Online citations, reference lists, and bibliographies.
← Back to Search

Funding New Business Ventures: Are Decision Makers Biased Against Women?

E. H. Buttner
Published 1989 · Economics, Business

Save to my Library
Download PDF
Analyze on Scholarcy Visualize in Litmaps
Share
Reduce the time it takes to create your bibliography by a factor of 10 by using the world’s favourite reference manager
Time to take this seriously.
Get Citationsy
Women have been leaving large corporations in increasing numbers in recent years to start their own businesses. However, they have not been succeeding at the same rate as their male counterparts. One potential barrier to a successful new venture is access to startup capital. Anecdotal evidence suggests that women starting their own businesses may have more difficulty obtaining financial support than men. In a loan decision simulation, this study systematically tested the allegations of female entrepreneurs that bank loan officers are more likely to grant loans, to make a counteroffer, and to make larger counteroffers to male entrepreneurs compared to female entrepreneurs under identical circumstances. Loan officers usually make funding decisions on the basis of information gathered from an interview and a business plan, while venture capitalists often screen proposals on the basis of a business plan alone. A second purpose of this study was to determine whether the mode of presentation— business plan versus business plan with interview—increased the male or female entrepreneur's probability of successfully obtaining a loan. A third purpose of this study was to examine the effects of the decision maker's previous experience on funding decisions. The recommendations of (experienced) loan officers versus (inexperienced) undergraduate students were compared in order to determine how experience and accountability influence loan decisions. The study consisted of a 2 x 2 x 2 research design with three independent variables. Loan officers and undergraduate students either read a business plan, or read a business plan and watched a videotape of an interview between a loan officer and a male or female entrepreneur who was seeking a loan to start a business. Participants then indicated the likelihood that they would recommend approval of the loan, make a counteroffer of a smaller amount, and the magnitude of the counteroffer. There was no evidence that sex stereotypes influenced business funding decisions. With respect to the amount of counteroffer, a significant three-way interaction was obtained between entrepreneurial gender, presentation format, and participant status. Loan officers made larger counteroffers to the female compared to the male when they read the business plan and watched the interview. Students made larger counteroffers to the male compared to the female when they read the business plan and observed the interview. Loan officers were significantly more cautious and conservative than students in their funding decisions. Failure to support allegations of bias against women entrepreneurs is discussed in terms of possible unrealistic expectations regarding the ease of obtaining startup capital. Further research is needed to examine this explanation. One implication of these findings is that female entrepreneurs should seek opportunities to meet with loan officers to present their business proposals. In the interview, the female has the opportunity to address questions of motivation and competence. On the other hand, bankers may make more impartial decisions when relying on information in the business plan alone, where financial considerations would have greater weight. Finally, the results suggest that studies using students as proxies for bank loan officers have very limited generalizability.
This paper references
10.1037/H0028649
Relative importance of three content dimensions in overall suitability ratings of job applicants' resumes.
M. D. Hakel (1970)
10.1037/H0031215
Evaluation of the Performance of Women as a Function of Their Sex, Achievement, and Personal History.
Gail Pheterson (1971)
10.1037/H0034198
The influence of sex-role stereotypes on evaluations of male and female supervisory behavior.
B. Rosen (1973)
10.1037/H0035406
Another look at contrast effects in the employment interview.
Frank J. Landy (1973)
10.1037/H0037128
The relationship between sex role stereotypes and requisite management characteristics.
V. E. Schein (1973)
10.2466/pr0.1973.32.1.261
Evaluation of Male and Female Ability: Bias Works Two Ways
K. Deaux (1973)
10.1037/H0035834
Influence of sex role stereotypes on personnel decisions.
B. Rosen (1974)
10.1037/H0037503
Race and sex as determinants of ratings by potential employers in a simulated work-sampling task.
W. C. Hamner (1974)
10.1037/H0037323
Effects of applicant's sex and difficulty of job on evaluations of candidates for managerial positions.
B. Rosen (1974)
10.1037/H0076544
The college student as interviewer: A threat to generalizability?
V. Bernstein (1975)
10.1037/H0076637
Relationships between sex role stereotypes and requisite management characteristics among female managers.
V. E. Schein (1975)
10.1037/0021-9010.61.1.80
Effect of applicant's sex, race, and performance on employers' performance ratings: Some additional findings.
W. J. Bigoness (1976)
10.1037/0021-9010.62.3.288
Sex and physical attractiveness of raters and applicants as determinants of resumé evaluations.
R. L. Dipboye (1977)
10.1037/H0076352
Relative Importance of Applicant Sex, Attractiveness, and Scholastic Standing in Evaluation of Job Applicant Résumés
R. L. Dipboye (1979)
10.5465/AMR.1980.4288749
Sex Effects on Evaluation
V. Nieva (1980)
10.1177/104225878200600408
Small Business Commercial Loan Selection Decision: An Empirical Evaluation
Nathaniel Jones (1982)
The woman entrepreneur as a reflection of the type of business
R. Hisrich (1982)
Sex bias in work settings: The Lack of Fit model.
M. Heilman (1983)
The woman entrepreneur: Implications of family, educational, and occupational experience
R. Hisrich (1983)
Ex-entrepreneurs and the decision to start an entrepreneurial eareer
R. Ronstadt (1984)
10.1016/0883-9026(85)90011-4
Criteria Used by Venture Capitalists to Evaluate New Venture Proposals
I. MacMillan (1985)
Intuition in Small Business Lending Decisions
A. Jankowicz (1987)
10.1016/0883-9026(88)90018-3
Bank Loan Officers' Perceptions of the Characteristics of Men, Women and Successful Entrepreneurs.
E. Buttner (1988)
Report on the State of Small Business
U. S. Small Business Administration. (1988)
The influence of entrepreneur's gender and type of business on decisions to provide venture capital
E. Buttner (1988)



