Academic journal article Entrepreneurship: Theory and Practice

The Differential Effect of Men and Women Entrepreneurs' Human Capital and Networking on Growth Expectancies in Bulgaria

Academic journal article Entrepreneurship: Theory and Practice

The Differential Effect of Men and Women Entrepreneurs' Human Capital and Networking on Growth Expectancies in Bulgaria

Article excerpt

Based on expectancy theory and social psychology perspectives, this study looks at the differential effects of men and women entrepreneurs' human capital and networking on their growth expectancies in the context of a transitional economy. Survey data from men and women new venture owners in Bulgaria (n = 544) suggest that growth expectancy among men is significantly and positively associated with outside advice achieved through networking. Among women entrepreneurs, growth expectancy is significantly and positively associated with perceived benefits from prior experience. A Chow test for coefficient differences reveals that the determinants of growth expectancy for women entrepreneurs are significantly different than those for men, rendering support for perspectives from social psychology, which suggest that women have different socialization experiences and, as a result, conceive of their new venture growth differently. Implications for managerial practice and public policy are discussed.

Introduction

The transition from a centrally planned to a market economy in the former communist world has been characterized by the rapid formation of entrepreneurial new ventures. In the 1990s, the proportion of nascent entrepreneurs there has caught up with the number in the developed Western economies to reach about 5% of the adult working population (Peng, 2001). Private small- and medium-sized enterprises account for as much as 50-60% of the gross domestic product (GDP) of countries such as Hungary, Lithuania, the Czech Republic, Poland, and Latvia, almost as much as in the industrialized West (World Bank, 2002). Entrepreneurship is seen as a major engine for job creation and social change in these economies (World Bank, 2002). That new and small entrepreneurial firms realize that their full growth potential is therefore an important managerial and public policy concern (Scase, 1997; Scott & Rosa, 1996).

Although in comparison to Western economies the share of women entrepreneurs in transitional economies who want to grow their ventures is relatively high (Welter, Smallbone, & Isakova, 2006), the women-led entrepreneurial businesses in transitional economies have shown a lower propensity to grow and a higher propensity to exit under unfavorable industry and competitive conditions. This finding is replicated by studies in Uzbekistan (Welter, Smallbone, & Schakirova, 2003), Slovenia (Tominc, 2003), Russia (Izyumov & Razumnova, 2000), Poland (Bliss & Garratt, 2001), Hungary (Hisrich & Fulop, 1994), and Bulgaria (Nikolova, 2000; Stoyanovska et al., 2000).

One explanation for the lower growth propensity of women entrepreneurs' ventures in a transitional economy may be that women have fewer resources for business growth (Cliff, 1998). Resource scarcity, particularly lack of financial resources, plagues entrepreneurship in all transitional economies (Tan, 1996; World Bank, 2000), but women may face significantly higher impediments for securing resources for business expansion than men do (Carter, Brush, Greene, Gatewood, & Hart, 2003). Prior research has established, in particular, that women may lack the professional experience (Ashwin, 2000) or the diverse social network (Aldrich, 1989) needed in order to fully utilize access to information, resources, and social support.

Another explanation for the lower growth propensity of women entrepreneurs' ventures in a transitional economy may be that, relative to men entrepreneurs, women have ex-ante lower growth expectancies for their ventures. Theoretical arguments from social psychology and social cognitive theory suggest that men and women have different socialization experiences, such as prior professional experience and social network affiliation, which shape different strategic choices (Bussey & Bandura, 1999; Carter, Williams, & Reynolds, 1997). Because women conceive of their businesses differently than men do, this leads to different approaches to venture creation and business growth expectancies (Brush, 1992; Cliff, 1998). …

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