managerial performance and business success: gender

08.07' סדרת ניירות לדיון מס

Managerial Performance and Business Success: Gender

Differences in Canadian and Israeli Entrepreneurs

By

Dafna Kariv Dafna Kariv The College of Management, Academic Studies, School of Business Administration, 7 Rabin Blvd., P.O.B 25073, Rishon Le-Zion, Israel 75190 March 2008 ______________________________________________________________________

The research was supported by the Research Unit at The School of Business Administration, The College of Management, Academic Studies.

Entrepreneurship, managerial performance and business success 1

Managerial Performance and Business Success:

Gender Differences in Canadian and Israeli Entrepreneurs

Kariv, D.1

1The School of Business Administration, the College of Management, Rishon Lezion, Israel

Contact details

Dafna Kariv, Ph.D.

The School of Business Administration, the College of Management,

9 Yitzhak Rabin Boulevard, Rishon Lezion 75190, Israel

Tel: +972-3-9634281

E-mail: [email protected] ; [email protected]

mailto:[email protected]

mailto:[email protected]


Abstract

The purpose of this paper is to assess the role of managerial performance in the success of

men-owned businesses (MOB) and women-owned businesses (WOB) for Canadian and

Israeli entrepreneurs. A process-oriented approach, a relatively overlooked perspective in

this field, was used for this assessment. The methodology used was based on two national

samples from Canada and Israel (n=235) which included mostly members of a private

business networking organization. Questionnaires were distributed to the respondents; only

entrepreneurs with at least one employee were included. Findings: Multilevel analyses

revealed that gender is significantly associated with some managerial functions, but except for

the business longevity—it is not directly associated with measures of business success;

nationality is associated with two measures of business success: turnover and growth. Women

entrepreneurs, both Canadian and Israeli, ranked significantly higher in some functions of

their managerial performance compared to their male counterparts. This study's main

implications are in deciphering the major role of managerial performance and nationality and

the relatively marginal effect of gender in business success measures, implying that the

gender gap in successful entrepreneurial businesses is decreasing. These findings can become

foundations for better understanding broader entrepreneurship questions and practice-based

researched endeavors. This paper's main contribution is in the identified need for developing

training and education programs for entrepreneurs in the areas of managerial skills and

practices; as well as in opening future avenues for cross-national assessments of a process-

oriented perspective in these areas.

Research paper

Key words: entrepreneurship, gender, cross-national, managerial performance, business success


Introduction

The development of businesses has been said to proceed through stages that parallel those of

human development, and much as in human development, each stage presents new challenges

to be met and dealt with (Reynolds, Storey & Westhead, 1994). According to this view, which

takes a process-oriented perspective (Aldrich, 1999; Aldrich & Langton, 1998; Elder, Johnson

& Crosnoe, 2003; Moen, 1998; Moen & Minor, 1998), the owner's entrepreneurial

characteristics, such as innovation, creativity, and risk-taking, are required mainly in the first

stages of venture creation, as he/she turns innovative ideas into an active business. Once the

business begins to function and succeed, however, the nature of the firm's needs change, and

the owner is expected to engage in different managerial tasks, such as supervising staff,

establishing strategic goals, or establishing effective networks. Furthermore, business success,

at least at the micro level dimension of analysis, depends on the ability of firms to adapt

internal structures and processes to available opportunities and external constraints (Pfeffer &

Salancik, 1978), and such adaptations depend on the actions of the firm's leader, (e.g.

Barringer & Jones, 2004; Chen & Barnes, 2006; Miller, Madsen & Cameron, 2006), the

entrepreneur. Choosing and utilizing the appropriate managerial performance is thus critical

in assuring the success of entrepreneurial businesses. Literature about how businesses need to

operate for achieving success disclosed robust works on business survival, growth in sales and

profitability as well as in growth in size of the firm (Bates, 1990; Cliff, 1998; Hall, 1992;

Kalleberg & Leicht, 1991; Sharfman & Dean, 1991) . Although a comprehensive review has

been done on business success measures, relatively few studies have explored the

relationships between managerial performance and business success in the entrepreneurial

realm.

The success of entrepreneurial businesses is multifaceted, taking on different forms

(Lussier & Pfeiffer, 2000; Shane & Venkataraman, 2000; Stevenson & Gumpert, 1985).


