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International Journal of Entrepreneurial Behavior & Research Barriers to women achieving their entrepreneurial potential: Women and risk Clare Brindley

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Barriers to women achieving their entrepreneurial potential Women and risk

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Clare Brindley Department of Business and Management, MMU Cheshire, Manchester Metropolitan University, Crewe, UK


Abstract Purpose – This paper provides a comprehensive summary of the academic literature with regard to risk and its role in the entrepreneurial experience of women. Entrepreneurial risk has an under-developed conceptual basis and distilling gender-specific aspects is difficult. Various academic disciplines have contributed to the topic of risk, e.g. economics, and often decision making is used to contextualise the topic. Though the literature does not always prove an association between the different facets of risk and entrepreneurship, there is general agreement that a number of factors, e.g. personal, political and social inter-relate to influence risk and subsequent behaviour. Design/methodology/approach – Uses a desk-based approach to data collection. An overview of the main issues concerning risk and entrepreneurship is given to contexualise the gender aspects to be discussed, drawing on the extant literature. Findings – The paper posits that an understanding of the gender aspects of risk is required if policy measures are to be constructive and help women overcome barriers and achieve their entrepreneurial potential. The conclusions drawn from the literature provide the foundations for a discussion of the likely policy measures that are required to encourage women entrepreneurs. Research limitations/implications – A summary is provided of the research and information gaps that remain in terms of women entrepreneurship and risk with the aim of encouraging further research in the area. Originality/value – Provides a comprehensive summary of the literature with regard to risk and the entrepreneurial experience of women, and discusses the likely policy measures required to encourage women entrepreneurs. Keywords Women, Entrepreneurialism, Risk management, Sex and gender issues Paper type Literature review

International Journal of Entrepreneurial Behaviour & Research Vol. 11 No. 2, 2005 pp. 144-161 q Emerald Group Publishing Limited 1355-2554 DOI 10.1108/13552550510590554

Introduction The aim of the paper is to explore the barriers to women achieving their full potential in the entrepreneurial sector and the extent to which these barriers are from structural sources or are the result of particular personality traits or perceptions. The research is exploratory in nature and has used a desk-based approach to data collection. Initially an overview of the main issues concerning risk and entrepreneurship is given to contextualise the gender aspects that are then discussed. The paper provides directions for further research by identifying the research and information gaps and provides suggestions for policy. One might speculate that gender-related differences are not significant within the entrepreneurial role in the SME sector and the problems encountered are not gender-specific but rather are related to the risks associated with new business development and growth. Previous research studies have evaluated the proposition that

gender-based experiences within entrepreneurship generate differences in the perceptiveness of uncertainty and risks and consequently differences in the preparedness to undertake risky decisions. An alternative proposition suggests that whilst the entrepreneur may enjoy degrees of freedom in decision making within their organisation a number of contextual factors, both internal and external, may impose gender-related barriers and constraints to the effectiveness of this decision-making ability.

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145 Overview of the research literature The growth in female entrepreneurship literature is evidenced by the identification by Carter et al. (2001) of over 400 academic references on the subject. Carter et al. (2001, p. 22) therefore argue that rather than their being a dearth of literature the problem “is a clear lack of cumulative knowledge and a failure to date to adequately conceptualise and build explanatory theories.” This problem is compounded if one investigates a topic that similarly has an underdeveloped conceptualisation – entrepreneurial risk. Yet risk theories have the potential to embrace several of the main themes categorised by Carter et al. (2001) such as motivations, start-up patterns and the management, performance and growth of SMEs. What is more difficult to distil is the gender specific aspects of entrepreneurial risk. By also contextualising the study in the area of risk perception, propensity and preparedness an attempt can be made to identify and isolate entrepreneurial risk and compare it to actual behaviour. For example, is it risk that is channelling individuals in particular directions or behaviours? It is recognised that for each individual, risk factors and the commercial opportunities they present will be contingent on the other factors and the general context within which the individual operates. The issue may not be that there are differences in risk propensity between individuals but the context of the individual decision to become an entrepreneur is contingent on other factors. Risk theories In the 1920s risk became popular in the economics field (Dowling and Staelin, 1994). Subsequent definitions of risk have reflected the academic disciplines they have emerged from. Thus, the management, environmental, insurance and psychology literature have each focused on a particular aspect of risk but all have tended to contextualise their definition of risk within the area of decision making. Commonalities in these paradigms relate to their definition of risk, which relate to the issues of unpredictability, decision making and potential loss. While technically, risk may be defined as the probability of incurring a loss (Knight, 1921) in reality this is a somewhat imbalanced definition given that most risky decisions in business are taken on the basis of generating a potential gain (Blume, 1971), whilst recognising that this may not be certain. Few if any business or investment decisions would be undertaken solely to avoid losses. The analysis of decision-making behaviour may be divided into three elements: risk perception, risk propensity and preparedness to take risks. Sitkin and Weingart (1995) define risk perception as a subjective interpretation of expected loss. This perception is affected by the individual’s view of the uncertainty of the decision and the consequence of the decision (Cunningham, 1967). This subjectivity or uniqueness is because “the internal interpretation of external events and circumstances are the key to risk perception, as each organisation or decision maker may view the same set of events and circumstances with

