Gender and Access to Finance: Perceived Constraints of Majority‐Female‐owned Indian Firms
| Published date | 01 April 2023 |
| Author | Nabamita Dutta,Sushanta Mallick |
| Date | 01 April 2023 |
| DOI | http://doi.org/10.1111/1467-8551.12623 |
British Journal of Management, Vol. 34, 973–996 (2023)
DOI: 10.1111/1467-8551.12623
Gender and Access to Finance: Perceived
Constraints of Majority-Female-owned
Indian Firms
Nabamita Dutta1and Sushanta Mallick2
1Department of Economics, College of Business Administration, University of Wisconsin - La Crosse, La
Crosse, Wisconsin, 54601, USA 2School of Business and Management, Queen Mary University of London,
Mile End Road, London, E1 4NS, UK
Corresponding author email: ndutta@uwlax.edu
Do rms with majority female ownership differ from rms with minority female owner-
ship or male-owned rms in terms of perceived constraints on accessing nance? Using
World Bank Enterprise Survey(WBES) data for Indian rms, our results show that there
is no signicant difference in male- and female-owned rms in terms of their perceptions
about accessing nance. Yet, this is true only for rms with minority female ownership
(less than 50%). Firms with majority female ownership do perceive more constraints on
accessing nance relative to rms with minority female ownership or zero female owner-
ship. Based on demand- and supply-side factors relating to business inexperience, weaker
networking, and lender perceptions, as suggested by signalling and gender congruity theo-
ries, the results imply that majority-female-ownedr ms need to negotiate morefor nanc-
ing access, as they need to display positive signals for those investors who might possess
stereotypical and gendered beliefs about the abilities of entrepreneurs. We also nd that
in relation to funding sources being one’sown retained earnings or money from family and
friends or advances from clients, majority-female-owned rms do not perceive nancial
barriers differently from male-owned rms or rms with minority female ownership.
Introduction
A growing literature has looked into the evidence
of a possible gender gap in accessing nance for
female-owned or female-led businesses (Aristei
and Gallo, 2016; Asiedu et al., 2013; Becker-Blease
and Sohl, 2007; World Bank, 2011). The gendered
aspect of entrepreneurial activity specically as it
relates to accessing nancial capital has also been
explored in studies such as Minniti (2009) and
Marlow and Patton (2005). In a broader context,
Klapper and Parker (2011) have provided an ex-
tensive literature survey on gendered differences
in business entry (also see Oppedal Berge and
Garcia Pires, 2020). What has not been adequately
explored is the role that perceived barriers can
play in terms of accessing nance for different
rms based on gendered ownership. Rather than
the actual institutional environment, on many
occasions it is the perception of the environment
that might affect ventures (Shepherd, Williams
and Patzelt, 2015; Krueger, 2008; Kwapisz, 2019).
Shepherd, Williams and Patzelt(2015, p. 35) in this
context argue that ‘it is not so much the objective
environment that is an input to entrepreneurial
decisions but, rather, the entrepreneur’sperception
of that environment’. Thus, this paper investigates
if perceived obstacles in accessing nance can
be different among rms with different levels of
female and male ownership.
A recent extensive literature has paid greater
attention to what constitutes the perception of
obstacles to innovation regarding a rm’s likeli-
hood to innovate and the degree to which rms
engage in innovation activities (Chatterjee and
Ramu, 2018; Hölzl and Janger, 2014; Mancusi
and Vezzulli, 2014; Pellegrino and Savona, 2017;
Iammarino, Sanna-Randaccio and Savona, 2009).
© 2022 British Academy of Management.
974 N. Dutta and S. Mallick
Yet, as pointed out by Kwapsiz (2019), we lack a
comprehensive understanding of the various per-
ceived obstacles that can affect an entrepreneur
(Kollmann, Stockmann and Kensbock, 2017).
When it comes to studying obstacles, access to
credit in particular has received attention(Alesina,
Lotti and Mistrulli, 2013; Muravyev, Schäfer and
Talavera, 2009; Treichel and Scott, 2006, to men-
tion a few relevant studies), but these studies have
considered actual obstacles in terms of accessing
nance and not perceived obstacles in the same
context. However, studies such as Krueger (2008,
p. 5) have emphasized that ‘barriers were clearly in
the eye of the beholder’. A few studies have tried
to nd answers in this regard. For example, Roper
and Scott (2009) provide empirical evidence based
on UK rms that women are more likely to per-
ceive nancial barriers than men when it comes to
business start-ups.
