Comparing the Performance of Male-and Female-Controlled Businesses: Relating Outputs to Inputs

Abstract

Previous research has found that female-owned businesses generally underperform male-owned businesses on a variety of measures such as sales and profit. Further, this underperformance appears to persist even after controlling for demographic differences. However, previous studies have tended to limit their assessment of performance to output measures (sales or profit, for example) without relating these output measures to appropriate inputs (such as total assets or owner's equity). This would appear to be a significant oversight. After controlling for industry, age of business, and the number of days a business operated, this study finds no significant differences between male- and female-controlled businesses with respect to total income to total assets (TITTA), the return on assets (ROA), or the return on equity (ROE). Interestingly, if the control variables are removed, there is evidence to suggest that female-controlled businesses outperform male-controlled businesses.

Does Gender Matter For Firm Performance? Evidence From Eastern Europe And Central Asia

“…For example, in a study from Australia, Watson (2002) shows that women business owners have less start up capital, which explains their lower incomes and profits compared to men. Coleman (2007) found that among small business owners in the US, women were less likely to have a loan of any type (46.5% v. 58.9% of the men) and a significantly lower percentage had loans from banks (27.3% v. 39.3%).…”

“…In a study from Australia, Watson (2002) shows that women business owners earn similar rates of return on equity and assets as male business owners. Using World Bank Enterprise Surveys (2002Surveys ( -2006, Bardasi et al (2007) find that in Africa, female-owned businesses are at least as productive as male entrepreneurs when measured by value added per worker and total factor productivity, holding constant the industry in which they work.…”

Business accomplishments, gender and entrepreneurial self-image

“…Several reasons have been proposed to explain the performance differences between male and female-owned firms, including the level of relevant business experience (Cliff, 1998;Cromie and Birley, 1992;Watkins and Watkins, 1983;Kalleberg and Leicht, 1991;Fischer, et al, 1993;Verheul and Thurik, 2001), the proportion of the total workweek committed to the business (Brush, 1992;Goffee and Scase, 1985;and Stigter, 1999), the propensity to take risks (Verheul and Thurik, 2001;Sexton and Bowman-Upton, 1990;Masters and Meier, 1988), age of the firm and the number of days a business operated (Watson, 2002), as well as the industry women are involved in (Watson, 2002;Verheul and Thurik, 2001). Other reasons refer to differences in values across gender, positing that women business owners are more likely to value quality and other goals not directly related to growth and economic performance (Brush, 1992;Du Rietz and Henrekson, 2000;Kalleberg and Leicht, 1991;Rosa et al, 1996;Verheul and Thurik, 2001;Verheul et al, 2002).…”

Performance implications of financial capital availability on the financial literacy – performance nexus in South Africa

“…Likewise, the firm's age is also a vital factor that affects firm performance. While older firms appear to be larger in terms of sales turnover, capital assets and number of employees, younger firms seem to have lower sales and as a result lower profits (Watson, 2002). Consequently, a firm's age denotes the power and experience a firm has in a chosen industry, which can, thus, be influential to the firm's performance .…”