ArticlePDF Available

Do You See What I See? Signaling Effects of Gender and Firm Characteristics on Financing Entrepreneurial Ventures


Abstract and Figures

In this study, we examine whether female entrepreneurs are held to a different standard than male entrepreneurs in obtaining financing from banks. To test this idea, we draw from the literature on signaling theory to propose that characteristics specific to the firm and the entrepreneur act as a means to communicate (i.e., signal) the inherent quality of the venture and thus impact the amount of capital the entrepreneur is able to obtain. We then explore the moderating role of gender based on gender role congruity theory to argue that capital providers reward the business characteristics of male and female entrepreneurs differently to the disadvantage of women.
Content may be subject to copyright.
Do You See What I See?
Signaling Effects of
Gender and Firm
on Financing
Kimberly A. Eddleston
Jamie J. Ladge
Cheryl Mitteness
Lakshmi Balachandra
In this study, we examine whether female entrepreneurs are held to a different standard
than male entrepreneurs in obtaining financing from banks. To test this idea, we draw from
the literature on signaling theory to propose that characteristics specific to the firm and the
entrepreneur act as a means to communicate (i.e., signal) the inherent quality of the venture
and thus impact the amount of capital the entrepreneur is able to obtain. We then explore
the moderating role of gender based on gender role congruity theory to argue that capital
providers reward the business characteristics of male and female entrepreneurs differently
to the disadvantage of women.
Over the last decade, women have made great strides in the ability to launch their
own ventures and obtain debt financing. While early research on the financing of women-
owned ventures suggested that female entrepreneurs face discrimination when seeking
capital (Brush, Carter, Greene, Gatewood, & Hart, 2001; Buttner & Rosen, 1988), more
recent studies suggest that gender differences in obtaining financial capital are diminish-
ing. For example, after accounting for structural differences between men’s and women’s
Please send correspondence to: Jamie J. Ladge, tel.: 617-373-8176; e-mail:, to Kimberly A.
Eddleston at, to Cheryl Mitteness at, and to Lakshmi
Balachandra at
© 2014 Baylor University
1July, 2014
DOI: 10.1111/etap.12117
May, 2016 489
DOI: 10.1111/etap.12117
C2014 Baylor University
ventures, women were shown to be as likely to seek (Orser, Riding, & Manley, 2006) and
obtain debt (i.e., bank) financing as men (Arenius & Autio, 2006; Becker-Blease & Sohl,
2007; Carter, Shaw, Lam, & Wilson, 2007; Haines, Orser, & Riding, 1999; Wilson,
Carter, Tagg, Shaw, & Lam, 2007). However, while female entrepreneurs’ access to debt
financing appears to be on par with their male counterparts, Jennings and Brush (2013,
p. 23) recently concluded that more fine-grained analyses suggest “evidence of a more
subtle, residual and ‘second order’ form of gender-based differential treatment.” Indeed,
several studies suggest that bank loan officers are more likely to question the commitment
of female entrepreneurs and to employ different evaluative criteria for male and female
entrepreneurs to the detriment of women (Carter et al.; Constantinidis, Cornet, &
Asandei, 2006). Evidence suggests that female entrepreneurs are often charged higher
interest rates (Fraser, 2005; Wu & Chua, 2012) and need to share greater information
than male entrepreneurs to obtain financing (Constantinidis et al.; Murphy, Kickul,
Barbosa, & Titus, 2007). Accordingly, an extra hurdle appears to exist that prevents
female entrepreneurs from obtaining the same levels of bank financing as their male
Since access to capital is key to growing an entrepreneurial venture, and yet it is one
of an entrepreneur’s most challenging problems (Carter, Gartner, Shaver, & Gatewood,
2003; Neeley & Van Auken, 2010), understanding if gender biases exist is important.
Because the most common source of external financing of women entrepreneurs’ ventures
is bank loans (Constantinidis et al., 2006), we focus on the loan amount male and female
entrepreneurs are able to obtain after taking into account structural differences between
their ventures. We draw from signaling theory (Spence, 1973) and its application to
entrepreneur financing (Jain, Jayaraman, & Kini, 2008; Ozmel, Reuer, & Gulati, 2013;
Prasad, Bruton, & Vozikis, 2000) to propose that signals that reflect a venture’s viability
(Jain et al.; Ozmel et al.; Reuber & Fischer, 2005) and the entrepreneur’s commitment to
the business (Busenitz, Fiet, & Moesel, 2005; Prasad et al., 2000) may explain differences
in the amounts of bank financing obtained by male and female entrepreneurs.
Signaling theory has been applied in the entrepreneurship literature to explore how
capital providers consider signals of underlying quality, such as viability and commit-
ment, to evaluate the potential of entrepreneurial ventures (Ozmel et al., 2013; Prasad
et al., 2000). Although the broader theory acknowledges that signals can be interpreted
differently by receivers in terms of strength and meaning (Park & Mezias, 2005), little
research has considered how the strength and meaning of signals vary depending on the
sender, and specifically, the gender of the sender. As such, we apply gender role congruity
theory (Eagly & Karau, 2002) to explore how gender affects the financial capital entre-
preneurs obtain from signals of viability and commitment. Gender role congruity theory
highlights the difficulties women face in gaining legitimacy in traditionally masculine
fields and proposes that observers use different standards to evaluate the performance of
men and women in gendered contexts (Eagly & Karau). Accordingly, we argue that the
masculine domain of entrepreneurship (Ahl, 2006; Bruni, Gherardi, & Poggio, 2004;
Gupta, Turban, Wasti, & Sikdar, 2009) causes legitimacy challenges for women because
gender affects the degree to which women versus men benefit from positive signals when
seeking bank financing.
Our study makes several contributions to the entrepreneurship literature. First, by
integrating gender role congruity theory with signaling theory we demonstrate how the
benefits accrued from signals of quality can vary depending on the gender of the sender.
Our results suggest that signals of viability and commitment by male and female entre-
preneurs appear to be rewarded differently by capital providers, often to the detriment of
women. As such, our research demonstrates the relevance of gender role congruity theory
to entrepreneurship by revealing how signals of viability and commitment are not asso-
ciated with the same levels of bank financing for men and women. Second, we contribute
to signaling theory by extending its predictions to bank financing and demonstrating the
important role that the gender of the sender plays in determining if signals of viability and
commitment reap financial rewards. Finally, we contribute to research on women entre-
preneurs by showing that gender biases still exist in regards to bank financing. However,
while our results suggest that women entrepreneurs may have difficulties communicating
the underlying quality of their ventures to capital providers, unexpectedly, we also find
that some signals of viability and commitment do not advantage men as much as the
literature would predict.
We begin by reviewing the literature on entrepreneur financing. This is followed by
the presentation of our main effect hypotheses, which focus on common factors capital
providers consider when offering loans to entrepreneurs. We then turn to the primary focus
of our paper—the moderating effect of gender. After the methodology and results are
presented, we turn to discuss the findings of our study.
Financing an Entrepreneurial Venture
Financing a new venture is known to be a primary challenge in entrepreneurship
(Ebben & Johnson, 2006). While there are several ways entrepreneurs can finance their
ventures, most often they draw on personal resources first, followed by financing
from family and friends, and then debt and equity capital (Berger & Udell, 2003).
Debt financing refers to interest-carrying loans that are offered primarily by banks. Equity
financing describes investments that involve shares in the firm in exchange for capital.
In entrepreneurship, equity financing usually refers to financing obtained from venture
capitalists or “angel investors” (Berger & Udell). Most entrepreneurial ventures rely on
debt financing because they do not meet the strict criteria required by equity investors such
as venture capitalists or angel investors. Additionally, many entrepreneurs do not want
to give up control and shares of their ventures, which would be required with equity
financing (Winton & Yerramilli, 2008). Given the scarcity of venture capital and other
equity investment channels for new businesses, and the known disparity between
men- and women-owned businesses in the venture capital arena (e.g., Becker-Blease &
Sohl, 2007; Bosse & Taylor, 2012), we focus this study on bank financing, which is the
most common source of external financing women entrepreneurs receive (Constantinidis
et al., 2006).
There are common criteria that banks use to assess entrepreneurial ventures for
loans—their assets, ability to pay back loans, and the venture’s track record (Coleman,
2002; Coleman & Robb, 2009; Haynes, Rowe, Walker, & Hong, 2000). While these
criteria are often highlighted, some research maintains that there are differences in bank
loan outcomes for male and female entrepreneurs. For example, research indicates that
female entrepreneurs are charged higher interest rates (Fraser, 2005; Wu & Chua, 2012)
and tend to receive smaller loan amounts than their male counterparts (Verheul & Thurik,
2001; Zimmerman, Treichel, & Scott, 2006). Research also suggests that in comparison
with male entrepreneurs, female entrepreneurs are more likely to expect to be rejected by
banks (Carter, Shaw, Wilson, & Lam, 2006) and to perceive bankers as having a negative
view of female entrepreneurs’ creditability (Hill, Leitch, & Harrison, 2006). Given these
research findings, we combine the range of learning from studies conducted on women
and entrepreneurial financing to develop our hypotheses on signaling and bank financing
3July, 2014
May, 2016 491
Signaling Theory and Entrepreneur Financing
Signaling theory is concerned with reducing information asymmetry by one party in
their evaluation of the quality of another party (Connelly, Certo, Ireland, & Reutzel, 2011;
Spence, 2002). “Quality refers to the underlying, unobservable ability of the signaler to
fulfill the needs and demands of an outsider observing the signal” (Connelly et al., p. 43).
For the signal to be meaningful to the sender, it “must be costly to obtain and correlated
with the underlying characteristics that are relevant to the decision maker” (Kirsch,
Goldfarb, & Gera, 2009, p. 489). For example, Spence (1973) explains that employers do
not fully know the quality of a job applicant and therefore use higher education as a signal
of quality since lower quality candidates would find it costly to obtain a degree because
they could not withstand the rigors of higher education. Thus, signals reduce the infor-
mation asymmetry for individuals outside the organization, including external investors
(Certo, 2003; Deeds, DeCarolis, & Coombs, 1997) because signals communicate the
inherent quality of a venture (Arthurs, Busenitz, Hoskisson, & Johnson, 2009; Busenitz
et al., 2005).
While most signaling models focus on quality as the distinguishing characteristic,
quality can be interpreted in many ways (Connelly et al., 2011).1In the entrepreneurship
literature, scholars have applied signaling theory to argue that capital providers assess
the underlying quality of entrepreneurial ventures by looking for signals that reflect the
viability of the venture (Jain et al., 2008; Reuber & Fischer, 2005) and the commitment of
the entrepreneur (Busenitz et al., 2005; Prasad et al., 2000). Viability signals reflect the
stability, health, and future prospects of a venture (Jain et al.; Ozmel et al., 2013). Com-
mitment signals reflect personal investment in the venture and an entrepreneur’s determi-
nation to overcome obstacles (Busenitz et al.; Prasad et al.). When seeking financial
capital, these signals, which are embedded in the actions and past behaviors of entrepre-
neurs, are believed to create trust and credibility more effectively than word or verbal
promises to capital providers (Busenitz et al.).
