Financing Strategies of New Technology-Based Firms: A Comparison by Gender

Authors

  • Alicia Robb Kauffman Foundation
  • Susan Coleman University of Hartford

DOI:

https://doi.org/10.4067/S0718-27242010000100003

Keywords:

new technology-based firms, women-owned firm, financing strategies.

Abstract

Technology-based firms have been and will continue to be important contributors to the U.S. economy. For the past two decades, technology firms have been a major source of innovation, business development and growth, and new jobs. Securing funding for new technology-based firms is particularly problematic, however, whether they are owned by women or men. Many such firms are built upon intellectual capital rather than on physical assets, so it is difficult to determine the value and prospects of the firm. The problem of asymmetric or incomplete information is especially acute (Brierley, 2001), often resulting in a shortage of capital or capital that can only be obtained under unfavorable terms and conditions. A number of researchers contend that one of the primary reasons women-owned firms tend to be smaller than firms owned by men is that women tend to concentrate in low-growth retail and service lines of business (Rosa et al., 1996; Du Rietz & Henrekson, 2000). These businesses have a higher risk of failure (Robb, 2002; Fairlie & Robb, 2008; Watson, 2003) combined with a higher level of difficulty in attracting sources of capital due to their limited prospects for growth and profitability (Menzies et al., 2004; Sabarwal & Terrell, 2008). More recently, however, some researchers have begun to attack the “myth” that women do not want high-growth businesses (Brush et al., 2001). They contend that a new generation of women entrepreneurs is willing to “go boldly where no one has gone before” by starting firms in the fields of technology and bioscience, where there are opportunities for significant growth and profits. In this paper we will examine the financing sources and strategies, by gender, for new technology-based firms using the Kauffman Firm Survey data. We identify not only sources of financing, but also financing gaps which may impede the ability of women to launch and grow technology-based firms.

Downloads

Download data is not yet available.

Author Biographies

Alicia Robb, Kauffman Foundation

Kauffman Foundation

Susan Coleman, University of Hartford

University of Hartford

References

AUDRETSCH, D. B. (2002). The Dynamic Role of Small Firms: Evidence from the U.S. Small Business Economics, 18, 13-40.

AUDRETSCH, D. B., Lehmann, E. E. (2004). Financing High-Tech Growth: The Role of Banks and Venture Capitalists. Schmalenbach Business Review, 56(4), 340-357.

BODEN, R.J. Jr. (1999). Flexible Working Hours, Family Responsibilities, and Female Self-Employment: Gender Differences in Self-Employment Selection. The American Journal of Economics and Sociology, 58(1), 71-83.

BOLLINGTOFT, A., Parm Ulhoi J., Madsen H., Neergaard H. (2003). The Effect of Financial Factors on the Performance of New Venture Companies in High-Tech and Knowledge-Intensive Industries: An Empirical Study in Denmark. International Journal of Management, 20(4), 535-547.

BOSMA, N., Van Praag, M., Thurik, R. (2004). The Value of Human and Social Capital Investments for the Business Peformance of Startups. Small Business Economics, 23(3), 227-236.

BOZKAYA, A., V an Pottelsberghe De La Potterie, B. (2008). Who Funds Technology-based Small Firms? Evidence from Belgium. Economics of Innovation and New Technology, 17(1/2), 97-122.

BRIERLEY, P. (2001). The Financing of Technology-based Small Firms. A Review of the Literature. Bank of England Quarterly Bulletin, 41(1), 64-76.

BRUSH, C., Carter, N., Gatewood, E., Greene, P., Hart, M. (2001). The Diana Project: Women Business Owners and Equity Capital: The Myths Dispelled. Kauffman Foundation, Kansas City, Missouri.

BRUSH, C., Carter, N., Gatewood, E., Greene, P., Hart, M. (2004). Gatekeepers of Venture Growth; A Diana Project Report on the Role and Participation of Women in the Venture Capital Industry . Kauffman Foundation, Kansas City, Missouri.

BUTTNER, E.H., Moore, D.P. (1997). Women´s Organizational Exodus to Entrepreneurship: Self Reported Motivations and Correlates with Success. Journal of Small Business Management, 35(1), 34-46.

CARTER, N. M., Williams, M., Reynolds, P.D. (1997). Discontinuance Among New Firms in Retail: The Influence of Initial Resources, Strategy, and Gender. Journal of Business Venturing, 13, 353-369.

CARTER, N.M., Brush, C.G., Greene, P.G., Gatewood, E., Hart, M.M. (2003). Women Entrepreneurs Who Break Through to Equity Financing: The Influence of Human, Social, and Financial Capital. Venture Capital, 5(1), 1-28.

CHAPPLE, K., Markusen, A., Schrock, G., Yamamoto, D. (2004). Gauging Metropolitan "High-tech" and "I-tech activity". Economic Development Quarterly, 18(1), 10-29.

CLIFF, J.E. (1998). Does One Size Fit All? Exploring the Relationship Between Attitudes Toward Growth, Gender, and Business Size. Journal of Business Venturing, 13, 523-542.

COLEMAN, S. (2002). Constraints Faced by Women Small Business Owners: Evidence from the Data. Journal of Developmental Entrepreneurship, 7(2), 151-174.

COLEMAN, S. (2007). The Role of Human and Financial Capital in the Profitability and Growth of Women-Owned Small Firms. Journal of Small Business Management, 45(3), 303-319.

COLEMAN, S., Robb, A.M. (2009). Sources of Financing for New Technology Firms: Evidence from the Kauffman Firm Survey. Working paper.

