Introduction

Women-owned firms represent an important segment of the small business sector. According to the latest available data from the US Census Bureau, there were 7.8 million privately-held women-owned firms in the United States in 2007 (2007 Survey of Business Owners). These firms generated an estimated $1.3 trillion in sales and employed 7.6 million people. Although women-owned firms still comprise a minority of all firms (28.7 %), the number of women-owned firms increased by 44 % from 1997 to 2007, compared with a growth rate of 30 % for US firms overall.

Firm ownership has become increasingly attractive to women, because it offers them a pathway to both personal and economic empowerment. Frequently women cite barriers in the form of a “glass ceiling” which prevents them from advancing their careers (Daniel 2004; Kephart and Schumacher 2005). Other women who struggle to balance the competing demands of work and family pursue business ownership as a way to achieve great flexibility in scheduling and control over their lives (Walker and Webster 2004; Walker et al. 2008). Still others cite a desire to “do something I love”. In addition to the psychic benefits provided by business ownership, a number of women start their own firms to help support their families and to achieve economic goals (Coleman and Robb 2012a).

In spite of their impressive growth in number, women-owned firms have lagged men-owned firms in a number of traditional economic performance measures. From 1997 to 2007, revenues for women-owned firms increased by 45.7 %, compared with 62.7 % for all US firms. Similarly, employment by women-owned firms grew by only 7.2 %, compared with a growth rate of 14.8 % for US firms overall. Finally, payroll grew by 46.3 % for women-owned firms, compared with 66.4 % for all US firms. These statistics, provided by the US Census Bureau, reveal that the relative performance of women-owned firms as measured by sales, employment and payroll did not keep pace with gains made by firms overall for the 1997–2007 period. Similarly, these data show that only two percent of women-owned firms generate revenues in excess of $1 million, while 89 % of women-owned firms have no employees aside from the entrepreneur herself (2007 Survey of Business Owners).

A number of studies have examined various aspects of performance for women-owned firms, including survival, firm size, growth rates, earnings and profits. In general, these studies have had mixed results regarding performance, as well as conflicting theories for performance differences between women- and men-owned firms. Most studies have been consistent in finding that women-owned firms are smaller than firms owned by men (Loscocco et al. 1991; Rosa et al. 1996). A growing number of researchers attribute this size discrepancy to differences in the motivations of women entrepreneurs (Cliff 1998; Orser and Hogarth-Scott 2002; Watson 2006). These studies suggest that women entrepreneurs prefer controlled rather than rapid growth. Nevertheless, Brush et al. (2001b) challenge the ‘myth’ that women do not want high growth firms by focusing on growth oriented firms that participated in the Springboard forums, while Menzies et al. (2004) surveyed nascent entrepreneurs in Canada and determined there were no significant differences between men and women in terms of the desired future size of the business. Similarly, Kepler and Shane (2007) used data from the Panel Study of Entrepreneurial Dynamics to find that gender did not affect firm performance when they controlled for other factors, leading them to conclude that factors such as differing expectations and motivations as well as the type of business and industry led to different performance outcomes.

Gender differences in areas of performance aside from size and growth have also shown conflicting results. Several studies have examined firm survival to find no differences between women- and men-owned firms (Kelleberg and Leicht 1991; Cooper et al. 1994; Robb and Watson 2010), while others have found that women-owned firms are more likely to close than firms owned by men (Robb 2002; Watson 2003). In terms of profits and other measures of financial success, most studies found few differences between women- and men-owned firms when they controlled for other variables (Watson and Robinson 2003; Du Rietz and Henrekson 2000; Kepler and Shane 2007). Nevertheless, several studies have noted that women entrepreneurs were less motivated by measures of financial success (Anna et al. 1999; Carter et al. 2003).

In response to repeated references to the “underperformance” of women-owned firms, a growing number of researchers contend that the performance of women-owned firms must be viewed and evaluated within the context of women’s lives (Brush et al. 2009). Specifically, women continue to play a dominant role in caring for the home, children, and elderly parents. These responsibilities can lead to alternate career paths or career interruptions. Similarly, family responsibilities may affect the goals and thus, the performance outcomes for their firms. Other researchers assert that we, as a society, have developed a “gendered” view of entrepreneurship which leads us to devalue the contributions and accomplishments of women (Ahl 2006). Thus, when we think of entrepreneurial role models we typically think of men like Steve Jobs or Bill Gates who have launched large and often technology-based firms rather than women.

The intent of this chapter is to provide a review of recent research on the topic of gender and performance. In doing so, I will address the major economic performance measures of firm survival, size, growth, employment, and profitability. As noted above, however, firm performance does not occur in a vacuum, and should be considered within the context of other factors. In light of this, I will also include a review of articles focusing on gender differences in resource endowments which may affect performance as well as a review of articles that address the role of context. Finally, I will include a review of articles that address gender differences in motivations and expectations, self efficacy, and attitudes toward risk since it stands to reason that entrepreneurs with different types of motivations and attitudes may experience different performance outcomes. This discussion will align us with the themes of well-being and quality of life for working women which are the focal point for this book. I will conclude with a summary of lessons learned from prior research and recommendations for research directions going forward.