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different eyes, resulting in different perceptions” (Ritchie and Brindley, 2001, p. 31). Perceptions may alter as a result of internal and external factors. The approach to risk may be found on a continuum from being a risk seeker to a risk averter. The issues of perception and propensity seem then to impact on an individual’s preparedness to take risks. An individual’s risk preparedness may depend either on the uncertainty of outcomes because of imperfect knowledge or on the potential scale of losses or gains. Osborne (1995, p. 6) describes successful entrepreneurs as “adept at calibrating the level of risk that matches potential reward and their capacity to manage uncertainty.” The implication of the preparedness to take risks is highlighted by van Praag and Cramer (2001, p. 45) who argued that whether one becomes an entrepreneur depends on associated utilities which depend on “ability and on individual risk attitude, since entrepreneurship is a risky business.” Others such as Sparrow (1999) have adopted an exogenous perspective with owner-managers categorising risk under five headings: business environment, the particular competitive positioning of the business, business processes, events and liabilities. Therefore, the importance of risk in an entrepreneurial context has both an organisational and an individual facet. From an organisational perspective, Sparrow (1999, p. 122) posits that “[S]mall firms have faced an explosion in business risks.” Hence, for Sparrow (1999, p. 123) these small firms must be conversant with the process of risk management and “the interrelationship between the roles of risk avoidance, retention and transfer”. There appears to be some consensus that an appreciation or knowledge of risk is warranted in order that policy makers and indeed budding entrepreneurs themselves can make objective decisions about the enterprise (see Busenitz, 1999; Stewart et al., 1999; Forlani and Mullins, 2000). The literature appears to suggest that there are three sets of factors that are impacting upon entrepreneurial risk: the decision situation context, such as beginning a business during a recession, the personality traits of the individual, where the individual lies on the continuum range of risk seeking to risk averse and the personal context of the individual including, experience, dependents, income, etc. Entrepreneurial risk Busenitz’s (1999, p. 325) premise is that “the dominant theme running throughout the entrepreneurship literature is risk and how entrepreneurs are predisposed towards risky alternatives or how they should manage risk.” van Praag and Cramer (2001) argue that entrepreneurs are historically seen as risk takers, as shown in the works of, Knight (1921), Say (1803/1971) etc. Similarly, McCarthy (2000, p. 563) argues that “the risk construct dominates the literature on entrepreneurship and the ability to bear risk has been identified as the primary challenge facing entrepreneurs (Knight, 1921).” Several authors give support for this viewpoint including: Kent et al. (1982), McClelland (1987), Koh (1996), Bygrave (1989), Palmer (1971), Sarachek (1978) and Ho and Koh (1992). The ability to take risks as being an inherent attribute of the entrepreneurial venture or personality is summed up by Klein (1977) who stated that “. . . if an entrepreneur is to profit from an unexploited potential, he must almost inevitably deal with a greater degree of uncertainty” (Klein, 1977, p. 36 cited in Landrum, 1991). Support for this theory is evidenced in the work of Viscott (1979) and Landrum (1991). For Thompson (1999, p. 289) entrepreneurs “through insight and flexibility they


