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Third in a series of reports using data from the Kauffman Firm Survey
Prepared By: Alicia M. Robb Susan Coleman
Women-owned firms represent an increasingly important segment of the smallbusiness sector. Characteristics of Businesses: 2002: 2002 Economic Census.1 million people. intellectual property. In addition to the 2004 baseline year data. This cohort is the first large. Additional years are planned. financing. growth (Brush et al. 2007).S. U. education. and payroll actually declined for the period of 1997-2002. various firm. and previous startup experience.5 million privately held women-owned firms in the United States in 2002. Detailed information on the firm includes industry. (2008).1 (Loscocco et al. These data contain detailed information on both the firm and up to ten business owners per firm. by gender. Although women-owned firms still comprise a minority of all firms (28 percent). compared with 30 percent for all U.S.S. 2002.C. Cliff. According to data from the U. their numbers have been growing rapidly.S. compared with a growth rate of 10. size 1.928 firms that started in 2004. owner. and performance characteristics of new firms. 2006.. Finally. Fairlie and Robb. In general. 1991). there were 6.Kauffman The Firm Survey Characteristics of New Firms: A Comparison by Gender T his short report uses data from the Kauffman Firm Survey to explore.. gender. 2008).org/kfs.S. and financial capital (equity and debt) used at startup and over time. For more information about the KFS survey design and methodology. firms. compared with 22 percent for all U. the studies suggest that womenowned firms are smaller and less growth-oriented than men-owned firms. ethnicity. 2001. firms overall. A number of studies examine the relative underperformance of women-owned firms in survival (Robb. This survey annually collects information on 4.S. compared with 4. employment. payroll grew by 17 percent. Similarly.3 percent for U. The Kauffman Firm Survey (KFS) is a survey of new businesses in the United States. These Census Bureau statistics reveal that. the number of women-owned firms with employees increased 8. national sample of firm startups that will be tracked over time. race. 2 K A U F F M A N F I R M S U R V E Y 3 : C H A R A C T E R I S T I C S O F N E W F I R M S : A C O M PA R I S O N B Y G E N D E R . two years of followup data (2005 and 2006) now are available. firms overall. physical location. see Ballou et al. In spite of these impressive gains.8 percent from 1997 to 2002.2 percent for U. their performance in terms of sales.. Survey of Business Owners Company Statistics Series. firms. work experience. firms overall. women-owned firms have lagged men-owned firms in a number of performance measures. see www.S. employment by women-owned firms grew by only one percent. Washington. Census Bureau.kauffman. Census Bureau. 1998). D. employment. For more details about how to access these data.3 percent for U. Information on up to ten owners includes age.3 percent.: USGPO. A publicuse dataset is available for download from the Kauffman Foundation’s Web site and a more detailed confidential dataset is available to researchers through a data enclave provided by the National Opinion Research Center. earnings. compared with a growth rate of 7. From 1997 to 2002. while the number of womenowned firms grew more rapidly than the number of firms owned by men. and profits (Kepler & Shane. The number of women-owned firms increased by 19. For the same period. These firms generated an estimated $940 billion in sales and employed 7. profits. the revenues for women-owned firms increased by less than 15 percent.
45 2. Asian. Conversely. trademarks.7% 10. The method for assigning owner demographics at the firm level was to first define a primary owner.0% 34. the white category includes only nonHispanic white.6 percent vs. an owner is defined as black.6% 13. As a result of the ordering. 60. A higher percentage of women than men (63. 9. In cases where two or more owners owned equal shares. 31.2% K A U F F M A N F I R M S U R V E Y 3 : C H A R A C T E R I S T I C S O F N E W F I R M S : A C O M PA R I S O N B Y G E N D E R 3 .35 0. see Ballou et al.1% 41. Hispanic. On average.6 percent) and were more likely to be organized as a sole proprietorship (45.A subset of the KFS confidential data—firms having data for all three years and those verified as going out of business in either 2005 or 2006—is used in this research. other. Multi-race/ethnic owners are classified into one race/ethnicity category based on the following hierarchy: black.6% 18.2% 31. Men had more years of prior industry experience (13.2 percent).23 43. the primary owner was designated by the largest equity share.9% 44.9 percent). 49. even if he/she is also Hispanic. Table 2 provides valuable insights into differences between women’s and men’s credit quality. and devoted more time to the business.7 percent) felt that they had some comparative advantage.5 percent). both women and men firm owners were 44 years old. Specifically. for firms included in the KFS. by gender. Female 44. a higher percentage of men had “high” business credit scores (12.04 years).9 percent) and their firms were more likely to be organized as either an LLC or as a corporation. This important distinction in credit quality could have implications for women owners’ ability Table 1 Primary Owner Characteristics by Gender Male Mean Owner Age Mean Work Experience (years) Mean Hours by Owner (weekly) Mean Number of Previous Business Starts Less than High School Degree High School Graduate Some College College Degree Graduate School or Graduate Degree Source: Kauffman Firm Survey Microdata. 34. This reduces the sample size to 4.6 percent). a higher percentage of women had “low” business credit scores (38.3 percent vs. For firms with multiple owners (35 percent of the sample). however. 10.7 percent vs. 27.1 percent vs.159 businesses.9 percent vs.9 percent). In turn. and white.69 9.and men-owned firms included in the KFS data.98 0.04 39. Table 1 provides descriptive statistics.9% 18. For example. but men were more likely to graduate (31. hours worked and a series of other variables were used to create a rank ordering of owners to define a primary owner. 31. Women were more likely to operate a homebased business (52.7 percent vs. Approximately 18 percent of both went on to obtain a graduate degree. Approximately one-fifth of both womenand men-owned firms owned companies that had some type of intellectual property in their first year of operation (patents. and/or copyrights).7 percent vs. more women than men attended college (41.23 years vs.3 percent vs. 32.80 13. (For more information on this methodology. Firms with a female primary owner are classified as womenowned firms. 2008).34 0. men-owned firms were more likely to have multiple owners (34. Table 2 reveals additional differences between women. In terms of educational level..7% 27.