We contribute to the growing literature on
perceived obstacles in the context of entrepreneur-
ship, and examine if perceptions differ based on fe-
male or male ownership of rms. Such differences
in perception in terms of nancial barriers can re-
sult from demand- or supply-side factors.Females
can seek less nance, and thus perceive barriers
differently from men, because they believe that
there is less need (Orser,Riding and Manley, 2006),
because they lack business experience, including
havingweaker networking (Carter and Shaw, 2006;
Carter et al., 2007; Heilbrunn, 2004; Manolova
et al., 2006), or because they do not have a strong
relationship with the lender (Madill, Riding and
Haines Jr, 2006). The supply-side factors can be
associated with established theories of signalling
and gender congruity. As shown in the literature,
including socio-linguistic research, signalling has
gender embedded in it (Talbot, 2010). The impor-
tance of signals sent by entrepreneurs is intricately
linked to how they are interpreted by the receiver.
Male and female entrepreneurs seeking nance
might be perceived differently (Croucher et al.,
2020; Greene et al., 2001). Studies focusing on sig-
nalling theory, as well on gender congruity theory,
have suggested that investors may have gendered
perceptions and thus expect the entrepreneurs
seeking funding to be male (Eddleston et al., 2016;
Hughes et al., 2012). Investors and venture capi-
talists are predominantly male (Brush et al., 2002),
which can strengthen gender bias. In this context,
a vast number of studies have shown that bank
nancing obtained by entrepreneurs is dependent
on signalling, which, in turn, is contingent on a
venture’s viability and the entrepreneurs’ commit-
ment to the business (Busenitz, Fiet and Moesel,
2005; Mascia and Rossi, 2017; Ozmel, Reuer and
Gulati, 2013; Prasad, Bruton and Voziki, 2000;
Reuber and Fischer, 2005). Related to this, as
suggested by signalling and gender congruity
theory, gendered and stereotypical beliefs can
differ regarding the abilities of male and female
entrepreneurs (see, for example, Balachandra
et al., 2019; Eddleston et al., 2016; Gupta et al.,
2009; Ahl, 2006; Eagly and Karau, 2002).
The combination of these factors can poten-
tially result in female-owned rms perceiving more
constraints in accessing nance, compared with
male-owned rms, effectively making them to be
rationed out of the credit market. But the differ-
ence might only be meaningful or signicant in the
context of female-majority rms. In the presence
of minority-female ownership, both demand- and
supply-side factors can still work in favour of these
rms, as they can potentially send similar signals to
rms with all-male ownership. In the presence of
majority-female ownership, it is reasonable to as-
sume that they play a prominent role in decision-
making and, thus, might be facing the gendered
constraints arising out of demand- or supply-side
factors.
Our paper focuses on the extent to whichfemale
ownership matters when it comes to perceiving -
nancial barriers by rms. As recent studies have
pointed out, a ne-grained analysis is called for
when studying the role of gender in the context
of entrepreneurial hurdles. Jennings and Brush
(2013, p. 23) note that a ne-grained analysis has
provided evidence of a ‘more subtle, residual and
“second order” form of gender-based differential
treatment’. Our paper stresses that it is impor-
tant to consider the degree of female ownership
and nds that it is only when females have major-
ity ownership (>50%) that a signicant difference
in perceived nancial barriers appears. Perceiving
such differences may not be contingent on male
and female ownership of rms as investigated so
far in the literature. Minority-female-owned rms
may not experience demand- and supply-side con-
straints because they gain experience from their
majority-male counterparts, benet fromnetwork-
ing, and do not necessarily experience gendered
perceptions from investors, as females might be
taking decisions along with males, who are seen as
ableentrepreneurs. But for majority-female-owned
© 2022 British Academy of Management.
Get this document and AI-powered insights with a free trial of vLex and Vincent AI
Get Started for FreeStart Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