attempt to manage risk rather than become unnecessarily exposed.” It is therefore predictable that entrepreneurs are risk takers (Cox and Jennings, 1995). Others such as Mitchell (1995) have concentrated on the activity as the basis for the definition, e.g. entrepreneurs being defined as individuals who have created a new business venture. Such studies may give the impression that there is a common definition but other research suggests that there may be differences in situational or individual circumstances that impact upon entrepreneurial behaviour. This definitional dichotomy between entrepreneurs and owner-managers often obscures rather than illuminates research being undertaken in entrepreneurship. However, it is not in the remit of this paper to revisit these definitional tensions. A semantic divergence is seen in the work of Kets de Vries (1977, p. 38) who argued that: “the entrepreneur can be considered more a creator of risk than a taker of it. However, although the entrepreneur does not necessarily bear the financial risk of an operation, he is exposed to a considerable degree of social and psychological risks”. According to Liles (1974) entrepreneurs have to cope with four types of risk: financial, career, family/social and psychological. Whatever, the source of the risk, Jover’s (1992) premise is that the number of business failures that occur illustrate the considerable risk inherent in business start-up. Risk propensity of entrepreneurs The literature suggests therefore, that entrepreneurship and risk are inextricably linked and this has led to a number of studies that have attempted to measure the risk-taking propensity of entrepreneurs, e.g. Palmer, 1971; Begley and Boyd, 1987; McGrath et al., 1992 and Ray, 1994. For Brockhaus (1980) entrepreneurs are not gamblers but moderate risk takers. However, it is fair to conclude that there has not been uniformity in the conclusions from these studies. Sexton and Bowman-Upton (1984) and Begley and Boyd (1987) offer some modest support for differences in risk-taking propensity. Indeed, Busenitz (1999) argued that the higher risk propensity of entrepreneurs has not been supported empirically. He argued that the “cognitive perspective provides an important perspective with which to investigate why some entrepreneurs accept an inordinate amount of risk even though, on average, they do not apparently differ in their risk-taking propensity” (Busenitz, 1999, p. 326), i.e. “it may be that entrepreneurs take more risky paths because they perceive little risk in their proposed ventures” (Busenitz, 1999, p. 326). He postulates that it could be that it is not risk propensity that distinguishes entrepreneurs from managers in large companies but differences in the way they think about and perceive risk. McClelland’s (1961) influential work, which adopted a behavioural science approach, identified that successful entrepreneurs were moderate risk takers, which concurs with Brockhaus (1980). Busenitz’s (1999, p. 328) premise is that in an established business, approaches to risk may be different than at the start-up phase in that “we suspect that entrepreneurs in the founding process tend not to be sensitised to the risk they face.” The budding entrepreneurs therefore do not view what they are doing as risky. Indeed, entrepreneurs may accept risks in part because they do not expect to have to bear them (Low and MacMillan, 1988 cited in Busenitz, 1999, p. 328). Furthermore, Busenitz (1999, p. 329) argues that increasing “evidence indicates that individuals vary in the way they deal with risk.” For example, Shapira (1995) explored

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individual differences in risk taking. As Busenitz (1999) asserts at start-up there is much uncertainty and it is the individual’s use of biases and heuristics that can be the basis on which the decision to go into business is made. For example, overconfidence may be seen as a bias. Thus “individuals with a greater sense of overconfidence are likely to function better in an entrepreneurial setting because they will be less overwhelmed with the multiple hurdles they face” (Busenitz, 1999, p. 331). It may be postulated that overconfidence is a result of personality or social constructs and may for example be found more frequently in certain social groupings. Risk and new ventures Simon et al. (2000, p. 114) argue that researchers such as, Boyd and Vozikis (1994), Krueger (1993), Krueger and Brazeal (1994) and Busenitz and Barney (1997), have “called for studies explaining why individuals decide to start companies, even though it is very risky” As Simon et al. (2000, p. 114) state: “[E]ven if they do not have a high-risk propensity, individuals who perceive less risk than others might unknowingly take risky action.” Similarly, Palich and Bagby (1995) argued that risk perception rather than propensity may explain venture start up. While Simon et al. (2000) focused on the economic aspects of risk, they suggest that future research should look at other aspects of risks. Social risks are highlighted in the work of Amit et al. (1995) and Birley and Westhead (1994). Other factors impact on risk perception, i.e. changes in employment status, see Amit et al. (1995) and exposure to role models see Dubinin (1989) and access to business start up advice, e.g. Chrisman et al. (1987). Exogenous factors are also, identified by Athayde (1999) as risk influencers. According to social learning theory, risk-taking behaviour can be seen as a learned behaviour e.g. transmitted by parents or shaped by socio-cultural environment. McCarthy (2000) found that risk taking is not just a function of personality but seems to reflect organisational context and organisational history. McCarthy (2000, p. 571) speculates that perhaps the solution is to “distinguish between different types of entrepreneurs and to recognise that risk taking propensity may vary with time and tenure.” As the business develops and the entrepreneurs learn, the entrepreneurs’ risk perception may also alter. For McCarthy (2000, p. 571) “[E]ntrepreneurs may oscillate between risk prone and risk averse modes of behaviours over time.” For Stewart et al. (1999) an awareness of an individual’s risk behaviour could help not only existing entrepreneurs in their business planning but also help potential entrepreneurs assess their suitability for entrepreneurship. The idea of suitability is also developed by Forlani and Mullins (2000) who argue that if individuals are aware of their own risk propensities they are able to determine whether their assessments of new venture opportunities, are influenced by their propensity to take risks. This raises the issue that if propensities differ, as a result of say gender, but they are not aware of this then a mis-guided assessment of the ventures’ competitiveness may be made. Sources of risk If one takes the view that entrepreneurship is a risky activity (Say, 1803; Knight, 1921; Busenitz, 1999; McCarthy, 2000 and van Praag and Cramer, 2001) the next question that arises is what is the source of the risk? There appears to be no consensus on where the seeds of risk are located. The essence of the problem is the range of variables at the macro, micro and individual levels that are potential influencers, as well as the need to


