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Some aspects of gender differences in the entreprenurial growth

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Some aspects of gender differences in the entreprenurial growth ...

GROWTH ASPIRATIONS OF SLOVENIAN ENTREPRENEURS

    A GENDER DIFFERENCES PERSPECTIVE

     12Polona Tominc, Miroslav Rebernik

Received: 3. 6. 2005 Preliminary communication

    Accepted: 13. 4. 2006 UDC: 65.012 (497.4)

    This paper aims at describing and explaining the differences in the growth

    aspirations of male and female entrepreneurs in Slovenia, in particular of those

    who are in the early stage of their entrepreneurial activity. This paper is based on

    Global Entrepreneurship Monitor data. Explanatory variables affecting the

    growth aspirations of early-stage entrepreneurs are related to the personal

    characteristics of entrepreneurs their entrepreneurial capacity (skills and

    motivation), as well as to the environmental characteristics regarding cultural and

    social support for entrepreneurship and, to some extent, also to firm

    characteristics, especially the age of the firm. All these topics are analysed on the

    basis of gender differences.

     1. Introduction

     Nowadays there is no longer any theoretical dispute that well-developed

    entrepreneurship has a critical effect on the success of national economies, that

    is, on economic growth. Two basic sources of economic growth through

    entrepreneurship can be distinguished, e.g. major established firms, and an

    entrepreneurial process taking place in new and growing enterprises (early-stage

    entrepreneurship), (Reynolds et al., 2002). In this paper, we especially focus on

    early-stage entrepreneurial activ. In our research, we made use of the Global

    Entrepreneurship Monitor (GEM) data base. GEM is a cross-national research

    program, aimed at describing and analyzing the entrepreneurial process in its

     1 Polona Tominc, PhD, Associate Professor, Department of Quantitative Economic Analysis.

    Faculty of Economics and Business, Maribor University, Razlagova 14, 2000 Maribor, Slovenia,

    Phone: + 386 2 22 90 254 ; Fax: + 386 2 25 16 681, E-mail: polona.tominc@uni-mb.si 2 Miroslav Rebernik, PhD, Professor, Faculty of Economics and Business, Maribor University,

    Razlagova 14, 2000 Maribor, Slovenia, Phone: + 386 2 22 90 254 ; Fax: + 386 2 25 16 68,

    rebernik@uni-mb.si

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Management, Vol. 11, 2006, 1, pp. 37-52 P. Tominc, M. Rebernik: Growth aspirations of Slovenian entrepreneurs A gender differences…

    early stages in a wide range of countries. It started in 1998 and since then has created a very rich database. Early-stage entrepreneurs are identified as those

    individuals, who are, firstly, personally involved in the creation of a new

    venture or who are, secondly, employed as owners/managers of a new firm that

    is less than 42 months old, while mature or established entrepreneurs are those

    individuals who have been involved into the entrepreneurial activity for longer than 42 months. Early-stage entrepreneurs are either nascent or new. Early-stage entrepreneurial activity is measured by the proportion of adults between the ages of 18-64 years in a country, who are engaged in setting up a new business (nascent entrepreneurs) or are employed as owners/managers of a new business that is no older than 42 months (new entrepreneurs). The two different causes for getting involved in an entrepreneurship are also distinguished: opportunity and necessity. Necessity-based early-stage entrepreneurs are those who engaged in setting up a new business out of necessity because they had no better choices for work, while opportunity based are those who are involved in

    entrepreneurship because an opportunity presented itself.

     The data in the GEM research project are obtained from four sources. Primary data are obtained from a survey of a sample of the adult population (the sample in each country of at least 2000 adults), from personal interviews with national experts and from a detailed questionnaire completed by national experts, while secondary data are obtained from established international sources of standardised data like Eurostat, OECD etc. A detailed description of the methodology behind the collection of data within the GEM research is provided in Reynolds et al. (2005).

