entreprises appar-
tenant en majorité à des femmes sont en général plus jeunes et non à une différence de
comportement entre les sexes.
Pour atteindre leurs objectifs de croissance, les hommes et les femmes doivent
surmonter des obstacles semblables. Les trois principaux obstacles perçus par les hommes
comme par les femmes entrepreneurs sont : la difficulté à trouver une main-d’œuvre
qualifiée, les impôts, et l’instabilité de la demande de consommation. Pour ce qui est du
financement, bien qu’il n’ait pas figuré au premier plan des préoccupations des proprié-
taires d’entreprises, il a été évoqué par 22 % des femmes entrepreneurs et par 27 % des
hommes.
Financement
Tous les entrepreneurs savent que le financement pose un défi de taille : en l’absence
de capitaux suffisants, il est peu probable que les jeunes entreprises soient capables de
s’implanter sur le marché ou de réaliser leur plein potentiel de croissance. Dans le passé,
diverses études ont montré que le traitement accordé par les institutions financières sur le
plan de l’accès au financement et des conditions d’obtention de ce financement variait
selon que l’entrepreneur était un homme ou une femme.
7
Dans la section qui suit, nous
nous penchons sur les genres de financement auxquels ont recours les hommes et les
L’ENTREPRENEURIAT AU FÉMININ 101
_________________________
7. Groupe de travail du premier ministre sur les femmes entrepreneures (2003), Rapport et recommandations.
Mémoire dans lequel Louise St. Cyr et coll. effectuent un examen des différentes études universitaires réal-
isées sur les femmes entrepreneurs et leur difficulté d’obtenir du capital.
Journal19-2-FINAL.qxd 3/1/2006 10:05 AM Page 101
femmes propriétaires de PME. Nous concluons que des caractéristiques telles la taille de
l’entreprise, son âge, et son secteur d’activité sont des déterminants plus importants de
l’accès au financement que le sexe.
Les femmes moins nombreuses que les hommes à solliciter du financement
Comme le montre la tableau 2, les femmes propriétaires d’entreprises étaient relative-
ment moins portées que les hommes à solliciter un prêt. Mais cet état de choses tient
moins à des difficultés particulières à obtenir du financement qu’au fait que les femmes
entrepreneurs considèrent ne pas en avoir besoin. Parmi celles n’ayant pas sollicité de
financement en 2000, 86 % ont affirmé ne pas en avoir besoin. Seulement 7 % des femmes
propriétaires d’entreprise se sont abstenues de solliciter du financement car elles étaient
convaincues que leur demande serait rejetée par les institutions financières. La plupart des
demandes adressées aux banques à charte correspondaient à des demandes de financement
par emprunt (68 % des demandes adressées par des femmes en 2000), pourcentage
comparable à celui observé chez les hommes propriétaires d’entreprise.
La raison du financement par emprunt évoquée par les femmes propriétaires était sem-
blable à celle évoquée par les hommes, à savoir accroître le fonds de roulement. Les autres
formes de financement demandées le plus souvent par les femmes propriétaires étaient :
nouvelle marge de crédit, prêt à terme et prêt hypothécaire. Aucune différence statis-
tiquement significative n’a été notée entre les hommes et les femmes en ce qui concerne
le financement par crédit-bail ou le financement par capitaux propres.
Mais aussi nombreuses à en obtenir
Les femmes propriétaires d’entreprise sont aussi nombreuses que les hommes à
obtenir le financement demandé. En 2000, 82 % des femmes propriétaires se sont vu
accorder le prêt demandé, comparativement à 80 % des hommes. En 2001, il y a eu un
fort recul du pourcentage de femmes ayant obtenu le financement demandé. Toutefois, il
est difficile de savoir si cette baisse tient à la plus petite taille de l’échantillon dans l’en-
quête de 2001 ou à une transformation des habitudes de prêt des institutions financières.
Conditions de crédit accordées aux entrepreneures, 2000
•Les formes de crédit les plus fréquentes chez les femmes étaient : les marges de crédit
(34 %), les prêts à terme (25 %) et les hypothèques (13 %).
•Les entrepreneures ont sollicité un prêt à terme moyen de 181 000 $, et ont obtenu un
102 CARRINGTON
Tableau 2. Demandes de financement et taux d’approbation pour les PME, selon que la participation
majoritaire dans l’entreprise est détenue par une femme ou un homme, 2000 –2001
Type de financement Femme Homme
2000 2001 2000 2001
Demandé 17 % 15 % 23 % 18 % Emprunt
Approuvé 82 % 75 % 80 % 81 %
Demandé 7 % 6 % 9 % 8 % Location-bail
Approuvé 99 % 100 % 97 % 93 %
Demandé 2 % 1 % 2 % 1 % Capitaux propres
Approuvé 87 % n/a 70 % 83 %
* Les données pour 2001 ne sont pas aussi statistiquement fiables co mpte tenu de la plus petite taille de
l’échantillonnage.
Source : Statistique Canada, Enquête sur le financement des petites et moyennes entreprises , 2000 et 2001.
Journal19-2-FINAL.qxd 3/1/2006 10:05 AM Page 102
prêt à terme moyen de 194 000 $ (chez les entrepreneurs, les chiffres correspondants
étaient de 137 000 $ et de 144 000 $).
•Pour ce qui est des hypothèques, les entrepreneures ont sollicité un prêt de 194 000 $ et
ont obtenu un prêt de 196 000 $ (chez les entrepreneurs, les chiffres correspondants
étaient de 572 000 $ et de 645 000 $).
•38 % des femmes ayant sollicité un emprunt ont dû donner des actifs personnels en
garantie (même pourcentage que chez les hommes).
•35 % (contre 40 % chez les hommes) ont dû engager des actifs de l’entreprise.
•Les fournisseurs de crédit exigeaient normalement les états financiers, une demande de
prêt en bonne et due forme, et les états financiers personnels. Près de 25 % des femmes
n’ont eu à produire aucun document (comparativement à 16 % des hommes).
Source : Statistique Canada, Enquête sur le financement des petites et moyennes entre-
prises, 2000.
Structure financière
Le financement offert par les institutions financières ne constitue qu’une des sources
de financement auxquelles ont recours les femmes propriétaires d’entreprises. L’examen
de la structure financière, de la structure de la dette et de la structure du capital social per-
met de brosser un tableau plus fidèle.
Les figures 5 et 6 énumèrent les dix principales sources de financement sollicitées par
les femmes entrepreneurs, au moment où elles ont lancé leur entreprise et en 2000.
Comme les hommes, les femmes entrepreneurs ont recours au financement interne pour
lancer leur entreprise. À cette étape de l’entreprise, les femmes engagent surtout leur
épargne et leur crédit personnels. Par ailleurs, à cette étape également, les femmes se
tournent plus souvent vers leurs proches ou des membres de leur famille pour obtenir un
prêt (qu’on appelle « capital de proximité »). Compte tenu du pourcentage élevé de
disparitions chez les jeunes entreprises, on comprendra l’importance du risque financier
que doivent assumer les femmes désireuses de lancer une entreprise.
Au fur et à mesure que l’entreprise vieillit, les propriétaires se tournent vers des
sources extérieures de financement : prêts bancaires, marges de crédit et cartes de crédit.
Toutefois, les femmes entrepreneurs, contrairement aux hommes, continuent d’utiliser
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leur épargne et leur crédit personnels pour financer leur entreprise. Ce comportement
s’inscrit dans la logique des entreprises relativement jeunes et petites.
Il y a une différence particulièrement marquée dans l’utilisation que font les hommes
et les femmes des prêts commerciaux, des marges de crédit commercial et du crédit com-
mercial des fournisseurs : en 2000, 50 % des hommes propriétaires de PME, contre 42 %
seulement des femmes, avaient obtenu un prêt commercial ou une marge de crédit. Les
femmes propriétaires étaient également moins nombreuses (30 %) que les hommes (41 %)
à recourir au crédit des fournisseurs.
Mais pour l’une et l’autre forme de crédit, l’écart entre les sexes résulte vraisem-
blablement du secteur dans lequel l’entreprise exerce son activité. Les entreprises en
agriculture sont beaucoup plus nombreuses (72 %) que les autres à recourir au crédit
commercial tandis que les entreprises dans la fabrication sont plus nombreuses (58 %) à
utiliser le crédit des fournisseurs. Dans ces secteurs, la proportion de femmes entre-
preneurs est moindre (voir la figure 4).
Structure de la dette
En 2000, les femmes entrepreneurs affichaient une dette de près de 33 milliards de
dollars. La tableau 3 fait voir la ventilation de cette dette selon le sexe et la source.
Abstraction faite du crédit des fournisseurs et des prêts individuels, il y a peu de différence
dans la structure de la dette chez les hommes et les femmes.
104 CARRINGTON
Tableau 3. Répartition de la dette selon la source, 2000
Fournisseur Participation majoritaire
détenue par une femme
Participation majoritaire
détenue par un homme
Banque à charte 31 % 30 %
Coopérative de crédit /
Caisse populaire
6 % 5 %
Carte de crédit 1 % 1 %
Programme gouvernemental 4 % 4 %
Crédit-bail 2 % 1 %
Prêt personnel 20 % 17 %
Crédit des f ournisseurs 15 % 21 %
Autres 21 % 21 %
Total 100 % 100 %
Source : Statistique Canada, Enquête sur le financement des petites et moyennes entrepris es, 2000.
