Adjusting for risk in comparing the performances of male- and female-controlled SMEs

Small and medium enterprise (SME) research has typically found that female-owned SMEs underperform male-owned SMEs. Further, this underperformance usually persists after controlling for variables such as industry, age of business, and size of business. However, previous studies have normally limited their assessment of performance to sales or profit (or growth in sales or profit) without controlling for differences in risk. Our results indicate that although profits are significantly higher for male-controlled SMEs, so is the variation in profits (risk). After adjusting for risk, we find no significant difference between the performances of male- and female-controlled SMEs.     

Managerial pay and financial performance of small business

The purpose of this study is to examine empirically whether managerial pay of small-firm executives is more closely related to profitability or generation of sales. Conventional economic doctrine supports the hypothesis that chief executives are paid primarily to advance profitability. The contrary hypothesis, given impetus by Baumol [2] and Galbraith [8], asserts a closer relationship between compensation and sales. Previous studies of large corporations have produced conflicting results. Regression analysis of the 78 small firms in this study reveals managers receiving compensation correlating fairly closely with both profitability and sales. The cumulative forces at work in these firms impacting upon managerial pay appear to have wrought a linkage conductive toward motivating managers to be both “bottom line” and marketing oriented.     

Gender,Social Networks,and Entrepreneurial Outcomes in Tanzania

This article presents results of a study that investigates egocentric network differences between female and male entrepreneurs and their entrepreneurial outcomes in Tanzania. Based on a random sample of 272 micro-, small, and medium-size enterprises, the study reveals that female and male entrepreneurs have diverse networks. However, when compared to their male counterparts, female entrepreneurs' strong ties included more kin members. No significant gender difference in the composition of weaker ties was observed, suggesting gender differences in the choice of individuals with whom to have strong ties but not with whom to have weak ties. A significant gender difference in entrepreneurial outcomes at both start up and at the time of research was found, suggesting an antecedent networking behavior influence on performance.     

Gender,entrepreneurial characteristics,and success: Evidence from Ethiopia

Africa‐based research on gender and entrepreneurship is very limited. This study compares the characteristics and relative successes of men and women entrepreneurs in Ethiopia with a view of isolating the unique hurdles encountered by female entrepreneurs. While both genders in this sample were pulled, rather than pushed, toward entrepreneurship, women were more influenced by family factors. With regard to personality traits, men entrepreneurs in this study were generally more confident in their ability to succeed, whereas women exhibited higher fear of failure and external locus of control. Women entrepreneurs also reported lower business and entrepreneurial skills and relied more on government funding. Furthermore, male entrepreneurs outperformed females in terms of sales, employment growth, and profitability. The study identifies areas in which the skills and competencies of Ethiopian women entrepreneurs can be developed through targeted training programs to enable them to more clearly recognize entrepreneurial opportunities and achieve business growth. The findings of this study and the concrete suggestions it offers to strengthen the success of Ethiopian women entrepreneurs may be relevant to other African countries as well.     

Female directors,board committees,and firm performance: Time-series evidence from Turkey

We study the relationship between female representation on boards and firm value and profitability in Turkey from 2011 to 2018, relying on hand-collected data covering the vast majority of listed firms. We build several proxies of female representation on boards and find no evidence that female directors predict firm value and profitability using broad measures that are typically required or mandated by regulators. However, we find that female directors predict higher firm value when they have a more active role in board governance through board committee memberships and when they are represented in these committees in relatively large numbers. The presence of female directors, who are members of controlling families is associated with higher firm value. The presence of female independent directors is associated with higher profitability. We also study three potential channels through which female directors might influence firm outcomes and find that the presence of female directors on boards and board committees (i) facilitates the production of financial statements of higher quality; (ii) may lead to lesser incidence of violations of capital market laws and regulations, and (iii) reduces the hoarding of negative news and the related stock price crash risk. We also compare female directors to their male counterparts and find limited evidence for systematic differences.     