     2. MEN AND WOMEN IN ENTREPRENEURSHIP

     There is a great deal of evidence of the importance of female entrepreneurs in the economic development of a country with regard to their contribution to job creation and economic growth as well as to the diversity of the economy (Carter et al., 1997, Verheul and Thurik, 2001). However, the number of female early-stage entrepreneurs still lags behind those of male, as empirical research has confirmed (Acs et al., 2005). Men are more likely to be involved in the early-stage entrepreneurship than women in all countries analyzed in 2003, as presented in Figure 1. While in some developing countries (for example China, Venezuela, Chile) women are almost equally involved in early-stage entrepreneurship, in some other countries the difference is much larger. For example, in Slovenia, a man is almost four times more likely to be involved in early-stage entrepreneurship than a woman.

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    Management, Vol. 11, 2006, 1, pp. 37-52 P. Tominc, M. Rebernik: Growth aspirations of Slovenian entrepreneurs A gender differences…

    Men and women in the early-stage men womenentrepreneurial activityUganda

    Venezuela

    Argentina

    ChileNew Zealand

    USA

    Iceland

    Brasil

    Australia

    Ireland

    China

    Norway

    Canada

    Switzerland

    Greece

    Finland

    SpainUnited Kingdom

    Denmark

    Germany

    Singapore

    Slovenia

    Sweden

    Belgium

    The Netherlands

    South Africa

    Hong Kong

    Japan

    Croatia

    Italy

    France

    010203040

    Persons per 100 adults of 18-64 years of age

     Figure 1: Men and women in the early stages of entrepreneurial activity

     One would expect that similar proportions among male and female early-

    stage entrepreneurs could also be found when analyzing opportunity and

    necessity driven entrepreneurship. The average number of female early-stage

    entrepreneurs per 100 male early-stage entrepreneurs for each category

    (opportunity and necessity) for each country is presented in Figure 2.

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    FranceBrazilManagement, Vol. 11, 2006, 1, pp. 37-52 ItalyP. Tominc, M. Rebernik: Growth aspirations of Slovenian entrepreneurs A gender differences… South Africa AustraliaChileVenezuelaGender differences between opportunity and necessity driven early-Ugandastage entrepreneurship across countries New ZealandSingaporeChinaIcelandopportunityUSAnecessity250The NetherlandsFinlandCanada200United KingdomSwitzerlandSpain150GreeceGermanyArgentina100NorwayWomen per 100 men Hong KongSweden50DenmarkIrelandJapan0BelgiumSloveniaCroatia

    Figure 2: Gender differences between opportunity and necessity driven early-

    stage entrepreneurship

     There is not a single country where women are more likely to be involved in opportunity early-stage entrepreneurship than men. The proportion is the highest in France, where 83.8 women per 100 men are on average involved in the early-stage entrepreneurship due to opportunity. In the majority of countries, especially in Europe, this proportion is less than 50%. However on the other hand, there are several countries, where women are more likely to be involved in necessity-driven early-stage entrepreneurship than men. Furthermore, in more than half of the countries analyzed, the proportion of women per 100 men that are involved in necessity driven early-stage entrepreneurship is higher than the proportion of women per 100 men who take advantage of a business opportunity.

     The analysis of factors that influence the level of male and female entrepreneurship is not the focus of this paper. Rather, we focused on explaining the differences between the growth aspirations of male and female early-stage entrepreneurs.

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    Management, Vol. 11, 2006, 1, pp. 37-52 P. Tominc, M. Rebernik: Growth aspirations of Slovenian entrepreneurs A gender differences…

     3. GROWTH ASPIRATIONS OF THE EARLY-STAGE

    ENTREPRENEURS.

     Early-stage entrepreneurs, both nascent and new, as well as those who have

    been present on the market for a longer period of time, have certain expectations

    regarding the growth of their companies in the future. In our paper, we analyse

    their growth aspirations by taking into account the following three aspects:

    1. the creation of new markets and market expansion. Ventures promising the

    creation of new markets and the expansion of existing ones are defined as

    ventures which develop in the environment where the level of competition

    of products/services offered is low or where products/services are new (with

    low customer awareness of the existence of this product/service), or the

    technologies and procedures required for its production/implementation

    have generally been available for less than a year. Market expansion at the

    lowest level was defined for those ventures, which fulfil at least one of the

    described conditions.