Journal19-2-FINAL.qxd 3/1/2006 10:05 AM Page 104
Structure du capital social
Le capital de risque et le financement par capitaux propres en début de croissance
s’inscrivent généralement dans la stratégie de financement des entreprises jeunes,
présentant un fort potentiel de croissance. Mais les femmes entrepreneurs semblent moins
portées à adopter ce genre de stratégie. Dans les PME où les femmes détiennent une
participation majoritaire, 81 % affirment ne pas vouloir partager les valeurs de participa-
tion en vue de rassembler des capitaux pour stimuler la croissance de leur entreprise, alors
que chez les hommes, le pourcentage correspondant est de 66 % seulement (Institut de
recherche sur les PME, 2002).
En 2000, les PME appartenant à des femmes rassemblaient des capitaux propres de
12,5 milliards de dollars, dont 94 % était conservé par le propriétaire, alors que chez les
hommes, la fraction correspondante était de 78 % seulement. La part des capitaux propres
représentée par du capital de risque, des capitaux providentiels ou du capital de proxim-
ité est si petite chez les femmes entrepreneurs que nous ne disposons pas de statistiques
fiables à ce sujet.
Résumé et discussion
Des chercheurs universitaires, au Canada comme aux États-Unis, se sont penchés sur
les différences selon le sexe en ce qui concerne l’accès au financement et les modalités de
crédit (Riding et Swift, 1990; Fabowle et al., 1995; Coleman, 2000). Exception faite d’une
seule étude réalisée par la Fédération canadienne de l’entreprise indépendante — laquelle
a mis en évidence un taux de refus de financement plus élevé pour les femmes proprié-
taires de PME (Marleau 1995) — aucune différence sensible n’a été observée en ce qui
concerne l’accès au financement entre les hommes et les femmes qui possédaient des
entreprises comparables au niveau de l’âge, de la taille et du secteur d’activité.
Le financement obtenu par les femmes et les hommes entrepreneurs en 2000 et 2001
soutient ces conclusions. Bien que, durant cette période, les femmes entrepreneurs aient
été relativement moins portées que les hommes à s’adresser aux institutions financières
pour obtenir du crédit, c’était, plus souvent qu’autrement, parce qu’elles considéraient ne
pas avoir besoin de financement externe. Les femmes entrepreneurs ayant sollicité du
financement étaient aussi nombreuses à en obtenir que les hommes. Les modalités du
financement étaient également comparables pour les deux sexes.
Parallèlement, d’importantes différences apparaissent entre les caractéristiques des
PME appartenant à des hommes ou à des femmes. Les entreprises appartenant à des
femmes sont plus jeunes, plus petites et concentrées dans les services et, en général, moins
rentables que les entreprises appartenant à des hommes. Bien que sans effet sur l’accès au
financement, ces différences semblent se répercuter sur la structure financière et la struc-
ture du capital social des PME appartenant à des femmes. Les femmes entrepreneurs
engagent leur épargne et leur crédit personnels plus souvent que les hommes, et cela
même après l’étape du démarrage. Il faudra poursuivre les recherches pour comprendre
les causes de ces différences et les solutions possibles, ainsi que leurs effets sur la crois-
sance des entreprises appartenant à des femmes.
Programme de recherche sur le financement des PME
Le bulletin Profils de financement des petites entreprises, produit par Industrie Canada
et qui s’inscrit dans le Programme de recherche sur le financement des PME, sert à
présenter périodiquement des articles sur divers segments du marché. D’autres bulletins
portent sur les entrepreneurs membres des minorités visibles, les jeunes entrepreneurs et
les PME à forte croissance.
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Le Programme de recherche sur le financement des PME, qui fait suite aux recom-
mandations présentées en 1999 par le Groupe de travail sur l’avenir du secteur des serv-
ices financiers canadien, est un vaste programme de collecte de données sur le finance-
ment des PME au Canada. En collaboration avec Statistique Canada et le ministère des
Finances Canada, Industrie Canada souhaite brosser un tableau complet du financement
des PME en publiant des données sur l’offre et la demande de financement.
Pour plus de renseignements sur le Programme de recherche sur le financement des
PME et pour avoir accès à diverses statistiques et études, consultez la page Web
www.strategis.ic.gc.ca/prf. Pour obtenir de l’information sur la méthode utilisée pour
réaliser l’Enquête sur le financement des petites et moyennes entreprises, veuillez com-
muniquer avec Klaus Kostenbauer, au (613) 951-0691, Division des petites entreprises et
enquêtes spéciales, ou consultez le site Web de Statistique Canada à www.statcan.ca
Information sur la personne-ressource
Pour obtenir des renseignements supplémentaires sur cet article, communiquez avec :
Christine Carrington, Direction générale de la politique de la petite entreprise, Industrie Canada,
Ottawa, Ontario, K1A 0H5
Tél. : (613) 957-7903
Téléc. : (613) 954-5492
Courriel : [email protected]
Références
Baldwin, J ., G. Gellatly et V. Gaudreault. 2002. « Financement de l’innovation dans les nouvelles petites entre-
prises : nouveaux éléments probants provenant du Canada ». Statistique Canada.
Brown, Doyle, Lewis, Mallette, Purcell et Young. 2002. « Women Entrepreneurs in Canada in the ’90s ». Étude
produite par l’Université Mount Saint Vincent pour la Banque de développement du Canada.
Coleman, S. 2000. « Access to Capital and Terms of Credit: A Comparison of Men- and Women-owned Small
Businesses ».
Fabowle, B. Orser, A. Riding et C. Swift. 1995. « Gender, Structural Factors, and Credit Terms Between
Canadian Small Businesses and Financial Institutions ».
Institut de recherche sur les PME, Université du Québec à Trois-Rivières. 2002. « Le financement des PME
canadiennes : satisfaction, accès, connaissance et besoins, 2001 ». Étude commandée par Industrie Canada.
Marleau, M. 1995. « Double Standard: Financing Problems Faced by Women Business
Owners ». Fédération canadienne de l’entreprise indépendante.
Orser, B. et A. Riding. 2004. « Examining Canadian Business Owners’ Perceptions of Success ». Mémoire
présenté dans le cadre de la conférence du Conseil canadien des PME et de l’entrepreneuriat, juin 2004.
Riding, A. et C. Swift. 1990. «Women Business Owners and Terms of Credit: Some Empirical Findings of the
Canadian Experience ».
106 CARRINGTON
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Exploring Motivation and Success Among
Canadian Women Entrepreneurs
Karen D. Hughes, University of Alberta
ABSTRACT. This paper presents preliminary findings on the reasons why Canadian women start businesses,
and the relationship between their motivations and economic success. The analysis draws on The Survey of Self-
Employment, a nationally representative survey of 3,840 Canadians conducted in 2000 by Statistics Canada and
Human Resources Development Canada. Drawing on existing studies which identify three broad groups of moti-
vation—classic, work-family, and forced—the paper examines how prevalent these motivations are amongst
Canadian women, and how motivations are linked to the types of businesses women build and the economic
rewards they receive. The findings suggest diversity in the motivations and success of women entrepreneurs.
SOMMAIRE. Cet article présente les conclusions préliminaires concernant les raisons pour lesquelles les
Canadiennes se lancent dans l’entreprise, ainsi que la relation entre motivation et succès économique. L’analyse
s’inspire du Sondage sur le travail indépendant, effectué au niveau national sur 3840 Canadiens en 2000 par
Statistique Canada et Développement en ressources humaines Canada. Partant d’études identifiant trois types de
motivation—classique, travail-famille et forcée—cet article examine leur prévalence chez les Canadiennes et
comment elles sont liées aux types d’entreprises qu’elles entreprennent et aux récompenses économiques qui en
découlent. Les conclusions suggèrent la diversité dans les motivations et le succès des femmes entrepreneurs.
Introduction
Canadian women’s entrance into self-employment and small business ownership in
recent years has been nothing short of dramatic. In a relatively short period of time, they
have established themselves as a formidable presence, contributing an estimated $18 bil-
lion to the Canadian economy and attracting much attention from policy makers and aca-
demic researchers alike (Canada, 2003). While many women thrive in entrepreneurial
work—earning good incomes and building vibrant businesses—not all women achieve
high levels of financial success. Instead there is growing evidence of diversity among
Canadian women entrepreneurs,
1
both in terms of their economic performance and suc-
cess, as well as their motivations for pursuing their own business (see for example Cliff
and Cash, 2005; Fischer et al., 1993; Hughes, 2005; Orser, 2004).
This paper presents preliminary findings on the question of why Canadian women are
entering entrepreneurship in such numbers, and the relationship between women’s motiva-
tions, the nature of their business, and their economic outcomes and success. The analysis
Journal of Small Business and Entrepreneurship 19, no. 2 (2006): pp. 107–120 107
_________________________
1. There has been much debate over how to define “entrepreneurs,” “small business owners,” and the “self-
employed” (see Hughes, 2005, for an overview of this debate). This paper adopts the broad definition of entre-
preneurship used by the Global Entrepreneurship Monitor (GEM) project: “Any attempt at new business or
new venture creation, such as self-employment, a new business organization, or the expansion of any existing
business, by an individual, a teamof individuals, or an established business” (Reynolds, Hay and Camp, 1999:
3). The term“women entrepreneurs” therefore includes self-employed women who work alone in incorporat-
ed or unincorporated businesses, as well as business owners who work and employ others in an incorporated
or unincorporated business. In addition to the termentrepreneurs, this paper also refers to women in self-
employment and small business ownership (SE/SBO).
Journal19-2-FINAL.qxd 3/1/2006 10:05 AM Page 107
draws on The Survey of Self-Employment, a national survey of 3,840 Canadians that was
conducted in 2000 by Statistics Canada and Human Resources Development Canada. In
order to contextualize the analysis, the paper begins by briefly outlining the changing
nature of entrepreneurship in Canada. It then reviews existing studies on the motivations
of women entrepreneurs. Subsequent sections discuss the data and findings. The conclu-
sion considers implications for public policy.