Analysis of Relative Growth Rates Between Domestic and International Earnings of U.S. Based Publicly Traded Restaurant Firms

ABSTRACT

This study explores the relative growth rates in earnings of public restaurant firms for a 20-year period from 1981-2000. No significant differences were found in sales growth between multinational and domestic restaurant firms. However, multinational firms significantly outperformed domestic firms in growth of operating income and pre-tax profitability. Multinational restaurant firms also had significantly lower negative growth in domestic earnings when compared to domestic firms. The results imply that multinational restaurant firms are more efficient than domestic firms in converting sales into profits.     

A theoretical overview and extension of research on sex,gender, and entrepreneurship

With the rising number of women-owned businesses has come a considerable amount of research, and even more speculation, on differences between male and female entrepreneurs and their businesses. To date, these findings and speculations have been largely atheoretical, and little progress has been made in understanding whether such differences are pervasive, let alone why they might exist. Thus public policy-makers have had little guidance on such difficult issues as whether or not unique training and support programs should be designed for women versus men. Moreover, lenders who finance new and growing firms have little to go on but their own “gut instinct” in assessing whether women's and men's businesses are likely to run in similar ways, or whether they might be run in different but equally effective ways.The lack of integrative frameworks for understanding the nature and implications of issues related to sex, gender, and entrepreneurship has been a major obstacle. Two perspectives that help to organize and interpret past research, and highlight avenues for future research, are liberal feminism and social feminism.Liberal feminist theory suggests that women are disadvantaged relative to men due to overt discrimination and/or to systemic factors that deprive them of vital resources like business education and experience. Previous studies that have investigated whether or not women are discriminated against by lenders and consultants, and whether or not women actually do have less relevant education and experience, are consistent with a liberal feminist perspective. Those empirical studies that have been conducted provide modest evidence that overt discrimination, or any systematic lack of access to resources that women may experience, impedes their ability to succeed in business.Social feminist theory suggests that, due to differences in early and ongoing socialization, women and men do differ inherently. However, it also suggests that this does not mean women are inferior to men, as women and men may develop different but equally effective traits. Previous entrepreneurship studies that have compared men and women on socialized traits and values are consistent with a social feminist perspective. These studies have documented few consistent gender differences, and have suggested that those differences that do exist may have little impact on business performance.While this interpretation of past findings is relevant to the question of if and how female and male entrepreneurs differ, there are still large gaps in our knowledge. In particular, only one study (Kalleberg and Leicht 1991) has systematically explored whether or not potential differences related to discrimination or socialization affect business performance; the study used limited measures of business performance, and assessed only a restricted range of male I female differences. This article reports on a study that explored other potential differences related to discrimination and to socialization (which are hypothesized based on liberal and social feminism) and looked at their relationship to a more comprehensive set of business performance measures.The study indicates that for a large, randomly selected sample of entrepreneurs in the manufacturing, retail, and service sectors, there were few differences in the education obtained by males and females, or in their business motivations. Women entrepreneurs were, however, found to have less experience in managing employees, in working in similar firms, or in helping to start-up new businesses. Women's firms also were found to be smaller than men's, to have lower growth in income over two years, and to have lower sales per employee. Regressions undertaken to examine predictors of a range of business performance indicators suggest that women's lesser experience in working in similar firms and in helping to start-up businesses may help to explain the smaller size, slower income growth, and lesser sales per employee of their firms.For policy-makers, this article suggests that systemic factors that afford women less access to experience must be addressed. Support for classroom training or related advisory activities may not be warranted; there is little evidence that women lack access to relevant classroom education. However, programs that help increase women's access to hands-on experience in starting firms or in working in the industry in which they hope to set up business does seem advisable. In-class education or counseling would not seem to compensate for lack of real-world experience, which suggests that any available funds should be directed more toward initiatives centered on apprenticeship programs than toward those centered on classroom teaching.Implications for lenders and investors are less clear cut, but suggest that whatever innate differences may exist between men and women are irrelevant to entrepreneurship. While women's businesses do not perform as well as men's on measures of size, they show fewer differences on other, arguably more critical business effectiveness measures-growth and productivity—and no differences on returns. Discrimination against women-owned businesses based on these findings would clearly be both unethical and unwarranted. The fact that women appear to obtain similar growth, productivity, and returns, in fact, suggests that they may be compensating for experience deficits in ways that current research does not illuminate. While more systematic inquiry is required to assist in understanding why men's and women's firms may differ in some predictable ways, this study would suggest that lenders and investors wishing to assist small businesses should focus on evaluating the amount and quality of the business and non-business experience of entrepreneurs, and consider sex an irrelevant variable.For entrepreneurs, this research reinforces the notion that acquiring relevant industry and entrepreneurial experience is of considerable importance if they seek to establish large firms and/or to achieve substantial firm productivity and returns. In particular, helping in the start-up of firms and spending extended periods of time in the industry of choice appear to yield subsequent rewards in the performance of any individual's firm. Future research is needed to investigate whether or not other types of business experience or non-business experience might bring additional benefits in terms of positive impact on future business performance, but the indication of the current work is that one's sex per se is neither a liability nor an asset.     