    2. an increase in the number of new jobs;

    3. export orientation.

     Expectations for future growth are formed under the influence of various

    factors. In much of the existing literature, one can find contradictory statements

    about factors with a strong impact on company growth (Bager , 2004), which is

    very often a consequence of methodological problems. Apart from

    methodological questions, environmental characteristics, as well as

    entrepreneurial and firm characteristics have an immense impact on growth.

    The personal characteristics of people entering entrepreneurship vary. In some

    cases, entrepreneurs are more like ?gamblers? (Global Entrepreneurship

    Monitor Denmark, 2004, p.90). A businessman/woman is likely to start a

    business in order to establish a lasting and growing firm, and will - after

    carefully studying the feasibility of his/her entrepreneurial idea, the level and

    nature of the difficulties and risks involved - adapt his/her aspirations.

    ?Gamblers? do not adapt their aspirations, either because they are unable or

    unwilling to approach an opportunity. ?Gamblers? lack the skills to properly

    manage uncertainty or plan for the long-term future of their ventures. At the

    same time, the characteristics of the environment in which an entrepreneur (or a

    future entrepreneur) acts, can be crucial for entrepreneurial motivation. A higher

    degree of motivation can be expected in those environments where

    entrepreneurship is socially legitimate and where people are encouraged to

    explore business opportunities. In short, the entrepreneur has the

    entrepreneurial capacity (skills and motivation) to turn entrepreneurial

    opportunity into a successful venture, while ?the gambler? does not.

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Management, Vol. 11, 2006, 1, pp. 37-52 P. Tominc, M. Rebernik: Growth aspirations of Slovenian entrepreneurs A gender differences…

     Not every entrepreneur is willing to expand his/her firm. In the early 80s,

    Ambrose (Ambrose, 1985) pointed out: ?The expectations of the

    entrepreneurial class must be modified downward greatly. The belief that each

    and every member of the class is highly motivated is naive... only about one

    third of the owners and managers of businesses can be truly classified under the

    full definitional expectations as entrepreneurs. That leaves two thirds with a

    shortfall of both commitment and motivation. That also requires that one third

    of highly motivated entrepreneurs accomplish what are the normal expectations

    of the full class structure of the entrepreneurs ?. An entrepreneur's motivations

    are strongly connected with her/his goals and explain why an entrepreneur

    chooses to move in a certain direction. Not all entrepreneurs have the goal to

    grow, since they may expect some consequences of growth to be negative and

    in contrast with their goals.

     Gender is an influential feature in a company’s growth – being female is

    supposed to have a negative effect on growth. Some research demonstrates (Kjeldsen et al., 2004) that female entrepreneurs rarely become ?growth

    entrepreneurs?. In our research, we were interested if women exhibit weaker

    entrepreneurial aspirations than men.

     The age of the firm is among the features that lead to negative growth

    aspirations. In our research, we focused on the growth aspirations of ventures

    and entrepreneurial ideas in their early phases nascent and new enterprises are analysed as well as companies that have existed for a longer period of time.

    Some research, (Schøtt et al., 2004), shows that entrepreneurial aspirations

    seem to be higher in nascent entrepreneurs than among entrepreneurs in new

    firms or those existing for a longer period of time.

     There have been only a few studies done in Slovenia on the topic described

    in this paper. They can be divided into two groups: those discussing different

    aspects of female entrepreneurship, but without the growth aspirations

    perspective (for example Glas and Petrin, 1998, Glas and Drnovšek, 2000) and

    those discussing the actual growth (while growth aspirations intended growth

     are seldom mentioned) of different groups of Slovene enterprises, but without

    the gender differences perspective (for example Drnovšek, 2002, Pšeničny, 2003, Vadnjal, 2005).