Contextualizing Women’s Entrepreneurship in Canada
Women’s influx into entrepreneurship occurs at a time when entrepreneurship itself is
undergoing important change. As Reynolds, Hay and Camp (1999) note in the Global
Entrepreneurship Monitor (GEM) project: “Entrepreneurship is now center stage in the
public policy arena of most countries” (5). With the shift from “old” to “new” economy
(Audretsch and Thurik, 2001; OECD, 2000), and the growing importance of new tech-
nologies, emerging creative and knowledge-based work, and ‘flexible’ firms (see for
example Bakker, 1996; Florida, 2002; OECD, 2000; Reich, 2001), we are seeing impor-
tant changes in the level and nature of entrepreneurship. Compared to the “old” post-war
Canadian economy, where self-employment and small business ownership (SE/SBO)
played a declining role relative to paid employment (Arai, 1997), entrepreneurship has
become an increasingly important source of economic growth. It is also far more diverse
in nature (Picot and Heisz, 2000; Statistics Canada and HRDC, 2002). Alongside small
business in traditional sectors, we are seeing rapid expansion of service and knowledge-
based firms, as well as the growth of micro home-based business, free agents or solo self-
employed workers, and “involuntary” entrepreneurs.
A few brief statistics illustrate the extent of this change. In the last three decades, for
example, the number of Canadians in SE/SBO has risen from just over 1 million to near-
ly 2.4 million in 2004 (Industry Canada, 2005: 24). Women have made especially dra-
matic gains in this sector. While men’s presence in SE/SBO has almost doubled in this
period, women’s numbers have nearly tripled, with approximately 850,000 women now
operating a business. Of note, women have made gains both as “employers” and “solo”
workers (those working alone without paid help), and are more likely than in the past to
operate in incorporated businesses and in knowledge-based sectors (Industry Canada
1998). According to time series data from Statistics Canada’s Canadian Socio-Economic
Information Management System (CANSIM),
2
just over one quarter of women in SE/SBO
now have incorporated businesses (10.1% solo and 15.8% employers), and they have
made significant gains in key knowledge-based sectors, with growing numbers in “upper-
tier services”
3
such as management, education, professional, science and technical areas.
Alongside these impressive advances, we also see a sizeable group of female entrepre-
neurs in unincorporated solo businesses (62.7%), who remain concentrated in traditional
female sectors in personal services and retail sales (Statistics Canada, CANSIM II, Table
242-0012).
108 HUGHES
_________________________
2. CANSIM provides over 27 million time series dealing with a range of social, economic, and fiscal issues in
Canada. Data can be accessed through Statistics Canada website at www.statscan.ca. In this paper, data is iden-
tified with reference to the matrix/table number (e.g. 242-0012) fromwhich it has been retrieved.
3. Upper tier services include more highly skilled, value added sectors in business services, education, health,
welfare, and public administration. Lower tier services refers to more labour intensive sectors in retail trade
and consumer services (Krahn, Lowe and Hughes, 2006: 59).
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Motivations in Women’s Entrepreneurship
Change of this magnitude raises questions about underlying motivations. Equally
important is the question of how motivations are linked to business success (Reynolds et
al., 2002: 17). To date, a number of studies have examined women’s motivations for
becoming entrepreneurs (see Brush, 1992; Cliff and Cash, 2005; Gatewood, 2004;
Hughes, 2005, for discussions of this issue). Some highlight individual, psychological, or
personality reasons, while others point to broader social and economic constraints.
Reflecting this different emphasis, a key point of debate concerns the relative role of
“choice” and “circumstance,” and the extent to which women have been “pulled” or
“pushed” into entrepreneurship.
The following summaries provide an overview of three commonly identified groups
of motivations—classic, forced, and work-family—that emerge from research in Canada,
the U.S. and Britain. While is it difficult to compare studies given the wide range of
approaches and measures used,
4
this overview nevertheless allows us to identify the most
commonly cited motivators across several different national contexts and time periods. It
also raises questions about how prevalent these motivations are for the diverse group of
women entrepreneurs operating in the Canadian economy today.
Classic Entrepreneurs—Independence, Challenge, Financial Independence
Acommon finding in many studies is that women are pulled into, or attracted to, entre-
preneurship for many of the same “classic” reasons as men—most notably a desire for
greater independence, challenge, and improved financial opportunity. Lavoie’s (1988)
review of Canadian studies found quite consistent evidence on this across the country for
the period of the 1980s. For example, a 1986 survey of 1,000 women by the BC Women’s
Program found challenge and self-fulfilment to be top motivators (reported by 46% of
women), followed by financial independence (23%). An Ontario study of 472 women by
Collom (1982) cited “personal challenge,” “own boss,” and “financial independence” as
the top three motivators (no percentages reported in original study). Though small scale,
a Quebec study of 50 women entrepreneurs by the Ministère de L’Industrie et du
Commerce (1985) found challenge to be the primary motivator (reported by 44%), fol-
lowed by financial independence (16%) and self-fulfilment (16%). Stevenson’s (1984)
study of 447 women in Atlantic Canada also found the desire to be one’s own boss, finan-
cial independence, and self-fulfilment to be leading motivators (see Lavoie, 1988: 30–31
and 49–53 for further details of each study).
Subsequent studies in Canada, the US and UK highlight these same factors (Belcourt,
1988, 1990; Carter and Cannon, 1992; Fischer, Reuber and Dyke, 1993; Lee-Gosselin and
Grise, 1990: Hughes, 2005; Moore and Buttner, 1997; Carr, 2000). For example,
Belcourt’s (1988, 1990) study of 36 elite business women found independence to be the
top motivator (cited by 67% of women), followed by financial opportunity (39%) and
challenge (28%). Lee-Gosselin and Grise (1990), though also noting other factors, empha-
size the issue of “self-determination” (including challenge and control) in their study of
400 Quebec women entrepreneurs. More recently Hughes’ (2005) study of 61 Alberta
women found challenging work and independence to be the most commonly cited moti-
vators. Of special note a mixed sample study of 608 women and men by Fischer and
MOTIVATION AND SUCCESS AMONG CANADIAN WOMEN ENTREPRENEURS 109
_________________________
4. Studies vary fromlarge surveys to small-scale interviews. Measures of motivation also vary, fromuni-
dimensional, forced choice rankings to open-ended, multi-dimensional measures.
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colleagues (Fischer, 1992; Fischer, Reuber and Dyke, 1993) found similar motivations for
men and women with respect to social/recognition and lifestyle issues, but slightly high-
er financial motivation for women than for men. In the US, a 1998 survey by Catalyst and
the National Foundation for Women Business Owners (NFWBO) found that the majority
of women were motivated by an entrepreneurial idea (Carr, 2000: 213). Moore and
Buttner’s (1997) multi-method study of 129 US women found challenge and self-deter-
mination to be the most influential. In the UK Carter and Cannon (1992) also find inde-
pendence and challenge to be leading motivators.
Forced Entrepreneurs—Unemployment, Job Loss, Lack of Work Opportunities
Though very few early studies of women entrepreneurs examine job loss or difficulty
finding employment as a major motivating factor (Belcourt, 1988, 1990; Lavoie, 1988),
this issue has been more fully explored in recent research, both for women and men.
Bogenhold and Staber’s (1991) analysis of Canada and several other countries finds a
strong positive relationship between rising self-employment and unemployment rates up
to the late 1980s. However, studies of more recent periods in Canada by Arai (1997) and
Lin et al. (1999a, 1999b) do not support an “unemployment push” hypothesis. The Global
Entrepreneurship Monitor (GEM) suggests as little as 1% of the Canadian labour force are
“necessity entrepreneurs”—though it also cautions that experts surveyed in each country
seem poorly informed about “necessity based” or “forced” entrepreneurs (Reynolds et al.,
2002: 7, 17).
Other studies, however, suggest that “push” factors are relevant for some entrepre-
neurs as a result of greater insecurity and flexibility in the “new economy.” For example,
Moore and Mueller (2002) find involuntary layoff and prolonged joblessness to be impor-
tant motivators. Nationally representative data from Statistics Canada’s Survey of Work
Arrangements also shows that for 13.3% of women and 11.3% of men a lack of available
work was the main reason for entering SE/SBO (Statistics Canada, 1997: 35–36). In
Alberta, Chambers (1998) finds a link between restructuring and downsizing and rising
levels of SE/SBO from the mid-1980s to late 1990s. Hughes (2005) also finds unemploy-
ment and layoff to be important for a small group of women in her study.
Outside of Canada, in the U.S. and Britain, several studies also suggest job loss and
downsizing are relevant for a small minority of entrepreneurs (Carr, 2000; Dennis, 1996;
J urik, 1998; Reed, 2001). For example, J urik’s (1998) small scale study of women in New
England and Sun Belt states found that about 20% were motivated by economic con-
straints. The Catalyst/NFWBO survey discussed by Carr (2000) suggests that push factors
were relevant for 6 to 10% of women, with recent entrepreneurs more likely to be
“forced.” In Britain, several studies point to a rise in “forced” entrepreneurship for women
in the 1980s and 1990s in specific regions and sectors (Baines and Wheelock, 1998;
Granger et al., 1995; MacDonald, 1996). While most of these studies use small, non-rep-
resentative samples, more recent analysis by Smeaton (2003) of three large national
British surveys confirms that “push” factors have taken on growing importance in Britain
since the 1980s, due to contracting out and redundancy in certain sectors.