A Contextual Perspective on Women’s Entrepreneurship

In order to properly understand and evaluate the performance of women-owned firms, it is important for us to gain an appreciation for the context in which women launch and operate their firms. By doing so, we are able to see that women make choices that often dictate when, how, and what they start. Further, their choices are shaped by their priorities at different stages of their own life cycles. In recent years, women have made tremendous gains in both education and in the workplace. Currently, female students actually outnumber males in college and are more likely to graduate (Diprete and Buckmann 2013). Similarly, a growing number of women including Hewlett Packard’s Meg Whitman, IBM’s Virginia Rometty, PepsiCo’s Indra K. Nooya, and GM’s Mary Barra have made progress in reaching the most senior ranks of corporations and thus serve as role models for the women who will follow. Thus, this generation of women is better prepared and better equipped for corporate or entrepreneurial success than ever before. In spite of the gains, however, women continue to be under-represented in the upper echelons of major corporations and Boards of Directors. Further, although women represent approximately one-half of the population, they represent only one-third of entrepreneurs (Kelley et al. 2012).

A number of theories have been posited for this discrepancy, but they essentially break into two major categories. The first set of theories suggests that women are discriminated against either overtly or covertly (Ahl 2006; Marlow 2002). Overt discrimination could result in the denial of advancement opportunities to women or the creation of workplace environments that are hostile to them. Covert, or indirect, discrimination refers to the ways in which girls and women are socialized compared to boys and men. For example, girls are supposed to be quiet, polite, and “cute”, while boys are allowed to be noisy and aggressive. These attitudes which are perpetuated in the popular media, stalk women throughout their lives, often discouraging them from taking leadership roles or standing out (Babcock et al. 2003; Bruni et al. 2004; Maccoby and Jacklin 1974; Tomlinson-Keasey 1990). Such attitudes also extend into the entrepreneurial realm by devaluing the types of businesses women launch as well as their motivations and goals for launching them.

A second set of theories suggests that women make different choices than men, and these choices are often driven by the nature of women’s life cycles (Brush et al. 2009). In particular, women bear children and men don’t. Although the distribution of household labor in modern households tends to be much more evenly divided than in past generations, women still bear the primary responsibility for child care and care of the home. Thus, women must divide their time, attention, and energies during the very years when most young professionals are advancing their careers, typically the years between 25 and 40. Consistent with this premise, research suggests that it is not uncommon for women to launch their firms when they are older and the children are in school. Alternatively, some women entrepreneurs start home-based businesses, which tend to be very small, for the specific purpose of being home with young children (Coleman and Robb 2012a).

This contextual framework for women’s entrepreneurship is useful in helping us to understand the performance of women-owned firms. As we will see, performance differences are often driven by both environmental factors that affect women in different ways than men as well as by personal motivations. A recognition of the role played by these factors will help us gain a deeper appreciation for the role and importance of women-owned firms.

Gender and Firm Survival

Prior research reveals that new and small firms have a relatively high failure rate in general, regardless of the founding entrepreneur’s gender. Approximately 25 % fail within their first 2 years and 50 % fail within the first 4 years. Research regarding gender differences in survival has been somewhat inconclusive, however. Robb (2002) used U.S. Census data on 45,000 firms to find that women-owned firms were less likely to survive than firms owned by men, even controlling for a number of firm characteristics. Similarly, Lowrey (2010) used data from the U.S. Survey of Business Owners to find that women-owned firms had lower survival rates than firms owned by men for the 2002–2006 timeframe. In a study of Australian firms, Watson (2003) also found that women-owned firms had a higher failure rate. When he controlled for industry sector, however, the gender difference in survival rate was no longer significant. Watson’s findings mirror those of an earlier study conducted by Kalleberg and Leicht (1991) who also controlled for industry differences by studying failure rates for companies in the computer sales and software, food and drink, and health industries in Indiana. Their findings revealed that women-owned firms were no more likely to go out of business than men-owned firms. They did find, however, that younger firms were more prone to failure. Similarly, Cooper et al. (1994) studied over 1,000 U.S. firms to find that women-owned firms were just as likely to survive, but less likely to grow than firms owned by men. Finally, in a study of U.S. and Australian firms, Robb and Watson (2010) found that women-owned firms did not underperform firms owned by men in terms of either survival or profitability when the authors controlled for firm size, industry, and risk. Taken together, the results of these studies on firm survival suggest that lower survival rates for women-owned firms may be driven by factors such as industry selection rather than inherent differences in the capabilities of women and men entrepreneurs. This hypothesis is consistent with prior research noting that women entrepreneurs tend to gravitate toward industries such as service and retail which are more competitive and less profitable (Hudson 2006; Loscocco et al. 1991; Wang 2013). Thus, their firms are prone to higher failure rates. We will explore this theme of “industry segregation” further as we move through this chapter.

