Are all things equal in the pursuit of entrepreneurship?
An entrepreneur's gender does not correlate with a new venture's performance, according to a new report by the Small Business Administration's Office of Advocacy.
While gender may not have an effect on overall success rates, however, the report shows that there are still several areas where men and women differ on the subject of starting a business. The report looked at data from the Panel Study of Entrepreneurial Dynamics, which yielded a representative sample of 685 entrepreneurs who started their business in 1998 or 1999. Factors such as the entrepreneur's preferences, motivation, and expectations were controlled for, in the case of the report.
Researchers found that one of the main differences between male and female entrepreneurs is in the kind of businesses they start. Female entrepreneurs are more likely to start businesses in personal services and retail trade, while males tend to get involved in the technology and manufacturing sectors.
One possible explanation for this, according to the report, is that women often face barriers to entry in starting a business. As a result, women may be more likely to start businesses that do not have high demands for human or financial capital often because they lack access to it early on. Along the same lines, women-owned businesses tend to be smaller in scale than those started by men, the report found.
The study also highlighted the fact that female entrepreneurs work fewer hours, on average, than their male counterparts. Researchers found that because women generally have more domestic demands competing for their time, they also spend fewer hours on developing their new ventures.
Additionally, the report also examined risk preferences among male and female entrepreneurs. Previous studies have determined that women in general have a greater aversion to financial risk than men. As entrepreneurs, women are more likely to start ventures that have a lower risk factor, and consequently focus more on minimizing risk during the start-up process than males do.
Finally, the report compared men and women on the basis of their business savvy and found that the genders differ in the way they identify and seek out new business opportunities. Women pursue information through their social networks, and therefore have a greater variety of sources than men, while male entrepreneurs tend to identify business opportunities through conversations with investors and bankers, the report found.