Work-Family Entrepreneurs—Work-Family Balance, Flexibility
While traditional theories of entrepreneurship overlook work-family motivations, these
factors appear to be especially important for women. Indeed, one of the key contributions
of studies on women’s entrepreneurship has been to highlight the importance of this issue
(see Brush, 1992; Stevenson, 1986, 1990 for valuable discussions). In Canada, Stevenson
110 HUGHES
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(1986) notes the attraction of flexibility for balancing family and work. Lee-Gosselin and
Grise (1990) also underline the role of family-based motivations, noting that for some
women “starting a business may be an adaptive response to the demands of the parent and
spouse/partner roles, which are very important to them” (425). More recent analysis by
Arai (2000) with nationally representative data for Canada confirms that the presence and
number of children significantly increases women’s likelihood of entering SE/SBO.
Hughes (2005) also finds work-family balance and flexibility to be important motivators
for a subsection of women in her Alberta study and in the Canadian economy overall.
In the US, Moore and Buttner (1997) also note the role of work-family balance for
16% of women in their study. Carr (2000) also notes that flexibility was a motivator for
half of the women surveyed in the 1998 Catalyst/NFWBO survey. Earlier analysis by Carr
(1996) of nationally representative mixed gender data also finds that family responsibili-
ties, especially the presence of children, are far more important for female than male
entrepreneurs. In Britain, several small scale studies underline the role of family respon-
sibilities in explaining women’s entrance into the small business sector (Baines and
Wheelock, 1998; Green and Cohen, 1995).
Research Focus and Data
Despite the strengths and range of literature on women’s entrepreneurial motivations,
a limitation of existing studies is that very few utilize nationally representative, mixed
gender data. As a result, it is difficult to generalize about women’s motivations, or about
differences between women and men, or amongst women themselves. Likewise, while
there has been a significant amount of research done on women’s motivations, there has
been less exploration of the links between women’s motivations and their economic suc-
cess. Thus, while we may surmise that challenge and independence are key motivators for
Canadian women, we actually do not know how prevalent they are in the current context,
nor how they compare to other motivators such as work-family balance or job loss. In
order to evaluate the situation in Canada, the analysis in this paper draws on nationally
representative data to address several key questions about the prevalence of various moti-
vations for Canadian women entrepreneurs, the differences in motivations between
women and men, as well as amongst women, and the links between women’s motivation
and their economic success. The specific questions and measures used in the analysis are
discussed in detail in the next section, along with the key findings.
Secondary analysis in this paper draws on the Survey of Self-Employment (SSE), which
was conducted by Statistics Canada in April 2000 on behalf of Human Resources
Development Canada. The objective of the SSE was to gather much needed information
on the rising phenomenon of SE/SBO. It was administered as a supplement to the month-
ly Labour Force Survey (LFS) and utilizes the LFS sampling frame, concepts, and defini-
tions. The LFS is a monthly household survey conducted by Statistics Canada. It is con-
sidered to be representative of 98% of all Canadians (with the exception of non-civilian,
institutionalized). Participants in the SSE had to be aged 15–69 and self-employed in their
main job in the reference week of the survey. The SSE had a response rate of 60.6% and
a sample size of 4,015. The sample used in this study (n=3,840) represents those individ-
uals who agreed to release their data to HRDC for analysis (see Statistics Canada and
Human Resources Development Canada, 2002: 10–12). To ensure the sample is repre-
sentative, weights provided by Statistics Canada are used.
In addition to standard questions included on the LFS about socio-demographic,
family and labour market background, the SSE included additional questions on a range
MOTIVATION AND SUCCESS AMONG CANADIAN WOMEN ENTREPRENEURS 111
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of issues unique to those working independently in their own business. These include
respondents’ initial reasons for entering small business or self-employment, the types of
work-related training they have engaged in (for example, formal or informal), the types of
working arrangements in place (for example, work location, control over work, usual
hours, employees), and their economic performance and security (for example, income,
retirement savings). Further details on the questionnaire and methodology used in the SSE
are available from the Microdata User Guide (Statistics Canada and Human Resources
Development Canada, 2000).
With respect to the categories of SE/SBO used in the analysis, the LFS and SSE distin-
guish between five types: (1) working owners of incorporated businesses with paid help;
(2) working owners of unincorporated businesses without paid help; (3) working owners of
unincorporated businesses or other self-employed with paid help; (4) working owners of
unincorporated businesses or other self-employed without paid help; and (5) unpaid fami-
ly members. In this analysis the fifth category is excluded, to ensure comparisons are made
strictly between those who are receiving pay. In some cases in the analysis the four groups
are used separately. In others they are aggregated into two main groups: (1) solo or own
account self-employed, which includes those working alone in an incorporated or unincor-
porated business; and (2) employers, which includes those employing others in an incor-
porated business.
Results
1) What motivates Canadian women entrepreneurs to start their own business? How
do the motivations of women differ from those of men, and from one another?
Existing research would lead us to believe that most women are motivated by “classic
factors” such as challenge, independence, and financial opportunity. Given the lack of rep-
resentative data, however, we do not know how important these “classic” motivators are,
relative to “work-family” or “forced” motivators, or the extent of differences between
women and men, or amongst women themselves. The SSE allows us to assess women and
men’s motivations by drawing on two separate questions. The first question posed to all
respondents asked: “Did you become self-employed because you could not find suitable
paid employment? Yes or No?” Those responding “yes” are classified as “forced entre-
preneurs.” The second questions asked (to those responding “no” to the first question):
“What is the main reason you became self-employed instead of working for an employer?”
Thirteen possible responses are provided, including motivators commonly cited in studies
such as challenge, independence, flexibility, and work-family balance.
Overall, 22% of women in the survey indicated they had entered SE/SBO because they
could not find suitable paid employment, a figure that is similar for men (21.7%). While
these findings do not support “push” factors as a majority motivator, they do suggest there
is a sizeable group of “forced” or “necessity” entrepreneurs within the “new” Canadian
economy. For those who chose to enter SE/SBO voluntarily, a wide range of motivations
are evident, as seen in Table 1. It is important to note that Table 1 does not include “forced
entrepreneurs” and that the reported percentages reflect only those who entered SE/SBO
voluntarily. The question also asks about main motivation and may therefore overlook
other important factors.
5
112 HUGHES
_________________________
5. As I have argued elsewhere, motivations for entering SE/SBO are complex and may represent a continuumof
“push” and “pull” factors (Hughes, 2003, 2005). A limitation of the SSE is that it does not allow us to assess
additional factors.
Journal19-2-FINAL.qxd 3/1/2006 10:05 AM Page 112
Overall, Table 1 indicates considerable diversity in the motivations of women entre-
preneurs. As existing studies suggest, the most commonly reported motivator is a desire
for independence, freedom, and to be one’s own boss (cited by 24% of women). However,
other “classic” motivators—such as challenge and financial opportunity—are somewhat
less important, and superseded by work-family balance (13.3%) and flexible hours
(10.2%). Close behind these is another factor often associated with work-family balance,
the ability to work from home (8.4%). Several other “classic” factors are also important.
Challenge (10.0%) is the most commonly cited, followed down the list by opportunities
for more money (6.4%) and control (4.6%).
As reported at the bottom of Table 1, the gender differences in motivations are statis-
tically significant. It is interesting, and in keeping with the research previously discussed,
to see that “work-family” factors are far less salient for men. J ust 7.9% of men cite any of
the work-family factors as a primary motivator (that is, balance, flexible hours, work from
home). This compares to a striking 31.9% of all women. Conversely, “classic” motivators
such as independence, challenge, control, and more money are far more commonly cited
by men. The only exception is challenge, creativity, and success, cited by roughly equal
proportions of women and men (10.0% and 9.7% respectively). Perhaps the most notable
gender difference on classic factors is the ranking of independence which, despite being
the top motivator for both sexes, is cited by 42.1% of men, and just 24.0% of women.
In order to more accurately compare the reported motivations for women and men
with the threefold typology derived from existing studies, we can sort women and men
into three groups—classic, forced, and work-family entrepreneurs. This is done by com-
bining responses to the two SSE questions in order to classify the full sample according to
their main reason for entering SE/SBO. A note of caution is warranted, however, as the
motivations reported in the SSE are forced choice answers, where respondents are asked
to provide one “main reason from a predetermined list of options.” The reductionist
approach greatly simplifies more complex, multi-dimensional motivations (see Fenwick,
2002; Hughes, 2005, for discussions of this issue). Thus, it needs to be emphasized that
MOTIVATION AND SUCCESS AMONG CANADIAN WOMEN ENTREPRENEURS 113
Table 1. Motivation for entering SE/SBO, Canada, 2000
Main Reason Women (%) Men (%)
Independence, Freedom, Own Boss 24.0 42.1
Work-Family Balance 13.3 1.7
Flexible Hours 10.2 5.3
Challenge, Creativity, Success 10.0 9.7
Joined / Took Over Family Business 8.8 9.5
Work fromHome 8.4 .9
Nature of Job 7.8 5.8
Other
1
6.6 6.7
More Money, Less Tax 6.4 9.6
Control, Responsibility, Decisions 4.6 8.7
Total Responses
2
n =958 n =2028
Pearson Chi -Square p =.000
1.
Includes an origi nal response category “other,” as well as responses with small cell sizes such as “less
stress” (reported by 0.8%).
2.
Excludes those who responded yes to previous question on whether they became self -employed due to
lack of job opportunities (n=838).

Journal19-2-FINAL.qxd 3/1/2006 10:05 AM Page 113
the responses provided reflect an existing typology provided by Statistics Canada, rather
than one generated from the spontaneous responses of entrepreneurs themselves.
