Mixed-gender ownership and financial performance of SMEs in South Africa

Abstract

Purpose The purpose of this paper is to investigate whether the presence of women among owner-stakeholders affects firms’ financial performance. Particularly, it extends the corporate governance literature by linking stakeholder theory and gender differences to explain why gender composition of ownership matters for firms’ performance. As the management of small and medium-scale enterprises (SMEs) revolves around owner-managers and their individual characteristics that are likely to affect their achievements, the study further investigates the relationship between the gender composition of ownership and the firm survival. Design/methodology/approach Using survey data on SMEs for 2007 and 2010, this study uses a panel-level heteroskedasticity technique and a probit methodology to assess the effect women’s presence among owners may exert on SMEs performance and survival, respectively. Findings Results indicate that firms jointly owned by men and women appear to perform better than those owned by men although the presence of women among owners does not correlate with firm survival. Research limitations/implications While the findings of this study shed some light on the performance impact of gender composition of firm ownership, reports based on the presence of women among owners may not present the full picture. Whether the ownership is shared equally between different genders might provide further insides on the magnitude and/or robustness of such effect. Moreover, a small sample period (T = 2) was used to analyse a single industrial sector (manufacturing), and even though the Hausman test confirmed the use of random-effects specification, caution should be taken when generalizing the findings to other cases. Practical implications The findings suggest that the leadership in mixed-gender context propels a perspective of women as a valuable resource within SMEs, but relying on it to sustain the survival would be unwise. Social implications South Africa scores particularly high on positive actions towards women entrepreneurship, and this is compounded in the SMEs sector by managerial attitudes that could offer positive developments for women. Originality/value The positive and significant relationship between women’s presence among owners and SMEs financial performance in South Africa complements the almost exclusively reported negative impact of gender diversity on firm performance. Consequently, mixed-gender owners’ team can be used as a fulcrum to promote SMEs growth in South Africa.

Internal constraints to business performance in black-owned small to medium enterprises in the construction industry

“…According to Abor and Quartey (2010), it is estimated that the majority of the formal business entities are SMEs and contribute between 52% and 57% to the gross domestic product (GDP) and 61% to employment. This supports the view by various scholars (Desiree & Kengne 2016;Mafini, Pooe & Loury-Okoumba 2016;Oyelana & Adu 2015) that SMEs are key drivers of economic growth and job creation since they introduce innovations to tap new markets, boost competition, accelerate economy-wide efficiency and reduce poverty and inequality. Small to medium enterprises are, therefore, essential for improving the standards of living in a society and for the stability of a country (Cant, Wiid & Meyer 2016).…”

Modelling key predictors that stimulate the entrepreneurial performance of small and medium-sized enterprises (SMEs) and poverty reduction: Perspectives from SME managers in an emerging economy

“…According to Reynolds, Fourie and Erasmus (2019), South African SMEs, in the contemporary African business environment, contribute up to 22% of the economy's gross domestic product (GDP). This aligns with the view of various scholars (Desiree & Kengne 2016;Mafini, Pooe & Loury-Okoumba 2016;Mafundu & Mafini 2019;Oyelana & Adu 2015) who maintain that SMEs are key drivers of economic growth and job creation as they introduce innovations to tap new markets, boost competition and efficiency across the economy, and reduce poverty and inequality. Mahadea and Kaseeram (2018) also share the same sentiments by asserting that SMEs can reduce the high level of unemployment and contribute to the GDP of the local economy in South Africa.…”

Women entrepreneurs’ opportunity identification of digital platform start-ups: emerging evidence from South Africa

“…Embracing entrepreneurship is critical as the country has to strategically build new businesses, especially those owned by women, given evidence of the association between per-capita GDP levels and the gender gap in entrepreneurship (Unnikrishnan and Hanna, 2019; Bravo and Contreras, 2004; Minniti, 2010). Simo Kengne (2016) confirms that women ownership in South African ventures are associated with a positive impact on firm financial performance.…”