Gender, Firm Size, and Growth

In contrast to research on firm survival, findings from prior research on the topic of gender and firm growth have been fairly consistent. Scholars have found, across a broad array of studies in the U.S. and other countries, that women-owned firms are smaller and less growth oriented than firms owned by men. Rosa et al. (1996) surveyed 600 Scottish and English small business owners to find that gender as a significant determinant of firm size as measured by both sales and number of employees. Similarly, Du Rietz and Henrekson (2000) studied 4,000 Swedish firms to determine the impact of gender on measures including sales, profitability, and employment. Their findings revealed that firms owned by women were significantly smaller and over-represented in service industries. In a study of Norwegian firms, Alsos et al. (2006) found that women-owned firms were significantly smaller and less likely to grow than firms owned by men. Sabarwal and Terrell (2008) conducted a more broad-based study of firms in 26 countries in Central and Eastern Europe. Their findings revealed large gender gaps in size, but not in profitability or efficiency Another study using a matched sample of female- and male-owned British firms conducted by Shaw et al. (2009) found that the firms owned by women had significantly lower levels of sales and employment than firms owned by men. Women entrepreneurs in this study reported a significantly higher level of time devoted to childcare responsibilities, a finding which brings us back to our theme of the context in which women entrepreneurs launch their firms. In the same study, Shaw et al. also found that their male entrepreneurs invested significantly higher amounts of capital, leading the researchers to conclude that women with children may be less willing to take financial risks by investing larger amounts of household income.

Studies of U.S. firms have yielded similar results regarding firm size and growth. Loscocco et al. (1991) studied over 500 firms in New England to find that firms owned by women had lower sales and income than men. They also found that women tended to operate in some of the less growth-oriented and profitable sectors of the service industry. Cooper et al. (1994) followed over 3,000 U.S. firms for 3 years to find that the impact of gender on firm growth was both negative and significant. In a somewhat later study, Carter and Allen (1997) found that women-owned firms lagged men-owned firms in measures of both sales and income. A recent study conducted by Fairlie and Robb (2009) using U.S. Census data revealed that women-owned firms were substantially smaller than firms owned by men and less likely to have employees. Overall, these studies reveal a consistent pattern of gender differences in the areas of firm size and growth. Often these differences are attributed to differences in industry selection, risk aversion, and motivations on the part of the entrepreneur.

Gender and Profitability

Although prior research is fairly consistent in finding that women-owned firms underperform firms owned by men in measures of size and growth, research regarding the impact of gender on firm profitability is less conclusive. In terms of profits and other measures of financial success, Anna et al. (1999) found that women in the traditional industries of service and retail had lower expectations for financial success but higher expectations for security. Conversely, women in less traditional industries had higher expectations for financial performance and rewards. Carter et al. (2003) studied nascent entrepreneurs to find that men rated the importance of financial success more highly than women, while Kepler and Shane (2007) used the Panel Study of Entrepreneurial Dynamics to find that men were more likely to start a business with the goal of making money. The results of these studies would seem to suggest that women have different motivations and expectations for their firms which in turn reflect their attitudes toward financial versus other types of rewards. This theory is borne out by a series of interviews conducted by Coleman and Robb (2012a) revealing that women who launched lifestyle types of firms were content with a relatively modest level of revenues, profits, and growth. Conversely, women who launched growth-oriented entrepreneurial firms were more highly motivated to achieve leadership positions within their industry as well as financial and economic rewards.

Since women-owned firms tend to be smaller, they also tend to generate a lower level of profits (Fairlie and Robb 2009). Nevertheless, women-owned firms appear to be just as profitable as men-owned firms when profits are measured relative to the level or assets employed. Fischer et al. (1993) surveyed over 500 U.S. firms in three different industries to find that women-owned firms had lower levels of sales, but did not differ significantly from men-owned firms in other measures of income and profitability. Du Rietz and Henrekson (2000) had similar results using data on a large sample of Swedish firms. In a study using data on almost 5,000 firms from the Australian Bureau of Statistics, Watson (2002) found no significant performance differences between women- and men-owned firms when he controlled for industry and age of the business. He concluded that, although women appear to devote fewer resources to their businesses, their profitability per dollar of assets and equity is comparable to that of men. A subsequent study comparing the performance of Australian and U.S. firms (Robb and Watson 2010) had similar results.

Taken together, the findings of these various studies suggest that the primary performance differences between women- and men-owned firms occur in the areas of firm size and growth rather than in those of profitability and efficiency. Findings regarding firm survival are somewhat less conclusive, but nevertheless suggest that women-owned firms have survival rates that are comparable to firms owned by men when we control for factors such as industry sector, firm age, and firm size. If this is the case, one might conclude that performance differences between women and men are not driven by innate gender differences in competence or ability, but rather by other factors. Two such factors, also supported by prior research, are gender differences in resource attributes and gender differences in motivations and expectations. I will explore the impact of each of these factors in the next two sections.