6
With these cautions in mind, Table 2 shows the results of classifying motivations in
this manner. As we can see, the largest group—which accounts for the 52.7% of women
and 71.5% of men—are in fact classic entrepreneurs who pursue SE/SBO voluntarily for
a variety of reasons. This category includes those who choose as their main motivation “a
desire for independence, freedom, own boss,” “challenge, creativity, success,” “control,
responsibility, decisions,” “more money, less tax,” and opportunities relating to a “family
business.” The second largest group, making up 25.3% of women but just 6.8% of men,
are “work-family entrepreneurs.” This group includes those citing “work-family balance,”
“flexible hours,” and “abililty to work from home” as their main motivators. The remain-
ing group are “forced entrepreneurs” who have entered SE/SBO because of a lack of suit-
able job opportunities. This group accounts for one-fifth of all women, a figure that is
higher than most existing research suggests.
2) Comparing women by the three main types of motivations, how do they differ in
their personal and educational background, and in the businesses they pursue?
In terms of their socio-demographic and educational backgrounds, are there signifi-
cant differences between these three groups of women? For example, are women with
higher education more likely to be classic entrepreneurs? Are married women more like-
ly to be motivated by work-family balance? Existing studies would lead us to expect the
latter, given that several studies find marital status and/or children to be associated with
greater emphasis on work-family motivators (Carr 1996; Arai 2000).
Table 3 reports differences amongst these three groups of women, in terms of age,
marital status, education and immigrant status. First, in terms of age, classic and forced
entrepreneurs tend to be older, while far more work-family entrepreneurs are concentrat-
ed in the mid-life age group as we would expect. Work-family entrepreneurs are also more
likely to be married or living common law (85.9%), although this is the typical situation
for the vast majority of women. Immigrant status also differs across the groups, with
work-family entrepreneurs significantly less likely to be immigrants (10.9%), in compar-
ison to classic (18.2%) and forced (22.8%) entrepreneurs.
Educational and work background is important not only for determining motivation,
but also for understanding differences in business performance and success, an issue which
we later explore. Here we see some significant differences. Classic entrepreneurs are much
more likely to have a university degree (27.5%), either undergraduate or graduate. Another
114 HUGHES
_________________________
6. Despite these caveats, it bears noting that the categories used are derived fromexisting studies (such as those
reviewed in earlier sections) which use a broad range of measures and approaches. Moreover, while forced
choice answers are less than ideal, 99.95% of respondents did choose to select one main motivator, with only
0.5% choosing other available options such as “don't know,” “refuse,” or “no response.”
Table 2. Typology of Motivations, Canada, 2000
Women (%) Men (%)
Classic Entrepreneurs (Pull) 52.7 71.5
Work-Family Entrepreneurs 25.3 6.8
Forced Entrepreneurs (Push) 22.0 21.7
Total
1
n =1232 n =2608
Pearson Chi -Square p =.000
1.
Includes the full sample (n=3840) who responded to both questions concerning motivation.

Journal19-2-FINAL.qxd 3/1/2006 10:05 AM Page 114
one-third (32.7%) have post-secondary certificates and diplomas. Work-family entrepre-
neurs are also the most likely to have taken some post-secondary education without com-
pleting a credential (36.8%), and the least likely to have a university degree (16.8%).
Finally, while roughly one-half of forced entrepreneurs have university (18.4%) or post-
secondary credentials (33.1%), they are also less likely to have completed high school
(17.3%). Interestingly, as far as past work experience is concerned, there are no signifi-
cant differences. The vast majority in all three groups—roughly two-thirds—have worked
as an employee at some point in the past. Another quarter or more has past work experi-
ence both in paid and self-employment.
Turning to their businesses, we can again note differences between the three groups.
Classic entrepreneurs are far more likely to be working in an incorporated business (37.5%),
and to be an employer, having had employees at some point during the year (50.5%).
Compared to other groups, they are far less likely to work in home-based businesses
(29.4%), and far more likely to work full-time (82.3%) and to work longer hours (an aver-
age of 41.9 per week). They also have much longer business tenure, with one-third in oper-
ation for 10 years or more. As far as industry location is concerned, 49.8% are in upper-tier
services (for example, professional and technical services) and 35.2% in lower-tier services
(for example, personal services, accommodation, retail sales). They are also more likely than
other groups to be in the goods sector, with 15.0% of women working there.
In contrast, work-family entrepreneurs are far more likely than the other groups to be
engaged in home-based (67.0%) businesses, to work part-time (33.4%) and to work
relatively shorter weekly hours (34.7 hours on average). Compared to classic entrepreneurs
they have younger businesses with nearly one-half (47.5%) in operation for less than 5
MOTIVATION AND SUCCESS AMONG CANADIAN WOMEN ENTREPRENEURS 115
Table 3. Socio-demographic Background of Women in SE/SBO, Canada, 2000
Age Classic (%) Work-Family (%) Forced (%)
15-24 4.0 2.0 3.0
25-34 17.1 22.7 18.1
35-44 32.4 40.5 29.9
45-54 31.0 23.0 34.3
55+ 15.6 11.8 14.8
Pearson Chi -Square p =.008
Marital Status
Married / Common Law 75.2 85.9 74.6
Separated/Divorced/ Widow 12.4 9.5 16.2
Single 12.4 4.6 9.2
Pearson Chi -Square p =.000
Immigrant (yes) 18.2 10.9 22.8
Pearson Chi -Square p =.001
Education
HS or less, non-grad 12.4 10.5 17.3
HS grad, some PS 27.4 36.8 31.3
PS Cert/Diploma 32.7 35.9 33.1
Univ Degree – Bach/Grad 27.5 16.8 18.4
Pearson Chi -Square p =.000
Past Experience
Employee 64.2 68.1 64.0
Self-Employed 4.6 1.6 3.3
Both 28.0 25.7 28.7
No Experience 3.2 4.6 4.0
Pearson Chi -Square p =.288
Total
1
n=649 n=312 n=271
1.
Includes all women (n=1232) who responded to both questions concerning motivation.
Journal19-2-FINAL.qxd 3/1/2006 10:05 AM Page 115
years. However, there are a sizeable number (29.0%) who have operated for 10 years or
more. In terms of business sector, the majority of work-family entrepreneurs are in upper-
tier services (58.4%). Surprisingly, perhaps, given the prevalence of home-based busi-
nesses, 10.5% are in goods sectors, with the remainder (31.1%) in lower-tier service sec-
tors. J ust one-fifth are employers (20.7%), and relatively few have incorporated their
business (16.1%).
Finally, forced entrepreneurs are far more recent entrants into this sector, with 56.5%
having business tenure of 5 years or less. Almost half have home-based businesses
(41.2%), and only a minority are incorporated (18.8%). Two-thirds of forced entrepre-
neurs are solo workers, but nearly one-third (30.6%) have had employees during the year.
Compared to work-family entrepreneurs they are slightly less likely to work part-time,
and the usual hours for full-time and part-time workers are almost on par with classic
entrepreneurs. Very few (4.4%) work in the goods sector, with the majority in upper-tier
(52.0%) and lower-tier (43.5%) services.
3) How do women’s motivations correspond to their economic performance and
success?
Given differences in women’s motivations, the sectors they work in, and the hours they
devote to their work, we would expect to see variation in their economic performance. In
particular, based on the literature, we would expect to see much lower incomes for work-
family and forced entrepreneurs. Indeed, when we look at selected performance measures
116 HUGHES
Table 4. Business Background of Women in SE/SBO, Canada, 2000
Classic (%) Work-Family (%) Forced (%)
Incorporated (yes) 37.5 16.1 18.8
Pearson Chi -Square p =.000
Employees (yes) 50.5 20.7 30.6
Pearson Chi -Square p =.000
Home-based Business (yes) 29.4 67.0 41.2
Pearson Chi -Square p =.000
Work Status
Full-time 82.3 66.6 74.8
Part-time 17.7 33.4 25.2
Pearson Chi -Square p =.000
Tenure
>5 years 40.3 47.5 56.5
5-10 years 26.4 23.4 29.0
10 +years 33.2 29.0 14.5
Pearson Chi -Square p =.000
Industry
2

Goods 15.0 10.5 4.4
Upper Tier Service 49.8 58.4 52.0
Lower Tier Service 35.2 31.1 43.5
Pearson Chi -Square p =.000
(Mean Hours) (Mean Hours) (Mean Hours)
Usual weekly hours
Full-time 46.5 42.6 45.6
Part-time 20.2 18.9 19.5
Total 41.9 34.7 39.0
Total
1
n=649 n=312 n=271
1
Includes all women (n=1232) who responded to both questions concerning motivation.
2
Upper tier services include more highly skilled, value added sectors in business services, education,
health, welfare, and public administration. Lower tier services refers to more labour intensive sectors in
retail trade and consumer services (Krahn, Lowe and Hughes, 2006: 59).

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we do see these types of differences. Table 5 presents data for three outcomes measures.
The first is self-reported income (originally reported in $5,000 intervals and recoded here
to a fourfold category). It should be noted that the SSE defines net income before taxes
and deductions for unincorporated businesses, and gross personal income before taxes and
deductions for incorporated businesses. Negative income/net losses are excluded from the
data (Statistics Canada and HRDC, 2002: 12–20). In addition to income, a second meas-
ure asks whether respondents “Have ever experienced financial difficulties as a result of
being self-employed. Yes or no?” The third measure asks “If instead of self-employment,
you could get a paid job at the going wage or salary rate for someone with your experi-
ence and education, would you accept it. Yes or no?”