While previous entrepreneurship research has applied signaling theory to investigate
signals that attract venture capital or angel investors (Busenitz et al., 2005; Prasad et al.,
2000) and to predict initial public offering (IPO) performance (Bruton, Chahine, &
Filatotchev, 2009; Certo, 2003; Jain et al., 2008), little research has considered their effect
on bank loans (Murphy et al., 2007). However, bank loan decisions include more than the
application of objective, bank operating procedures. They include a subjective informal
process, often described as a “gut reaction” that is framed by the capital provider’s beliefs
and values (Wilson et al., 2007). Thus, in line with signaling theory, signals can be
interpreted differently by receivers in terms of their strength and meaning (Park & Mezias,
2005). Because the full set of information required to evaluate the quality of an entrepre-
neurial venture is never at hand, capital providers utilize signals to assess the asymmetry
between what they know and what they need to know before granting a loan. In turn, those
entrepreneurs who are able to signal the underlying quality of their ventures to capital
providers should be able to procure resources for their businesses (Busenitz et al.).
In this study, we identify characteristics of the venture and the entrepreneur that have
been linked to new venture success and the procurement of bank loans and therefore
represent potential decision cues for capital providers. Given the importance of signaling
viability to attract financing, we consider the age of the firm (e.g., Baum, Calabrese, &
Silverman, 2000; Haines et al., 1999), size of the firm (e.g., Aldrich & Auster, 1986;
Haines et al.), and past financial performance (e.g., Haines et al.; Wiklund & Shepherd,
1. Please see Connelly et al. (2011) for a complete review.
2003). Further, in line with research on commitment signals, we investigate the entrepre-
neur’s personal investment in the venture (Busenitz et al., 2005; Prasad et al., 2000) as
well as the entrepreneur’s investment of time in the venture (Wilson et al., 2007). After
exploring how signals of viability and commitment predict the size of bank loans, we then
seek to extend signaling theory by proposing that receivers may interpret signals differ-
ently depending on the gender of the sender.
Signaling Viability by Overcoming Liabilities of Newness and Smallness
Signaling theory highlights the need for entrepreneurs to signal the viability of their
new venture to capital providers (Busenitz et al., 2005; Connelly et al., 2011). Liabilities
of newness and smallness raise questions regarding the new venture’s legitimacy and,
particularly, its long-term viability (Zimmerman & Zietz, 2002). Business start-ups face
liability of newness due to their age (Stinchcombe, 1965), and by extension liability of
smallness due to their size (Aldrich & Auster, 1986), that impact the amount of funding
entrepreneurs are able to obtain (Cassar, 2004). Newness and smallness offer capital
providers insight into the perceived uncertainty regarding a venture. For example, new
and/or small firms often lack the market recognition, economies of scale, and strategic
partners that more established firms utilize to secure key resources (BarNir, Gallaugher, &
Auger, 2003). In contrast, larger, more mature businesses are perceived as a lower risk for
financing (Heidrick & Nicol, 2002).
In line with signaling theory, Reuber and Fischer (2005) explained how a young
venture’s lack of a track record leads outsiders to question its viability. Young ventures
have little production experience and often operate with immature and unrefined activities
that cause outsiders to have concerns about their viability. Further, young firms are seen
as highly uncertain because their lack of operating history provides little information for
capital providers to assess their future performance potential (Daily, Certo, & Dalton,
2005; Reuber & Fischer).
In addition to the liability of newness, venture size is an important signal of quality
since it communicates the viability of the business and its ability to grow (Bell, Moore, &
Filatotchev, 2012; Busenitz et al., 2005). For example, regarding IPOs, research has found
that larger firms tend to attract more prestigious investment bankers since their expected
returns are seen as more certain than those of smaller firms (Carter, Dark, & Singh, 1998;
Daily et al., 2005). Similarly, research on bank loans has stressed the importance of
communicating business stability and size to lenders (Wilson et al., 2007). Firms that have
a small number of employees are less likely than larger firms to be profitable and survive
(Kalleberg & Leicht, 1991), and therefore face greater difficulties in raising financial
capital (Aldrich & Auster, 1986).
Accordingly, firm age and size can be seen as signals of viability that represent a
venture’s ability to overcome liabilities of newness and smallness. By reaching a threshold
of maturity and size, entrepreneurs are able to communicate the viability of their ventures
to capital providers. Entrepreneurial ventures that overcome liabilities of newness and
smallness gain legitimacy in the eyes of observers that thereby leads them to acquire key
resources including financial capital (Tornikoski & Newbert, 2007; Zimmerman & Zietz,
2002). Therefore, we expect that entrepreneurial ventures that are older and larger will
receive greater amounts of bank financing than younger and smaller ventures. Stated
Hypothesis 1: Firm age, a signal of viability, is positively related to the amount of
bank financing received.
5July, 2014
May, 2016 493
Hypothesis 2: Firm size, a signal of viability, is positively related to the amount of
bank financing received.
Signaling Viability Through Past Performance
A venture’s track record of performance is often considered by capital providers as
a sign of future viability (Jain et al., 2008; Reuber & Fischer, 2005). Measures of past
performance signal a venture’s viability by highlighting the business’s credibility and
growing value (Bruns, Holland, Shepherd, & Wiklund, 2008; Covin & Slevin, 1997).
Drawing from signaling theory, Jain et al. argued that past performance provides legiti-
macy for entrepreneurial ventures and signals their ability to remain economically viable.
For example, capital providers look at a business’s past performance to determine if it has
the capacity to pay back a particular loan amount (Wilson et al., 2007). It has been argued
that entrepreneurial ventures need to signal their past earnings to secure financing
(Busenitz et al., 2005) because a strong past performance tends to indicate strong future
performance and therefore can be used to signal a venture’s viability, especially when a
business lacks other forms of information to express quality (Dimov, Shepherd, &
Sutcliffe, 2007). Therefore, signaling theory predicts that strong past performance will be
associated with higher funding amounts.
Hypothesis 3: Past performance, a signal of viability, is positively related to the
amount of funding received.
Signaling Commitment Through Investment of Personal Capital and Time
Due to the high uncertainty associated with investing in new ventures, capital pro-
viders seek commitment signals from entrepreneurs (Barney, Busenitz, Fiet, & Moesel,
1989). Signaling theory explains how entrepreneurs’ commitment signals help capital
providers more accurately evaluate which new ventures to fund (Prasad et al., 2000) since
they demonstrate an entrepreneur’s determination in overcoming obstacles to achieve new
venture success (Busenitz et al., 2005). In particular, the personal dedication of time and
money reflects an entrepreneur’s commitment to the venture and intent to make it succeed
(Busenitz et al.).
Regarding personal capital, signaling theory suggests that larger investments by an
entrepreneur signal to investors the financial potential of the venture in the eyes of the
entrepreneur (Busenitz et al., 2005). Research examining managerial stock ownership
indicates that greater ownership signals stronger bonds with the firm and greater optimism
for the venture’s future performance (Goranova, Alessandri, Brandes, & Dharwadkar,
2007). Additionally, research on IPOs suggests that higher top management ownership
signals confidence and commitment to the venture to investors (Jain et al., 2008). From
a signaling theory perspective, greater personal capital investment serves as a credible
signal since owners have access to more information about the venture than observers
(Connelly et al., 2011). While research on public firms typically examines boards’and top
managers’ investment in stock ownership (i.e., Goranova et al.; Jain et al.), entrepreneur-
ship research tends to focus on an entrepreneur’s wealth invested since most entrepreneurs
have limited funds to invest in their venture (Busenitz et al.; Prasad et al., 2000). There-
fore, we expect an entrepreneur’s personal investment in the business to be positively
related to the amount of bank financing received.
Additionally, entrepreneurs can signal their commitment to the venture through the
investment of time that they devote to the business (i.e., hours devoted to the business per
week). Through the devotion of time, entrepreneurs communicate their determination to
make their business succeed (Cassar & Friedman, 2009). Although heavy investment
of time and money could signal escalation of commitment (McCarthy, Schoorman, &
Cooper, 1993), these investments also make an entrepreneur’s goals more aligned with those
of capital providers (Forbes, Korsgaard, & Sapienza, 2010). Further, an underinvestment is
likely to act as a negative signal that communicates expectation for poor future performance
(Busenitz et al., 2005). Indeed, research suggests that entrepreneurs who signal commitment
to their business by making personal sacrifices are more likely to acquire resources that
improve their business’ success (Zott & Huy, 2007). Therefore, entrepreneurs who signal
greater commitment to their ventures through personal investments of time and money will
receive larger amounts of financial capital than those who do not.
Hypothesis 4: Founder investment of time (hours devoted to the business), a signal of
firm commitment, is positively related to the amount of funding received.
Hypothesis 5: Founder investment of personal capital, a signal of firm commitment, is
positively related to the amount of funding received.
Gender and Financing Entrepreneurial Ventures
A “vicious cycle” exists between female entrepreneurs’ access to bank financing and
growth: While their venture’s small size and low growth impede their ability to obtain
bank financing, a lack of bank financing, in turn, limits their growth (Constantinidis et al.,
2006). Many scholars believe that female businesses tend to underperform in comparison
with those owned by men because of undercapitalization (i.e., Carter & Williams, 2003;
Jennings & Brush, 2013; Marlow & Patton, 2005; Orser et al., 2006). The growth and
performance of a business is directly tied to an entrepreneur’s ability to access uninter-
rupted flows of critical resources such as financial capital (Leitch & Hill, 2006). Although
research has recently shown that male and female entrepreneurs have similar access to
debt financing (i.e., Arenius & Autio, 2006; Becker-Blease & Sohl, 2007; Carter et al.,
2007; Orser et al.; Wilson et al., 2007), there appears to be discrepancy in regards to the
amount of capital raised by male versus female entrepreneurs (Verheul & Thurik, 2001;
Zimmerman et al., 2006). Further, research indicates that banks appear to apply lending
standards in a subjective manner to the detriment of women (Carter et al.; Orser & Foster,
1994). In explaining women entrepreneurs’ struggle to obtain financing, Marlow and
Patton (2005, p. 718) noted that a “normative male model of entrepreneurial achievement”
exists which, “by design, disadvantages women.
Studies have found that despite similar efforts to seek a variety of external funding
(Brush, Carter, Greene, Gatewood, & Hart, 2006; Orser et al., 2006), women experience
greater difficulty obtaining funding relative to their male counterparts (Verheul &
Thurik, 2001). Although some studies show that discrepancies in funding between male-
and female-owned ventures are due to women’s reluctance to seek financing (Fairlie &
Robb, 2009; Marlow & Patton, 2005; Morris, Miyasaki, Watters, & Coombes, 2006), or
differences in business size and sector (Arenius & Autio, 2006; Orser et al.; Riding &
Swift, 1990), others have uncovered apparent discriminatory practices by bank loan
officers toward women entrepreneurs (Buttner & Rosen, 1988; Fay & Williams, 1993;
Riding & Swift). For example, Carter et al.’s (2007) experimental and qualitative study
revealed that loan officers employ some different evaluative criteria for male and female
entrepreneurs. Studies suggest that the legitimacy and credibility of women entrepre-
neurs’ ventures are often questioned, which creates an extra hurdle that women
7July, 2014
May, 2016 495
entrepreneurs need to clear before they can obtain financing (Brush, Carter, Gatewood,
Greene, & Hart, 2004; Constantinidis et al., 2006; Murphy et al., 2007). Below, we draw
insights from gender role congruity theory (Eagly & Karau, 2002) to explain how gender
shapes the entrepreneurial context to affect the amount of bank financing obtained by
men and women.
The Moderating Role of Entrepreneur Gender
Gender role congruity theory captures the (1) attitudes about the appropriate social
roles of men and women, and the (2) gender stereotypes that reflect the beliefs about
the characteristics, attributes, and behaviors of men and women (Eagly & Karau, 2002;
Powell & Butterfield, 2003; Powell, Butterfield, & Parent, 2002). The theory includes
descriptive norms, which are consensual expectations about how men and women actually
behave, and injunctive norms, which are the consensual expectations about how men and
women should behave (Eagly & Karau). While descriptive norms reflect stereotypes of
men and women, injunctive norms add a prescriptive element.