A Resource-Based View of Gender Differences in Performance

The Resource-based View is grounded in the earlier work of Edith Penrose (Penrose 1959), an economic theorist who established the link between resources, profitable firm growth, and competitive advantage. Penrose believed that the task of the entrepreneur was to manage the firm’s resources in a way that would allow her to take advantage of opportunities in the marketplace and, thus, to achieve profitable growth. Penrose also noted that the entrepreneur must continually maintain and develop the firm’s resources in order to retain a competitive advantage. The Resource-based View (RBV) which emerged from Penrose’s work views the firm as a collection of tangible and intangible assets (Brush et al. 2001a; Hanlon and Saunders 2007). According to the RBV, the central role of the entrepreneur is to assemble, develop, and transform needed resources (Amit and Schoemaker 1993; Wernerfelt 1984). Those firms that do so most effectively are also the firms that will enjoy superior performance (Brush et al. 2001a; Sirmon and Hitt 2003). What resources are we talking about? The typical ones cited in prior research include financial capital, human capital (education and experience), and social capital (networks and contacts). Gender differences have been noted in each of these resource categories.

In the area of financial capital, women entrepreneurs typically start their firms with smaller amounts of capital than men (Alsos et al. 2006; Coleman and Robb 2009; Verheul and Thurik 2001). This is because women are more likely to establish sole proprietorships, so they do not have partners or investors who can provide financial capital. Similarly, women tend to have lower earnings than men and occupy lower ranks within existing companies and organizations. Thus, the accumulated earnings that they could devote to a new business are smaller. In contrast, Gundry and Welsch (2001) found that growth-oriented women entrepreneurs launched with adequate amounts of capital and drew on a broader array of financing sources than low growth firms.

Prior research has also noted that women business owners experience greater difficulties in raising capital from external sources. Fabowale et al. (1995) studied over 2,000 Canadian small businesses to find that women were no more likely to be turned down for loans, but they were more likely to express dissatisfaction with their lending relationships. Using data from the Survey of Small Business Finances, Coleman (2000, 2002) found that women business owners were just as likely to receive loans but less likely to apply. Further, her results revealed that women owners were more likely to anticipate denial. Blake (2006) concluded that, although the 5 Cs of creditFootnote 1 are supposedly gender-blind, they are not gender neutral thereby imposing additional constraints on women desiring to start businesses. Carter et al. (2007) noted that although gender is seldom mentioned as a criterion for lending, differences were found in the lending process depending on whether the loan officer was male or female. Similarly, Bruns et al. (2008) conducted a study of Swedish loan officers to find that their lending decisions were not homogeneous. Rather, the loan officers placed greater value on education and experience that was similar to their own. If the majority of loan officers are male, this could have the potential to disadvantage women borrowers.

Prior research reveals that women entrepreneurs have experienced even greater barriers in their attempts to secure external equity in the form of angel investments or venture capital. These are often essential forms of capital for growth-oriented firms. As in the case of external debt, Orser et al. (2006) studied Canadian entrepreneurs to find that women were less likely to seek equity capital, even controlling for firm size and industry sector. Based on these results, Orser et al. concluded that their results did not support a finding of discrimination in the market for financial capital, but did support prior research suggesting that women have a lower risk tolerance and were thus less likely to seek venture capital funding. The Diana Project team conducted research on growth-oriented firms to find that women entrepreneurs were largely excluded from venture capital networks (Brush et al. 2001b, 2004; Greene et al. 2001). In a study on angel investing, Becker-Blease and Sohl (2007) found some evidence of homophily on the part of entrepreneurs who preferred to seek funding from investors of the same sex. The authors noted that since there are relatively few women investors, this creates a problem for women entrepreneurs seeking external equity. Consistent with this, Harrison and Mason (2007) noted the small number and lack of visibility of women angel investors.

Human capital refers to the education and experience that entrepreneurs bring into their firms. Although women are just as likely to attend college as men, they are less likely to major in disciplines such as business, engineering, or computer science, all of which can serve as starting points for new entrepreneurs (Bobbitt-Zeher 2007; Menzies et al. 2004; Zafar 2009). As noted above, women are much more likely to start firms in low growth, highly competitive industries such as personal services and retail. Similarly, women are less likely to have senior management or prior entrepreneurial experience than men, another important predictor for entrepreneurial success (Boden and Nucci 2000; Carter et al. 1997; Nelson and Levesque 2007). These human capital differences also have an impact on the entrepreneur’s ability to raise financial capital, since investors tend to weigh prior experience, and particularly, prior entrepreneurial experience, heavily (Franke et al. 2008). In a study of U.S. firms, Carter et al. (2003) found that having a graduate degree significantly increases the odds of securing outside equity. Although women are actually more likely to graduate from college than men, they are still less likely to have post-graduate degrees. In a study of firms in the service and retail industries, Brush and Chaganti (1998) found that both education and prior managerial experience had an impact on firm performance as measured by cash flows and employment growth. Similarly, Coleman (2007) used data from the Survey of Small Business Finances to find that both education and experience had a positive impact on the profitability of women-owned firms. Social capital consists of networks and contacts, and this is also an area in which women and men entrepreneurs differ. Although prior research suggests that women devote attention to networking, they do not always network strategically in order to acquire key resources needed by their firms. Davidsson and Honig (2003) studied nascent entrepreneurs in Sweden to find that membership in a business organization had a positive impact on both first sale and profitability. In a study of growth-oriented firms Brush et al. (2001b) found that women-owned firms received only 5 % of all venture capital financing; Brush et al. (2001b, 2004) also concluded that a key factor in this funding discrepancy was that VC networks tended to be relatively closed and male-dominated with few women in investing or decision-making roles. In a study of Australian firms, Watson (2011) found that men tend to use formal networks such as banks, accountants, attorneys, industry associations, and business consultants, more than women. In contrast, women rely more heavily on informal networks. Although Watson did not find that these differences in networking strategy led to significant performance differences between women and men, he did find that networking with accountants and industry associations was associated with firm growth. This finding suggests that women entrepreneurs who want to grow their firms may need to expand their networks beyond family and friends.

