Management in Women-Owned Enterprises

By Chaganti, Radha | Journal of Small Business Management, October 1986 | Go to article overview
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Management in Women-Owned Enterprises


Chaganti, Radha, Journal of Small Business Management


MANAGEMENT IN WOMEN-OWNED ENTERPRISES

According to recent statistics, women are starting small businesses at twice the rate of men, and women-owned enterprises (WOEs) now account for 25 percent of all small businesses. Survival rates are comparable to those of male-owned ventures. It should be useful, therefore, to gain a better understanding of the factors that explain the success of these ventures.

Previous research suggests that success of an enterprise is a function of the "fit" between seven strategic elements: shared values, strategies, structures, systems, staff, skills, and styles. The strategic fit is determined by the organizational properties of the enterprise and the external environment in which it functions. One organizational property has been neglected by researchers: the sex of the owner. This paper explores the configuration of the seven strategic elements in eight WOEs examined via case studies.

BACKGROUND

Business literature provides conflicting views regarding the nature of strategic management in successful women-owned enterprises (WOEs). For example, many writers have concluded that women entrepreneurs behave differently from men and that several factors unique to women determine their success or failure. The implication is that women enter business for different reasons than male entrepreneurs and that their personality characteristics, strengths, and weaknesses as business leaders are different. Consequently, the strategic management of WOEs tends to be distinctly feminine.

Other researchers, however, maintain that the behaviors of women and men as entrepreneurs are very similar. This research suggests that strategic management in WOEs is similar to that in male-controlled enterprises. According to this line of reasoning, the entrepreneurial characteristics of male and female entrepreneurs are similar. A growing venture would pose similar challenges, problems, and opportunities for all entrepreneurs; hence, to succeed, male and female entrepreneurs need to respond similarly.

Two contrasting models of strategic management in WOEs can thus be derived, following the logic of current research on women and leadership in organizations. These divergent traditions can be identified as the feminine mode and the entrepreneurial mode. The feminine mode suggests that women behave differently as entrepreneurs and managers. As such, strategic management in WOEs would be quite distinct from that seen in a typical successful small firm, and would generally correspond with the previously identified "feminine" leadership style.

In contrast, the entrepreneurial mode is derived from the assumption that female and male leaders are similar. This suggests that female entrepreneurs tend to manage their ventures in much the same way that successful male entrepreneurs do. The salient strategic management features that characterize the two modes are summarized in table 1.

This article has two primary objectives: (1) to provide a brief review of the literature describing the two conflicting models of strategic management in women-owned enterprises; and (2) to test, in a preliminary way, the accuracy of these models in describing real-world situations. An analysis in depth is made of eight women-owned enterprises as a means of accomplishing the second objective. In this analysis, actual behavior with regard to the seven elements of strategic management (shared values, strategies, structures, systems, staff, skills, and styles) will be compared to the behavior suggested by each of the competing models.

THE FEMININE MODEL OF

STRATEGIC MANAGEMENT

This view is based primarily on the negative experience of women in corporate managerial careers. Corporate women often find themselves excluded from positions of authority and leadership. The reasons are many, one of the most important being the stereotype that they lack leadership qualities.

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