Revisiting the entrepreneur gender–performance relationship: a firm perspective

Research shows that firms started by women underperform those started by men but the relationship may not be as straightforward as previously thought. Using a sample of 4,540 Korean ventures in 2002 we investigated the effects of three firm characteristics—resources, industry, and regional location—on firm performance. Results indicate that firms started by male entrepreneurs, compared to female, have greater firm assets, compete in high-technology manufacturing industries, and are more likely to locate in clustered regions. Further, these firm characteristics are positively associated with domestic and international firm performance. Findings suggest firm resource and context characteristics fully mediate the entrepreneur gender–firm performance relationship. Overall, gender is not a determinant of domestic or international firm performance.     

Venture capitalists at work: A diff-in-diff approach at late-stages of the screening process

In this paper we use a new methodology aimed at identifying only the venture capitalists (VC) treatment effect: we compare a representative sample of firms financed by private VC in the period 2004–2014 with a sample of firms rejected by VC at the very late-stages of the screening process. These firms narrowly lost the contest and are hence very similar, before VC financing, to the VC backed firms; self-selection is specifically taken into account. In line with previous results, Italian startups financed by VC reach a larger size and become more innovative than other startups. On the contrary, sales growth is similar and profitability is worse than firms in the control group. VC-backed companies experience larger rise in labor costs, while the commercialization of their innovative projects takes longer: this explains their worse profitability and the deterioration in their credit score. Both effects tend to disappear after four years from VC financing, when sales increase for VC-backed firms at the same pace as for the control group. Unlike other studies, no differences are detected for the survivorship rates of VC-backed firms in Italy. We also provide new evidence on the impact of VC on firms’ financial structures: VC-backed firms show a much larger increase in equity; this rise is however only half the increase in total assets that is hence not only explained by the injection of VC equity. Another result in this direction is that the effects on firms’ size and innovation hold when we restrict the control group to firms that also increase their equity from investors different from VC; this suggests that VC effects on size and innovation might also be linked to their managerial expertise and network connections. Finally, in line with previous evidence, the effects found in the paper are exclusively driven by independent VC investors compared with captive VC.     

Business groups and profit redistribution: A boon or bane for firms?

This article examines the phenomenon of profit redistribution in Indian business groups and relates redistribution with the underperformance of group-affiliated firms relative to unaffiliated firms. The study also documents that profit redistribution is more pronounced in groups of large sizes and high levels of corporate control. The relative underperformance of affiliated firms persists even after controlling for other explanations such as corporate diversification and resource transfers to unlisted firms. The empirical results of the study lend support for the inefficient profit redistribution explanation of the “business group discount”.     

