Academic journal article Entrepreneurship: Theory and Practice

All Credit to Men? Entrepreneurship, Finance, and Gender

Academic journal article Entrepreneurship: Theory and Practice

All Credit to Men? Entrepreneurship, Finance, and Gender

Article excerpt

Availability of, and access to finance is a critical element to the start-up and consequent performance of any enterprise. Hence, any barriers or impediments to accessing appropriate levels or sources of funding will have an enduring and negative impact upon the performance of affected firms. Although findings have been somewhat inconsistent, there is support for the notion that women entrepreneurs entering self-employment are disadvantaged by their gender. This argument is evaluated through a theoretical analysis of gender using the example of accessing both formal and informal sources of business funding to illustrate how this concept impacts upon women in self-employment.

Introduction

This article contributes to the debate surrounding the negative effect of gender characterization upon female entrepreneurs (Carter, Anderson, & Shaw, 2001) using a specific issue, sources of financial support to new and existing firms, to illustrate this association. When engaging with entrepreneurship within a market economy, the availability of finance and access to that finance is a critical element to the start-up and consequent performance of any enterprise. Hence, barriers or impediments to accessing appropriate levels or sources of funding will have an enduring and negative impact upon the performance of affected firms. Whilst it is evident that locating, accessing, and managing finance is a critical and challenging task for most entrepreneurs, although findings have been somewhat inconsistent, recent research does support the notion that gendered characterizations will impact negatively upon women during this process (Aldrich, Elam, & Reese, 1997; Brush, 1997; Carter & Rosa, 1998; Marlow, 2002). This problem is critical as the consequence of undercapitalization during enterprise formation and development is then underperformance during the life of the business (Carter & Marlow, 2003). It is not suggested that self-employed women are all destined to fail, or that their ventures will all fall into the "plodder" category (Storey, 1994), but that gendered characterizations will impede the full realization of business potential. This is illustrated to some degree in a recent analysis of firm performance in Australia where Watson (2002), drawing upon social feminist theory and evidence from a large statistical data set, argues that male and female entrepreneurs in fact, have few performance differences in terms of total income to total assets. It was apparent that women had fewer assets in the first instance so their businesses remained smaller than those of their male counterparts, but it was argued that the use of these assets suggests that it is not an inherent difference in the ability to "do business" which distinguishes men and women but rather, the outcome of a normative male model of entrepreneurial achievement which, by design, disadvantages women. Equally, the Diana Project--which focuses upon venture capital allocation in the U.S.--suggests that women are impeded by myths associated with their gender regarding their inability to generate businesses of interest to venture capitalists (Brush, Carter, Gatewood, Green, & Hart, 2001). So, it is not the mere fact of genetic make up which determines an individual's propensity to achieve as an entrepreneur, but the values attached to gendered characterizations of feminine and masculine stereotypes.

As noted above, empirical evidence, which explores the link between gender, enterprise, and funding constraints, offers somewhat conflicting evidence regarding this association. So for example, while the evidence does support the notion that women begin their firms with poorer levels of funding than their male counterparts (Brush, 1997; Carter & Rosa, 1998), clear associations between gender disadvantage and funding are more difficult to isolate given the number of extraneous variables which intrude into the process and practice of finance, markets, management, and performance in general. …

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