Table 5 presents the results for these measures. As we can see, classic entrepreneurs
have much higher income levels. Over one third earn incomes above $40,000 a year, and
there is a sizable group in the $60,000+category (22.1%). Another one-third (34.9%) earn
$20,000-39,999, with the remainder earning less than $20,000 (29.7%). In contrast, work-
family and forced entrepreneurs are far more likely to earn low incomes, with nearly two-
thirds of women earning under $20,000 a year. J ust a tiny percentage of women in both
groups are present in the upper income levels (60,000 +). Indeed, there is remarkable sim-
ilarity in the income distributions for these two groups.
Additional measures suggest further variation in economic security and performance
across the three groups. Not surprisingly, in light of reported income levels, nearly half of
forced entrepreneurs (42.1%) report having experienced financial difficulties, and well
over half would be willing to take a paid job (53.8%) if they could find something suit-
able. In contrast, just one quarter of classic entrepreneurs express any interest in paid
employment, and roughly one-third report having experienced some financial difficulty.
Given the similar income levels of forced and work-family entrepreneurs, it is interesting
to see that the latter are the least likely to report financial difficulties (27.3%), or a will-
ingness to take a paid job (18.6%). This perhaps reflects greater access to other sources of
household income (e.g. a primary breadwinner) as well as a conscious trade-off between
income and quality of life rewards.
Given that classic, work-family, and forced entrepreneurs differ significantly in terms
of their businesses, as well as their education and socio-demographic characteristics, it is
possible that the variations we see in economic performance and returns are due to these
differences, rather than women’s motivations per se. Preliminary regression analysis (not
MOTIVATION AND SUCCESS AMONG CANADIAN WOMEN ENTREPRENEURS 117
Table 5. Economic Performance of Women in SE/SBO, Canada, 2000
Classic (%) Work-Family (%) Forced (%)
Income
Less than $20,000 29.7 62.9 60.0
$20,000 – 39,999 34.9 26.5 29.2
$40,000 – 59,999 13.3 6.5 7.7
$60,000 + 22.1 4.1 3.1
Pearson Chi -Square p =.000
Have experienced financial difficulty (yes) 35.1 27.3 42.1
Pearson Chi -Square p =.001
Would take paid job (yes) 25.5 18.6 53.8
Pearson Chi -Square p =.000
Total
1
n=649 n=312 n=271
1.
Includes all women (n=1232) who responded to both questions concerning motivation.

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reported here) using dummy variables to test the effect of “classic,” “work-family” and
“forced” motivation suggests that motivations do have a statistically significant relation-
ship to income, even when controlling for many of the socio-demographic and business
related factors in Tables 3 and 4. However, more extensive analysis of the data is needed
before it is possible to say definitively whether and how motivations matter for women’s
business performance and success.
Conclusions and Policy Implications
Two key findings emerge from this preliminary analysis. The most important is that
there are notable differences among Canadian women entrepreneurs in terms of their
motivation for starting a business, and between the motivations of women and men.
Second, for women, different motivations appear to be linked to different types of busi-
nesses and economic success. Of the three groups identified, classic entrepreneurs have
higher human capital, higher income, and operate in more traditional businesses that are
incorporated, non-home based, and employing others. In contrast, work-family entrepre-
neurs work the least hours of all three groups, have lower incomes and are the most like-
ly to be in unincorporated, home-based businesses, working alone. Forced entrepreneurs
are more recent entrants, with the majority working in unincorporated solo business.
While their income levels parallel those of work-family entrepreneurs, however, their
work hours more closely resemble those of classic entrepreneurs.
From a policy standpoint these findings suggest that, in addition to shared interests,
there are important sources of diversity among Canadian women entrepreneurs. A key
question then is how well current policies and programs respond to these distinct groups.
Many current programs, for example, seek to improve business performance and growth,
an issue of great interest to classic and forced entrepreneurs. But such programs may be
less relevant to work-family entrepreneurs who appear to be making a conscious trade-off
between growth, financial returns, and quality of life. So, too, the financial difficulties
faced by many forced entrepreneurs raise policy concerns both for women’s long-term
economic security, and overall performance of the SE/SBO sector. Targeted initiatives for
this group might help them build more viable businesses or, failing that, transition into
employment that is more financially secure.
Though diverse, Canadian women entrepreneurs do not lack common ground. On the
contrary, they share many basic concerns. For example, previous analysis based on the
SSE (Hughes, 2005) makes clear the importance of human capital development. Women
entrepreneurs of all kinds have high levels of interest in training and education, and enjoy
higher economic returns as a result of engaging in it. Thus, skill development and train-
ing have a critical role to play in improving the economic performance of women entre-
preneurs (Hughes, 2005). Public policy that addresses these types of common interests,
while also paying attention to the diversity among women entrepreneurs, will greatly
facilitate women’s success in this rapidly expanding sector. So too will academic research
that sheds further light on the diversity among Canadian women entrepreneurs, and the
relationship between their motivations and success.
Acknowledgments
I would like to thank the editors and anonymous reviewers for their very helpful comments and
feedback on an earlier draft of this paper. I also wish to acknowledge the assistance provided by
HRSDC/Statistics Canada in accessing the Survey of Self-Employment in Canada in previous analy-
sis which has informed this paper.
118 HUGHES
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Contact Information
For further information on this article, contact
Karen D. Hughes, 13-15 Tory Building, University of Alberta, Edmonton, Alberta
Phone: (780) 492-0320/492-7078
E-mail: [email protected]
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Women Entrepreneurs: Debt Financing and
Banking Relationships
Judith J. Madill, Eric Sprott School of Business, Carleton University
Allan L. Riding, Eric Sprott School of Business, Carleton University
George H. Haines Jr., Eric Sprott School of Business, Carleton
University
ABSTRACT. Women-owned businesses are integral to accomplishing national and regional goals of economic
welfare and job creation. Since a key concern for women entrepreneurs continues to be access to capital, this
paper reported on research designed to investigate women entrepreneurs and their access to debt financing from
commercial lenders. The research utilized the Surveys of Financing of Small- and Medium-sized Enterprises
administered across Canada during the fall of 2001 and 2002. The research showed that the gender of the SME
ownership teamdoes not affect either loan turndown rates or rates of loan application. The research does show
a significant gender difference in the length of lender-borrower relationships. Even when controlling for age of
the firm, the study showed that male SME owners have significantly longer relationships with lenders—
suggesting that male entrepreneurs may benefit more fromrelationships with their lenders than do female
entrepreneurs.
SOMMAIRE. Les entreprises appartenant à des femmes sont indispensables à la réalisation des objectifs
nationaux et régionaux de bien-être économique et de création d’emploi. Étant donné que l’accès au capital
demeure une grave préoccupation pour les femmes entrepreneurs, cet article porte sur une investigation de
celles-ci et de leur accès au financement par emprunt auprès de prêteurs professionnels. La recherche se sert des
sondages sur le financement des petites et moyennes entreprises effectués dans tout le Canada en automne 2001
et 2002. Elle montre que le genre des propriétaires de PME n’a pas d’effet sur les taux de refus de prêt ou de
demande de crédit, mais elle signale une importante différence dans la durée des relations entre prêteur et
emprunteur. Même en contrôlant l’âge de l’entreprise, il apparaît que les propriétaires mâles jouissent de
relations bien plus longues avec les prêteurs—ce qui peut suggérer qu’ils en tirent davantage de profit que les
femmes entrepreneurs.
Introduction
Women-owned businesses are integral to accomplishing national and regional goals of
economic welfare and job creation. Over 2.6 million people were employed by business-
es with at least one women owner in 2001 and women entrepreneurs brought in combined
annual revenues of $407 billion in 2000, representing 43% of Canada’s Gross Domestic
Product (GDP) (Government of Canada, 2004). Women hold, on average, majority own-
ership in approximately 18% of firms in Canada, with a high of 21% in the province of
Quebec and a low of 9% in Manitoba and Saskatchewan (Government of Canada, 2004).
Further, women-owned businesses are increasing in number and hold considerable
untapped potential. Industry Canada reports that between 1991 and 2001, women’s self-
employment expanded by 43%, compared to 21% growth for men (Government of
Canada, 2004). According to the Prime Minister’s Task Force on Women Entrepreneurs
(2003: 25–26):
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•Since 1976, the average annual growth rate of self-employment for women has been
5.3%, compared with 2.2% for men.
•Between 1981 and 2001, the number of women entrepreneurs in Canada increased
208%, compared with a 38% increase for men.
•In 2000, women held at least 50% ownership in 31% of knowledge-based industry
(KBI) firms and 31% of manufacturing firms.
While these indicators show the very positive aspects of the rapid growth and eco-
nomic impact of women-owned entrepreneurial businesses, there are a number of indica-
tors that may be viewed as flags for caution. Recent data show that women-owned SMEs
are approximately half the size of SMEs owned by men: average annual sales revenues of
women-owned firms in 2000 was $311,289, compared with an average of $654,294 in
sales for firms owned by men (Government of Canada, 2004). In addition, the Task Force
notes: “women tend to own firms in slower growth and higher risk sectors, such as retail
and service, in which access to financing is relatively more challenging” (2003: 26).
