Gender differences in firm performance: Evidence from new ventures in the United States.

Robb, A-M., & Watson, J., (2012). Journal of Business Venturing, vol.27(5), 544-558.

Topics: Entrepreneurship, Gender Differences, Performance

Year: 2012

Country: United-States


The present article studies differences in performances between female- and male-owned firms. Key takeaway:  Women who want to launch a new venture should not be discouraged as there is no difference in performance between female- and male-owned ventures. 


Research studying differences in performances between female- and male-owned firms, have established that “female-owned firms underperform male-owned firms”. However, the findings may be influenced by the performance measures used and the failure to take into account key demographic differences (size or scale of venture, risk aversion, industry, age, experience). The authors argue that “while there may be differences in the way women and men choose to operate their ventures, this does not imply that female-owned firms will underperform male-owned firms”. 

Data and Methodology

To determine whether controlling for key demographic differences and the use of appropriate performance measures will alleviate the differences in performance, the study uses a five-year database of 4000 new ventures (1041 female-owned and 2975 male-owned) from the Kauffman Firm Survey (KFS) between 2004 and 2008. The performance measures examined include: “4-year closure rates” (proxy for firm failure); “return on assets” (ratio of net income over assets); and “a risk-adjusted measure” (the Sharpe ratio with “profit as a reward measure and standard deviation in profit as variability (risk) measure”). They use a univariate and multivariate standard linear models, to control for key demographic variables (industry, experience and hours worked). 


The results confirm the expectation that there is “no difference in the performance of female- and male-owned new ventures with respect to overall (4-year) survival, return on asset and risk-adjusted terms”. The results show that women do not hold a disadvantage (relative to men) in terms of acquiring the necessary skills to start a new venture. A key implication of the findings is that future research should focus on “the factors that facilitate (or inhibit) the success of new ventures, irrespective of the gender”. The findings might also encourage women who are seeking to start a new venture by eliminating the false belief that their new ventures are “less likely to succeed than those initiated by men.” 

A limitation of this study is measuring firm performance only in financial performance without taking into account other subjective outcomes (“self-realization, status, autonomy, and time flexibility”). Furthermore, the results only apply to US early stage firms, so further research should include other countries so the findings could be generalised. 

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