recognise the process dimensions of entrepreneurship. The entrepreneurial process takes place against a backdrop of policies, structures and frameworks which may facilitate or inhibit entrepreneurship, e.g. the contextual setting will differ in terms of previous economic development, regional policies and local support mechanisms. The individual contextual factors include: family history and tradition of entrepreneurship, cultural influences relating to family and friends, family commitments and opportunities and educational opportunities. The individual characteristics influencing the propensity of the individual to engage and develop a career in entrepreneurship are the personal traits and characteristics such as attitudes to self-employment, risk-taking behaviour, age, self-confidence and gender. These may be influenced by the individual contextual factors detailed earlier. Entrepreneurial Processes would be contingent on the three other sets of elements. For example, the individual who originates from a background in which there is a strong tradition of entrepreneurship and family support may inherit the business or a part of an existing family business automatically. While another individual may need to undertake more of the initial stages of setting up the business, including determining the opportunity, persuading oneself and others about the viability, raising risk capital. It may be suggested in SMEs, where there is a tendency for less division of labour along functional lines that the link between the organisational and individual context is more pronounced. The literature in the risk management field (e.g. Ritchie and Marshall, 1993) indicates that the primary sources of risk to the business organisation may be categorised into exogenous (e.g. technology developments, changing consumer tastes) and endogenous (e.g. quality of internal financial control systems, effective management structures). The capability of the SME internal decision making to manage and respond effectively to the information and change signals received will be determined by the endogenous factors. MacCrimmon and Wehrung (1986) established that the preparedness of the decision-making unit to take risks may often be determined by the organisation’s financial position, as a firm being prepared to take greater risks when facing threats to its survival. These findings all support and are compatible with the classification of strategic risks derived by Ritchie and Marshall (1993). Indeed, the view that risk-taking may be less a factor of the individual personality traits and more a factor of the decision situation was supported by the research of Slovic (1972). However, this view is contradicted by Sparrow (1999, p. 123) who argued that “[S]ignificant differences have been identified between the risk conceptions and practices of businesses and individuals.” These differences may for example be due to ethnic, gender, class or age differences. Sparrow (1999, p. 123) acknowledges the studies that have been undertaken but concluded “there are no studies of the holistic manner in which small firms’ owner-managers construe and manage risk.” The lack of a holistic paradigm means that components or facets of risk within the SME context, e.g. “risk propensity” and “risk perception”, need to be the starting point of any debate on risk sources and its management. Gender-related attitudes towards risk and entrepreneurship There are few studies that have specifically focused on women entrepreneurs’ risk attributes. This is perhaps not surprising when Brush (1998) identified that research focussing on women or including women counted for less than 10 percent of all

