Contemporary research has consistently shown the barriers female entrepreneurs face in obtaining venture funding, but a new study has revealed that when it comes to social enterprise projects, women actually have a slight advantage.
Researchers from the US studied the relationship between funding and the gender of entrepreneurs by analysing archival data on social entrepreneur projects from crowdfunding sites including Kickstarter and Indiegogo.
What they found was that women got a “significantly higher amount of funding,” compared to their male counterparts, and that “women raise more significant amounts of money for their social entrepreneur efforts,” according to one of the study’s authors, Professor Zhenyu Liao.
Prof Liao, an organisational development expert from Northeastern University, worked with a handful of researchers to conduct an experiment where they presented investors with potential investments to see which ones they would invest in. They focused on studying entrepreneurs involved in social enterprises (businesses that focus on social justice issues such as environment or racial and gender inequality) due to the challenges these entrepreneurs often face when balancing their mission with earning a profit.
“Ultimately, we found women tend to be perceived as having a higher pro-social motivation,” Prof Liao said. “Those kinds of higher social motivations will translate it into stronger confidence among those investors that those women entrepreneurs are more likely to commit to those social goals in their social, entrepreneurial projects.”
“Whenever we talk about entrepreneur activities, people primarily focus on profits, on the financial success,” he continued. “Social entrepreneurs actually have dual roles. They initially started with social welfare goals … (and) they want to make sure those social entrepreneur projects can function well, so they also have to maintain their financial stability.”
Often however, a “mission drift” occurs, where social enterprises neglect their original mission in service of achieving financial success — posing a problem for investors.
Women entrepreneurs were found to possess more motivation to achieve these social goals and as less likely to prioritise them over financial achievements.
“Female social entrepreneurs are perceived to have a lower risk of mission drift because they are perceived to have stronger prosocial motivation,” the authors concluded.
Liao explained; “When investors are trying to make a decision, the huge concern for them is whether social entrepreneurs can continue to stay committed to those social goals. Because sometimes when we grow, we face huge financial challenges … sometimes they just prioritise the financial goal.”
So women entrepreneurs do have some unique advantages…but only in certain domains! Nevertheless, Prof Liao believes this is a significant and “really powerful” benefit.
Image credit: Shutterstock
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