This paper is referenced by
10.1007/S40497-021-00296-9
Making do by doing without: bricolage in the funding sources of female entrepreneurs in resource-constrained environments
Bede Akorige Atarah (2021)
10.1186/s12905-021-01471-6
Does persistence make you healthy? An empirical study on female entrepreneurs from China
Heqi Jia (2021)
10.1016/J.JBVI.2021.E00268
Does gender matter? Evidence from crowdfunding
Ramy Elitzur (2021)
10.1111/1759-3441.12315
An Empirical Analysis of International Migrant Business Ownership and Employment in Regional Australia*
Owen Hogan (2021)
10.1515/erj-2020-0306
Impact of Accelerators, as Education & Training Programs, on Female Entrepreneurs
Carolina Dams (2021)
10.1016/j.jbvi.2020.e00167
A Meta-Analysis of the Gender Gap(s) in Venture Funding: Funder- and Entrepreneur-Driven Perspectives
Mark Geiger (2020)
10.1080/10864415.2020.1715531
Reward versus Altruistic Motivations in Reward-Based Crowdfunding
Sunghan Ryu (2020)
10.1177/09708464211032546
Women Entrepreneurs and Determinants of Their Success: An Empirical Study
Sudarshan Maity (2020)
10.1109/IEEECONF51154.2020.9319937
Overcoming Challenges of Women Entrepreneurship in Bahrain: Evidence from the Events Planning Sector
Aysha Ali Alnefaiei (2020)
10.1108/JEEE-04-2017-0027
A comparative study of women entrepreneurship in transitional economies
Lei Zhu (2019)
Closing the Finance Gap by Nudging: Impact Assessment of Public Grants for Women Entrepreneurs
Stjepan Srhoj (2019)
10.2139/ssrn.2966673
Reward versus Altruistic Motivations in Reward-Based Crowdfunding
Sunghan Ryu (2019)
10.1177/1042258717728028
Don’t Pitch Like a Girl!: How Gender Stereotypes Influence Investor Decisions
L. Balachandra (2019)
10.1142/s1084946719500146
GENDER DIFFERENCES IN VENTURE FINANCING: A STUDY AMONG CANADIAN AND US ENTREPRENEURS
Y. Robichaud (2019)
10.14711/thesis-991012873360803412
Women’s Inheritance Rights and Entrepreneurship Gender Gap
S. L. Naaraayanan (2019)
10.5539/ijbm.v14n11p90
Poverty among Women in Nigeria–Psychological and Economic Perspective: A Study Based On South West, Nigeria
O. Ifeanyi (2019)
10.2139/ssrn.3432664
The Effect of Adaptation and Mitigation for Small Businesses Impacted by Hurricane Katrina
Tia Michelle McDonald (2019)
10.1111/ijmr.12173
Female Entrepreneurship and the Metanarrative of Economic Growth: A Critical Review of Underlying Assumptions
Hannah Dean (2019)
10.1108/JEC-04-2017-0028
Traversing the women entrepreneurship in South Asia: A journey of Indian startups through Lucite ceiling phenomenon
Tanu Shukla (2018)
10.1007/S11187-017-9922-2
Gender disparity in angel financing
S. Poczter (2018)
Essays in Entrepreneurship and Financial Economics
Chengxin Luo (2018)
Working Moms and Economic Development Policy: Are We Planning for Women?
L. Erwin (2018)
The Other Gender Gap Female Entrepreneurship Post-World War II
Patrick Luo (2018)
10.2139/ssrn.3152260
Обзор Эмпирических Исследований Факторов Предпринимательской Активности (Review of Empirical Studies of Factors of Entrepreneurial Activity)
V. Barinova (2018)
Access to Finance for French Firms: Do boardroom attributes matter?
Ramzi Benkraiem (2018)
10.1007/978-3-319-64916-0_3
Entrepreneurship: An Overview
F. Chowdhury (2018)
1 Confidence Signaling , Gender , and Crowdfunding Outcomes
Jeroen de Baat (2018)
10.1108/IJGE-08-2017-0048
Double bind in loan access in China: the reification of gender differences in business loans
Huacen Xu (2018)
10.1007/S11365-017-0480-5
The salient role of institutions in Women’s entrepreneurship: a critical review and agenda for future research
D. Giménez (2018)
10.31033/IJEMR.8.3.15
Differences Between Male and Female Entrepreneurs in The Kingdom of Bahrain: Does Gender Matter?
R. V. N. Salindo (2018)
10.1108/afr-08-2019-0094
An analysis of China’s reforms on mortgaging and transacting rural land use rights and entrepreneurial activity
Yanling Peng (2018)
10.17919/X9PX00
Being Female Affects Business Loans from Family and Friends
K. Eddleston (2018)
See more
Semantic Scholar Logo Some data provided by SemanticScholar