Gender stereotypes are pervasive cognitive shortcuts that influence how observers
process information about men and women due to prescriptive descriptions as to how they
should behave (Eagly & Karau, 2002; Heilman, 2001). Traditional gender roles assign
men the “breadwinner” role and emphasize leadership, while they assign women the
“caretaker” role and emphasize family and relationships (Powell & Eddleston, 2013;
Wood & Eagly, 2010).As a result, men are expected to thrive in roles that are more agentic
and task oriented, while women are expected to thrive in roles that are more communal
and relationship oriented (Eagly, 1987). Further, gender stereotypes contain status beliefs
that associate higher status and competence to men versus women, particularly in contexts
perceived as masculine (Ridgeway, 2001, 2012, 2014; Ridgeway & Correll, 2004).
Although women’s rights and roles have evolved and progressed over the last decades,
with an increasing number of women around the globe starting their own businesses
(Powell, 2011), stereotypes of males and females have remained relatively stable across
cultures and time (Wood & Eagly).
Gender role congruity theory explains how gender stereotypes evoke different stan-
dards for attributing performance to ability for men and women (Eagly & Karau, 2002;
Ridgeway & Correll, 2004). Gender stereotypes comprise the genetic code of the gender
system since they embody the cultural rules and norms that guide how individuals
perceive and enact gender differences (Ridgeway, 2001). In turn, it is the social context
that provides the “arena” in which these rules and norms are brought to bear on the
behavior and evaluations of men and women (Ridgeway & Correll, p. 514). In social
contexts that are gender-typed as masculine or feminine, gender becomes salient and
therefore affects how a woman, compared with a similar man, is perceived and evalu-
ated (Ridgeway, 2012, 2014; Ridgeway & Correll). Gender role congruity theory
explains how women often are perceived less favorably than men when holding posi-
tions of power and leadership due to perceived incongruity between traditional gender
norms and leadership role expectations (Carli & Eagly, 2011; Eagly & Carli, 2007;
Eagly & Chin, 2010; Eagly & Karau). The coupling of being a member of a stereotyped
social group with an incongruent social role creates an inconsistency in the perceiver’s
mind that negatively affects the evaluation of the group member. For example, studies
investigating gender stereotypes have shown that archetypical managers (Powell &
Butterfield, 2003; Powell et al., 2002) and entrepreneurs (Gupta et al., 2009) are inher-
ently portrayed as more masculine than feminine, a portrayal that creates a barrier for
Entrepreneurship has traditionally been seen as a male preserve (Ahl, 2006; Bruni
et al., 2004). Collins and Moore (1964, p. 5) first explained, “However we may feel about
the entrepreneur, he emerges as essentially more masculine than feminine.” Research has
recognized how most entrepreneurial role models are men (Bird & Brush, 2002; Gupta
et al., 2009) and how men tend to hold positions of higher power, status, and authority
than women (Powell, 2011). There is an abundance of research that supports the gender
stereotype that men are seen as more effective leaders (Powell & Butterfield, 1989, 2003;
Powell et al., 2002) and the belief of “think manager—think male” (Schein & Mueller,
1992; Schein, Mueller, Lituchy, & Liu, 1996). Further, research shows that men tend to
own larger, more profitable, faster growing businesses than women (Brush et al., 2006;
Cliff, 1998), which contributes to the stereotype of “think successful entrepreneur—think
male.” In accordance with gender role congruity theory, these observations and beliefs are
likely to propagate the entrepreneurial stereotype as male. As a result, because the rules,
norms, and general practices in the financial capital community are dominated by mas-
culine values, women are left seemingly mismatched with entrepreneurial ideals (Greene,
Brush, Hart, & Saparito, 2001).
Consequently, when women choose to enter the male preserve of entrepreneurship
(Ahl, 2006), they are perceived as less legitimate and credible in the eyes of capital
providers (Greene et al., 2001; Murphy et al., 2007). A so-called “cupcake stigma” exists
for women entrepreneurs that leads them to be seen as less serious and committed to
entrepreneurship since their businesses tend to be gendered in nature (e.g., selling cup-
cakes) and stereotyped as having low prospects for growth or profits (Cliff, 1998; Gupta
et al., 2009; Morris et al., 2006). Gender stereotypes compel capital providers to view a
woman’s business as a hobby, part time, or an extension of their homemaker role, thereby
leading them to view women as less attractive investments (Arenius & Autio, 2006;
Loscocco & Smith-Hunter, 2004). Further, research on banks’ lending criteria shows that
lending officers are more likely to focus on male entrepreneurs’ personal characteristics
and their businesses’ financial history, while in contrast, they focus on women entrepre-
neurs’ level of research about the business (Carter et al., 2007). Additionally, whereas
lending officers commonly discussed the requested loan size of women entrepreneurs,
they did not consider this for the men (Carter et al.). These findings suggest that capital
providers are more likely to question the venture’s viability and the entrepreneur’s
commitment for female than male entrepreneurs. Accordingly, it appears that regardless of
the actual performance of female-owned businesses, gender stereotypes lead female
entrepreneurs to be perceived differently than male entrepreneurs (Brush et al., 2004;
Jennings & Brush, 2013; Murphy et al., 2007). Therefore, female entrepreneurs may face
greater difficulties in signaling the quality of their ventures to capital providers.
Gender role congruity theory explains how individuals selectively attend to informa-
tion that confirms, rather than disconfirms, gender stereotypes (Eagly & Karau, 2002).
Gender stereotypes act as schemas that influence how individuals interpret and make
sense of the social world (Fiske, 1998). While often not conscious, gender stereotypes bias
judgments of men and women and evoke different standards and expectations for their
performance (Correll, 2004; Foschi, 1989). As a result, a double standard for assessing the
competence of men and women results (Foschi, 2000). For women, because strong
performance is inconsistent with stereotyped expectations of entrepreneurship, their per-
formance is more likely to be critically scrutinized and not seen as indicative of their
ability. In contrast, the performance of men is less likely to be scrutinized since a strong
performance is consistent with gendered expectations. As such, men are judged by a more
lenient standard than women, and women must display a higher level of ability to be
perceived as competent in a masculine setting (Ridgeway, 2001). Referred to as the
9July, 2014
May, 2016 497
“legitimacy argument,” when women occupy nontraditional roles, their legitimacy and
credibility are questioned, which thereby leads to their comparative devaluation with
men and impedes their success (Ridgeway). Applied to the financing of men’s and
women’s ventures, this suggests that the perceived incongruity between the female gender
role and entrepreneurship leads to the signals from women’s ventures being perceived less
favorably than those of men. Indeed, a woman entrepreneur interviewed in Constantinidis
et al.’s (2006, p. 147) study explained that, “It is a matter of credibility . . . a woman has
to expend more energy than a man to convince the banker.
Therefore, since capital providers must make lending decisions without access to
complete information and under uncertain conditions, they may be especially vulnerable
to the influence of gender stereotypes (Gupta et al., 2009). Indeed, the concept of “signal
fit” explains that when a signal is not consistent with expectations, the signal is likely to
be ignored or rejected since it is seen as lacking credibility and usefulness for the decision
(Connelly et al., 2011). Combined with the predictions of gender role congruity theory,
this suggests that gender stereotypes will impact how observers interpret the signals of
male and female entrepreneurs, and particularly the value they place on signals of venture
viability and entrepreneur commitment. We therefore argue that women entrepreneurs
will receive less capital than male entrepreneurs for the display of positive business
Hypothesis 6: The gender of the entrepreneur moderates the relationship between
business characteristics that signal viability and commitment and the amount of
funding received such that men will receive greater amounts of bank financing than
women for the display of positive business characteristics.
Data Source
Because the purpose of our study was to examine differences in the bank financing
received by male and female entrepreneurs, we sought to collect data from approximately
equal numbers of men and women who had founded their own businesses. However, since
the majority of entrepreneurs are male (Kepler & Shane, 2007), we utilized the Center for
Women and Enterprise (CWE) to assist in the gathering of survey data from female
entrepreneurs. CWE is “a non-profit organization dedicated to helping women start and
grow their own businesses” (CWE, 2011). Although not all participants in CWE programs
are female, only about 20–30% of their participants are male. Therefore, we also surveyed
entrepreneurs who were associated with a university-based entrepreneurship program
located in the same city as CWE. The university population was expected to be predomi-
nantly male.
We mailed surveys to 300 entrepreneurs in the university population and to 900
entrepreneurs in the CWE population. The population for CWE included all entrepreneurs
on their mailing list, most of which had participated in a workshop or program within the
last 5 years. The majority of CWE workshops and programs are open to the public, and
some are free of charge. The university population included entrepreneurs who had been
actively involved in a free entrepreneurship program within the last 3 years. Only full-time
businesses (those with entrepreneurs who devoted 30 or more hours per week to the
business) were included in the final sample, which led to 27 entrepreneurs from the CWE
population and five entrepreneurs from the university population being excluded from
the study. For the university population, 67 (22%) usable surveys were returned, and for
the CWE population, 134 (15%) usable surveys were returned. Overall, 33% of the sample
of entrepreneurs was from the university population (31% female), and the remaining
67% of the sample was from the CWE population (87% female). Thus, the final sample
utilized to test our hypotheses consisted of 201 entrepreneurs.
In order to determine if data from the two populations could be combined to test the
hypotheses, univariate analysis of variance tests were conducted controlling for gender.
When controlling for gender, there were no significant differences between entrepreneurs
sampled from the CWE or university populations for the following variables: age
(M =45), race (Caucasian 85%, AfricanAmerican 9%, AsianAmerican 2%, Hispanic 2%,
Other 2%), marital status (single 27%, married 57%, separated 2%, divorced 13%,
widowed 1%), education (M =2.12), years in business (M =6.64), number of employees
(M =10.23), those who had received a loan within the past 3 years (48%), whether the
entrepreneur was currently seeking funding (27%), and the amount of funding being
sought (M =$291,915) (not significant [n.s.] in all cases). Therefore, given the minimal
differences between the CWE and university samples when entrepreneur gender was
controlled, data from the two populations were combined to test our hypotheses.
Dependent Variables. The amount of business financing recently procured from bank
loans was assessed by asking respondents the amount of monetary funds received from
bank loans within the last 3 years (Berger & Udell, 2003).2
Independent Variables. Number of employees was measured by asking respondents how
many people are employed by the firm full time. Age of business was assessed by asking
respondents to report how many years their business has been in operation. Hours devoted
to the business was captured by asking respondents to report the hours they devote to the
business in a typical work week. Personal investment in the business was captured by
asking respondents how much start-up capital they personally invested during the first year
of the business. Finally, past performance was assessed with multiple indicators of business
success, thereby capturing richer information than single indicators of performance (Birley
& Westhead, 1990; Wiklund, Patzelt, & Shepherd, 2009). In line with recent calls for
entrepreneurship performance measures to consider how small businesses compare with
competing businesses in their industry (Wiklund et al.), respondents were asked to rate their
business’s past performance from the last 3 years on a 7-point scale (1 =much worse than
competitors, 4 =about the same as competitors, 7 =much better than competitors) on
growth in sales, growth in market share, growth in number of employees, growth in
profitability, ability to fund growth from profits, return on equity, return on total assets, and
profit margin on sales. These eight items were averaged to yield a past performance score,
with higher values indicating stronger performance (α=.95). A similar measure of entre-
preneurial performance has been used by Ling and Kellermanns (2010), Eddleston and
Powell (2008), and Powell and Eddleston (2013). Further, Ling and Kellermanns showed
that self-reported measures of business performance compared with competitors demon-
strate convergent validity with actual sales growth for privately held businesses.