compared with 54.6% 55.3 percent of men started their firms with $25. 8. As noted in prior research (Anna et al.2% 45.1 percent vs.8% 43.4% 10. particularly in the form of debt. generate earnings.8 percent of women used less than $7.8% 12.3% 23.999 $125.1% 22.7% 16.0% 32. 65.500 of startup capital.3% 18. grow. could impact the performance outcomes of womenowned firms in terms of their ability to survive. 13.6% 31.8 percent vs.. we provide descriptive statistics for firm outcomes by gender.5% 49. compared with 32.000–$7..999 $25.000 $2. Conversely.000+ Source: Kauffman Firm Survey Microdata.5% 21. particularly in the early stages of the firm’s development.1 percent). women are much more heavily represented in retail (19 percent vs. 2008).9% 17. revealing that men-owned 4 K A U F F M A N F I R M S U R V E Y 3 : C H A R A C T E R I S T I C S O F N E W F I R M S : A C O M PA R I S O N B Y G E N D E R .7% 32.1% 23.0% 37. 1999. and hire employees. 1999.0% to secure financing. Loscocco et al.000 or more. 12 percent) and “other services” (11.7% 19. 38.1 percent of men. Table 2 also reveals that women started their firms with less capital than men did.Table 2 Firm Characteristics by Primary Owner Gender (Percentage of Firms) Male Home-Based Comparative Advantage Intellectual Property Multi-Owner Firm Low Business Credit Score Medium Business Credit Score High Business Credit Score Legal Form Sole Proprietor Partnership LLC Corporation Start Up Capital Less than $2.0% 25.9% 29.6% 60. This funding gap. 1991). Female 52.4% 34.1% 51.500 –$24.5 percent) than they are in construction (4. Kelleberg & Leicht.9% 5.499 $7. Du Rietz & Henrekson. Industry differences may have an impact on the types of capital that female owners seek and are able to obtain.7% 63.5% 19.3% 7. 1991. for their firms.000–$124.9 percent of women.8% 19. Consistent with prior research (Coleman & Robb. In Table 4.9% 38.0% 16.9% 31. Table 3 provides an industry breakdown for firms included in the KFS.
000. compared with 12. and Educational Services Administrative.549). On average.0% 11. Men-owned firms were larger than women-owned firms in terms of both assets and revenues.5% K A U F F M A N F I R M S U R V E Y 3 : C H A R A C T E R I S T I C S O F N E W F I R M S : A C O M PA R I S O N B Y G E N D E R 5 .000. and survival. compared with $57.1% 18.000. Waste Management.6% 7. $14. Entertainment.9 percent of women-owned firms.8 percent of men-owned firms had revenues in excess of $100. Table 4 also reveals that men-owned firms outperformed women-owned firms in profitability.5% 11.8% 5.373 vs.4% 5. Further.6 percent of women-owned firms.4 percent of men-owned firms survived through 2006.264 for women-owned firms. men-owned firms were more than twice as profitable as women-owned firms on average ($30.6% 8.8 for women-owned firms.1% 13.1. less profitable. In fact.0% 3. More than 20 percent of men-owned firms had profits in excess of $10.7% 2.7% 2.1% 5. compared with 1.1% 3. men-owned firms had assets of $104. Finally. compared with 76.1% 6. compared with 37 percent of women-owned firms. 32.3% 6. and less likely to survive than men-owned firms. More than 50 percent of men-owned firms had assets in excess of $50.3% 5. Table 3 2-Digit NAICS Distribution by Primary Owner Gender (Percentage of Firms) Male Construction Manufacturing Wholesale Retail Transportation & Warehousing Information Finance and Insurance Real Estate & Rental and Leasing Professional.3% 10.8% 5. 36.987.313.2% 12. Female 4.2 percent). Support.firms outperformed women-owned firms in every measure examined.1% 2.338 for women-owned firms. Our descriptive statistics reveal that womenowned firms included in the KFS were smaller in terms of assets and revenues.2% 19.8% 16. Management.0% 2.3% 2. compared with $60. compared with only 19. Average revenues for men-owned firms were $118.0% 1. men-owned firms had higher survival rates than women-owned firms—81. and Recreation Accommodation and Food Services Other Services Source: Kauffman Firm Survey Microdata. and Remediation Services Health Care and Social Assistance Arts. Men-owned firms were more likely to employ workers aside from themselves (44 percent vs. Similarly.0% 3. employment.2% 2. and the average number of employees for a men-owned firm was 3.8 percent of women-owned firms.
