SME financing and credibility: does entrepreneur’s gender matter?
Objectives: The aim of this paper is to explore the notion of entrepreneur credibility, a sense of belief or trust in the individual’s ability to fulfill the entrepreneurial role and create and sustain a viable venture, as perceived by key stakeholder in particular from gender perspective. Prior Work: Current literature emphasizes the masculine discourse which informs the idea of the contemporary entrepreneur (Ahl, 2006). Women lack business credibility in the eyes of employees, customers, suppliers and financial institutions (Baines et al., 2003; Belle and La Valle, 2003; Marlow et al., 2008;). It has been suggested that it is both more difficult for women to raise start-up and growth finance (Coleman, 2000; SBA report, 2013) and that women encounter credibility problems (Marlow et al., 2008; Freel et al., 2012) when dealing with banks in particular. Assessing the influence of gender upon entrepreneurial credibility and investigating the implications of such remains difficult. Approach: We address this gap through a quantitative analysis of the relationship between gender and perceived credibility in terms of SME financing, exploring these effects by industry, establishment employment size, and over time. Using a panel firm-level dataset from the Business Environment and Enterprise Performance survey (BEEPS) on 26 countries in Central and Eastern Europe and Central Asia for 2002-2009, we study whether entrepreneur’s credibility with various stakeholders such as banks and informal finance providers differs by gender, estimating fixed/random effects panel data models and also performing propensity score matching on gender variables. Results: Preliminary findings suggest that there is evidence of lower credibility as measured by having an overdraft, checking/savings account, and access to alternative informal sources of financing, of female-owned enterprises for older firms. Results for start-up firms are mixed, which calls for further investigation. Implications: This initial comparative research provides valuable insights for policy. Although there are early indications of lack of credibility shown by female business owners, we question whether the reasons for these findings might lie in the risk-averse type behaviors reported generally in the academic literature, and hence unwillingness of the female business owners to use overdraft facility, and use informal lending as part of fuelling the growth of their business. Value: By offering an attempt to measure female credibility in relation to SME financing we offer an innovative way to study and new interpretations of the access to finance literature.
Citation:Marlow, S., Vershinina, N. and Rodionova, Y. (2013) “SME financing and credibility: does entrepreneur’s gender matter?” ISBE Conference, Cardiff
Research Group:Centre for Research in Ethnic Minority Entrepreneurship