2. While we also asked respondents to report the amount of venture capital invested in their businesses, this
source of funding was not included in our analyses since only five respondents had received venture capital.
Three women ($20,000; $25,000; $250,000) and two men ($1,000,000; $1,100,000) in our sample reported
having received venture capital.
11July, 2014
May, 2016 499
Moderator Variable. Whether the entrepreneur was male or female was coded as
0=male and 1 =female.
Control Variables. We controlled for four characteristics of entrepreneurs and their
firms that may have influenced the relationships examined. Because entrepreneurs’
family structure and human capital may influence their business and personal outcomes
(Baron, 2002; Jennings & McDougald, 2007), marital status (married/unmarried) and
education (highest level attained) were controlled. Because the type of industry in
which a firm operates tends to vary based on the gender of the owner, with women
concentrated in retail and service industries, and men concentrated in construction and
manufacturing (Anna, Chandler, Jansen, & Mero, 2000; Madill, Haines, & Riding,
2005), and additionally, retail and service businesses tend to require less external
financing (Constantinidis et al., 2006; Orser et al., 2006), we controlled for whether the
firm operated in manufacturing/construction versus service/retail sectors. Industry was
coded as 0 =retail and service, and 1 =manufacturing and construction. Finally, we
controlled for home-based business location since such businesses tend to require less
bank financing and are more likely to be associated with female than male entrepre-
neurs (Madill et al.; Orser et al.; Wilson et al., 2007). This was coded 1 =home-based
location and 2 =independent location.
Table 1 reports means, standard deviations, and correlations for the unstandardized
variables. Table 2 reports the results of the moderated hierarchical ordinary least squares
regression analysis that was conducted to test the hypotheses. For the regression, control
variables were entered into the model first, followed by the independent variables in
model two, the moderator variable (gender) in model three, and finally the two-way
interaction terms to create a full model in model four (Cohen & Cohen, 1983). In order to
facilitate the interpretation of our moderation results, we plotted the significant interaction
effects (Aiken & West, 1991).
Regarding main effects, three main effects were found to be significant. Number of
employees (β=.42, p<.001) and past performance (β=.16, p<.05) were shown to be
positively related to the loan amount received from banks. However, hours devoted to the
business was found to be negatively related to the amount of bank financing (β=−.13,
p<.10). Gender was not shown to be significantly directly related to the amount of bank
financing after taking into account the control and independent variables.
Now, turning to the moderation results and the key focus of our study, four hypo-
thesized interaction effects were found to predict bank financing. The addition of
the interaction effects significantly contributed to the model (ΔR2=.09, p<.001). The
significant interaction effects presented in Table 2 were plotted in Figures 1 through 4 to
facilitate their interpretation.
Results demonstrated that as the number of employees increased, so did the amount
of bank financing for both males and females. However, the slope is steeper for males,
indicating that males received more bank financing for overcoming the liability of small-
ness than females (β=−.14, p<.05). High past performance significantly increased the
amount of bank financing men received (β=−.42, p<.001), but did little to increase
the amount of bank financing received by women. The age of the business (β=.26,
p<.05) also did little to contribute to the amount of bank financing received by women,
although the results did show that older firms owned by women received more bank
Table 1
Correlation Table
Men Women Total sample Total sample
1 234 5678910Mean Mean Mean Standard deviation
1. Industry .45 .18 .27 .44
2. Home based 1.67 1.55 1.59 .49 .07
3. Education 3.70 3.96 3.88 1.23 .21** .05
4. Marital status .71 .52 .58 .49 .04 .25*** .05
5. Employees 23.83 3.88 10.23 48.62 .01 .13.20** .12*
6. Age of business 8.05 5.98 6.64 5.73 .06 .14* .08 .19*** .19**
7. Hours devoted 51.05 44.03 46.26 19.62 .10.20** .07 .13* .12* .14*
8. Past performance 4.34 3.84 4.00 1.14 .10.15* .13* .12* .06 .17** .21***
9. Personal investment $100,903 $31,005 $53,261 $116,625 .06 .22*** .02 .04 .04 .06 .14* .11
10. Gender .68 .47 .29*** .11.10.19** .19** .17** .17** .21** .28***
11. Bank financing $537,743 $37,126 $196,526 $1,444,105 .12* .11.12* .11.41*** .02 .03 .16* .00 .16*
p<.10; * p<.05; ** p<.01; *** p<.001
13July, 2014
May, 2016 501
financing than older firms owned by men. Unexpectedly, we found that newer male-owned
firms received the greatest amount of bank financing, which was significantly more than
the amount received by newer female-owned firms. As such, “newness” did not appear to
be a liability for male-owned businesses. Finally, hours devoted to the business was found
to significantly moderate the relationship between gender and bank financing (β=.32,
p<.001). Contrary to our hypothesis, we found that hours devoted to the business was
negatively related to the amount of bank financing received by male entrepreneurs,
although it did little to affect the amount of bank financing received by female entrepre-
neurs. Our results are more fully discussed below.
Drawing from signaling theory, we proposed that banks may partly base loan amount
decisions on an entrepreneur’s business characteristics, particularly focusing on those
factors that signal quality by demonstrating viability and commitment to the venture.
Unlike the vast majority of research that has focused on the debt versus equity composi-
tion of capital raised by entrepreneurs (i.e., Cassar, 2004; Chaganti, DeCarolis, & Deeds,
1995; Verheul & Thurik, 2001) or potential differences in male and female entrepreneurs’
Table 2
Multiple Regression Analysis: Dependent Variable: Financing from Banks
Variables Model 1 Model 2 Model 3 Model 4
Step 1: Controls and main effects
Marital status .08 .05 .04 .06
Education .10 .01 .02 .07
Industry (manufacturing) .11 .13* .12.14*
Home-based business .09 .07 .07 .09
Main effects
Number of employees .42*** .41*** .48***
Age of business .09 .10 .29**
Hours devoted to business .13.13* .39**
Past performance .16* .15* .51***
Personal investment .03 .05 .08
Step 2: Moderator
Gender .06 .01
Step 3: Interaction effects
Gender ×number of employees .14*
Gender ×age of business .26*
Gender ×hours devoted to business .32**
Gender ×past performance .42***
Gender ×personal investment .02
R2.04 .22 .23 .32
Adjusted R2.02 .19 .19 .26
ΔR2.18*** .00 .09***
F 2.186.10*** 5.54*** 5.79***
n=201, p<.10; * p<.05; ** p<.01; *** p<.001
Regression coefficients are reported as betas.
access to bank financing (i.e., Arenius & Autio, 2006; Orser et al., 2006; Wilson et al.,
2007), we examined the amount of capital entrepreneurs were able to obtain from banks.
We did not include other sources of funding such as venture capital because only five of
our respondents had obtained this kind of funding. We also opted to not include capital
provided by friends and family because the conditions with which family/friends may be
Figure 1
Moderating Effect of Gender on Relationship Between Number of Employees
and Bank Financing
Low Number of Employees High Number of Employees
Figure 2
Moderating Effect of Gender on Relationship Between Past Firm Performance
and Bank Financing
Low Past Performance High Past Performance
15July, 2014
May, 2016 503
willing to support the venture tend to be subjective in that they may support the entre-
preneur with longer payback periods, various terms, or even forms of financing, whereas
for a bank, it is a structured decision.3We later suggest that future research should apply
3. We thank an anonymous reviewer for this point.
Figure 3
Moderating Effect of Gender on Relationship Between Business Age and Bank
Low Business Age High Business Age
Figure 4
Moderating Effect of Gender on Relationship Between Hours Spent on
Business and Bank Financing
Low Hours on Business High Hours on Business
our framework to other entrepreneurial financing contexts, such as venture capital and
angel investing, to determine if the effect of gender on the rewards from quality signals is
pervasive in entrepreneurial finance.
Our findings revealed that after taking into account multiple controls, the gender of
the entrepreneur did not directly affect the amount of financing received from banks. This
finding adds to other research investigating the link between gender and bank financing
(i.e., Arenius & Autio, 2006; Orser et al., 2006; Wilson et al., 2007) that reports no
evidence of gender discrimination in regards to access to bank loans when controls that
tend to vary between male and female entrepreneurs are taken into account. However,
several main effects were found to predict the bank loan amount procured by entrepre-
neurs including number of employees, past performance, and number of hours devoted to
the business. Yet, while number of employees and past performance were found to be
positively related to the bank loan amount, as predicted, interestingly, hours devoted to the
business was negatively related to the bank loan amount. While the entrepreneurship
literature has discussed the importance of entrepreneurs investing time into their business
(i.e., Cassar & Friedman, 2009; Wilson et al.), our results suggest that to bankers, a greater
number of hours devoted to the business may signal something other than commitment,
perhaps communicating that an entrepreneur is inefficient or ill-suited to run the business
(e.g., “in over his/her head”). Since all of the entrepreneurs in our study devoted at least
30 hours per week to their venture, spending significantly more time working in the
business could also be a sign of escalation of commitment, a problem particularly preva-
lent among founders (McCarthy et al., 1993). Future studies should investigate this
unexpected finding.
Turning to our results regarding the moderation effect of gender, our study provides
ample support to our contention that banks reward signals of quality among male and
female entrepreneurial ventures differently. We found four significant gender moderation
effects suggesting that gender plays an important role in how signals of quality are
interpreted, and thus rewarded, by banks. As predicted, we found that male entrepreneurs
are given more funding than female entrepreneurs on the basis of number of employees
and past performance. Despite showing a strong track record of past performance, women
entrepreneurs appear to procure less bank financing than their male counterparts. Indeed,
high past performance was a strong positive signal for men but the relationship dampened
for women. Additionally, women were not funded as well as men on the basis of having
a high number of employees, suggesting that large venture size is a positive signal of
viability for men but less so for women. These findings could explain why other research
focusing solely on access to bank financing has not found gender differences; the effect of
gender is more subtle and covert. Certainly, more research is needed to investigate such
gender biases to understand why the apparent viability and success of women-owned
businesses are not rewarded to the same extent as they are for men by bank financiers.
Similarly, our findings for business age and hours devoted to the business indicate that
female entrepreneurs are not significantly rewarded for these signals of viability and
commitment. Neither of these factors strongly contributed to the bank loan amounts
procured by women. However, although these factors did play a role in the bank loan
amounts obtained by men, the relationships were not as predicted. Similar to our main
effect finding, a higher number of hours devoted to the business hurt a male entrepreneur’s
bank loan amount. This result was much stronger for men than for women. Perhaps men
who devote a significantly high number of hours to their venture are perceived as owning
a struggling business or as being incompetent and ineffective as entrepreneurs. Drawing
from signaling theory, future researchers should investigate how banks (and other capital
providers) interpret this business characteristic and in particular, how men may face
17July, 2014
May, 2016 505
gender bias as well from certain signals. This unexpected finding demonstrates the
applicability of signaling theory to the entrepreneur financing literature and the impor-
tance of understanding how business characteristics may be differentially rewarded based
on the sender. Our findings suggest that the gender of the sender plays an important role
in determining how signals of entrepreneurial viability and commitment are compensated
by capital providers.