COLOMBO, M. G., Grilli L. (2007). Funding Gaps? Access to Bank Loans by High-Tech Start-Ups. Small Business Economics 29, 25-46.

COOPER, A.C., Gimeno-Gascon, F.J., Woo, C.Y. (1994). Initial Human and Financial Capital as Predictors of New Venture Performance. Journal of Business Venturing, 9, 371-395.

CROSS, C., Linehan M. (2006). Barriers in Advancing Female Careers in the High-Tech Sector: Empirical Evidence from Ireland. Women in Management Review, 21(1), 28-39.

DU RIETZ, A., Henrekson M. (2000). Testing the Female Underperformance Hypothesis. Small Business Economics, 14, 1-10.

FAIRLIE, R. W., Robb A. M. (2009). Gender Differences in Business Performance: Evidence from the Characteristics of Business Owners Survey. Small Business Economics, 33, 375-395.

FREEAR, J., Wetzel, Jr., W. E. (1990). Who Bankrolls High-Tech Entrepreneurs? Journal of Business Venturing, 5, 77-89.

GATEWOOD, E. J., Brush, C. G., Carter, N. M., Greene, P. G., Hunt, M. M. (2009). Diana: A Symbol of Women Entrepreneurs´ Hunt for Knowledge, Money, and the Rewards of Entrepreneurship. Small Business Economics, 32, 129-144.

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.

GUIDICI, G., Paleari, S. (2000). The Provision of Finance to Innovation: A Survey Conducted Among Italian Technology-based Small Firms. Small Business Economics, 14(1), 37-53.

HOLLOWELL, C., Mellors N., Silver J. (2006). Alternative Routes: A Study on Women and Technology Entrepreneurship in the North-west of England. Entrepreneurship and Innovation, 7(2), 113-120.

LERNER, J. (1999). The Government as Venture Capitalist: The Long-Run Impact of the SBIR Program. The Journal of Business, 72(3), 285-318.

MANIGART, S., Struyf C. (1997). Financing High-Technology Startups in Belgium: An Exploratory Study. Small Business Economics, 9, 125-135.

MARLOW, S., Patton, D. (2005). All Credit to Men? Entrepreneurship, Finance, and Gender. Entrepreneurship Theory and Practice, 29(3), 526-541.

MAYER, H. (2008). Segmentation and Segregation Patterns of Women-Owned High-Tech Firms in Four Metropolitan Regions in the United States. Regional Studies, 42(10), 1357-1383.

MENZIES, T. V., Diochon M., Gasse Y. (2004). Examining Venture-Related Myths Concerning Women Entrepreneurs. Journal of Developmental Entrepreneurship, 9(2), 89-107.

MOORE, B. (1994). Financial Constraints to the Growth and Development of Small High-Technology Firms. In: D.J. Storey and A. Hughes (Eds.) Finance and the Small Firms. Routledge, New York. Pp. 112-144.

MORRIS, M.H., Miyasaki, N.N., Watters, C.E., Coombes, S.M. (2006). The Dilemma of Growth: Understanding the Venture Size Choices of Women Entrepreneurs. Journal of Small Business Management, 44(2), 221-244.

ORSER, B.J., Hogarth-Scott, S., Riding, A.L. (2000). Performance, Firm Size, and Management Problem Solving. Journal of Small Business Management, 38(3), 42-58.

ORSER, B.J., Hogarth-Scott, S. (2002). Opting for Growth: Gender Dimensions of Choosing Enterprise Development. Canadian Journal of Administrative Sciences, 19(3), 284-300.

PAYTAS, J., Berglund, D. (2004, March). Technology Industries and Occupations for NAICS Industry Data . Carnegie Mellon University Center for Economic Development.

ROBB, A. (2002). Entrepreneurial Performance by Women and Minorities: The Case of New Firms. Journal of Developmental Entrepreneurship, 7(4), 383-397.

ROBB, A., Ballou J., DesRoches, D., Potter F., Zhao Z., Reedy E.J. (2009). An Overview of the Kauffman Firm Survey . Kauffman Foundation, Kansas City, Missouri.

ROBB, A., Robinson D. (2009). The Capital Structure Decisions of New Firms. Working Paper.

ROSA, P., Carter S., Hamilton D. (1996). Gender as a Determinant of Small Business Performance: Insights from a British Study. Small Business Economics, 8, 463-478.

SABARWAL, S., Terrell K. (July 2008). Does Gender Matt er for Firm Performance? Evidence from the East European and Central Asian Region. IPC Working Paper Series No. 73. http://ssrn.com/abstract=1223454. [Accessed 4/1/2010]

TAI, A. R., Sims, R. L. (2005). The Perception of the Glass Ceiling in High-Technology Companies. Journal of Leadership and Organizational Studies, 12(1), 16-23.

WATSON, J. (2003). Failure Rates for Female-Controlled Businesses: Are They Any Different? Journal of Small Business Management, 41(3), 262-277.

WESTHEAD, P., Storey D. J. (1997). Financial Constraints on the Growth of High-Technology Firms in the United Kingdom. Applied Financial Economics, 7, 197-201.

Downloads

Published

2010-03-22

How to Cite

Robb, A., & Coleman, S. (2010). Financing Strategies of New Technology-Based Firms: A Comparison by Gender. Journal of Technology Management & Innovation, 5(1), 30–50. https://doi.org/10.4067/S0718-27242010000100003

Issue

Section

Research Articles

Similar Articles

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 > >> 

You may also start an advanced similarity search for this article.