A Study on the Major Problems of U.S. Women-Owned Small Businesses

By Lee, Sang-Suk; Denslow, Diane | Journal of Small Business Strategy, Winter 2005 | Go to article overview

A Study on the Major Problems of U.S. Women-Owned Small Businesses


Lee, Sang-Suk, Denslow, Diane, Journal of Small Business Strategy


ABSTRACT

This paper investigates the types of problems women-owned businesses face and the relative significance of these problems. The 800 U.S. women business owners were drawn at random from the membership directory of NAWBO (National Association of Women Business Owners). This paper analyzed the differences of major problems across each growth stage (that is, start-up, early growth, later growth and maturity) and in terms of the type of entrepreneur (that is, general/opportunistic or technical/craftsman) in U.S. women-owned businesses. The findings indicated there were significant differences in the problems faced by women-owned businesses who were in various growth stages of their business life (start up to the maturity stage). Finally, significant differences were found by entrepreneur type (technical/craftsman or general/opportunistic) within these women-owned businesses

INTRODUCTION

The substantial increase in the number of women business owners and their contribution to economic growth and job creation in the last decade in most developed countries is accompanied by an increasing number of studies on the phenomenon of female entrepreneurship (Verheul et al. 2002). Women-owned businesses represent an important and growing part of the United States economy. According to the National Foundation for Women Business Owners (NFWBO), there are over nine million women-owned businesses in the U.S. representing 38 percent of all businesses. These firms employ 27.5 million people and generate over $3.6 trillion in sales annually (The National Foundation for Women Business Owners 2000).

Much of the research on entrepreneurial activity indicates that many women encounter barriers due to their lack of requisite skills, training, and background. Jones et al. (2002) suggested that Small Business Development Centers (SBDC) in their role as the consultants should understand differences in clients' needs and provide appropriate support mechanisms. Studies in the field of female entrepreneurship have mainly focused on personal characteristics, such as motivation and experience, and the distinctive features of their businesses, such as firm size and sector.

Relatively few studies have explored the growth stages and features of business type in women-owned businesses. The goal of this study is to investigate whether there are differences in problems with respect to growth stages (that is, start-up, early growth, later growth, and maturity stage) and type of entrepreneur (that is, general/opportunistic or ' technical/craftsman) in women-owned firms.

Some researchers have proposed alternative frameworks to understand the characteristics and problems of a diverse variety across the growth stages of small business (Terpstra and Olson 1993; Kazanjian 1989). In particular. Mitra and Pingali (1999) suggested a framework that can discriminate between differing levels of growth orientation and internal capacity for growth in individual firms within the small-scale sector, and to identifying the growth stage of the firm. Flynn and Forman (2001) suggest that there are differences in the strategic and operating environments of the new venture organizations, based on their growth stages. Also, they are in need of help in negotiating various legal and governmental related issues.

The purpose of this study is to evaluate the problems of U.S. women-owned businesses across business growth stages, by the type of entrepreneur. The two categories for type of entrepreneur used in this study are ones identified in previous research and are general/opportunistic and technical/craftsman (Lee and Osteryoung 2001). The four business growth stages are Start-Up, Early Growth, Later Growth, and Maturity Stage. While previous studies have proposed that each of the growth stages is systematically associated with specific areas of concerns for a better performance, empirical findings were not conclusive enough to offer support for the proposition.

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