Phasing Out an Inefficient Venture Capital Tax Credit

In 2005, the Government of Ontario, Canada, announced the phase out of the Labour Sponsored Venture Capital Corporation (LSVCC) tax credit, which will become effective in 2011. Some media attention has suggested this might lead to difficulty for Ontario entrepreneurs and emerging firms in raising capital. This study presents evidence from Ontario innovative healthcare firms that capital raising concerns are not related to the phasing out of the LSVCC tax credit, and this evidence is consistent with evidence of extreme underperformance of LSVCCs. However, amongst firms currently funded by LSVCCs, there is significant concern about the phase out of the tax credit, which is at least in part attributable to the terms within LSVCC shareholder agreements. Policymakers should account for firms currently funded by LSVCCs to efficiently facilitate the phase out of the tax credit.     

Seasoned equity offerings,operating performance and overconfidence: Evidence from the UK

Prior research on seasoned equity offerings in UK shows that equity issuers report a significant long-term underperformance in the period following the event. However, the factors contributing to such underperformance are not yet fully explored. Using a sample of rights issues for the period 1988–1998, this study suggest that the long-term underperformance is significantly related to a deterioration of companies’ operating fundamentals in the post-offering period. Further comparison between “Best” and “Worst” post-issue performers reveals that long-term underperformance is predominantly robust in the case of fastgrowing firms with over-optimistic management. This evidence is consistent with the managerial overconfidence and “empire-building” hypotheses.     

The Influence of CEO Gender on Market Orientation and Performance in Service Small and Medium‐Sized Service Businesses

This study examines the effects of CEO gender on market orientation and performance (growth and profitability) among a sample of small and medium‐sized service businesses. Gender was found to have significant indirect effects (via market orientation) on both market performance (growth) and financial performance (profitability). That is, female‐led service SMEs perform significantly better due to their stronger market orientation relative those led by males. The findings further suggest that female‐led firms were slightly better than their male‐led counterparts in transmitting market performance into financial performance, although the differences were not statistically significant.     

Private investment in small public entities

Private placements provided by institutional or individual accredited investors are becoming an important financing tool for small public firms worldwide. However, private placement issuers offer poor average returns. We explain this puzzle using 2,987 traditional private placements by Canadian small public firms over a decade. We observe significant long-run post-issue underperformance using a classic factor pricing model. This underperformance is partially erased when the returns are adjusted to consider the issuers’ high level of investment, and to include the discount granted to private investors. We split the sample by the glamour/value dimension and by the firms’ investment activity. Only glamour firms with high investment activity underperform in the long run. Private investors obtain positive returns on placements in value and high investment firms. However, they overestimate investment projects of glamour firms.     

Sources of variation in firm profitability and growth

This article reports an analysis of the sources of variation in profitability and growth for manufacturing firms located in eleven European countries. A variance decomposition analysis determines the importance of the country, industry, corporate group and firm effects on profitability and growth. The analysis reveals evidence of differences between industries in the comparative advantage offered by different countries, reflecting a tendency for specialization and geographic concentration. However, as in several previous studies, the firm-level effects are the most important class of effect in explaining the variation in performance.     

Differences between women and men MBA entrepreneurs: exploring family flexibility and wealth creation as career motivators

Previous research into gender differences among entrepreneurs has yielded varied explanations as to why female entrepreneurs differ from male entrepreneurs. This study explores motivational differences using a sample of MBA entrepreneurs. This allows comparisons between male and female entrepreneurs, who are similar in terms of business education, educational credentials, and other important variables. Logistic regression is used to measure the relationship between career motivators and gender and between career motivators and gender adjusted for marital status and the presence of dependent children. The study concludes that differences between female and male entrepreneurs become larger if the entrepreneurs are married with dependent children.     

New venture internationalization,strategic change,and performance: A follow-up study

