Academic journal article Journal of Small Business Management

Relationships among Strategic Capabilities and the Performance of Women-Owned Small Ventures

Academic journal article Journal of Small Business Management

Relationships among Strategic Capabilities and the Performance of Women-Owned Small Ventures

Article excerpt

This study of small, life-style ventures owned by women focuses on the strategic, firm-level factors related to business performance. A theoretical model drawing on the resource-based theory is developed and tested empirically. The model includes strategic capabilities, management styles, and their relation to performance. It is tested empirically on a sample of 220 Israeli female business owners. Analysis reveals that life-style venture performance is highly correlated with certain aspects of the business owner's skills as well as the venture's resources. Paradoxically, the owner/managers in the sample rate their skills and their venture's resources as being weak in precisely those areas that correlate positively with business performance. These findings suggest that performance of life-style ventures owned by women depends more on marketing, financial, and managerial skills than on innovation.

According to U.S. estimates, women have been starting businesses at a rate more than double that of men since the 1980s (Brush 1992; Dollinger 1999). Worldwide, firms owned by women comprise between one-fourth and one-third of all businesses (Moore 1999). In spite of this rapid growth, relatively little empirical research has focused on women business owners (Baker, Aldrich, and Liou 1997; Holmquist and Sundin 1996). Even fewer studies have dealt with correlates of the performance of ventures owned by women (Fasci and Valdez 1998; Lerner, Brush, and Hisrich 1997). Especially notable is the absence of studies focusing on the strategic aspects of businesses owned by women and the impact of strategy on performance. Moore (1999) defines five clusters in the existing research on female entrepreneurs, none of them relating to strategic issues.

In this study we examine the relationship between the strategic capabilities of the women business owners and the performance of their firms, with the aim of contributing to the understanding of this neglected issue. In doing so, our hypotheses and model are based on the resource-based view of the firm. The resource-based theory is the most appropriate to understanding small business creation and management because it best describes how business owners themselves build their businesses from the resources and capabilities they currently possess or can acquire (Dollinger 1999).

The literature indicates that ventures owned by women tend to underperform in financial/growth terms compared to male-owned firms (Srinivasan, Woo, and Cooper 1994). The findings of our study may contribute to understanding some of the reasons for this under-performance from the strategic point of view

Most of the literature on life-style firms owned by women is based on research conducted in the U.S., Canada, and Europe. The American male entrepreneur formed the norms against which female entrepreneurs were usually compared. The tendency to identify entrepreneurs with masculine characteristics has been worldwide (Moore 1999). This study adds to the existing body of knowledge by using an instrument developed and studied in the U.S. to examine the capabilities of women business owners in another country. The data presented in this study show great similarity to data reported from the U.S., thus contributing to the concept of the universality of strategic capabilities in achieving business success.

The Resource-Based View

Scholars adhering to the resource-based view of the firm (Barney 1991; Grant 1991; and Peteraf 1993, for example) suggest that differences in performance among companies may be best explained through differences in corporate assets and resources and their application rather than through differences in industry structure identified by industry analysis. According to the resource-based view, a firm may be perceived as an aggregation of resources and capabilities, which are translated by management into the strengths and weaknesses of the firm. Scholars adhering to this view argue that the firm's tangible and intangible resources are central in explaining its performance (Werner-felt 1984). …

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