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academic investigations (cited in Baker et al., 1997) and of 227 studies published between 1980-1987 only 6 percent investigated women and minorities (cited in Churchill and Hornaday, 1987). It has often been left to other academic disciplines such as consumer decision making (Ward and Sturrock, 1998), psychology (Fischhoff et al., 1977) or gambling studies (King, 1985; Bruce and Johnson, 1994) to focus on women and risk but again these studies often merely include rather than focus on women. Thus, as Brush (1998) found the extent that women create or manage differently SMEs is not well understood and in the new venture creation process one of the processes is the appropriate management of risk (Hofer and Bygrave 1991 cited in Brush, 1998). Moreover, gender, education (see Cuba et al., 1983; Decarlo and Lyons, 1979; Sexton and Bowman-Upton, 1990 cited in Stewart et al., 1999) age, industry sector, business size can all be seen as influencing risk propensity. Slovic (2000, p. xxxiv) posits that “[A]lmost every study of risk perception has found that men seem to be less concerned about hazards than are women.” Chung (1998) agrees, arguing that “both the marketing and psychological literature suggest than men tend to make more risky judgements than women.” Masters and Meier (1988) on the other hand found no significant difference in risk propensity, which in turn contrasts with Sexton (1989a) who found that females were more risk averse. For Chung (1998) this difference is seen as a result of differences in information processing styles, i.e. there is a difference in the approach to risk cues in that women assigned significantly more weight to risk cues. Indeed, Chung (1998) found that in fact women tended to assign more importance to all cues than men, which offered direct support to the issues that women are more detailed information processors than men. She also discovered that women made significantly more risk averse judgements than men. This supports the work of Sexton and Bowman-Upton (1990) who found that although male and females entrepreneurs have similar traits, there are noticeable differences in risk taking. Key determinants Social factors Slovic (2000) concluded that sociopolitical factors could be key determinants of gender differences in risk perception. He also argues that the differences in risk perception could be linked to issues of power and influence or rather women’s lack of access to them. Slovic (2000, p. 402) argues that “differences in perceptions and attitudes point towards the role of power, status, alienation, trust, perceived government responsiveness and other sociopolitical factors in determining perception and acceptance of risk.” Similarly, Brush (1998, p. 160) concluded that in all OECD countries “women encounter social structures in work, family and social life that influence development of human and social capital, different from their male counterparts. This argument is based on the premise that the entrepreneur starts with a set of endowments both “human and social capital” (Brush, 1998, p. 157). The influence of differences in these “endowments” (Brush, 1998) is explored by a number of authors. Ljunggren and Kolvereid (1996) found there was no gender difference in regard to complying with social pressure concerning business start-up but women perceived stronger social support at the start-up phase. Ljunggren and Kolvereid (1996) believe that this may be due to women spending more time building support for their idea and being reluctant to start before having social support or perhaps it is because it is the type of business that requires more support.


Brindley and Ritchie (1999) also found that choice of business has been based on their previous work experience, which may indeed help to minimise the risk of venturing into completely uncharted territory with a new business. Furthermore, during the female entrepreneurs’ start-up phase the main source of support and assistance came from family and friends, i.e. trusted sources of help that the women had previously experienced. It would therefore appear that by choosing a familiar business activity and by relying on a network of family and friends perhaps women are sub-consciously minimising the risk of the new business venture. Financial factors A more traditional view of capital as financial capital is included as a risk construct in a number of studies. Buttner and Rosen (1988) found that women were perceived by bank workers as less entrepreneurial than men and were evaluated lower on risk-taking propensity. In Sexton and Bowman-Upton’s (1990) paper female entrepreneurs scored significantly lower than male entrepreneurs on their risk-taking scale but were still higher than the risk-taking level recorded within the general public. “Although the risk taking scale was designed to measure four facets of risk (monetary, physical, social and ethical), it correlates with monetary risk” (Jackson et al., 1972 cited in Sexton and Bowman-Upton, 1990, p. 34). Sexton and Bowman-Upton (1990, p. 34) therefore conclude that female entrepreneurs “are less willing to get involved in situations with uncertain outcomes where financial gain is involved.” Ljunggren and Kolvereid (1996), who as well as exploring motivations to start up a business, also investigated the respondents’ experiences concerning profit and risk. In their findings, Ljunggren and Kolvereid (1996) found that women stressed autonomy reasons for starting a business more than men did but no gender differences were found in regard to challenge, risk or profitability. It could be suggested that as the study viewed risk as a financial construct there may have been different risks for the women, e.g. social risks that are ameliorated during the screening process. Jones’ (2000, p. 212) methodology also included a financial category “to capture financial responses such as risk and capital concerns associated with self employment.” Jones’ (2000, p. 213) findings revealed that Brazilian male and female entrepreneurs has similar dispositions and did not differ in their “business opportunity wants” and posits that cultural differences may over-ride biological sex conditioning. Buttner’s (1999) paper on business initiation fails to mention risk but suggests that there may be gender differences in how businesses are initiated which may impact upon their success. One of the key differences appears to relate to access to capital. Buttner (1999) argues that starting with a smaller capital base may disadvantage women SME owners, as a lack of working capital is one of the biggest problems for start-ups. Indeed, this poorer capital base may be reflected in survival rates and subsequent growth opportunities. Jones (2000) identified that the most distinguishing concerns between genders were centred on enterprise location and growth opportunities. It could be argued that these categories in themselves may still be viewed as financial measures and what they perhaps more carefully reveal is the differences in the sources or types of risk between men and women. Growth imperatives Cliff (1998, p. 525) cites authors who have shown that “small business performance is influenced by the motivations, aspirations, and intentions of entrepreneurs.” She