     In the first part of the findings of our research, we report results of the

    analysis of the differences in growth aspirations in nascent and new, as well as

    mature entrepreneurs, paying special attention to gender differences. Since good

    business opportunities and entrepreneurial capacities are important components

    and a prerequisite for the development of successful enterprises, in the second

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    Management, Vol. 11, 2006, 1, pp. 37-52 P. Tominc, M. Rebernik: Growth aspirations of Slovenian entrepreneurs A gender differences…

    part of our findings we reported the results on the availability of business

    opportunities in Slovenia and the equality between men and women in

    accessing good business opportunities. As already mentioned, the availability

    and accessibility of good business opportunities should be accompanied by

    entrepreneurial capacity the entrepreneur's skills and motivation, which

    shapes their personal growth aspirations, as well as making it possible for the

    business opportunity to develop into something that enables the formation of a

    lasting and growing firm. Thus, we tried to analyse the entrepreneurial capacity

    of those starting new ventures in Slovenia.

     In our research, we did not deal with factors that decrease entrepreneurial

    aspirations or with factors that might hinder the development and growth of

    companies. Some research, (Rebernik et al., 2004), has found that such

    obstacles are mainly due to the accessibility of financial resources as well as to

    the lack of an educated and skilled workforce and administrative obstacles.

     4. VARIABLES AND METHODS

     Analytical indicators used in the analysis of the early-stage entrepreneurial

    activity in the adult population are:

    a) Early-stage entrepreneurial activity index, which defines the number

    of persons per 100 adults, between the ages of 18 and 64 years, who

    are trying to start a new business. Those indices for female and male

    entrepreneurs are shown at the beginning of this paper in Figure 1.

    b) Opportunity early-stage entrepreneurial activity index, which defines

    the number of persons per 100 adults, between the ages of 18 and 64,

    who exploit entrepreneurial opportunities.

    c) Necessity early-stage entrepreneurial activity index, which defines the

    number of persons per 100 adults, between the ages of 18 and 64, who

    are engaged in entrepreneurial activities because they have no better

    alternative for finding work.

     Analytical indicators used in the analysis of growth aspirations in the adult

    population are:

    a) Employment index showing the increase in the number of new jobs,

    which defines the number of persons per 10.000 adults, who intend to

    increase the number of jobs in the next five years by 20 or more.

    b) Employment/market creation index showing expected job creation

    and market growth, which defines the number of persons per 10,000

    adults, who intend, within the next five years, to increase the number of

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Management, Vol. 11, 2006, 1, pp. 37-52 P. Tominc, M. Rebernik: Growth aspirations of Slovenian entrepreneurs A gender differences…

    jobs by 20 or more, or to plan some market expansion/creation for their

    products or services (market creation at the lowest level).

    c) Employment/market creation/export index index showing the increase

    in the number of new jobs, market expansion, and export orientation,

    which defines the number of persons per 10.000 adults, who intend to

    increase the number of jobs in the next five years by 20 or more, or will

    expand/create new markets with their products or services to at least at

    the lowest level and at the same time intend to export more than 50% of

    their sales in the next five years. Regarding the average size of Slovene

    firms, (6.2 employees) the expectation to create 20 or more jobs in five

    years is not very appropriate, but we were using this index in order to

    draw comparisons with other GEM countries.

     In places where there is a larger share of people inclined to

    entrepreneurship, we would, on average, expect that there would be more

    ventures showing growth aspirations. On the basis of correlation analysis, it can

    be stated that this holds true for adults who are entrepreneurially active because

    of opportunity but not for adults who are active because of necessity (both

    early-stage). This confirms the thesis that the availability and perception of the

    likelihood of good business opportunities are two important factors for the

    shaping of early-stage entrepreneurial aspirations. The results of correlation

    analysis for 17 European GEM countries, which were included in the project in

    2003, are given in Table 1, and confirm this view.

Table 1: Correlation coefficients among the analytical indicators of the early-stage

    entrepreneurship and growth aspirations indices in the adult population - European GEM countries for 2003.