Financing is a central challenge facing all entrepreneurs. Without sufficient levels of
finance, firms’ ability to achieve their growth potential will be compromised. To the extent
that women-owned firms are systematically disadvantaged with respect to access to cap-
ital, the potential of such firms may not be realized. St-Cyr (2000) suggests that women
entrepreneurs may face differential treatment (as compared to male entrepreneurs) when
seeking financing from financial providers in the marketplace. The Prime Minister’s Task
Force refers to St-Cyr stating that existing research on the gender issue of commercial
lending is contradictory and that these issues have not been resolved. The Task Force
report (2003: 56–57) quotes St-Cyr (2000), who, in her review of previous studies on
women entrepreneurs and their access to capital, summarized the debate as follows:
Women entrepreneurs have a higher loan refusal rate … However, there
are widely differing views in the literature on the causes of this situa-
tion. Some researchers believe that the refusal rate has to do with the
women’s personal characteristics and the characteristics of their busi-
nesses (younger, smaller, less profitable, in sectors that are less attrac-
tive to bankers, unincorporated and only one owner). … Other studies
[conclude that] differences persist even when the personal and corpo-
rate characteristics of women entrepreneurs are controlled for [and] …
some studies have attributed the differences [to] women entrepreneurs’
lack of preparation to their lack of management skills and negotiating
ability … Hence, there is a serious possibility that women are being dis-
criminated against by financial institutions. Thus, whether it is due to
personal characteristics, the characteristics of their businesses or dis-
crimination … women entrepreneurs have difficulty obtaining the
financing needed to launch and develop their companies.
Previous research on the topic of access to capital by women owners of SMEs
includes, in the Canadian context, Riding and Swift (1990), Fabowale, Orser and Riding
(1995), Haines, Orser, and Riding (1999), and the Canadian Federation of Independent
Business (CFIB, 1995). Access to capital for women entrepreneurs is also an issue inter-
nationally, as noted by the OECD (2000). International studies include research published
by Verheul and Thurik (Netherlands, 2001), Bennet and Dann (Australia, 2000), Haynes
and Haynes (USA, 1999), as well as Coleman (USA, 2000, 2002).
However, these studies—as well as the premise used by the Prime Minister’s Task
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Force—are not at all conclusive. One of the major criticisms of many of the studies is fail-
ure to control for the attributes of firms that had applied for bank financing (e.g., size,
sector, etc., dimensions across which men- and women-owned firms differ systemically).
Second, the studies did not document whether or not men and women owners differed
with respect to the relative frequencies with which they applied for bank financing.
Research is required to examine the experiences of women business owners in other coun-
tries—in particular Canada. This issue is not simply a matter of equity. If women owners
are convinced that lenders are biased against them, they may be reluctant to seek loans
and may eschew opportunities for growth based on what may be an incorrect understand-
ing of the lending process. In this context, the Prime Minister’s Task Force (2003: 55)
notes that “Some women entrepreneurs … feel intimidated by lending institutions” and
that “the number one concern of women entrepreneurs across Canada continues to be
access to capital.”
The purpose of this paper is to report on research designed to investigate issues relat-
ed to women entrepreneurs and their access to debt financing from commercial lenders.
Specifically, the research and paper are guided by three major objectives:
•To assess whether women entrepreneurs are disadvantaged in obtaining financing
from commercial lenders,
•To explore the loan application process to determine whether women approach this
process differently from men, and
•To assess what is known about women entrepreneurs and their banking relationships.
The financing of women-owned businesses is of interest to policy makers, academics,
and business owners/practitioners. To the extent that growth and viability of women-
owned firms is limited by a relative lack of access to capital, policy makers must address
such issues. This is especially true because women-owned and women-led businesses are
the fastest growing segment of new venture creation in many countries including the US
and Canada. (In the US, women ownership of SMEs has increased by 103% between 1987
and 1999, and now represents about forty percent of all firms [Gundry et al., 2002, in
Amatucci and Sohl, 2004: 181]). For academics, gaining further knowledge of the factors
that underpin financing decisions would be of benefit in terms of understanding how
financial markets operate and the nature of imperfections. For business owners/practi-
tioners, the repercussions of conveying a false impression in research that suppliers of
debt capital are biased, are considerable. Key among them is the potential for women-led
businesses to be unnecessarily constrained if, needlessly fearing bias, women owners are
unwilling to seek debt capital.
To achieve its objectives, this paper presents the findings of empirical analysis of the
financing experiences of large samples of business owners, both male and female. This
permits analysis of the rates of both application for, and approval of, debt capital across
gender of ownership. The next section of this paper will briefly review and assess the
existing research on women entrepreneurs’ access to bank debt financing. This literature
review is followed by a description of the empirical research used to investigate the three
research questions. Findings and results are then reported and the paper concludes with a
discussion of the findings, major implications and conclusions that may be drawn from
these findings, and outlines avenues for future research.
Previous Research: Women Entrepreneurs and Debt Capital
The ability of women-owned businesses to access financing has been the subject of
considerable research and debate over the past fifteen years. In a series of seminal studies,
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Buttner and Rosen (1988, 1989, 1992) investigated women owners’ access to debt capi-
tal. Subsequently, Coleman (2000), Riding and Swift (1990) and Fabowale, Orser and
Riding (1995) have continued this work. Research on debt capital, like the research on
equity capital, was originally premised on the perception that women-owned businesses
receive less financing than male-owned firms. Reasons were said to include:
… lack of experience in dealing with lending institutions, inability to
build a credit rating, lack of financial literacy, absence of networks,
inherent gender bias and rigid lending policies. Some women entrepre-
neurs also reported that they feel intimidated by lending institutions.
(Prime Minister’s Task Force on Women Entrepreneurs, 2003: 55)
Do Women-Owned Businesses Have Higher Refusal Rates?
Basic finance textbooks and bank training material stress the “5 Cs” of commercial
lending (see, for example,http://www.smallbusinessfinancetips.com/establishing-busi-
ness-credit.html). According to this standard, determinants of credit outcomes include:
•The firm’s ability to service the loan (“capacity”).
•The firm’s reliance on debt (“capitalization”).
•The firm’s sensitivity to economic “conditions.”
•The “character” of the principal owner(s).
•The borrower’s “collateral.”
These traditional criteria do not suggest directly that gender is a criterion upon which
to determine credit outcomes. However, there has been considerable speculation that gen-
der might very well play into credit and loan decisions. Therefore, the fundamental issue
in the literature relates to whether or not women-owned SMEs have higher loan refusal or
turndown rates. A search of the existing literature suggests that the weight of current evi-
dence shows no discrimination in terms of “approval rates” (Riding and Swift, 1990;
Statistics Canada, 1994; Fabowale et al., 1995; Cavalluzzo and Cavalluzzo (interest rates
don’t differ), 1998; Carter and Rosa, 1998; Haines et al., 1999; Haynes and Haynes, 1999;
Coleman, 2000, 2002; Verheul and Thurik, 2001; Cavalluzzo, Cavalluzzo and Wolken,
2002; Government of Canada, 2005).
However, there are also indications that women may face higher loan refusal rates—
or at least less favourable conditions in terms for such loans. A Canadian study published
by the Canadian Federation of Independent Business (CFIB, 1995; listed on the
www.cfib.ca, accessed March 2005 and also listed as Marleau, 1995) did report higher
refusal rates. Riding and Swift (1990), also using CFIB survey data, reported that appar-
ent gender-related differences in many aspects of banking practices (rates of loan
approvals, co-signature requirements, interest rates on loans and lines of credit) could be
accounted for by the differences in the characteristics of male- and female-owned busi-
nesses. However, Riding and Swift (1990) did show what appears to be a gender-related
difference in collateral requirements for lines of credit. On the other hand, Haines, Hotte,
and Riding (1998) reported no differences between genders with respect to personal and
spousal loan guarantee requirements. Coleman (2000) reported that while lenders don’t
discriminate against women in terms of access to capital, women-owned firms pay high-
er interest rates and are more likely to put up collateral for these loans.
With these exceptions, the literature indicates that differences in turndown rates can be
accounted for by systemic differences in the characteristics of male- and female-owned
businesses and that women-owned businesses are not systematically discriminated
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against. Yet debate continues about the nature of debt lending and about the credibility of
certain findings. For example:
While the research quoted by Industry Canada indicates that men and
women are not treated differently by financial institutions, the Task
Force finds that conclusion suspect. This research may be valid if the
loan applications by men indicated that they had no independent credit
rating, no hard assets, little or no work history, and that they wanted to
start a company in the service sector. (Prime Minister’s Task Force on
Women Entrepreneurs, 2003: 60)
So, this issue remains one of considerable academic, policy and professional interest.
Therefore, the first proposition to be tested in the current research is as follows:
Proposition 1: Women owners of SMEs do not face higher loan refusal rates than men
owners of SMEs.
Do Women Apply Less Often for Loans/Credit?
A number of studies report that women entrepreneurs are just as likely as men entre-
preneurs to apply for credit (for example, Cavalluzzo and Cavalluzzo, 1998), yet a major-
ity of other studies show that women entrepreneurs are less likely to apply for loans or
credit. In an early study, Buttner and Rosen (1992) found that, relative to men, fewer
women business owners had applied for debt capital (they could not explain this finding),
and they also reported no gender differences in perceptions regarding the difficulty of
obtaining such financing. Several recent studies have confirmed the finding that women
entrepreneurs are indeed less likely to apply for credit (Cavalluzzo, Cavalluzzo, and
Wolken, 2002; Fielden et. al., 2003) and explain this finding as a reflection of women’s
belief that they would not be able to attain it. As Haines et al. (1999: 305) stated: “… if
women business owners are (possibly erroneously) informed that banks discriminate
against them, they may well avoid lending institutions and forego growth opportunities.”
Borrowing a term from Kon and Storey (2003), some of these women may be “discour-
aged borrowers”—good borrowers who do not apply for a bank loan because they feel
they will be rejected. Buttner and Rosen (1992), however, report that women and men do
not differ in terms of their perceptions of the likelihood of being turned down.
There is also evidence, from the literature of psychology of risk taking that suggests
gender differences in terms of financing. Prince (1993: 175) finds that males are “more
prone to feel involved and competent in money handling and take risks to amass wealth.”