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identifies two contrasting viewpoints. First, Sexton (1989b) who found that there are no psychological reasons that predispose women to keep their enterprises small and second, social feminist theories which offer socio-cultural reasons for gender differences. Cliff (1998, p. 526) argues that “[W]omen who lack relevant experience may question their ability to manage a quickly growing enterprise and may therefore purposely limit the expansion of their firms.” Black (1989 cited in Cliff, 1998) believed that due to socialisation processes, women have different ways of thinking, different values, etc. which Cliff (1998, p. 527) argues is “a compelling argument for anticipating gender differences in growth intentions.” Growth is after all a risk. A risk which may be financial or social and may come from exogenous or endogenous sources. For example, changes in the marketing environment may require growth to maintain a SME’s market position. Cliff (1998) utilises the work of Goffee and Scase (1985, p. 70) who identified that women regard growth as “very risky” because it would deter them from achieving their goal of developing an “employer-employee relationship based upon trust and mutual respect.” Cliff (1998, p. 531) pronounced that “differences in the growth intentions of male and female entrepreneurs are not only surprising but also requires an explanation.” Cliff’s (1998) findings showed that 13 per cent of her mixed gender sample believed external factors, e.g. economic conditions, were the reason for their lack of growth. None of the women but a third of the men used this reason, which was a significant gender difference and Cliff (1998) believes it shows entrepreneurs wanted to grow but market conditions prevented this. She concluded that there are not any significant differences in whether men and women wanted to expand their firms but there were significant differences in the way they wanted to grow. “Female business owners appear to be more careful and conservative, purposely striving for a controlled and manageable rate of growth” (Cliff, 1998, p. 535). Cliff (1998, p. 535) goes onto argue that this “deliberately chosen slower pace reflects a concern about the risks and negative outcomes associated with expanding too quickly. These risks and negative outcomes tend to be personal rather than economic, such as the belief that fast-paced expansion will place inordinate demands on the entrepreneur’s time and energy.” Cliff (1998) proposed that SMEs set business size thresholds and advocated further research to determine “whether the observed gender differences reflect a true difference in the growth orientations of male versus female entrepreneurs, or merely a difference in the rhetoric used by men and women to describe their attitudes towards expansion” (Cliff, 1998, p. 539). Comparing women and men – a fair comparison? An exploration of the rhetoric used is supported by Mirchandani (1999, p. 225) who contends that “[M]uch of the literature on women and entrepreneurship does not address the consequences of adapting theories of entrepreneurship, developed through the analyses of men’s lives, to the experiences of women.” For Mirchandani (1999, p. 227) it is certain structures that “support, perpetuate and even create gender differences.” Mirchandani (1999) suggested that it appears it is women that have to adapt in order to equalise rather than the structures. Lee-Gosselin and Grise (1990 cited in Mirchandani, 1999) argued that women entrepreneurs challenge the presumption that SMEs should be growth oriented. Yet, for Mirchandani (1999, p. 228) “it is a pity that despite the research to date the focus remains on individualistic strategies that


allow women to mimic the male norm.” Adopting this viewpoint suggests that what is required is an understanding of the semantics used by men and women before making assumptions and to explore the influence these definitional cues have on behaviour. According to Mirchandani (1999) the focus of literature has been in comparing men and women in terms of entrepreneurship. Hisrich (1989) is used by Mirchandani (1999) to illustrate this point as Hisrich (1989) compared men and women in terms of demographics, personality and business type. The issue of language is taken up by Mirchandani (1999) who argues that Goffee and Scase’s (1985) typology mirrors the typical male roles exemplified by the Bem Sex Roles Inventory, where male items on the scale include ambition, independence, individualism, competitiveness, self-reliance, risk-taking behaviour and ease of decision making (cited in Eichler, 1980, p. 63). Thus, Mirchandani (1999) argues that comparison is really a judgement on whether women have adopted these masculine traits or whether they have not. Mirchandani (1999) summarises that some studies have found little differences between men and women entrepreneurs in terms of motivation, departure point or personality (cites Hisrich, 1989; Birley, 1989 and Smith et al., 1992 as examples of this). Similarly, Koh’s (1996) findings illustrated that those who were entrepreneurially inclined had a greater risk propensity but there were no significant sex differences. Whether this is because as Birley (1989, p. 37) anticipated that the profile of women entrepreneurs would move closer to men or because the comparative parameters are flawed is still being debated. If one accepts that “gender, occupation and organisational structure mutually influence one another in women’s experiences of small business ownership” (Mirchandani, 1999, p. 225) then what is required is research that “develops approaches which are able to document gender differences without obscuring all other points of difference amongst entrepreneurs” (Mirchandani, 1999, p. 229). Conclusions In summary, the literature has adopted a cross-disciplinary approach to risk and research and has tended to focus on a particular aspect of risk, e.g. propensity rather than taking a holistic view of risk. The relationship between preparedness, propensity and perception has not been given sufficient attention in the literature generally and even less in the context of women and risk. It would therefore be wrong to treat women entrepreneurs as an homogenous group. Perceptions may be influenced by the self-confidence levels of the individuals involved in the entrepreneurial venture. If an individual is confident the situation or decision maybe seen as less risky but if the individual lacks confidence then they may perceive more barriers and anticipate the decision to be more risky. Studies such as Bruce and Johnson (1996) and Li and Smith (1976) have suggested that women become less risk averse when they have more confidence and Slovic (2000) and Chung (1998) identified that although women and men had exhibited similar traits (i.e. in regard to propensity) there were still noticeable differences in risk taking. If the process by which entrepreneurs view risk and what is influencing their risk perception is not understood it is difficult to offer help and advice. Furthermore, an issue that relates perception with definitions goes back to what is categorised as a financial risk by individuals. For example, there is the issue of how financial risk or indeed “growth” as a financial risk indicator, is defined by the individual. Differences in attitudes to growth (see Chung, 1998) may have more to do