Our findings further reveal. Multivariate results2 (not shown) reveal that performance differences between women. and profits. and employment. our multivariate results did provide a positive link between startup capital inputs and performance outputs. 6 K A U F F M A N F I R M S U R V E Y 3 : C H A R A C T E R I S T I C S O F N E W F I R M S : A C O M PA R I S O N B Y G E N D E R .4% 32. Coleman.8% 21. Finally.8 percent of women started their firms with less than $25. Alternatively.0% 81. income.313 women-owned firms started with smaller amounts of capital.000.9 percent of men. and a possible loss of control. Susan and Alicia Robb (2009).338 50.373 $104. and employment. it is not the only factor determining women-owned firms’ performance.6% 36. however. although that difference was not statistically significant. 61. women may place less value on firm size and profits than do menowned firms. They also demonstrated lower survival rates than men. Female 37. This finding leads us to conclude that. revenue. women-owned firms still underperformed firms owned by men in assets.8 $60.1 $118.987 $30. 2. revenue. growth. profits. it is not surprising that they underperform relative to men-owned firms in these performance measures.9% 1. that even controlling for the amount of startup capital. women may have a higher level of risk aversion for the perceived risks associated with firm size.264 $14. Our results suggest that other motivations may be at work.Table 4 2006 Outcomes by Primary Owner Gender (Percentage of Firms & Average Outcomes) Male 50K+ Assets (2006) 100K+ Revenue (2006) 10K+ Profits (2006) Employer Firm (2006) Survived Through 2006 Average Employment Average Revenue Average Profits Average Assets Source: Kauffman Firm Survey Microdata. compared with 55.2% 76.549 $57. Our findings reveal that firms that started with higher amounts of capital (>$125K) had significantly higher performance levels in terms of assets. Working paper. As suggested by prior research. Women-owned firms demonstrated significantly lower levels of 2006 assets.1% 44. Thus.4% 3. The Impact of Financial Capital on Business Performance: A Comparison of Women. although the level of startup capital does impact performance. revenue.and Men-Owned Firms.and menowned firms persist. even controlling for a variety of firm and owner characteristics. since women-owned firms start with lower levels of startup capital. These possibilities provide opportunities for further research into the motivations and performance outcomes of women-owned firms.0% 19.8% 12.
Richard H.. Erin. Robb. Women Business Owners in Traditional and Non-Traditional Industries. Robert W. and Alicia Robb (2009). Journal of Business Venturing 13. Does One Size Fit All? Exploring the Relationship Between Attitudes Toward Growth. Journal of Small Business Economics. Erik Jansen.. Barton. Gender. and Myra Hart (2001). Small Business Economics 14. and Magnus Henrekson (2000). Journal of Business Venturing 15. Alicia M. Robb. Gender and Organizational Performance: Determinants of Small Business Survival and Success. Candida. Journal of Small Business Economics. Mero (1999). Allen (1991). Are Male and Female Entrepreneurs Really That Different? SBA Office of Advocacy. Zhao. Coleman. Academy of Management Journal 34 (1). New Firm Financing for Women-Owned Firms: Evidence from the Kauffman Firm Survey Data. and Scott Shane (2007.sba. Kauffman The Firm Survey © 2009 by the Ewing Marion Kauffman Foundation. (2002). 383–397. Kelleberg. 65–85. Mo.. and Z. Du Rietz. 523–542. Social Forces 70 (1). J. Testing the Female Underperformance Hypothesis. Kepler. Susan. Potter. Karyn A. K A U F F M A N F I R M S U R V E Y 3 : C H A R A C T E R I S T I C S O F N E W F I R M S : A C O M PA R I S O N B Y G E N D E R 7 . E. Leicht (1991). Chandler. A. Anita. Fairlie. and Kevin T.. and Neal P. Ballou. 279–303. Brush.REFERENCES Anna. (2008). Elizabeth Gatewood. (1998). 1–10.. Kauffman Firm Survey: Results from the Baseline and First Follow-Up Surveys. Shane. F. Jennifer E. Entrepreneurial Performance by Women and Minorities: The Case of New Firms. Cliff. Arne L. forthcoming. DesRoches. Gaylen N. September). and Business Size. http://www. Journal of Developmental Entrepreneurship 7 (4). Robb (2009). 136–161. Loscocco. All rights reserved. S.gov/advo.J. Nancy Carter. Joyce Robinson. Reedy.: Kauffman Center for Entrepreneurial Leadership. and Alicia M. Gender and Small Business Success: An Inquiry into Women’s Relative Disadvantage. Gender Differences in Business Performance: Evidence from the Characteristics of Business Owners Survey. D. forthcoming. T. and John K. Hall. Kansas City. Kauffman Foundation. The Diana Project: Women Business Owners and Equity Capital: The Myths Dispelled. Patricia Greene. Alexandra L.
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