Gender and Alternative Start-Up Business Funding

Abstract

The broad context for our study is set by discussions of equality of opportunity to start-up business finance. There is an increasing literature which suggests that female entrepreneurs face significant disadvantages compared to their male counterparts in their access to resources from orthodox channels such as banks. The consequence of undercapitalization during the start-up phase is underperformance during the life of the business. Adopting a range of informal 'bootstrapping' techniques gives entrepreneurs the opportunity to obtain alternative financial resources without resorting to debt or equity funding. In this article, we draw on a unique sample of 211 nascent entrepreneurs in the early stages of business start-up, contacted through a postal and web-based two-wave longitudinal survey, to examine gender differences with regards to different forms of bootstrapping behaviour. The study demonstrates significant differences in the ways that male and female entrepreneurs access informal financial resources. We discuss explanations drawn from women's studies suggesting that the features of capital markets and business and personal characteristics that limit female business owners from accessing sources of orthodox finance also impede their access to the most effective forms of bootstrapping. We suggest that further explanatory and qualitative research is required to investigate these effects.

Owners' Characteristics and the Financial Bootstrapping Strategies Used by Rural Small Businesses in South Africa

“…However, considering minimisation of investments, females have a higher mean than males. The results are consistent with the findings of Jayawarna et al (2012). The study found gender differences in some of the measures of financial bootstrapping.…”

Entrepreneurial social capital research: resolving the structure and agency dualism

“…Research in this tradition has focused on the difficulty female entrepreneurs have in accessing capital (Carter et al, 2003) or the fact that males and females tend to have very different social networks (Jones and Jayawarna, 2010). In the latter case, female networks are typically dominated by strong ties (family and friends) with limited links to more professional networks which provide access to a wider range of resources (Jayawarna et al, 2012). From a more theoretical perspective, there is a clear difference between those who subscribe to the idea that 'alert' entrepreneurs are able to identify new opportunities which have an objective reality (Shane, 2003;Shane and Venkataraman, 2000) and the opposing view that opportunities are created (Sarasvathy, 2001) rather than discovered.…”

My mother-in-law does not like it: resources, social norms, and entrepreneurial intentions of women in an emerging economy

“…Women face more obstacles in getting external finance in general as a result of gender stereotyping (Jayawarna et al, 2012;Marlow & Patton, 2005). For instance, Fay and Williams (1991) suggest that approvals for start-up loans for women are significantly lower than for their male counterparts.…”