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with women not wishing to risk their home/work balance rather than an antagonism to growing the business per se. Moreover, it is argued by some (Ljunggren and Kolvereid, 1996) that women are better at self-screening and thus women reduce risk by doing what they know (which may ghettoise them to low-growth sectors) and using family support (in capital or in kind) at the start-up phase. The latter may also be related to the social structures that women encounter (Brush, 1998). From a feminist standpoint, women are never just women (Mirchandani, 1999) and it is thus the social structure that helps create or sustain differences in entrepreneurial behaviour. Promoting SMEs as growth oriented may be increasing risk perceptions towards entrepreneurship in certain demographic groups. As Athayde (1999) argued it maybe exogenous issues rather than psychological characteristics that determine whether a woman becomes self-employed. Similarly, Thompson (1999) argued that women, due to their lack of relevant work/management experience, limit their choice of sector for their business start-ups to those with low barriers of entry but with often high attendant risks, e.g. catering. The source of risk in this instance is therefore exogenous. Consequently, Athayde (1999) argued for entrepreneurial theory that is able to assess both personality and situational variables as well as interactions between the two. Indeed, Brush (1998, p. 58) found that gender differences based on motives or individuals’ characteristics are not conclusive and posits that psychological motives or traits, e.g. achievement, may combine with economic necessity or wealth seeking to motivate new business start-up in men and women. The fact that an individual may oscillate over time between being risk averse and risk prone also offers a challenge. A knowledge of risk or the ability to assess their own propensity and perceptions would aid potential entrepreneurs to determine whether they would be suitable entrepreneurs and indeed whether they would be able to sustain the business. It would also help entrepreneurs realise how they would be influenced by their own risk perceptions in managing their business. It seems apparent that risk is present in the decision situation context, the personality traits of the individual decision maker and in the specific decisions that have to be made. Few studies have shown how to affect change in or towards the entrepreneurial sector. Yet implicitly the studies on risk, albeit often in a wider decision making context than the small business sector, suggest that changes in the context or changes in access to opportunities and/or support mechanisms can facilitate change. The assumption that the changes in attitude/behaviour are simply a product of risk factors is misleading. There are obvious changes occurring within the gendered context, which influence the needs and behaviour patterns of women in the SME sector. Personality traits may possibly reinforce other risk influences, though it would be naive to assume that this would always be the case, for all SMEs and for all women. For example, the raised expectations of SMEs growth potential or business inputs/processes may not be deliverable by SMEs in certain sectors or those lacking a desire to put into place factors (e.g. time, staffing) to support such growth. The literature signifies a very complex set of inter-relationships between all of the factors involved. Thus, isolating particular sub-factors or variables for measurement purposes would be impractical and the bi-directional influences present would prevent any meaningful assessment of the strength and direction of the association. In terms of a coherent body of work the literature is playing catch-up, i.e. whilst acknowledging

changes in the decision-making context of women, the literature is not yet focused on women entrepreneurial context. Certain factors such as the changes in social structures (e.g. the family as primary social structure) or changes in the political climate leading to SME support will influence attitudes to risk and subsequent behaviour. Environmental changes in the gambling market in regard to access and opportunity have illustrated that such change can be introduced (Brindley, 2001).