The Role of Motivations and Expectations

A second explanation for performance discrepancies between women and men business owners could be differences in motivations and expectations for their firms. This distinction ties in directly with issues of wellbeing and quality of life which are central to this book. Prior research consistently reveals that women entrepreneurs are more concerned with work/life balance and flexibility of scheduling. Boden (1999) employed a sample of over 50,000 individuals in the United States to find that the majority of self-employed women cited flexibility of scheduling, childcare issues, or other family obligations as a primary reason for becoming self employed. Consistent with this, Walker et al. (2008) studied the owners of home-based businesses in Australia to find that their primary motivations were flexibility in their lifestyle and a desire to balance work and family. Anna et al. (1999) also found that women entrepreneurs who started businesses in more traditional fields had higher expectations for work/life balance and security, while both Carter et al. (2003) and Kepler and Shane (2007) found that male entrepreneurs rated the importance of financial success more highly than women.

One of the areas where prior research has noted persistent gender differences is firm size and growth. A growing number of studies attribute gender differences in these particular performance measures to differences in motivations and attitudes. Cliff (1998) conducted interviews with over 200 Canadian entrepreneurs to find that women entrepreneurs were much more concerned than men with the risks associated with rapid growth. Orser and Hogarth-Scott (2002) also studied Canadian entrepreneurs to find that men perceived growth to be significantly more important than women. In contrast, women weighed the personal demands associated with growth including loss of family time, difficulty in maintaining balance, and added stress, much more negatively. Still and Walker (2006) conducted a study of women entrepreneurs in Australia and found that the majority were not interested in growing their firms or “creating an empire”. Alternatively, they were more concerned about the stresses associated with business growth and with maintaining control. Echoing these results, Morris et al. (2006) studied women entrepreneurs in New York State to conclude that slower growth was a conscious choice on their part. Consistent with this, in a study of British firms Roomi et al. (2009) found that most women owners did not aspire to growth. Rather, the majority launched small, local firms operating in the service or retail sector.

Fairlie and Robb (2009) used U.S. Census data representing 75,000 U.S. firms to find that women selected different industries than men and worked fewer hours at their enterprises. Further, women were twice as likely to respond that they owned the business to meet family responsibilities. Coleman and Robb (2012b) used data from the Kauffman Firm Survey to find that there were no significant performance differences between women- and men-owned firms after 4 years of operation aside from firm size. Nevertheless, Coleman and Robb found that women were just as likely as men to state that their firms met their own performance expectations, leading them to conclude that women entrepreneurs are motivated by different types of firm outcomes than men.

These studies on the motivational aspects of entrepreneurship suggest that women often have different preferences and goals for their firms. Although a growing number of women are launching growth-oriented firms (Brush et al. 2001b), many still choose self employment to fulfill personal goals and to achieve the flexibility required to balance work and family. If these are the primary motivators, firm size, growth, and profits, may be less compelling. The results of these studies also give credence to the theory that the performance goals that women establish for their firms are a reflection of the stages of their life cycle as well as the priorities they have at different stages of the life cycle. This may explain why women are just as likely to have surviving and profitable firms, but less likely to have large or growth-oriented firms. As noted above, the challenges of firm growth in terms of time, attention, energy, and financial resources, may conflict with other priorities and responsibilities at particular stages of a woman’s life cycle.

Are Women More Risk Averse?

One explanation that has been put forth for performance differences between women and men entrepreneurs has been differences in their attitudes toward risk. Prior research suggests that women are more risk averse which may have an effect on their willingness to launch and grow their firms. Several of these articles focus on the investment decisions and choices of women investors. In a study of defined contribution pension plans, Bajtelsmit and VanDerhei (1997) found that women were more likely to invest in fixed income alternatives and less likely to invest in stock Similarly, Hinz et al. (1997) found that a large percentage of women invested in the minimum risk portfolio available when given a range of pension alternatives. Using the 1989 Survey of Consumer Finances, Jianakoplos and Bernasek (1998) found that single women held a lower percentage of risky assets than single men or married couples. Also using the 1989 Survey of Consumer Finances, Bajtelsmit et al. (1999) found that women demonstrated greater relative risk aversion than men in their allocation of wealth into defined contribution pension plans. Similarly, using the 1992 and 1995 Surveys of Consumer Finances, Sunden and Surett (1998) found that both gender and marital status affected the ways in which individuals allocated assets in defined contribution plans with women making more conservative choices than men. Harrihan et al. (2000) found that, even controlling for differences in risk tolerance, women were more likely to invest in risk-free securities than men.

