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Financing Strategies of New Technology-Based Firms: A Comparison by Gender

Journal of Technology Management & Innovation

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Title Financing Strategies of New Technology-Based Firms: A Comparison by Gender
Financing Strategies of New Technology-Based Firms: A Comparison by Gender
Financing Strategies of New Technology-Based Firms: A Comparison by Gender
 
Creator Robb, Alicia
Coleman, Susan
 
Subject new technology-based firms; women-owned firm; financing strategies.
 
Description Technology-based firms have been and will continue to be important contributors to the U.S. economy. For the past two decades, technology firms have been a major source of innovation, business development and growth, and new jobs. Securing funding for new technology-based firms is particularly problematic, however, whether they are owned by women or men. Many such firms are built upon intellectual capital rather than on physical assets, so it is difficult to determine the value and prospects of the firm. The problem of asymmetric or incomplete information is especially acute (Brierley, 2001), often resulting in a shortage of capital or capital that can only be obtained under unfavorable terms and conditions. A number of researchers contend that one of the primary reasons women-owned firms tend to be smaller than firms owned by men is that women tend to concentrate in low-growth retail and service lines of business (Rosa et al., 1996; Du Rietz & Henrekson, 2000). These businesses have a higher risk of failure (Robb, 2002; Fairlie & Robb, 2008; Watson, 2003) combined with a higher level of difficulty in attracting sources of capital due to their limited prospects for growth and profitability (Menzies et al., 2004; Sabarwal & Terrell, 2008). More recently, however, some researchers have begun to attack the “myth” that women do not want high-growth businesses (Brush et al., 2001). They contend that a new generation of women entrepreneurs is willing to “go boldly where no one has gone before” by starting firms in the fields of technology and bioscience, where there are opportunities for significant growth and profits. In this paper we will examine the financing sources and strategies, by gender, for new technology-based firms using the Kauffman Firm Survey data. We identify not only sources of financing, but also financing gaps which may impede the ability of women to launch and grow technology-based firms.
Technology-based firms have been and will continue to be important contributors to the U.S. economy. For the past two decades, technology firms have been a major source of innovation, business development and growth, and new jobs. Securing funding for new technology-based firms is particularly problematic, however, whether they are owned by women or men. Many such firms are built upon intellectual capital rather than on physical assets, so it is difficult to determine the value and prospects of the firm. The problem of asymmetric or incomplete information is especially acute (Brierley, 2001), often resulting in a shortage of capital or capital that can only be obtained under unfavorable terms and conditions. A number of researchers contend that one of the primary reasons women-owned firms tend to be smaller than firms owned by men is that women tend to concentrate in low-growth retail and service lines of business (Rosa et al., 1996; Du Rietz & Henrekson, 2000). These businesses have a higher risk of failure (Robb, 2002; Fairlie & Robb, 2008; Watson, 2003) combined with a higher level of difficulty in attracting sources of capital due to their limited prospects for growth and profitability (Menzies et al., 2004; Sabarwal & Terrell, 2008). More recently, however, some researchers have begun to attack the “myth” that women do not want high-growth businesses (Brush et al., 2001). They contend that a new generation of women entrepreneurs is willing to “go boldly where no one has gone before” by starting firms in the fields of technology and bioscience, where there are opportunities for significant growth and profits. In this paper we will examine the financing sources and strategies, by gender, for new technology-based firms using the Kauffman Firm Survey data. We identify not only sources of financing, but also financing gaps which may impede the ability of women to launch and grow technology-based firms.
Technology-based firms have been and will continue to be important contributors to the U.S. economy. For the past two decades, technology firms have been a major source of innovation, business development and growth, and new jobs. Securing funding for new technology-based firms is particularly problematic, however, whether they are owned by women or men. Many such firms are built upon intellectual capital rather than on physical assets, so it is difficult to determine the value and prospects of the firm. The problem of asymmetric or incomplete information is especially acute (Brierley, 2001), often resulting in a shortage of capital or capital that can only be obtained under unfavorable terms and conditions. A number of researchers contend that one of the primary reasons women-owned firms tend to be smaller than firms owned by men is that women tend to concentrate in low-growth retail and service lines of business (Rosa et al., 1996; Du Rietz & Henrekson, 2000). These businesses have a higher risk of failure (Robb, 2002; Fairlie & Robb, 2008; Watson, 2003) combined with a higher level of difficulty in attracting sources of capital due to their limited prospects for growth and profitability (Menzies et al., 2004; Sabarwal & Terrell, 2008). More recently, however, some researchers have begun to attack the “myth” that women do not want high-growth businesses (Brush et al., 2001). They contend that a new generation of women entrepreneurs is willing to “go boldly where no one has gone before” by starting firms in the fields of technology and bioscience, where there are opportunities for significant growth and profits. In this paper we will examine the financing sources and strategies, by gender, for new technology-based firms using the Kauffman Firm Survey data. We identify not only sources of financing, but also financing gaps which may impede the ability of women to launch and grow technology-based firms.
 
Publisher Facultad de Economía y Negocios, Universidad Alberto Hurtado
 
Contributor —
 
Date 2010-03-22
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Artículo revisado por pares
 
Format application/pdf
 
Identifier http://www.jotmi.org/index.php/GT/article/view/art141
10.4067/S0718-27242010000100003
 
Source Journal of Technology Management & Innovation; Vol 5, No 1 (2010); 30-50
Journal of Technology Management & Innovation; Vol 5, No 1 (2010); 30-50
0718-2724
 
Language eng
 
Relation http://www.jotmi.org/index.php/GT/article/view/art141/522
 
Rights Copyright (c) 2010 Journal of Technology Management & Innovation
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