Additionally, we found that newer, male-owned businesses received the greatest
amount of bank financing. Older businesses (male-owned) may have received small bank
loans since they could finance their businesses gradually over time and thus may appear
to need less financing, or they may be perceived as having less potential for high returns
given their mature age. These results counter previous arguments regarding the liability of
newness—but only for male entrepreneurs. Newer businesses owned by women appear to
struggle to receive bank loans, yet the loan amounts offered to more established female-
owned businesses only increased slightly. Thus, women who signaled their businesses’
longevity and viability through the age of the business did not gain as much funding from
banks. Future research should investigate why newer male-owned businesses appear to
procure the greatest bank financing amounts. Gender role congruity theory may shed light
on how bank lenders perceive young businesses owned by men. The entrepreneurial
stereotype as male and associated with images of being a “conqueror of unexplored
territories” and a “cowboy of industry” may encourage lenders to be more willing to invest
and take a chance on newly formed male-owned businesses. As such, gender stereotypes
may lead newer male-owned businesses to be perceived as an opportunity while newer
female-owned businesses are perceived as a risk.
Taken together, these results have important implications for entrepreneurship
research and theory. Our study adds to the entrepreneurship literature by demonstrating
that while business characteristics that reflect signals of viability and commitment are
associated with bank financing, gender alters the reward amounts received from these
signals. As such, our research demonstrates the gendered context of entrepreneurship
financing and suggests that although women have made progress in gaining similar access
to bank financing as men, gendered biases exist that prevent them from being equally
funded for signaling their business’s viability and commitment.
We contribute to theory in two specific ways. First, by drawing from the principles
of gender role congruity theory and signaling theory, we demonstrate how the benefits
accrued from signals of viability and commitment can vary depending on the sender
communicating the signal and, specifically, the gender of the sender. As such, our study
contributes to signaling theory by revealing that capital providers appear to apply different
standards to male and female entrepreneurs seeking financing. Second, our study shows
the applicability of gender role congruity theory to entrepreneurship by suggesting that
gender stereotypes influence the degree to which male and female entrepreneurs are
rewarded for their achievements. In line with this theory, our results indicate that female
entrepreneurs face hurdles in gaining legitimacy with capital providers that thereby limit
their ability to raise capital. Thus, while women entrepreneurs may not be overtly dis-
criminated against when seeking capital, it appears that covert and implicit biases exist
that create barriers for them. More research is needed to explore the nuances between
overt and covert forms of gender discrimination in entrepreneur financing. Similar find-
ings have been noted in studies of women in managerial and professional roles in which
they are turned down for job opportunities or promotions due to implicit gender biases of
the decision makers (e.g., Correll, Benard, & Paik, 2007; Ridgeway & Correll, 2004).
Before concluding, it is important to note the limitations of our study. First, because
this study was cross-sectional, cause-and-effect relationships should not be inferred;
analyses that were conducted cannot prove causation but merely support a set of
hypothesized paths. For example, greater funding could also lead to a larger firm size.
To minimize this concern, we used predictor variables that require the development over
time and are therefore historical in nature, such as the choice to use past performance
versus current sales or current performance. However, we recommend that future
research studies be conducted using longitudinal designs to increase our understanding
of the cross-sectional relationships we found in our study. Second, because the variables
were measured at the same time from the same source, common method variance could
interfere with our findings (Podsakoff & Organ, 1986). However, as noted by Spector
(2006), any indication of common method bias will not necessarily affect results or
Third, much like other comparable survey-based studies in the entrepreneurship
literature (e.g., Anna et al., 2000; DeTienne & Chandler, 2007; Eddleston & Powell,
2008), the small sample size may not be representative of a larger population of entre-
preneurs. Our study suffers from low response rates of 22% (university population) and
15% (CWE) for the two studies. However, Holbrook, Krosnick, and Pfent (2007) argued
that surveys with low response rates (between 5% and 54%) are minimally different from
samples with larger response rates with respect to sample representativeness. Further, the
low response rate from entrepreneurs has long been a recognized problem in the literature
(i.e., Bartholomew & Smith, 2006). Additionally, the generalizability of our study may be
limited since the entrepreneurs we surveyed were associated with entrepreneurship
centers. Therefore, future research should draw from larger populations of entrepreneurs
and aim for higher response rates in an effort to more broadly capture the dynamics
associated with this type of sample.
In this study, we focused on predicting the amount of bank financing. Future research
should investigate whether our results hold when predicting the amount of equity financ-
ing received. Since banks tend to focus on a firm’s stability and ability to repay a loan,
while equity investors focus on a venture’s potential for growth and high returns (Bruns
et al., 2008), different signals may be desired by debt versus equity providers, and signals
could communicate different information to debt versus equity providers. Further, differ-
ences may also exist among different equity providers, specifically, venture capitalists and
angel investors. For example, research has found that the importance of entrepreneurial
passion to the evaluation of a venture’s funding potential varies depending on the personal
characteristics of angel investors (Mitteness, Sudek, & Cardon, 2012). Future research
should therefore examine how characteristics of the capital provider impact the impor-
tance of entrepreneurial signals. Additionally, research should directly investigate how
capital providers of debt and equity evaluate and interpret entrepreneurial signals and, in
turn, decide the funding amounts to reward to entrepreneurs.
In conclusion, business characteristics alone do not predict the amount of bank
financing received by entrepreneurial ventures. Rather, our results demonstrate that
gender plays an important role in predicting the degree to which business characteristics
that signal venture viability and entrepreneur commitment are rewarded with bank loans.
Despite the success of many women business owners, most still face an added hurdle on
the basis of their gender that prevents them from being rewarded for signals of venture
viability and entrepreneur commitment. Indeed, if women are systematically dis-
advantaged, the full potential of their businesses may never be realized. This study calls
attention to the need for financial backers of all types to be made aware of any implicit
biases they may hold and to consider the role gender stereotypes play when evaluating
ventures. If not, they run the risk of overlooking the potential of a firm by focusing on
what they want to see and not on what they should be seeing.
19July, 2014
May, 2016 507
Ahl, H. (2006). Why research on women entrepreneurs needs new directions. Entrepreneurship Theory and
Practice,30(5), 595–621.
Aiken, L.S. & West, S.G. (1991). Multiple regression: Testing an interpreting interactions. Newbury Park,
CA: Sage.
Aldrich, H.A. & Auster, E. (1986). Even dwarfs started small: Liabilities of size and age and their strategic
implications. In B.M. Staw & L.L. Cummings (Eds.), Research in organizational behavior (Vol. 8, pp.
165–198). Greenwich, CT: JAI Press.
Anna, A.L., Chandler, G.N., Jansen, E., & Mero, N.P. (2000). Women business owners in traditional and
non-traditional industries. Journal of Business Venturing,15(3), 279–303.
Arenius, P. & Autio, E. (2006). Financing of small businesses: Are Mars and Venus more alike than different?
Venture Capital,8(2), 93–107.
Arthurs, J.D., Busenitz, L.W., Hoskisson, R.E., & Johnson, R.A. (2009). Signaling and initial public offerings:
The use and impact of the lockup period. Journal of Business Venturing,24(4), 360–372.
Barney, J.B., Busenitz, L., Fiet, J.O., & Moesel, D. (1989). The structure of venture capital governance: An
organizational economic analysis of relations between venture capital firms and new ventures. Best paper
proceedings of the annual meetings of the Academy of Management, Washington, DC.
BarNir, A., Gallaugher, J.M., & Auger, P. (2003). Business process digitization, strategy, and the impact of
firm age and size: The case of the magazine publishing industry. Journal of Business Venturing,18, 789–814.
Baron, R.A. (2002). OB and entrepreneurship: The reciprocal benefits of closer links. Research in Organi-
zational Behavior,24, 225–269.
Bartholomew, S. & Smith, A.D. (2006). Improving survey response rates from chief executive officers in
small firms: The importance of social networks. Entrepreneurship Theory and Practice,30(1), 83–96.
Baum, J.A.C., Calabrese, T., & Silverman, B.S. (2000). Don’t go it alone: Alliance network composition and
startup’s performance in Canadian biotechnology. Strategic Management Journal,21, 267–294.
Becker-Blease, J.R. & Sohl, J.E. (2007). Do women-owned businesses have equal access to angel capital?
Journal of Business Venturing,22(4), 503–521.
Bell, R.G., Moore, C.B., & Filatotchev, I. (2012). Strategic and institutional effects on foreign IPO perfor-
mance: Examining the impact of country of origin, corporate governance, and host country effects. Journal of
Business Venturing,27, 197–216.
Berger, A.N. & Udell, G.F. (2003). The economics of small business finance: The roles of private equity and
debt markets in the financial growth cycle. Journal of Banking and Finance,22, 613–673.
Bird, B. & Brush, C. (2002). A gendered perspective on organization creation. Entrepreneurship Theory and
Practice,26(3), 41–65.
Birley, S. & Westhead, P. (1990). Growth and performance contrasts between “types” of small firms. Strategic
Management Journal,11(7), 535–557.
Bosse, D.A. & Taylor, P.L., III (2012). The second glass ceiling impedes women entrepreneurs. The Journal
of Applied Management and Entrepreneurship,17(1), 52–68.
Bruni, A., Gherardi, S., & Poggio, B. (2004). Entrepreneur mentality, gender and the study of women
entrepreneurs. Journal of Organizational Change Management,17(3), 256–268.
Bruns, V., Holland, D.V., Shepherd, D.A., & Wiklund, J. (2008). The role of human capital in loan officers’
decision policies. Entrepreneurship Theory and Practice,32(3), 485–506.
Brush, C., Carter, N., Gatewood, E., Greene, P., & Hart, M. (2004). Clearing the hurdles: Women building
high-growth businesses. Upper Saddle River, NJ: Prentice Hall.
Brush, C., Carter, N., Greene, P., Gatewood, E., & Hart, M. (2001). An investigation of women-led firms and
venture capital investment. Report to the US SBA Office of Advocacy/National Women’s Business Council.
Duxbury, MA: C. B. Associates.
Brush, C., Carter, N., Greene, P., Gatewood, E., & Hart, M. (2006). The use of bootstrapping by women
entrepreneurs in positioning for growth. Venture Capital Journal,8(2), 1–19.
Bruton, G.D., Chahine, S., & Filatotchev, I. (2009). Founders, private equity investors, and underpricing in
entrepreneurial IPOs. Entrepreneurship Theory and Practice,33(4), 909–928.
Busenitz, L.W., Fiet, J.O., & Moesel, D.D. (2005). Signaling in venture capitalist–new venture team funding
decisions: Does it indicate long-term venture outcomes? Entrepreneurship Theory and Practice,29, 1–12.
Buttner, E.H. & Rosen, B. (1988). Funding new business ventures; are decision makers biased against women
business owners? Journal of Business Venturing,4, 249–261.
Carli, L.L. & Eagly, A.H. (2011). Gender and leadership. In A. Bryman, D. Collinson, K. Grint, B. Jackson, &
M. Uhl-Bien (Eds.), The Sage handbook of leadership (pp. 103–117). Thousand Oaks, CA: Sage Publications.
Carter, N. & Williams, M. (2003). Comparing social feminism and liberal feminism. In J. Butler (Ed.), New
perspectives on women entrepreneurs (pp. 25–41). Greenwich, CT: IAP.
Carter, N.M., Gartner, W.B., Shaver, K.G., & Gatewood, E.J. (2003). The career reasons of nascent entre-
preneurs. Journal of Business Venturing,18(1), 13–39.