Gender differences in attitudes forward risk have also been noted in studies of entrepreneurs. In one such study using data from the 1998 Survey of Consumer Finances, Coleman (2003) found that women reported a higher level of risk aversion than men, with almost 50 % of women stating that they were not willing to take any financial risks. In contrast, however, Schooley and Worden (1996) found that gender was not a significant factor in attitudes toward risk if life cycle stage and employment were held constant. Constantinidis et al. (2006) studied women entrepreneurs in Belgium to find that their perspectives on growth varied depending upon their level of family responsibilities. Those women entrepreneurs who had families and children had higher levels of risk aversion which led to a reluctance to invest larger amounts of capital in their firms. This finding would seem to support our contention that women’s behaviors and attitudes should be viewed in context.

Other studies on attitudes toward risk have focused more specifically on women’s decision-making within corporate and entrepreneurial contexts. In a study of Spanish graduate students, Canizares and Garcia (2010) found that, when surveyed on their intention to launch an entrepreneurial firm, women exhibited a greater fear of failure than men. Alternatively, male students were more likely to express a desire for new challenges as well as a willingness to take at least moderate risks. Cliff (1998) studied a sample of Canadian firms to find that women were more concerned than men with the risks associated with rapid growth. Similarly, in a study of firms in the U.S. Kepler and Shane (2007) found that women showed a preference for launching low risk/low return companies. Several researchers have linked higher levels of risk aversion on the part of women entrepreneurs to performance measures relating to firm size and growth (Orser and Hogarth-Scott 2002; Watson and Newby 2005; Watson 2006).

Related to the issue of risk aversion, a number of studies have found that women have lower levels of self efficacy than men. Within an entrepreneurial context, entrepreneurial self efficacy (ESE) has been defined as the individual’s belief that she has the necessary skills and abilities to launch a firm (Chen et al. 1998; Drnovsek et al. 2010). If women entrepreneurs have less confidence in their abilities, they may be less willing to take the types of risks that accompany launching or growing a firm. In a study of teens and MBA students, Wilson et al. (2007) found that differences in ESE emerge at an early age. Results from both samples revealed that both girls and women had lower levels of ESE and were less likely to consider entrepreneurship as a career path. Another study involving MBA students (Zhao et al. 2005), did not find gender differences in ESE, but did find gender differences in entrepreneurial intentions. These researchers found that women students perceived the task environment (launching a firm) to be more difficult and less rewarding than men. In a study using GEM data from 17 countries, Koellinger et al. (2008) found that women were significantly less likely to believe that they had the skills necessary to launch a firm. Further, women had a significantly higher fear of failure. Similarly, Kirkwood (2009) found that women had less confidence in their entrepreneurial abilities than men, and were even reluctant to call themselves entrepreneurs.

Taken together, these studies suggest that women entrepreneurs, in general, are more reluctant to take risks, have a greater fear of failure, and have less confidence in their abilities to successfully launch an entrepreneurial venture. In turn, we might anticipate that these factors would affect the types of firms women start as well as their performance goals and expectations for these firms. As a counterpoint to these studies, however, Brush et al. (2001b) launched the Diana Project which attacked many of the “myths” associated with women’s entrepreneurship. In particular, these researchers took issue with the contention that women do not want high growth businesses. They backed up their position with a study of women entrepreneurs who participated in the Springboard forums. Springboard Enterprises (http://www.springboardenterprises.org) is an organization that helps growth-oriented women entrepreneurs prepare for and connect with equity investors. This study and subsequent work associated with the Diana Project helped to document the experience of women who are, in fact, eager to accept the challenges and risks associated with growth-oriented entrepreneurship.

Women and Innovation

Although innovation is not typically grouped with measures of performance, a firm’s ability to innovate has important implications for survival, profitability, and growth. In light of that, it is important to review studies that have focused on innovation in women-owned firms. Traditionally, innovation has been associated with the development of new products and services in specific industries such as manufacturing, high tech, and bioscience. These industries are important, because they tend to have more truly “entrepreneurial” firms, which are characterized by high levels of growth and job creation. Women, who are less likely to have degrees in the STEM disciplines (science, technology, engineering, and math), are under-represented in these industries and often perceive these fields as hostile and unwelcoming (Zafar 2009; Treanor et al. 2010). A number of prior studies have also confirmed that women-owned firms tend to be more heavily concentrated in the service or retail industries rather than in sectors that we would categorize as “high tech”. Women are also less likely to have the types of leadership positions in innovative firms that would prepare them to launch growth-oriented firms of their own (Cross and Linehan 2006; Tai and Sims 2005).