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155 Implications for policy Identifying the most effective way of removing or reducing the barriers women face requires a number of initiatives. In terms of “business support” we need to know how women view risk and identify what influences their perceptions of risk before advice can be targeted. If agencies do not know how women view risk it is difficult to advise on strategies to help women cope with varying risks, managing uncertainty and appropriate risk management tools. The provision of such a tool kit would enable both the individual and the support networks to make objective decisions, removed from a reliance on stereotypes. It is a false assumption that all women are risk averse or that women owned businesses are not growth orientated. What has to be acknowledged is that “success” and “growth” may be defined by women in different ways than the usual criteria used to promote these terms. Underlying these issues is the suggestion by some research studies that women self-screen when deciding to begin a business, which often leads them to rely on family capital and to begin businesses based on what they know. Business support has the opportunity to widen horizons by reducing barriers, viz access to financing and by illustrating how women’s skills may be transferred into other business ventures that they may not have considered. However, this is only possible if business support networks move away from stereotypical definitions, understand that risk perception is not a uniform concept and identify ways in which women can access advice at the screening stage. This is important because studies suggest that as women gain confidence they become less risk adverse. If confidence can be instilled, effective businesses may be developed but confidence can only be engendered if support agencies understand how women view risk. Thus a knowledge of risk helps individuals to assess their suitability for an entrepreneurial career (their appetite for risk) and to assess best fit/choice of risk opportunities the business/individual may face. In addition, through the life cycle of a business the business owner may oscillate between being risk prone and risk seeking and support can help business owners identify/anticipate this oscillation. This would enable the SME owners to recognise their own risk perceptions in managing the business and the influence these may have on the business. Moreover, by managing the sources of risk, sustainability of the business becomes more likely. There appears to be a general training need for risk management within the sector that business support should provide. However, in terms of women-owned businesses or engendering potential women entrepreneurs this risk management training must be cognizant of the influence of social structures on women’s understanding and attitudes towards entrepreneurial risk. During the “start-up phase”, there needs to be a realisation that women do what they know to reduce risk and hence they may begin businesses that are located in low-growth sectors of the economy. Such a ghettoisation of women-owned start-ups

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makes them potentially more vulnerable to exogenous risk sources. This situation needs to be recognised and accommodated and there needs to be a policy recognition that women come to the SME sector with different “human endowments.” If entrepreneurship in itself is seen a risky situation, lack of confidence can further increase barriers to women considering entering self-employment. At the start-up phase, the question “Is SME ownership an opportunity for women?” has to be answered. Support is needed for individuals to help to screen themselves as potential entrepreneurs, to recognise the barriers they perceive, to create a dialogue and influence their risk perceptions. If Shaver’s (1995) view is adopted, i.e. that entrepreneurs can be made, then this validates schemes that re-train individuals to enter self-employment following redundancy and career breaks etc. It is important that support agencies do not leave the SME alone after the start-up phase, as an individual may go from being risk prone to risk adverse. There is a need to guide these new recruits through as their businesses develop. A scheme where the individual can recognise their own risk issues and how support agencies can help alleviate them is therefore proposed. As the business progresses the promotion of the premise that SMEs must be growth oriented has a potential detrimental effect by increasing the number of risk barriers. The definition of success used by outside agencies is more often a financial measure, which may mitigate against women. For self-employed women their maintenance of a home/work balance maybe deemed a success, as they can self-manage their time and collect their children from school. Agencies that only promote financial success may be guilty of promoting a male hegemony that supports a masculine view of entrepreneurship. The result may impact upon the financial support available from banks to support women-owned SMEs, which raises question about equal opportunity/access to capital. There is a need for a post-start-up tool kit to help women entrepreneurs recognise their own risk behaviour and then realise what growth opportunities may be avoided. How women-owned businesses are measured, the metrics used by outside agencies, e.g. banks, the issues that women businesses grow less quickly and that women may be more uncomfortable with growth have implications for advice and support given. There is a need to understand how women want to grow their business and a subsequent need that they are not castigated if their ambitions are different and if they see fast growth as risky. Currently, it would appear that women have to adapt to equalise and they may always be onto a loser if success is only defined in growth terms. Research and information gaps There appears to be a lack of empirically robust research on entrepreneurial risk and specifically on women entrepreneurs and risk. A number of research and information gaps have been identified. First, the definitional tension between entrepreneurs and owner managers has yet to be resolved and this impacts upon the establishment of cumulative knowledge. Second, the semantics used by men and women are different and it is yet to be fully explored how these semantic differences impact on risk behaviour. Specifically in terms of risk, the higher risk propensity of entrepreneurs has not been empirically supported and the risk propensity of entrepreneurs has not been adequately measured. Indeed, a measure of risk attitude and risk preparedness has not been established. Similarly, the influences that impinge upon risk propensity as a


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