Carter, R.B., Dark, F.H., & Singh, A.K. (1998). Underwriter reputation, initial returns, and the long-run
performance of IPO stocks. Journal of Finance,53(1), 285–311.
Carter, S., Shaw, E., Lam, W., & Wilson, F. (2007). Gender, entrepreneurship, and bank lending: The criteria
and processes used by bank loan officers in assessing applications. Entrepreneurship Theory and Practice,31,
Carter, S., Shaw, E., Wilson, F., & Lam, W. (2006). Gender, entrepreneurship and business finance: Investi-
gating the relationship between banks and entrepreneurs in the UK. In C.G. Brush, N.M. Carter, E.J.
Gatewood, P.G. Greener, & M.M. Hart (Eds.), Growth-orientated women entrepreneurs and their businesses:
A global research perspective (pp. 373–391). Cheltenham, UK: Edward Elgar Publishing.
Cassar, G. (2004). The financing of business start-ups. Journal of Business Venturing,19(2), 261–283.
Cassar, G. & Friedman, H. (2009). Does self-efficacy affect entrepreneurial investment? Strategic Manage-
ment Journal,3, 241–260.
Center for Women and Enterprise (CWE). (2011). About us. Boston, MA: Center for Women and Enterprise.
Available at, accessed 25 October 2011.
Certo, S.T. (2003). Influencing initial public offering investors with prestige: Signaling with board structures.
Academy of Management Review,28(3), 432–446.
Chaganti, R., DeCarolis, D., & Deeds, D. (1995). Predictors of capital structure in small ventures. Entrepre-
neurship Theory and Practice,20(2), 7–18.
Cliff, J.E. (1998). Does one size fit all? Exploring the relationship between attitudes towards growth, gender,
and business size. Journal of Business Venturing,13, 523–542.
21July, 2014
May, 2016 509
Cohen, J. & Cohen, P. (1983). Applied multiple regression/correlation analysis for the behavioral sciences
(2nd ed.). Hillsdale, NJ: Erlbaum.
Coleman, S. (2002). Characteristics and borrowing behavior of small, women-owned firms: Evidence from the
1998 survey of small business finances. Journal of Business and Entrepreneurship,14(2), 151–166.
Coleman, S. & Robb, A. (2009). A comparison of new firm financing by gender: Evidence from the Kauffman
Firm Survey data. Small Business Economics,33, 397–411.
Collins, H. & Moore, M.G. (1964). The enterprising man. East Lansing, MI: Bureau of Business and
Economic Research, Michigan State University.
Connelly, B.L., Certo, S.T., Ireland, R.D., & Reutzel, C.R. (2011). Signaling theory: Areview and assessment.
Journal of Management,37(1), 39–67.
Constantinidis, C., Cornet, A., & Asandei, S. (2006). Financing of women-owned ventures: The impact of
gender and other owner-and firm-related variables. Venture Capital,8(2), 133–157.
Correll, S.J. (2004). Constraints into preferences: Gender, status, and emerging career aspirations. American
Sociological Review,69(1), 93–113.
Correll, S.J., Benard, S., & Paik, I. (2007). Getting a job: Is there a motherhood penalty? American Journal
of Sociology,112 (5), 1297–1339.
Covin, J.G. & Slevin, D.P. (1997). High growth transitions: Theoretical perspectives and suggested directions.
In D. Sexton & R. Smilor (Eds.), Entrepreneurship 2000 (pp. 99–126). Chicago, IL: Upstart Publishing
Daily, C.M., Certo, S.T., & Dalton, D.R. (2005). Investment bankers and IPO pricing: Does prospectus
information matter? Journal of Business Venturing,20(1), 93–111.
Deeds, D.L., DeCarolis, D.M., & Coombs, J.E. (1997). The impact of firm-specific capabilities on the amount
of capital raised in an initial public offering: Evidence from the biotechnology industry. Journal of Business
Venturing,12, 31–46.
DeTienne, D.R. & Chandler, G.N. (2007). The role of gender in opportunity identification. Entrepreneurship
Theory and Practice,31(3), 365–386.
Dimov, D., Shepherd, D.A., & Sutcliffe, K.M. (2007). Requisite expertise, firm reputation, and status in
venture capital investment allocation decisions. Journal of Business Venturing,22, 481–502.
Eagly, A. (1987). Sex differences in social behavior: A social-role interpretation. Hillsdale, NJ: Erlbaum.
Eagly, A.H. & Carli, L.L. (2007). Through the labyrinth: The truth about how women become leaders.
Boston, MA: Harvard Business School Press.
Eagly, A.H. & Chin, J.L. (2010). Diversity and leadership in a changing world. American Psychologist,65(3),
Eagly, A.H. & Karau, S.J. (2002). Role congruity theory of prejudice toward female leaders. Psychological
Review,109(3), 573–598.
Ebben, J. & Johnson, A. (2006). Bootstrapping in small firms: An empirical analysis of change over time.
Journal of Business Venturing,21(6), 851–865.
Eddleston, K.A. & Powell, G.N. (2008). The role of gender identity in explaining sex differences in business
owners’ career satisfier preferences. Journal of Business Venturing,23, 244–256.
Fairlie, R.W. & Robb, A.M. (2009). Gender differences in business performance: Evidence from the Char-
acteristics of Business Owners survey. Small Business Economics,33, 375–395.
Fay, M. & Williams, L. (1993). Gender bias and the availability of business loans. Journal of Business
Venturing,8, 363–377.
Fiske, S.T. (1998). Stereotyping, prejudice, and discrimination. In D.T. Gilbert, S.T. Fiske, & G. Lindzey
(Eds.), Handbook of social psychology (4th ed., Vol. 2, pp. 357–411). Boston: McGraw-Hill.
Forbes, D.P., Korsgaard, M.A., & Sapienza, H.J. (2010). Financing decisions as a source of conflict in venture
boards. Journal of Business Venturing,25(6), 579–592.
Foschi, M. (1989). Status characteristics, standards, and attributions. In J. Berger, M. Zelditch, Jr., & B.
Anderson (Eds.), Sociological theories in progress: New formulations (pp. 58–72). Newbury Park, CA: Sage.
Foschi, M. (2000). Double standards for competence: Theory and research. Annual Review of Sociology,
26(1), 21–42.
Fraser, S. (2005). Finance for small and medium sized enterprises: A report on the 2004 UK Survey of SME
Finances. Warwick Business School, University of Warwick, Coventry.
Goranova, M., Alessandri, T.M., Brandes, P., & Dharwadkar, R. (2007). Managerial ownership and corporate
diversification: A longitudinal view. Strategic Management Journal,28(3), 211–225.
Greene, P.G., Brush, C.G., Hart, M.M., & Saparito, P. (2001). Patterns of venture capital funding: Is gender
a factor? Venture Capital,3(1), 63–83.
Gupta, V.K., Turban, D., Wasti, S.A., & Sikdar, A. (2009). The role of gender stereotypes in perceptions of
entrepreneurs and intentions. Entrepreneurship Theory and Practice,33(2), 397–417.
Haines, G.H., Jr, Orser, B.J., & Riding, A.L. (1999). Myths and realities: An empirical study of banks and the
gender of small business clients. Canadian Journal of Administrative Sciences,16(4), 291–307.
Haynes, G.W., Rowe, B.R., Walker, R., & Hong, G.S. (2000). The differences in financial structure between
women- and men-owned family businesses. Journal of Family and Economic Issues,21(3), 209–226.
Heidrick, T. & Nicol, T. (2002). Financing SMEs in Canada: Barriers faced by women, youth, aboriginal and
minority entrepreneurs in accessing capital. Ottawa, ON, Canada: Industry Canada.
Heilman, M.E. (2001). Description and prescription: How gender stereotypes prevent women’s ascent up the
organizational ladder. Journal of Social Issues,57, 657–674.
Hill, F.M., Leitch, C.M., & Harrison, R.T. (2006). “Desperately seeking finance?” The demand for finance by
women-owned and-led businesses. Venture Capital,8(2), 159–182.
Holbrook, A., Krosnick, J., & Pfent, A. (2007). The causes and consequences of response rates in surveys
by the news media and government contractor survey research firms. In J.M. Lepkowski, N. Clyde Tucker,
J. Michael Brick, E.D. De Leeuw, L. Japec, P.J. Lavrakas, et al. (Eds.), Advances in telephone survey
methodology (pp. 499–528). New York: Wiley.
Jain, B.A., Jayaraman, N., & Kini, O. (2008). The path-to-profitability of Internet IPO firms. Journal of
Business Venturing,23(2), 165–194.
Jennings, J.E. & Brush, C.G. (2013). Research on women entrepreneurs: Challenges to (and from) the broader
entrepreneurship literature? Academy of Management Annals,7(1), 663–715.
Jennings, J.E. & McDougald, M.S. (2007). Work-family interface experiences and coping strategies: Impli-
cations for entrepreneurship research and practice. Academy of Management Review,32, 747–760.
23July, 2014
May, 2016 511
Kalleberg, A.L. & Leicht, K.T. (1991). Gender and organizational performance: Determinants of small
business survival and success. Academy of Management Journal,34(1), 136–161.
Kepler, E. & Shane, S. (2007). Are male and female entrepreneurs really that different? Washington, DC: U.S.
Small Business Administration, Office of Advocacy. Available at, accessed 12 October
Kirsch, D., Goldfarb, B., & Gera, A. (2009). Form or substance: The role of business plans in venture capital
decision making. Strategic Management Journal,30, 487–515.
Leitch, C.M. & Hill, F.M. (2006). Guest editorial:Women and the financing of entrepreneurial ventures: More
pieces for the jigsaw. Venture Capital,8(1), 1–14.
Ling, Y. & Kellermanns, F.W. (2010). The effects of family firm specific sources of TMT diversity: The
moderating role of information exchange frequency. Journal of Management Studies,47(2), 322–344.
Loscocco, K. & Smith-Hunter, A. (2004). Women home-based business owners: Insights from comparative
analyses. Women in Management Review,19(3), 164–173.
Madill, J.J., Haines, G.H., Jr, & Riding, A.L. (2005). The role of angels in technology SMEs: Alink to venture
capital. Venture Capital,7(2), 107–129.
Marlow, S. & Patton, D. (2005). All credit to men? Entrepreneurship, finance, and gender. Entrepreneurship
Theory and Practice,29(3), 717–735.
McCarthy, A.M., Schoorman, F.D., & Cooper, A.C. (1993). Reinvestment decisions by entrepreneurs:
Rational decision-making or escalation of commitment? Journal of Business Venturing,8(1), 9–24.
Mitteness, C., Sudek, R., & Cardon, M.S. (2012). Angel investor characteristics that determine whether
perceived passion leads to higher evaluations of funding potential. Journal of Business Venturing,27,
Morris, M.H., Miyasaki, N.N., Watters, C.E., & Coombes, S.M. (2006). The dilemma of growth: Understand-
ing venture size choices of women entrepreneurs. Journal of Small Business Management,44(2), 221–244.
Murphy, P.J., Kickul, J., Barbosa, S.D., & Titus, L. (2007). Expert capital and perceived legitimacy:
Female-run entrepreneurial venture signaling and performance. International Journal of Entrepreneurship &
Innovation,8(2), 127–138.
Neeley, L. & Van Auken, H. (2010). Differences between female and male entrepreneurs’ use of bootstrap
financing. Journal of Developmental Entrepreneurship,15(1), 19–34.
Orser, B.J. & Foster, M.K. (1994). Lending practices and Canadian women in micro-based businesses. Women
in Management Review,9(5), 11–19.