A new and growing stream of research contends, however, that our definitions of innovation tend to be “gendered” and biased toward the types of industries that are dominated by men (Blake and Hanson 2005; Eriksson and Aromaa 2012; Ranga and Etzkowitz 2010; Sjogren and Lindberg 2012). Thus, women appear to be less innovative in comparison. They further note that we often measure innovation in terms of the creation of new products often involving some type of intellectual property. These researchers suggest that we have not focused as much on innovations in the service industry where women dominate or in process rather than product innovations. Blake and Hanson (2005), in particular, stress that we need to consider the contexts in which women operate when we evaluate the extent and nature of their innovative activities. Recent research conducted by Coleman and Robb (2014) provides support for these arguments. Coleman and Robb studied female and male entrepreneurs to find that males were more likely to associate innovation with the development of a new or improved product or service, means of production, or delivery system. In contrast, women were more likely to associate innovation with the introduction of new management or marketing practices. Both genders reported, however, that innovation was important for their firms, and they devoted resources for that purpose.

Context Revisited

The results of prior research suggest that the performance of women-owned firms needs to be viewed within the context of the goals and objectives that women establish for their firms as well as where they are in their life cycle. Recent studies cited in this article reveal that women-owned firms do not underperform firms owned by men in either survival or profitability when we control for variables such as industry, firm size, and firm age. Prior research does reveal, fairly consistently, however, that women-owned firms, on average, have lower growth trajectories than men-owned firms. Part of this difference can be explained by the different resource attributes women bring to their firms or have access to. In terms of financial capital, there is strong evidence that women have lower earnings and less accumulated wealth than men. Further, they experience barriers in their attempts to secure external capital, particularly in the form of external equity. Although women have made impressive progress in the human capital attributes of education and experience, they are still less likely to have degrees in the growth-oriented STEM fields (science, technology, engineering, and math). Similarly, few women have as yet penetrated the most senior ranks of corporations. Finally, women have different social capital in the form of networks and contacts than men. People tend to network with others who are like them. Thus, women tend to network with other women, and are correspondingly closed out of male-dominated networks that could provide valuable access to financial capital, talent, information, and opportunities. Going forward, one of our challenges is to ensure that women have the opportunity to embark on their entrepreneurial careers with the same resource endowments as men. This means creating and developing opportunities for women to acquire the financial, human, and social capital needed to launch and grow their firms.

Aside from differences in resource attributes, prior research increasingly suggests that women entrepreneurs are different from men in terms of their motivations. In particular, women appear to prefer controlled and manageable rather than rapid growth. Women are also more likely than men to cite flexibility and a desire to balance work and family as goals. In light of these motivational differences, it is not surprising that women appear to “underperform” men in the areas of firm size and growth. Some researchers contend that the myth of female underperformance has emerged because we insist on measuring the performance of women-owned firms with the same yardstick we use for men (Marlow et al. 2008). They contend that, if women have different motivations, we should perhaps be using a different yardstick.

The interviews that Alicia Robb and I conducted as a part of our research in writing our book, A Rising Tide: Financing Strategies for Women-Owned Firms (Coleman and Robb 2012a), suggest that successful (and happy!) women entrepreneurs find a way to pursue entrepreneurship on their own terms rather than mimicking the strategies, behaviors, and attitudes of their male peers. All of our entrepreneurs had a very clear idea of what was important to them. In some instances it was pursuing firm size, growth, and economic gain, but in others it was flexibility, spending time with family, creative freedom, or the opportunity to develop a new and as yet untested idea. Their firms were grounded in these fundamental goals as well as in the personal value systems of the entrepreneurs themselves. Thus, they were not in the position of pursuing goals or living a life that they did not really believe in or want. We found them to be remarkably happy, unconflicted, and successful as they defined success. That was probably one of our most valuable takeaways from the experience of writing the book: women can and are pursuing success on their own terms.

In this sense, our findings echo those of Brush et al. (2009) who developed a “gender-aware framework” for women’s entrepreneurship. According to these researchers, the basic framework of money, markets, and management do not adequately encompass the experience of women entrepreneurs. Thus, we need to expand the normal “3M” framework (money, markets, and management) to encompass the additional dimensions of motherhood and the effects of the meso/macro environment, thereby providing a “5M” perspective. As Brush et al. point out, the home and family have a much greater impact on the expectations, goals, and decisions of women than men. These impacts will permeate their work lives as well as their personal lives. Similarly, environment in the form of societal expectations and cultural norms affect the types of businesses women start, the resources they are able to acquire, and the goals they establish for their firms. In this sense, the performance of women-owned firms must be viewed within the context of the rich tapestry of women’s lives and the social/cultural environment. Success is not necessarily a race to some hypothetical financial finish line, but rather part of a journey that allows women to satisfy multiple goals and objectives at different stages of their lives.

