Frontiers of Entrepreneurship Research
1996 Edition
SUMMARIES

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WOMEN ENTREPRENEURS: PROFILE DIFFERENCES ACROSS HIGH AND LOW PERFORMING ADOLESCENT FIRMS


Kathleen R. Allen

Nancy M. Carter

Entrepreneur Program, BRI
School of Business Administration
University of Southern California
Los Angeles, CA 90089-1421

Telephone
213-740-0659
414-288-5100

Fax
410-837-5012
414-288-1660

Principal Topics

Research over many years has helped us understand the nature of women entrepreneurs, their businesses, and how they may differ from their male counterparts in terms of characteristics, experience, skills, motivation, and intent. Significant evidence from the study of women-owned businesses indicates that although they represent one of the fastest growing segments of the US economy, they lag behind men-owned businesses in size as measured by sales and income. Prior research has tended to pool all women entrepreneurs into one group and report averages, the effect of which has been to mask the nature and achievements of women in high growth, often non-typical industries with enormous numbers of women who start small businesses, principally in retail and service areas. Researchers have also learned that the ultimate size a business reaches appears to be determined by the size at start-up. To the extent that this is true, this study sought to determine if factors exist at the conception of women’s businesses that might predict business performance, specifically, which businesses will eventually achieve large scale in terms of revenues.

Method

The sample for the research consisted of 1,400 women business owners who responded to a 1994 National Association of Women Business Owners (NAWBO) survey of their membership. An effort was made to use only serious businesses that had already transitioned out of the incubation stage, that were start-ups as opposed to businesses that had been purchased, and that were no longer relying solely on start-up resources. Firms at least two years, but less than eight years old were selected as representing the adolescent stage of the business. "Serious" businesses were those in which the respondent indicated they worked at least 35 hours per week in the business and they owned at least 50% of the business. The qualifying group of businesses was divided further into two groups: (1) those with sales revenues in the top 25% of their cohort group (industry); and (2) those in the bottom 25% of their cohort group in terms of sales revenues. Sales revenue was the dependent variable in the study. Independent variables were grouped as (1) intention variables: expectation of sales growth, interest in the financial performance of the company, and hours spent at work; (2) financial variables: the use of credit cards, lack of capital, banking relationship, and commercial loan; and (3) situational variables: previous business education, dependent children at home, and being married.

Major Findings

A step-wise logistic regression analysis was used. Organizational age was added in the first step as a control variable. From the results of this study, it appears that having capital to grow and expand the business operations, preferably through commercial business loans and private sources, in addition to a personal banking relationship and a focus on profit and growth, contributes significantly to the high performance of women-owned businesses. Contrary to much research on social/cultural barriers that are thought to inhibit or even preclude women from growing companies, the situational variables of previous education, being married, and having dependent children at home do not appear to have affected the respondents in this study toward either low or high performing businesses.

Implications

The results of this research contribute to a more complex understanding of women business owners and provide new information on the intentions of the growing segment of women creating high growth companies, often in non-typical industries. For practitioners, the results suggest that entrepreneurs need to understand the nature of businesses in their industry to seek patterns of successful behavior that may be applied to their new venture. In addition, women business owners who desire to grow their businesses to a high level need to place an emphasis on financial management. On a policy level, it may also suggest that programs geared toward preparing potential women entrepreneurs should focus more on the skills and behaviors that increase the chances of significant business growth.

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