Although many scholars, business experts, and government agencies enthusiastically advise all firms, including new and small ventures, to internationalize, such advice does not appear to be based on empirical evidence. Few researchers have empirically examined the link between new venture performance and the internationalization of new ventures. At best, the evidence suggests that there is no significant relationship.We used a sample of 62 U.S. new venture manufacturers in the computer and communications equipment industries during the late 1980s. These industries were purportedly globalizing and may have been leading other industries into increased international operations. We found that higher levels of internationalization (percentage of foreign sales to total venture sales) were associated with higher relative market share two years later. However, there was no significant direct relationship between percentage of international sales and subsequent return on investment (ROI). Perhaps international operations simply cost more than expected. Or perhaps, as MacMillan and Day (1987) found in their study of corporate ventures over a 4-year time period, increases in market share may be a prelude to higher ROI as scale benefits translate into higher profitability. However, the 2-year time period of our study may simply not be long enough for investments in higher market shares to produce improved profits.During the 2-year study period, many of the ventures changed their level of internationalization. Of the 36 ventures who were domestic (no international sales) in the prior study, 10 expanded into international markets over the 2 years. Of the 26 originally international ventures (international sales of at least 5%), half increased their percentage of international sales, nine reduced it, and four stayed the same. Whereas the average change in international sales percentage of the ventures was only 2.9 percentage points, the large standard deviation of 13.0 percentage points, and the leptokurtic distribution (9.2) reflected the dramatic changes made by some of the ventures. Using subgroup analysis we examined these changes in percentage of international sales in conjunction with changes in strategies and performance. Ventures that had increased international sales, relative to those that had not, exhibited more positive associations between the degree of strategic change and performance as measured in terms of both relative market share and ROI. Increased international sales in technology-based new ventures seems to require simultaneous strategic changes in order to positively impact venture performance.This study is a follow-up to McDougall's (1989) finding that technology-based new ventures that had sales in foreign markets had significantly different strategies than similar ventures that sold their products only domestically. The current study enriches the previous findings by adding consideration of (1) changes in degree of internationalization, (2) changes in strategy, and (3) venture performance.Although we found no performance penalty associated with increasing international sales alone, indiscriminant advice for new ventures to sell in foreign markets without other supporting strategic actions is inconsistent with our findings. Internationalization, alone, did not lead to increased profitability.Entrepreneurs of young technology-based firms who are considering internationalization should take heed of our results. Internationalization of sales does not appear to be a simple matter of applying established strategies and procedures developed for a domestic arena. Successful internationalization appears to require changes in the venture's strategy as well.     

Social Responsiveness,Profitability and Catastrophic Events: Evidence on the Corporate Philanthropic Response to 9/11

In this study we seek to determine whether catastrophic events lead to corporate charitable giving unrelated to levels of firm profitability. We examine the issue relative to the corporate philanthropic response to the 9/11 terrorist attacks of 2001. Based on a sample of 489 Fortune 500 companies, we find that differences in the extent of corporate contributions following 9/11 are positively and significantly associated with differences in firms' profitability. Further, while the degree of connection to the catastrophic event led to higher levels of giving in comparison to the contributions of less connected firms, differences in the extent of philanthropy are still␣related to short-term profitability for the more connected firms. The study thus provides evidence suggesting that even in the wake of catastrophic events, corporate philanthropic giving is constrained by economic concerns.     

Women count: Perceptions of forecasting in sales

This study identifies sales managers’ perceptions of sales forecasting. We surveyed close to 400 business-to-business sales managers, split about equally by gender, and concluded forecasting-related preferences, beliefs, and desires. Herein, we evaluate gender differences and identify some critical perceptions of women that differ from the perceptions of their male counterparts. We also compare attitudes, behaviors, and demographics of women and men. We conclude with organizational recommendations and implications for firms concerning hiring practices, forecasting tool selection, training and development, and the use of an employee resource group.     

A Gender‐Aware Study of Self‐Leadership Strategies among High‐Growth Entrepreneurs

We apply a gender‐aware framework to examine the self‐leadership strategies men and women early stage high‐growth entrepreneurs employ as they develop innovations. Utilizing a matched‐pair sample of early stage entrepreneurs operating firms in high‐technology business incubators, our results suggest that female and male entrepreneurs have significantly different self‐goal‐setting and self‐cueing behaviors. Results also suggest male entrepreneurs who use stronger goal‐setting behaviors increase their intellectual property development to a greater extent than female founders. Further, for female entrepreneurs who use greater self‐cueing, the negative relationship realized with intellectual property development is lower than for male entrepreneurs.