Lessons Learned and Directions for Future Research

In this chapter we have focused on a sampling of recent research on the performance of women-owned firms. Conventional “wisdom” asserts that women-owned firms underperform firms owned by men, yet studies we have cited reveal that women and men do not differ in measures of firm survival or profitability when we control for factors such a industry, firm size, and firm age. These findings attest to the success of women in launching and sustaining viable firms. Performance differences still persist, however, in the areas of firm size and growth, revealing that the majority of women launch small, lifestyle firms, rather than growth-oriented entrepreneurial firms capable of providing a substantial number of jobs. Why does this particular performance difference exist? Recent research reviewed in this chapter suggests a number of possible factors. The first of these is that women bring and have access to different types of resources in the form of human, social, and financial capital. These resource differences, in turn, provide a “barrier to entry” for growth-oriented entrepreneurship. Other studies suggest that women have different motivations and goals for their firms than men. The goal of balancing work and family, for example, may make rapid growth and the challenges that go with it less attractive to women entrepreneurs. Another set of studies points to higher levels of risk aversion which may discourage women from entrepreneurship in general and from growth-oriented entrepreneurship in particular. Similarly, if women have lower levels of entrepreneurial self efficacy, they may doubt their ability to manage the challenges associated with growing and managing a large firm. These varied perspectives point to some of the weaknesses of prior research as well as opportunities for further research going forward. To date, much of the research on firm performance has been based on studies using large domestic or even global data sets such as the Survey of Small Business Finances, the Panel Study of Entrepreneurial Dynamics, the Global Entrepreneurship Monitor, and the Kauffman Firm Survey. An advantage of these sources is that they provide data on a large number of firms, thereby allowing us to track the performance and compare different sub-populations such as women versus men. A disadvantage, however, is that the large data sets are less effective in capturing attitudinal perspectives such as personal motivations, attitudes toward growth, and confidence in one’s own abilities. Thus, “big data” have allowed us to determine that women entrepreneurs underperform men in measures of firm size and growth, but it has not allowed us to fully understand why. In contrast, studies that have incorporated personal interviews or focus groups provide a more nuanced approach. These suggest that the performance of women-owned firms must be understood within the context of the individual woman entrepreneur. Thus, some women may, in fact, aspire to growth-oriented entrepreneurship (Brush et al. 2001b; Coleman and Robb 2012a), while others prefer smaller, less growth-oriented firms that allow for a greater degree of personal balance and, in some instances, a desire to balance work and family. Going forward, there are further opportunities for research that will incorporate these attitudinal perspectives for women at different stages of their life cycles.

In terms of the resources that women bring into their firms, there are also opportunities for new research. Many of the past resource “deficiencies” that have been attributed to women in the areas of human, social, and financial capital are becoming less pronounced thanks to recent initiatives in both the public and private sectors. In the area of human capital, women are even more likely to graduate from college today than men. Further, initiatives at the local, state, and national levels have been directed toward attracting a greater number of girls and young women into the STEM disciplines. This shift will provide a new generation of women with educational backgrounds conducive to launching new growth-oriented firms. Future research could focus on this cohort’s involvement in and experience with growth-oriented entrepreneurship.

Women are also making gains in the workplace, albeit too slowly. Although we have a growing number of high profile women CEOs who can serve as role models, their numbers remain small, and women continue to be under-represented on Boards of Directors. In light of this, we need case studies that document the experience of women who have attained the types of senior level management and decision-making experience that will equip them to lead their own growth-oriented firms. In particular, we need to gain a better understanding of how these hard-charging women executives and entrepreneurs achieve balance. What types of decisions do they make about their priorities at different stages of their lives, and how do they manage their time and energy?

In the area of social capital, women are also making gains in learning how to identify and tap into the types of resources and individuals that will help their firms succeed. Organizations such as Springboard Enterprises, Astia, and Golden Seeds are working with both women entrepreneurs and women investors to provide training, strategies, and contacts that are vital for raising external equity. Closing the external equity gap between women and men will go a long way toward providing the resources women need to achieve significant size and scope for their firms. Crowdfunding for equity, authorized as a part of the 2012 JOBS Act will also open a door by providing women entrepreneurs with direct access to thousands of potential external equity investors. In fact, crowdfunding may be a game changer for women entrepreneurs who have been largely excluded from the closely-knit and male dominated markets for external equity. These changes on the horizon also provide opportunities for new research on women entrepreneurs’ access to financial capital and its effect on their growth aspirations and trajectories.

Taken together, these new developments suggest that the context for women entrepreneurs is also changing, and changing in ways that will create new opportunities for women to participate in the full gamut of entrepreneurial activity ranging from small, lifestyle firms to large, growth-oriented ventures in a broad range of industries. In this broader context, however, women’s decisions about their personal entrepreneurial journey will continue to be shaped not only by their resource attributes, but also by their motivations, goals, attitudes, and life/family situations. The good news is that as these changes come to pass, women will have a broader array of choices and strategies than ever before to make the choices that are right for them.