Orser, B.J., Riding, A.L., & Manley, K. (2006). Women entrepreneurs and financial capital. Entrepreneurship
Theory and Practice,14(3), 643–665.
Ozmel, U., Reuer, J.J., & Gulati, R. (2013). Signals across multiple networks: How venture capital and
alliance networks affect interorganizational collaboration. Academy of Management Journal,56(3), 852–866.
Park, N.K. & Mezias, J.M. (2005). Before and after the technology sector crash: The effect of environmental
munificence on stock market response to alliances of e-commerce firms. Strategic Management Journal,26,
Podsakoff, P.M. & Organ, D.W. (1986). Self-reports in organizational research: Problems and perspectives.
Journal of Management,12, 531–544.
Powell, G.N. (2011). Women and men in management (4th ed.). Los Angeles, CA: Sage.
Powell, G.N. & Butterfield, D.A. (1989). The “good manager”: Did androgyny fare better in the 1980s? Group
and Organization Studies,14(2), 216–233.
Powell, G.N. & Butterfield, D.A. (2003). Gender, gender identity, and aspirations to top management. Women
in Management Review,18, 88–96.
Powell, G.N., Butterfield, D.A., & Parent, J.D. (2002). Gender and managerial stereotypes: Have the times
changed? Journal of Management,28, 177–193.
Powell, G.N. & Eddleston, K.A. (2013). Linking family-to-business enrichment and support to entrepreneur-
ial success: Do female and male entrepreneurs experience different outcomes? Journal of Business Venturing,
28, 261–280.
Prasad, D., Bruton, G.D., & Vozikis, G. (2000). Signaling value to business angels: The proportion of the
entrepreneur’s net worth invested in a new venture as a decision signal. Venture Capital,2(3), 167–182.
Reuber, A.R. & Fischer, E. (2005). The company you keep: How young firms in different competitive contexts
signal reputation through their customers. Entrepreneurship Theory and Practice,29(1), 57–78.
Ridgeway, C.L. (2001). Gender, status, and leadership. Journal of Social Issues,57(4), 637–655.
Ridgeway, C.L. (2012). Framed by gender: How gender inequality persists in the modern world. Social
Forces,92(1), 401–405.
Ridgeway, C.L. (2014). Why status matters for inequality. American Sociological Review,79(1), 1–16.
Ridgeway, C.L. & Correll, S.J. (2004). Unpacking the gender system a theoretical perspective on gender
beliefs and social relations. Gender & Society,18(4), 510–531.
Riding, A.L. & Swift, C.S. (1990). Women business owners and terms of credit: Some empirical findings of
the Canadian experience. Journal of Business Venturing,5, 327–340.
Schein, V.E. & Mueller, R. (1992). Sex role stereotyping and requisite management characteristics: A cross
cultural look. Journal of Organizational Behavior,13, 439–447.
Schein, V.E., Mueller, R., Lituchy, T., & Liu, J. (1996). Think manager—think male: A global phenomenon?
Journal of Organizational Behavior,17, 33–41.
Spector, P.E. (2006). Method variance in organizational research: Truth or urban legend? Organizational
Research Methods,9, 221–232.
Spence, A.M. (1973). Job market signaling. The Quarterly Journal of Economics,87(3), 355–374.
Spence, A.M. (2002). Signaling in retrospect and the informational structure of markets. American Economic
Review,92, 434–459.
Stinchcombe, A.L. (1965). Social structure and organizations. In J.G. March (Ed.), Handbook of organiza-
tions (pp. 142–193). Chicago, IL: Rand McNally & Company.
Tornikoski, E.T. & Newbert, S.L. (2007). Exploring the determinants of organizational emergence: A legiti-
macy perspective. Journal of Business Venturing,22(2), 311–335.
Verheul, I. & Thurik, R. (2001). Start-up capital: Does gender matter? Small Business Economics,16,
Wiklund, J., Patzelt, H., & Shepherd, D.A. (2009). Building an integrative model of small business growth.
Small Business Economics,32, 351–374.
25July, 2014
May, 2016 513
Wiklund, J. & Shepherd, D. (2003). Knowledge-based resources, entrepreneurial orientation, and the perfor-
mance of small and medium-sized businesses. Strategic Management Journal,24(13), 1307–1314.
Wilson, F., Carter, S., Tagg, S., Shaw, E., & Lam, W. (2007). Bank loan officers’ perceptions of business
owners: The role of gender. British Journal of Management,18, 154–171.
Winton, A. & Yerramilli, V. (2008). Entrepreneurial finance: Banks versus venture capital. Journal of
Financial Economics,88(1), 51–79.
Wood, W. & Eagly, A.H. (2010). Gender. In S.T. Fiske, D.T. Gilbert, & G. Lindzey (Eds.), Handbook of social
psychology (5th ed., Vol. 1, pp. 629–667). New York: Oxford University Press.
Wu, Z. & Chua, J.H. (2012). Second-order gender effects: The case of U.S. small business borrowing cost.
Entrepreneurship Theory and Practice,36, 443–463.
Zimmerman, M.A., Treichel, M., & Scott, J. (2006). Women-owned businesses and access to bank credit: A
time series perspective (evidence from three surveys since 1987). Venture Capital,8(1), 51–67.
Zimmerman, M.A. & Zietz, G.J. (2002). Beyond survival: Achieving new venture growth by building
legitimacy. Academy of Management Review,27, 414–431.
Zott, C. & Huy, Q.N. (2007). How entrepreneurs use symbolic management to acquire resources. Adminis-
trative Science Quarterly,52, 70–105.
Kimberly A. Eddleston is a professor of entrepreneurship and innovation, D’Amore-McKim School of
Business, Northeastern University, 209 Hayden Hall, Boston, MA 02115-5000, USA.
Jamie J. Ladge is an associate professor of management and organizational development, D’Amore-McKim
School of Business, Northeastern University, 112 Hayden Hall, Boston, MA 02115, USA.
Cheryl Mitteness is an assistant professor of entrepreneurship and innovation, D’Amore-McKim School of
Business, Northeastern University, 209b Hayden Hall, Boston, MA 02115, USA.
Lakshmi Balachandra is an assistant professor in the Entrepreneurship Department, Babson College, Babson
Park, MA 02481, USA, Tel: 617-239-6446,
... They hold private information about their individual capabilities, which they can indicate to outsiders with signals such as education or experience (Ko & McKelvie, 2018). An entrepreneur also has private information about his or her commitment and might signal heightened levels of effort to increase the chances of early-stage funding (Eddleston et al., 2016;Elitzur & Gavious, 2003). As startups transition from early to growth phases, management boards often come into being, and the founders might be replaced as company leaders (Certo, Covin et al., 2001). ...
... Receivers lack private information about the quality of a venture and seek it to be able to make informed assessments. Entrepreneurship studies identify various receivers, including investors (Ahlers et al., 2015), employees (So¨derblom et al., 2015), directors (Acharya & Pollock, 2013), banks (Eddleston et al., 2016), suppliers and buyers (Luo et al., 2020), governments (Zhou et al., 2020), partners (Ozmel et al., 2013), and acquirers (Ragozzino & Reuer, 2011). Different receivers attend to and interpret signals in various ways (Connelly et al., 2011). ...
... This theory is especially relevant for the receiver irrationality construct. Entrepreneurship signaling research thus integrates gender role congruity theory to account for gender stereotypes and cognitive biases in receivers' interpretation of signals (Eddleston et al., 2016;Liao, 2021), such as when receivers perceive signals that convey a particular message as more relevant, depending on the signaler's gender. ...
Full-text available
A rapidly expanding body of entrepreneurship literature draws on signaling theory. Yet as the field grows, common understanding of the theory’s underlying constructs has become increasingly fuzzy and riddled with ambiguities. To establish a common ground for entrepreneurship scholars, we take stock of 172 articles in a systematic literature review and develop a taxonomy of signal constructs. In an effort to increase the clarity of signal constructs further, we apply this taxonomy to assess the signal constructs’ boundary conditions, relationships, and interplays with complementary theories in entrepreneurship contexts. Finally, we leverage the novel insights to identify promising opportunities for further theory-based developments in the field.
... While some studies indicated limited impact on long term outcomes, more evidence reinforces negative impacts within the pattern of lending discrepancy (13)(14)(15). Even when minority and women business owners receive loans, they often come with more restrictive terms and higher rates compared to their white male counterparts (14,(16)(17)(18). Small business who are refused loans, are only allowed limited funding, or have smaller amounts of loan forgiveness may experience financial uncertainty as a result. ...
Full-text available
Background The Covid-19 pandemic exacerbated dental staffing shortages, which impact care delivery and ultimately oral health equity. Federal funding efforts like the Paycheck Protection Program (PPP) sought to aid traditionally underserved businesses including those owned by veterans, minority racial and ethnic groups, and women. Objectives (1) To examine differences in PPP funding between veteran- and nonveteran-owned dental care delivery businesses and organizations and (2) to analyze other relevant factors associated with variation in PPP funding levels for dental businesses. Methods Using publicly available PPP data, we ran unadjusted bivariable and adjusted multivariable linear regression models to estimate associations between loan approval amount and forgiveness amount, veteran status, and relevant covariates. Results Minority racial and ethnic groups and women received less PPP funding and less loan forgiveness, on average, compared with non-minority groups. In the adjusted model with no missing self-reported demographic observations at p < 0.10, veterans received more PPP funding and loan forgiveness, on average, compared to non-veterans. Conclusion To our knowledge, this is the first comprehensive analysis of all dental recipients of PPP funding throughout the United States. Despite PPP program intentions and strategies, traditionally underserved dental businesses did not receive increased funding to support employment.
... Because of these gender biases, occupations and jobs are stereotyped as masculine if men dominate in them and are stereotyped as feminine otherwise. Accordingly, women working in occupations that are perceived as masculine will encounter significant challenges and roadblocks (Eddleston et al., 2016;Gupta et al., 2009). ...
Full-text available
To understand the ethical issue of gender inequality in entrepreneurial financing, we examine the effect of angel investors’ political ideology, the conservatism–liberalism continuum, on their investments in women-owned ventures. We propose that more conservative angel investors tend to have a lower percentage of investments in women-owned ventures in their portfolios. Moreover, drawing on the gender role congruity theory, we show that when investing in women-owned ventures, more conservative angels favor women-owned ventures with a higher percentage of male co-founders and operating in women-dominated industries. Our analysis, based on a longitudinal sample of 172 angels from 2010 to 2019, supports these hypotheses. Our study contributes to the literature by highlighting angel political ideology as a critical antecedent of the gender disparity in entrepreneurial financing.
... Entrepreneurship is considered a masculine domain (Ahl, 2006;Gupta et al., 2009), dominated by masculine behaviors (Marlow and McAdam, 2012;McAdam et al., 2019) and masculine-specific values (Ahl, 2006;Tatli et al., 2014). As such, it poses legitimacy challenges for women (Eagly and Karau, 2002) when seeking financing (Eddleston et al., 2016;Edelman et al., 2018;Guzman and Kacperczyk, 2019;Marlow and Patton, 2005;Murphy et al., 2007) or approaching potential employees, customers, and partners (Zimmerman and Zeitz, 2002). ...