In his review of this literature, Stan (2005: 28) points out “other researchers have shown
that the lower levels of risk-aversion and greater tendency towards over-confidence in
males is present only for tasks which are considered to be “masculine” in nature (Beyer
and Bowden, 1997). Financial decisions are usually considered to fall into this category.”
Based on this assessment of the literature, the second proposition investigated in this
research is:
Proposition 2: Women entrepreneurs are less likely than men entrepreneurs to apply
for loans.
Do Women’s Relationships with Commercial Lenders Differ from those of Men?
It has been argued that strong relationships between lenders and borrower clients may
have advantages for both. Advantages for the lenders include the ability to maximize prof-
its by reducing risks, improving information flows, increasing customer satisfaction and
enhancing loyalty (Binks and Ennew, 1997; Ennew and Binks, 1999; Madill et. al., 2002;
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Petersen and Rajan, 1994; Sharpe, 1990; Tyler and Stanley, 1999; Zeithaml, Berry and
Parasuraman, 1996). Advantages for the borrowers consist of greater access to supply,
more favourable rates, higher perceived quality of service, reduced stress, avoidance of
switching costs, and increased convenience (Binks, Ennew, and Reed, 1992; Binks and
Ennew, 1997; Bitner, 1995; Ennew and Binks, 1999; Madill et. al., 2002; Petersen and
Rajan, 1994). It is important to recognize that the benefits that accrue to both buyers and
sellers in relationships are not immediate. Rather, they emerge as the relationship devel-
ops from early stages through maturity. It is also important to recognize that relationships
differ. For example, some relationships are characterized by higher levels of interaction
and participation than others. Previous research by Binks and Ennew (1997) and Ennew
and Binks (1999) has shown that client perceptions of quality of service are partially
determined by interaction levels between suppliers and consumers.
A very limited amount of research has examined the nature of women entrepreneurs’
relationships with their lenders. However, the literature that does exist intimates that at the
very least women entrepreneurs’ relationships may be different than those developed by
men entrepreneurs (Kolodinsky and Hogarth, 2001), and that perhaps women entrepre-
neurs’ relationships are not as positive as those between male entrepreneurs and their
lenders (Fielden, Davidson, Dawe and Maken, 2003). Hence, the third proposition inves-
tigated in this research is:
Proposition 3: Relationships between female entrepreneurs and their lenders are
weaker than those of male entrepreneurs.
Because so little research has been done, it is not possible to predict what these dif-
ferences might be, but this research will investigate the following dimensions of the rela-
tionship: (a) the length of the relationship between SME owners and their lenders, (b) the
strength of the relationship with lenders.
Data and Methodology
The methodological challenge of this study is to determine if a particular attribute (gen-
der) affects (a) financing outcomes, (b) rates of application for financing, and (c) rela-
tionships with lenders. The impacts of this attribute cannot be measured through simple
cross tabulations because of the need to control for other variables that can legitimately
affect financing outcomes. Ideally, comparison of financing experiences between the two
sets of firms (women-owned SMEs and men-owned SMEs) needs to be conducted, to the
extent possible, on a ceteris paribus basis by controlling for those factors that might be
determinants of financing outcomes.
To examine the role of gender of ownership on lending decisions and terms of credit,
the research drew on data collected by Statistics Canada (in conjunction with Industry
Canada and Finance Canada). Specifically, the 2000 and 2001 Surveys of Financing of
Small- and Medium-sized Enterprises are large-scale surveys administered, respectively,
during the Fall of 2001 and 2002 that collected data regarding the financing experiences
of SME owners during the preceding one-year periods. Both surveys are stratified sam-
ples of SMEs that represent private sector commercial businesses: with less than $50 mil-
lion in annual sales; fewer than 500 employees; and that reported business activity during
the preceding respective year. The data comprised baseline data (size, age, sector, other
attributes of firms and owners, etc.), gender breakdowns of owners, and recent financing
experiences of the businesses. The 2000 survey also included financial statement data for
a large subset of the respondents. The surveys were representative of a sampling frame
comprising approximately 1.28 million Canadian SMEs that have these attributes.
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Because they were collected by Statistics Canada, the surveys boast high response rates
from eligible respondents, 62% for the initial survey and 66% for the second survey. The
2000 survey comprises 11,015 respondents and the 2001 survey a total of 3,842 valid
cases. Both are relatively free of non-response and selection biases. These data are a
research resource that allow estimation of the distributions and statistical properties of,
among other elements, attributes of the businesses, characteristics of the owners (includ-
ing a gender breakdown), applications for various types of financing, and the outcomes of
these applications. The data allow direct comparisons of businesses owned by women
with those owned by men and the data also speak to both application and acceptance rates.
In examining gender differences and business ownership, Fischer and Reuber (2004)
articulate specific criteria required to draw valid cross-gender comparisons. They note that
empirical studies must include sub-samples of both genders and control for systemic dif-
ferences in the attributes of firms (i.e. would similar males and females be equally likely
to get financing?). A key advantage of the data set utilized in the current study is that it
allows for comparisons that respect these guidelines.
Measures Utilized
The SME FDI data identified respondents that reported that their firms had sought
debt financing, respondents who replied in the affirmative to the following question:
During 2001 [2000], did the business or its owners approach any type
of credit supplier to request new or additional credit for business pur-
poses? (2002 [2001] FDI survey, Question C-1)
To determine the type of financing requested, this research also utilized the data collect-
ed in response to the question:
What type of financing did the business request from [Name of suppli-
er], and what was the total amount of financing requested? (2002 [2001]
FDI survey, Question D.4)
To measure turndown rates and reasons for turndowns, the research utilized questions
asking whether any credit was authorized as a result of the request (Question D.5) and
what reasons were given to the business by the credit supplier for refusing to provide the
amount requested (Question D.8). Similarly, to gauge the nature of the lender-borrower
relationship, questions asking (a) about length of relationship with financial supplier and
(b) whether the supplier was also the main personal financial institution for the respon-
dent were analyzed. Other baseline data employed here included responses to questions
about sales revenues, growth, sector, age and owners’ business experience. Table 1 pres-
ents a list of the attributes of firms and their primary owners that are available in the 2001
survey. Financial measures are not available in the 2002 survey.
The gender ownership of the firm was measured by the question (Question H.5) which
asked: “What percentage of the business ownership was held by women?”
1 - None
2 - More than 50%
3 - 50%
4 - Less than 50%”
This question allowed ownership to be categorized as: (1) no women owners, (2) less than
50% owned by a woman, (3) ownership split equally (50/50) between men and women,
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128 MADILL, RIDING AND HAINES

Table 2. Joint Distribution of Sample Data: Ownership Gender, Size, and Sector (2001 Data)
Gender of
primary
owner(s)
Size of Firm
(Employees)
Other
Services
Goods
Producing
Wholesale
& Retail
Professional
Services
Total
Male
Ownership
58 103 19 98 278
1 to 4 204 402 131 373 1110
5 to 9 51 103 48 44 246
10 or more 169 284 145 125 723
Total Men 482 892 343 640 2,357
Female
Ownership
30 11 12 29 82
1 to 4 84 52 56 98 290
5 to 9 18 7 10 7 42
10 or more 23 25 19 6 73
Total
Women
155 95 97 140 487
Total Sample 637 987 440 780 2,844

Table 1. SME FDI Baseline Data Items
Credit Application Outcomes Business and Owner Attributes
• Whether or not loan application was accepted
or turned down
• Reasons stated for loan turndown (if any)
• Type of loan application (termloan, line of
credit, etc.)
• Type of financial institution
• Use(s) of loan proceeds
• Total amount requested, amount authorized
• Whether loan authorization was on personal or
commercial basis
• Interest rate on loans
• Presence of loan guarantees
• Collateral requirements (value of collatera l
and type of assets)
• Documents requested by lenders
• Account manager turnover
• Timeliness of lending decision
• Whether lender is also majority of owners’
personal banker
• Length of banking relationship
• Legal structure of firm
• Age of firm
• Size of firm(number of employees), annual
revenues
• Number of owners
• Gender of owner(s), manager
• If primary owner is member of visible
minority, aboriginal, or disabled
• Age of primary owner
• Home-based business or not
• Experience of primary manager, business
owner(s)
• Level of managerial involvement of primary
owner
• Industrial sector
• Exporter status
• Expenditures on R&D, technology acquisition
• Historical revenue growth
• Key income statement and balance sheet data
• Sources of capitalization
• Sector (NAICS), including whether or not fi rm
is classified as KBI according to Industry
Canada’s definition
• Significant financing events during 2000

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Table 3. Measures of Potential Lending Criteria
Variable Sample Weighted Estimates
Business Risk
R&D expenditure as % of business investment 2.7 2.5
Expenditure on technology as % of business investment 2.0 1.4
Loan purpose: working capital or R&D (%) 21.4% 26.0%
Turned down by supplier (%) 2.6% 1.4%
Conditions/Industry Preference
Rural location 29.5% 34.9%
Exporter firm(%) 22.4% 16.3%
Age of Firm
Legal status: Incorporated (%) 75.2% 65.2%
Legal status: Partnership (%) 9.5% 7.3%
Legal status: Sole Proprietorship (%) 15.0% 26.7%
Early-Stage Firm 25.0% 33.7%
Age of Firm(Years) 6.76 6.31
Collateral Requirements
Personal collateral as% of loan requested 14.79 5.39
Business collateral as% of loan requested 4.85 2.06
Total collateral as% of loan requested 19.64 7.45
Ratio of Assets to Loan Request 43.70 11.52
Credit History
Majority owner