Perceived Financial Barriers and the Start-up Decision: An Econometric Analysis of Gender Differences Using GEM Data

Stephen Roper, Jonathan M. Scott

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Abstract

Although accessing finance is key to the foundation of any business, particular concerns have been expressed about the ability of UK women-owned firms to obtain external finance. In this article we use an econometric approach to explore the effect of perceptions of financial barriers to start-up on the start-up decision itself. Our analysis is based on the Global Entrepreneurship Monitor (GEM) UK 2004 database. Standardizing for a range of individual characteristics, we find that women are around 7.4% more likely to perceive financial barriers to business start-up than men.As perceptions of financial barriers are linked negatively to the start-up decision, stronger perceptions of financial barriers among women are having a disproportionate effect on women's start-up decisions. However, being female also has an additional negative effect on the start-up decision, not linked to financial barriers. Policy responses, therefore, need to take into account the demand-side with the aim of countering the more negative perceptions of start-up finance among potential women entrepreneurs. Mentoring and confidencebuilding programmes are obvious possibilities.We also find support for the value of university and college-based work experience programmes.
Original languageEnglish
Pages (from-to)149-171
JournalInternational Small Business Journal
Volume27
Issue number2
DOIs
Publication statusPublished - 2009

Fingerprint

Econometric analysis
Start-up
Global Entrepreneurship Monitor
Gender differences
Finance
Women entrepreneurs
Policy responses
Mentoring
Data base
External finance
Business start-up
Individual characteristics
Econometrics
Work experience

Bibliographical note

Subject to restrictions, author can archive post-print (ie final draft post-refereeing).

Cite this

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title = "Perceived Financial Barriers and the Start-up Decision: An Econometric Analysis of Gender Differences Using GEM Data",
abstract = "Although accessing finance is key to the foundation of any business, particular concerns have been expressed about the ability of UK women-owned firms to obtain external finance. In this article we use an econometric approach to explore the effect of perceptions of financial barriers to start-up on the start-up decision itself. Our analysis is based on the Global Entrepreneurship Monitor (GEM) UK 2004 database. Standardizing for a range of individual characteristics, we find that women are around 7.4{\%} more likely to perceive financial barriers to business start-up than men.As perceptions of financial barriers are linked negatively to the start-up decision, stronger perceptions of financial barriers among women are having a disproportionate effect on women's start-up decisions. However, being female also has an additional negative effect on the start-up decision, not linked to financial barriers. Policy responses, therefore, need to take into account the demand-side with the aim of countering the more negative perceptions of start-up finance among potential women entrepreneurs. Mentoring and confidencebuilding programmes are obvious possibilities.We also find support for the value of university and college-based work experience programmes.",
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Perceived Financial Barriers and the Start-up Decision: An Econometric Analysis of Gender Differences Using GEM Data. / Roper, Stephen; Scott, Jonathan M. .

In: International Small Business Journal, Vol. 27, No. 2, 2009, p. 149-171.

Research output: Contribution to journalArticleResearchpeer-review

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AB - Although accessing finance is key to the foundation of any business, particular concerns have been expressed about the ability of UK women-owned firms to obtain external finance. In this article we use an econometric approach to explore the effect of perceptions of financial barriers to start-up on the start-up decision itself. Our analysis is based on the Global Entrepreneurship Monitor (GEM) UK 2004 database. Standardizing for a range of individual characteristics, we find that women are around 7.4% more likely to perceive financial barriers to business start-up than men.As perceptions of financial barriers are linked negatively to the start-up decision, stronger perceptions of financial barriers among women are having a disproportionate effect on women's start-up decisions. However, being female also has an additional negative effect on the start-up decision, not linked to financial barriers. Policy responses, therefore, need to take into account the demand-side with the aim of countering the more negative perceptions of start-up finance among potential women entrepreneurs. Mentoring and confidencebuilding programmes are obvious possibilities.We also find support for the value of university and college-based work experience programmes.

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