This study was driven by an initial finding that female founders' participation rate in Israeli accelerators is significantly higher (15.3 %) than their participation rate in the. Israeli startup sector (7.4 %). Linking accelerators' design to the known barriers to female entrepreneurship, we examined how accelerators may enhance female entrepreneurship by addressing their specific needs. Based on a dataset (N = 779) of structured interviews with startup founders who participated in accelerator programs in Israel during 2011–2019, we present evidence that female founders seek and gain more entrepreneurial knowledge, network building, and entrepreneurial self-efficacy during their participation in accelerators than do male founders. Female founders also seek to increase their legitimacy more than do their male counterparts but did not report making more progress in this aspect. Finally, both the goal of and progress in obtaining access to capital and improving fundraising skills received lower ratings from female founders than from male founders. We further ask whether accelerators are more helpful for women because they are better adapted to the female gender or because they are generally better adapted to founders with those background conditions that often characterize women. We found that the startup's stage of development and the founder's prior entrepreneurial experience mediated most gender differences, supporting the latter possibility. We discuss the implications of our findings for accelerators and other support programs as a means of increasing women's participation rates in innovative entrepreneurship.
Full-text available
Despite the increased interest in entrepreneurship across scientific and professional fields over the years, existing research in female entrepreneurship has remained largely disjointed in the academic literature, due to the different theories, approaches, methodologies, and research questions addressed, making it difficult to take stock of what is known about women’s entrepreneurial activity. This paper aims at deepening the contribution of female entrepreneurship to organizational success/resilience, and so to the economic recovery, by conducting a review of literature and a content analysis of the most frequent topics on the subject and their chronological evolution over time.This paper, on the one hand, provides a structured reference point to carry research on gender entrepreneurship forward into specific sub-areas. On the other hand, it offers insights about the opportunities and barrier that can explain the women’s interest and motivation for entrepreneurship encompassing a range of aspects (i.e., performance, governance, disclosure, CSR), encouraging them to become effective entrepreneurs and sustain the growth in our economies and societies.KeywordsLiterature reviewFemale entrepreneurshipGovernancePerformanceDisclosure
In this conceptual paper, we respond to the calls for broader theoretical approaches that can coherently demonstrate a high degree of conceptual sensitivity to multiple combinations of institutional factors influencing women's informal entrepreneurship (WIE) and related agency. We do so by integrating constructs of gender and gender inequality with those of institutional logics and institutional voids. We find that a refined understanding of institutional voids is required to pave the way for a meaningful theoretical integration and empirical application of the related conceptualizations. We offer such a revised definition by placing formal and informal logics (rather than institutions) at the heart of it. In our theorizing, we propose that gender interplaying with formal and informal institutional logics create varying degrees of obscure and unique institutional voids that shape WIE prevalence. The proposed harmonized theoretical lens provides researchers with flexible yet consistent guidance for conducting context‐specific empirical work that can coherently advance understanding of underlying logics shaping WIE and related agency.
This chapter begins with a brief exploration of the importance of entrepreneurial activity as a driver of global economic growth. The importance of entrepreneurship in developing economies is examined as are the traits, motivations, and drivers of entrepreneurs and the economic, social, cultural, legislative, and regulatory circumstances that encourage and in some cases discourage entrepreneurial activity. The impact of entrepreneurship training and education on encouraging women entrepreneurs is examined, the relative importance of women entrepreneurs is examined, and emphasis is placed on the relatively greater difficulties that are faced by women entrepreneurs particularly in regards to obtaining funding for starting new ventures. Opportunities are identified that may useful for policy makers, investors, and those that may seek to promote social entrepreneurship and economic growth in developing economies.
Purpose Emerging evidence regarding crowdfunding challenges long-standing “gender gap” views of traditional entrepreneurial financing and indicates that female entrepreneurs may have an advantage in crowdfunding. Yet, the literature primarily focuses on influences at the individual level, largely overlooking the interaction between gender and higher-level culture. Drawing on Hofstede's cultural dimensions, this paper aims to investigate the associations among entrepreneurs' gender, culture and crowdfunding performance, particularly in how entrepreneurs' gender and culture interact to affect crowdfunding performance. Design/methodology/approach Leveraging a sample of 21,730 Kickstarter crowdfunding campaigns and combining these data with data from Hofstede's study, the World Bank (WB) and the International Telecommunication Union (ITU), this study applies multilevel models to empirically investigate this question across 22 countries/regions. Findings This study confirms that the advantageous effect, that female entrepreneurs are likely to obtain better fundraising performance over their male counterparts, does exist in crowdfunding. Furthermore, the findings reveal that this advantageous effect of female entrepreneurs on crowdfunding performance would be reinforced when cultures of individualism and indulgence are high and culture of long-term orientation is low. Originality/value This study contributes to the literature on gender gaps in crowdfunding and entrepreneurial financing by adding an important culture-related boundary condition to the gender preference reported in earlier crowdfunding work. Moreover, the paper extends the knowledge about the impact of culture on crowdfunding performance and enlightens future research on leveraging multilevel modeling approach to examine the complex interplay between individuals and situations in crowdfunding.
Purpose The purpose of this paper is to explore the antecedents of media attention in the context of early-stage startups. While many studies have examined the implications of media attention on firm outcomes, few have investigated the antecedents especially in the context of early-stage startups who significantly lack organizational legitimacy. This study attempts to answer an important and yet unanswered question: What type of startups are more likely to be covered by the media? Design/methodology/approach Using Poisson regression, the authors analyze all media articles written about 315 early-stage ventures in the USA. Findings The authors found that startups with a prestigious investor or a patent have more media attention and startups with a female founder or prior entrepreneurial experience have less. The results suggest that entrepreneurial signals do play a role in media attention, but that the signal–signaler relationship may be more complicated than that in the investment literature. Practical implications Entrepreneurs may benefit from signaling less noisy and unambiguous signals that the media pays more attention to, such as getting an endorsement from reputable third parties early on, which might activate noisy signals. Originality/value The contribution of this paper is to extend the current literature on media attention and entrepreneurship by shedding light on attributes of startups that may help or hurt the volume of media attention in an uncertain and noisy environment.
Full-text available
Literature on the creation of organizations is often cast within a masculine gender framework. This paper draws from three theoretical perspectives to develop a new perspective that broadens the view of organizational creation by encompassing the relative balance of feminine and masculine perspectives in the entrepreneur's venture start-up process and new venture attributes. We elaborate the relatively less visible feminine and personal perspective and compare this with the traditional or masculine perspective. Important to the discussion is the distinction between biology (sex: male and female, man and woman) and socialized perspectives (gender: masculine and feminine). While research and the general public often use the concept of gender loosely to signify sex, we follow a more precise feminist distinction. The paper advances new concepts of gender-maturity (an individual difference) and gender-balance (an organizational quality).
Full-text available
A role congruity theory of prejudice toward female leaders proposes that perceived incongruity between the female gender role and leadership roles leads to 2 forms of prejudice: (a) perceiving women less favorably than men as potential occupants of leadership roles and (b) evaluating behavior that fulfills the prescriptions of a leader role less favorably when it is enacted by a woman. One consequence is that attitudes are less positive toward female than male leaders and potential leaders. Other consequences are that it is more difficult for women to become leaders and to achieve success in leadership roles. Evidence from varied research paradigms substantiates that these consequences occur, especially in situations that heighten perceptions of incongruity between the female gender role and leadership roles.
This paper has three overarching objectives. The first is to document the development of the body of work known as women's entrepreneurship research. The second is to assess the contributions of this work, specifically vis-à-vis the broader entrepreneurship literature. The third is to discuss how this broader literature poses challenges (both difficulties as well as opportunities) for scholarship on female entrepreneurs. We approach these objectives from the standpoint of informed pluralism, seeking to explore whether and how women's entrepreneurship research offers extensions to—and can be extended by—general research on entrepreneurs and their ventures.
We explore a well-known instance of fast decision making under high uncertainty, venture capital (VC) opportunity screening. We analyze a sample of 722 funding requests submitted to an American VC firm and evaluate the influence of the form of the submission and content of business planning documents on VC funding decisions. We improve on prior literature by a) using a large sample of known representativeness, b) relating request characteristics to actual VC decisions, and c) developing an inferential logic that takes account of the multiple sources of information to which VCs have access. We find that the presence of planning documents and some information contained therein are weakly associated with VC funding decisions. Based on our inferential strategy, we find that this information is learned independently of its inclusion in the business planning documents. Copyright 2009 John Wiley & Sons, Ltd.
We analyze how entrepreneurial firms choose between two funding institution: banks, which monitor less intensively and face liquidity demands from their own investors, and venture capitalists, who can monitor more intensively but face a higher cost of capital because of the liquidity constraints that they impose on their own investors. Because the firm's manager prefers continuing the firm over liquidating it and aggressive (risky) continuation strategies over conservative (safe) continuation strategies, the institution must monitor the firm and exercise some control over its decisions. Bank finance takes the form of debt, whereas venture capital finance often resembles convertible debt. Venture capital finance is optimal only when the aggressive continuation strategy is not too profitable, ex ante; the uncertainty associated with the risky continuation strategy (strategic uncertainty) is high; and the firm's cash flow distribution is highly risky and positively skewed, with low probability of success, low liquidation value, and high returns if successful. A decrease in venture capitalists' cost of capital encourages firms to switch from safe strategies and bank finance to riskier strategies and venture capital finance, increasing the average risk of firms in the economy.
Since the early 1980s, new ventures with high growth potential and large capital needs have found an ever-increasing pool of venture capital available to support their growth. However, the flow of venture capital investment to women-led businesses remains meager in spite of the fact that in the US and Europe an increasing number of businesses are owned by women. The apparent disparity between potential investment opportunity and actual deals made between venture capital firms and women-led businesses raises the question of whether gender is an issue. The majority of venture capital studies investigate equity funds flows, investor criteria and the nature of the investor-investee relationship. Research on women entrepreneurs focuses on psychological dimensions, business characteristics and performance. Questions about the intersection of gender and venture capital financing are largely unexamined. This exploratory study utilizes longitudinal data to track US venture capital investments by proportion, stage, industry and gender. The descriptive statistics and our analysis of the findings suggest several hypotheses to explain the apparent gender gap.
How does gender inequality persist in an advanced industrial society like the United States, where legal, political, institutional, and economic processes work against it? This book draws on empirical evidence from sociology, psychology, and organizational studies to argue that people's everyday use of gender as a primary cultural tool for organizing social relations with others creates processes that rewrite gender inequality into new forms of social and economic organization as these forms emerge in society. Widely shared gender stereotypes act as a "common knowledge" cultural frame that people use to initiate the process of making sense of one another in order to coordinate their interaction. Gender stereotypes change more slowly than material arrangements between men and women. As a result of this cultural lag, at sites of social innovation, people implicitly draw on trailing stereotypes of gender difference and inequality to help organize the new activities, procedures, and forms of organization that they create, in effect reinventing gender inequality for a new era. Chapters 1 through 3 explain how gender acts as a primary frame and how gender stereotypes shape interpersonal behavior and judgments in contextually varying ways. Chapters 4 and 5 show how these effects in the workplace and the home reproduce contemporary structures of gender inequality. Chapters 6 examines the cultural lag of gender stereotypes and shows how they create gender inequality at sites of innovation in work (high-tech start-ups) and intimate relations (college hook-ups). Chapter 7 develops the implications of this persistence dynamic for progress toward gender equality.
The entrepreneurship literature has been criticized for providing inadequate accounts of business owners' actual experiences and challenges. Work-family interface (WFI) considerations in particular are noticeably absent from much theorizing and research-despite the importance of such considerations to entrepreneurs themselves. We demonstrate how constructs from the WFI literature can help address an important entrepreneurship question that has not been answered satisfactorily to date: Why is there a persistent performance differential between male-headed and female-headed firms?