Do Strategic Business Networks Benefit Male- and Female-Owned Small-Community Businesses?

By Miller, Nancy J.; Besser, Terry L. et al. | Journal of Small Business Strategy, Fall/Winter 2006 | Go to article overview

Do Strategic Business Networks Benefit Male- and Female-Owned Small-Community Businesses?


Miller, Nancy J., Besser, Terry L., Riibe, Jennifer V., Journal of Small Business Strategy


ABSTRACT

This research, based on social capital and strategic networking theory, explored small business owners' use of formal networking as a strategy for conducting business in competitive markets. Data were collected from 285 men and 111 women, who operated small businesses in small communities and were members of one of 29 business networks. Findings, based on hierarchical regression, suggest there are descriptive differences among male and female small business owners such as the business size and years of ownership that should be further explored. However, no differences were found for perceived network benefits based on gender, size of business, or years of ownership. Variables central to social capital and strategic network theory held a positive effect on network benefits (R^sup 2^ = .580), suggesting strategic business networks do benefit both male- and female-owned small community businesses. Understanding how small community businesses operate and interact in network organizations has implications for business improvement and, ultimately, small community development.

INTRODUCTION

Size does matter when making strategic decisions about growth, transition, or business continuance (Gilinsky, Stanny, McCline, & Eyler, 2001). Most U.S. business organizations are small and autonomous and consequently exhibit a high dissolution rate. Dissolution rates have been higher for establishments aged 10 years or more and operating with fewer than 20 employees, than for newly created organizations with greater than 20 employees (Aldrich & Auster, 1986). Organizations face both internal and external obstacles that make survival difficult. Limited investigations of small businesses in small or rural communities have been conducted showing that scarcity of resources and barriers generated by fierce competition further jeopardize business survival (Bhat & Fox, 1996). Small populations and often remote locations can translate into limited local demand and create difficulties for achieving economies of scale or critical mass (Henderson, 2002b). McDaniel (2001) found that small firms in small U.S. communities today lag behind their urban counterparts and may not be performing as well as they could. He suggests that developing alliances or networks with other small businesses may be useful for overcoming some of these challenges facing rural or small communities.

More and more women are turning to self-employment in both rural and urban areas of the U.S. Jackson (1998) reported that 27 percent of women-initiated firms were motivated by glass-ceiling barriers to advancement or a lack of challenge in existing careers. In research conducted by Lichter (1989), women in rural areas were unemployed or under-employed at a rate 42 percent higher than for men in rural areas and at a rate of 38 percent higher than for women in urban areas. Indeed, the number of female-owned businesses across the U.S., particularly in the small business sector, has grown at nearly twice the rate of all firms established between 1997 and 2004 (Morisseau-Kuni, 2004; CWBR, 2005). In a recently issued report based on the 2002 U.S. Economic Census, women owned nearly 6.5 million non-farm businesses or 30 percent of all U.S. businesses (US Census Bureau, 2006).

Traditionally, female-owned businesses are smaller in number of employees and sales volume than male-owned businesses which may further compound women's ability to successfully operate small community businesses (Brush & Hisrich, 1991, Marlow & Patton , 2005). Evidence also suggests that female-owned businesses are less successful than male-owned businesses when success is measured in terms of earnings (Weiler & Bernasek, 2001). Some of the greatest challenges facing women who desire to start or grow a business are access to strategic advice, creditors, and suppliers (Marlow & Patton, 2005). Membership and participation in a business or trade network can offer opportunities for women to make contacts that may not otherwise form. …

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