     Early-stage Opportunity early-Necessity early-stage

    entrepreneurial stage entrepreneurial entrepreneurial

    activity index activity index activity index

    0.668 0.685 0.154 Employment index (p=0.003) (p=0.002) (p=0.554)

    0.835 0.820 0.329 employment/mark

    (p=0.000) (p=0.000) (p=0.197) et creation index

    0.754 0.747 0.233 employment/mark(p=0.000) (p=0.001) (p=0.368) et creation/export

    index

     Therefore, we next analysed the growth aspirations among the early-stage

    entrepreneurs themselves. Entrepreneurial growth aspirations among early-stage

    entrepreneurs were measured in the same manner as in the previous case

    (among adults):

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    Management, Vol. 11, 2006, 1, pp. 37-52 P. Tominc, M. Rebernik: Growth aspirations of Slovenian entrepreneurs A gender differences…

     - growth aspiration employment, is found in those male and female early-

    stage entrepreneurs who intend to increase the number of jobs by 20 or more in the next five years ;

     - growth aspiration employment/market creation, is found in those male

    and female early-stage entrepreneurs who intend to increase the number of jobs in the next five years by 20 or more or plan some market expansion/creation for their products/services;

     - growth aspiration employment/market creation/export, is found in those

    male and female early-stage entrepreneurs who intend to increase the number of jobs by 20 or more, plan some market expansion/creation for their products/services or export more than 50% of their sales.

     All three rates are measured by the number of persons per 100 early-stage entrepreneurs.

     The availability of good business opportunities was measured by the percentage of adults who believe that within the next six months, in the area where they live, new business opportunities are likely to arise. Qualifications needed for entrepreneurship were measured by the percentage of adults who believe that they have the skills and experience needed for setting up a new business, while the motivation for entrepreneurship was measured by the percentage of adults who believe that they are successful owners of a newly established firm, who are respected in society and have a high social status. For analyzing the association between various variables, we used the correlation analysis (Pearson correlation coefficients), while for testing statistical significance of gender differences, the Chi-square test was used. The general criteria for rejecting the hypothesis that differences between genders do not exist is determined by statistical signification at 5%.

     5. FINDINGS

     Growth aspirations an across countries comparison and gender

     differences in Slovenia

     Early-stage entrepreneurs, regardless of gender, exhibit very different growth aspirations across GEM countries, as presented by Figure 3, where the growth aspirations related to the combination of future employment, market creation and export are presented for 17 European GEM countries. Early-stage entrepreneurial growth aspirations in Slovenia are obviously much higher than in other European countries. In 2003, there were 13.11 per 100 adults entering entrepreneurship (nascent and new male/female entrepreneurs), aged between

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Management, Vol. 11, 2006, 1, pp. 37-52 P. Tominc, M. Rebernik: Growth aspirations of Slovenian entrepreneurs A gender differences…

18 and 64 who intended to increase the number of jobs by 20 or more, planned

    some market expansion/creation for their products/services or export more than

    50% of their sales in Slovenia, which places Slovenia far ahead from the rest of

    Europe. Sweden is in second place with 8.46, while the average for all 17

    European countries is 5.18.

     Next we were interested if growth aspirations between men and women

    involved with early-stage entrepreneurship differed. The data enable this sort of

    gender differentiation only for Slovenia, for other GEM countries the data were

    not available. In 2002 and 2003 in Slovenia, there were 145 new and nascent

    entrepreneurs included in the research (of which there were 38 women and 107

    men) and 212 mature male and female entrepreneurs (53 women and 159 men).

    As already mentioned, nascent entrepreneurs are those who have taken some

    action towards creating a new business, new entrepreneurs are those who are

    employed as owners/managers of new businesses which have not paid wages or

    salaries for more than 42 months, and mature entrepreneurs are those who are

    Sloveniaemployed as owners/managers of businesses that that have paid wages or

    Swedensalaries for more than 42 months. Results are given in Table 2.

     Switzerland

    IcelandGrowth aspirations employment/market creation/exportIreland

    Norway14

    Belgium12Finland10United Kingdom

    8Denmark

    Italy6

    Germany4The Netherlands

    2Greece

    Croatia0

    Spain

    France

    Persons per 100 early-stage entrepreneurs

Figure 3: Growth aspirations employment, market creation and export of the early-

    stage entrepreneurs in European GEM countries, 2003.

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