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CHAPTER III: WOMEN-OWNED BUSINESS IN PALESTINE

3.3. Characteristics of women-owned businesses

3.3.2. Business Level

Regarding business characteristics, previous studies have described the size, ownership, sectors, management strategies, business performance, and success of firms run by women.

Other recent studies have focused on resources, organizational structure, funding, growth strategies, and operations. All these organizational factors clearly influence businesswomen and their business ventures’ suceess.

Size and growth: Although the number of firms owned by women has grown considerably, most continue to be small (Zahra, 2012) and employ a limited number of staff (Rob & Wolken, 2002; Arasti et al. 2012); their tendency toward remaining relatively small is attributed to women’s choice of industry, as they traditionally have chosen to work in the service and retail sectors (Galindo, Guzman, & Ribiero, 2009), which have lower expectations to grow and offer rewards than technological sectors (Greene et al., 2003). According to the findings of the Global Entrepreneurship Monitor report, businesses run by women not only tend to be smaller but are also less costly to operate than those run by men (GEM, 2004). Therefore, women choose to start businesses with lower levels of initial employment and capitalization (Brush, 1992).

Businesses owned by women, who generally lack appropriate industrial experience, and business skills (Lerner et al., 1997), do not record high levels of growth on the whole (Brush et al., 2006; Buttner, 1993; Cliff, 1998). Their reduced ability to attract financial resources (Buttner, 1993) as well as networking effectiveness and lack of business training significantly affects business growth (Roomi et al., 2009). Furthermore, personal goals, ambitions, and skills are believed to affect women’s growth orientation in business (Brush & Carter, 2006; Roomi et al., 2009). It is noted that women’s growth goals are also influenced by many factors including their reasons for starting a business. Women start businesses to be personally challenged and to integrate personal and business goals, unlike men, who tend to start businesses to be the boss and grow the business as large as possible (Hadary, 2010). Their education background preferences and lack of industry experience and skills also lead to low-growth potential (Brush et al., 2010), not to mention their growth objectives may also be driven by factors other than human capital or the ability to secure external capital (Coleman, 2007), such as their need to focus on maintaining an income rather than growing a business (Galindo, Guzman, & Ribiero, 2009). Previous studies show that women are less driven by opportunity and more oriented toward wage substitutions (Minniti et al., 2005).

Sector: Although present in all sectors of the economy, businesswomen typically work in the service, retail trade, and perishable goods sectors (Weeks, 2009), where they may have had previous managerial experience in a similar line of business (Neider, 1987). Women are less likely to be found in manufacturing and high technology (Anna et al., 2000; Brush et al., 2006).

Women often tend to be involved in traditional low-risk sectors (Minniti, 2005) that do not emphasize the importance of high growth rates and which also allow flexible work hours suitable to the needs of their family (Greene et al., 2003). In addition, gender stereotypes impact attitudes and behaviors of people. Some argue that the influence of gender stereotyping in entrepreneurship is the fact that certain industries are dominated by either men or women (Anna et al., 1999). Women tend to work in certain occupations that are considered socially acceptable for their gender.

Ownership: Businesses owned by women and men tend to have similar forms of ownership (Rosa & Hamilton, 1994). Some differences were found with regard to the type of partners chosen, with women tending to have a single family member in this role or contributing

to the business in some way (Arasti et al. 2012). Comparable to men-owned businesses, women often choose sole proprietorship as the preferred form of business structure (Hisrich & Brush, 1983).

Management and strategies: Women-owned businesses tend to be open to interacting with others, and are more participative regarding decision making (Neider, 1987). Buttner (2001) reports that the managerial style of women entrepreneurs was best described using relational dimensions such as mutual empowering, collaboration, sharing of information, and nurturing.

According to Heffernan (2003) female negotiating styles have been shown to be different and it has been demonstrated that they are significantly more beneficial to long-term business success.

Furthermore, women-owned businesses are described as having a more “feminine” (Chaganti, 1986) and informal management style. Women-owned businesses are described also by openness in communication, and less hierarchal organizational structures (Helgesen, 1990).

Regarding strategies, according to Porter (1996), the essence of strategy is choosing to perform activities differently from competitors, which requires creativity and company insights.

Companies owned by women generally adopt a product-service-quality strategy (Chaganti &

Parasuraman, 1996) showing little interest in high-growth strategies due to the inherent risks involved (Cliff, 1998). According to Dechant and Al-Lamky (2005), studies covering women entrepreneurs noticed that businesses run by women tend to grow at a slower rate than those run by men. In their empirical study, Dechant and Al-Lamky (2005) found that the Bahraini and Omani women entrepreneurs have no strategy for future growth. A qualitative study on Iranian women entrepreneurs found that women utilized strategies that helped them to moderate the work-family conflict (Arasti, Panahi, Zarei, and Rezaee, 2012).

Performance: Most previous research of female entrepreneurship indicates that they underperform their male counterparts (Brush, 1992; Rosa et al., 1996). However, there are also studies that do not find gender-based differences in firm performance (e.g. Du Riez &

Henrekson, 2000). Although a subject of debate, the reasons for this under-performance are usually associated with initial under-resourcing (Carter, Anderson & Shaw, 2001). Previous research has shown the performance of women-owned firms lags that of male-owned firms in terms of annual sales, employment growth, income, and venture survival (Boden, 2000; Robb and Wolken, 2002). Women-owned businesses have lower sales and employ fewer people than men (Fischer et al., 1993).Furthermore,women-owned businesses are less profitable than those

started by men, because women are less motivated to make high profits and they pursue different goals (Brush, 1992). They have less confidence in their entrepreneurial abilities, and their tendencies to start types of businesses that have lower growth potential are also reasons for women having lower growth expectations for their businesses (Kepler, 2007).