Challenging the female underperformance hypothesis

Abstract

Purpose

The question of whether female‐owned firms underperform male‐owned firms has triggered much research and discussion. Klapper and Parker's review concluded that the majority of prior research suggests that female‐owned firms underperform relative to male‐owned firms. However, using performance measures that control for size and risk (and after controlling for demographic differences such as industry, experience and hours worked) Robb and Watson found no gender performance difference in their sample of newly established US firms. The aim of this study, therefore, is to replicate Robb and Watson's study to determine whether their findings can be generalized to another geographical location, Australia.

Design/methodology/approach

The authors test the female underperformance hypothesis using data from the CAUSEE project, a panel study which follows young firms over four years. They use three outcome variables: survival rates, return on assets and the Sharpe ratio.

Findings

Consistent with Robb and Watson the results indicate that female‐owned firms do not underperform male‐owned firms.

Originality/value

While replication studies are rare in entrepreneurship, they are an important tool for accumulating generalizable knowledge. The results suggest that while female‐owned firms differ from male‐owned firms in terms of many control variables (such as industry, owners' previous experience and hours worked) they are no less successful. This outcome should help dispel the female underperformance myth; which if left unchallenged could result in inappropriate policy decisions and, more importantly, could discourage women from establishing new ventures.

Citation

Zolin, R., Stuetzer, M. and Watson, J. (2013), "Challenging the female underperformance hypothesis", International Journal of Gender and Entrepreneurship, Vol. 5 No. 2, pp. 116-129. https://doi.org/10.1108/17566261311328819