Gender differences in entrepreneurs'perceived problems, profits and plans

INTRODUCTION Small businesses are important to the economy of almost every country, but life for entrepreneurs can often turn out to be full of difficulties during the first critical years, with many discontinuing their businesses or at least failing to thrive and grow (Audretsch, 1995; Chaganti & Chaganti, 2009). In order to take a closer look at the situation faced by the owners of young firms, this study looks at the problems, profit levels and future plans reported by European business owners who started their businesses in 2002 and were still personally operating them in 2005. The overall averages as well as the averages for men and women are compared, and then those variables for which there were fairly large gender differences are further examined for each of the ten countries included in the study. The following section provides a brief background on business performance in small business and the problems entrepreneurs often face. The results of this study on European business owners are then presented. PROBLEMS, PROFITS AND PLANS Business performance is a complex issue that can be measured with a variety of indicators, the most common of which are sales, profits, assets, physical output, market share, number of employees and the growth rate in these indicators (Ardishvili, Cardozo, Harmon & Vadkath, 1998; Birley & Westhead, 1990; Chandler & Hanks, 1994; Rue & Ibrahim, 1998; Wiklund, 1998, Zinger, Rolland & Zanibbi, 2001). However, as Penrose (1959, p. 199) stated half a century ago, "There is no way of measuring an amount of expansion, or even the size of a firm, that is not open to serious conceptual objections." Likewise, the definition of business failure is not consistent across studies, as this term has been applied to a variety of reasons for business discontinuance from bankruptcy to retirement to the sale of the business (Bruno & Leidecker, 1988; Watson & Everett, 1999, 1996). The industry in which a business operates, as well as its size and age, are all possible factors in performance. The majority of business start-ups are imitative businesses in mature industries and serve local markets, all of which limit their growth potential (Aldrich, 1999; Samuelsson, 2004). The size of a business is associated with better performance as larger businesses have been found to reap higher sales and profits (Alowaihan, 2004; Kalleberg & Leicht, 1991) as well as greater growth in assets (Glancey, 1998). It can also be argued that sales precede the other indicators because an increase in sales necessitates increases in assets and employees, which leads to rising profits and/or market share (Flamholtz, 1986). To some extent there are mixed results in the literature regarding the performance of new companies. Firms less than five years old have been found to have higher investment levels as well as higher sales and growth rates (Dobson & Gerrard, 1989; Glancey, 1998; Gray, 2006). Other studies have found younger businesses produce lower levels of performance (Alowaihan, 2004; Stinchcombe, 1965). Alowaihan (2004) found that the age of a business was positively correlated with its gross earnings, with newer businesses reporting lower earnings. Audretsch (1995) determined that, for those who survive the first few difficult years, both survival and growth is higher in subsequent years. One reason for better performance in older businesses may be that the amount and depth of personal business experience of its owner increase over time, and both are related to the development of absorptive capacity, which is dependent upon previous knowledge (Gray, 2006). As these grow over time, performance is likely to increase. The desires, motives and plans of the founder are also vitally important to the perceived level of performance of an enterprise, as some business owners have modest growth aspirations for their firms or do not pursue profit maximization and growth as primary goals (Buttner & Moore, 1997; Cliff, 1998; Gray, 2006; Human & Matthews, 2004; Lerner, Brush, & Hisrich, 1995; Robinson, 2001; Roomi et al. …