However, one major finding that repeatedly emerges from studies on entrepreneurship is that

women-owned businesses and men-owned businesses (WOB and MOB, respectively) differ

in some success measures (e.g., Alsos, Isaksen & Ljunggren, 2006; Bhide, 1999, 2000;

Birley, 1989; Boden & Nucci, 2000; Grilo & Irigoyen, 2006). With the exception of a few

recent studies showing no gender differences among entrepreneurial businesses in some

success measures (e.g., Johnsen & McMahon, 2005; Menzies, Dichon & Gasse, 2004), most

studies revealed differences in business longevity (Low & MacMillan, 1988; Pugh, Hickson,

Hinings, & Turner, 1968), rates of sales (Bhide, 2000; Cassar, 2004; Covin, Green & Selvin,

2006; Covin & Selvin, 1991), and rates of growth (number of employees), (Bhide, 1999,

2000; Flamholtz & Randle, 2000; Greiner, 1998; Watson, 2006) among others. Variations in

success across gender-based businesses has traditionally been explained either by the

resource-based view (e.g., Barney, 1991, 2001; Bird & Brush, 2002; Boden & Nucci, 2000;

Brush, Carter, Gatewood, Greene, & Hart, 2004; Conner & Prahalad, 1996; Cooper & Goby,

1999; DeTienne & Chandler, 2007; Fasci & Valdez, 1998; Loscocco, Robinson, Hall &

Allen, 1991; Marlow & Patton, 2005), i.e., owners' human capital, motivations to start a

business, their choices of industry, among others (Jones & Raydel, 2002; Kirchoff, 1994); or

by the output-oriented perspectives, in terms of the business's results, e.g., sales turnover and

profitability; growth; longevity, and more (Alsos, et al., 2006; Boden & Nucci, 2000; Fielden,

Davidson, Dawe & Makin, 2003; Grilo & Irigoyen, 2006). A literature search that addresses

the differential success of MOB and WOB in such measures however reveals that there are

only a few studies of substance that deepen the exploration to a process-oriented perspective

in explaining MOB and WOB's success in these measures (Baron, 1998; Greene, Hart,

Gatewood, Brush & Carter, 2003; Verheul & Thurik, 2001). While the theoretical importance

of sustaining the firm's competitive advantage has catapulted this issue to the forefront of

agendas for both output-oriented and resource-based approaches (Barney, 1991, 2001); the

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process-oriented approach – referring to both the theoretical and practical role of gender

performance in sustaining a competitive advantage - continues to lag behind (Zahra, 2007).

As such, issues such as managerial performance carried out by men and women are pushed to

the rear of research in entrepreneurship.

A process-oriented approach

Guided by the literature on life course theory, the process-oriented point of view (Aldrich,

1999; Aldrich & Langton, 1998; Moen & Minor, 1998) refers primarily to actions and

activities of leading entrepreneurs (Low & MacMillan, 1988; Ucbasaran, Westhead & Wright,

2001; Zahra, 2007) along the entrepreneurial process or life course of their businesses - from

exploration to exploitation (Shane & Venkataraman, 2000), focusing on the connection

between entrepreneurs' actions and their organizational development. This view treats the

business outcomes (i.e., survival, financial performance, and growth) as the results of the

business processes (Aldrich, 1999), in the context of the environment and organizational

processes (Carsrud, Olm, & Eddy, 1986; Gartner, 1989). Recently, there have been calls in

research for a shift in focus, from the traits and motivations of entrepreneurs to performance

and behavior (Gartner, 2001; Ucbasaran et al., 2001; Zahra, 2007). One such performance

would be entrepreneurs' managerial performance.

Taking a process-oriented perspective means emphasizing performance, which can be

relatively easily adjusted and modified to the firm's needs. Explaining MOB and WOB's

success measures through the owner's human capital, for example, means addressing existing

facts, some of them unchangeable, i.e., past experience in entrepreneurship or management, or

attainment of academic education in entrepreneurship – thus assuming that only a limited

number of individuals with unique initial human resources will achieve success for their


businesses. By taking a process-oriented view, implications on how to achieve better results

in their businesses are applicable, and should promote a narrowing of the gender gap in

entrepreneurial businesses' success.

Additionally, the process-oriented view emphasizes the role of environment and the

external relationships on the owner's performance and the business processes (Street &

Cameron, 2007); asserting that environments' influences on entrepreneurial businesses or on

entrepreneurs, i.e., men versus women, vary across cultures (Mirom, Erez & Naveh, 2004),

thus should be addressed accordingly. Statistical assessments suggest that the number of

people involved in entrepreneurship is about 73 million, about 30 million of whom are

women1. Considering the importance of entrepreneurship to nations' economies, and the

growing numbers of entrepreneurs, particularly women entrepreneurs, it is surprising that

little has been written on gender and the success measures of entrepreneur-owned businesses

in the context of their environments (Greene et al., 2003). The assumption that there is a

single, 'universal' environment that affects entrepreneurial businesses' success means ignoring

environmental or contextual effects (Aldrich, 1999; Shane, 2003; Shane & Venkatamaran,

2000); yet, only a very limited number of studies have addressed comparative cross-cultural

perspectives of gender and success measure of new businesses (e.g., Cameron &Quinn, 1988;

Street & Cameron, 2007). Comparisons across nations of the relationships between

managerial performance and success measures of MOB and WOB thus seem warranted.

The shortcomings in the afore-described research were the impetus for a comparative cross-

cultural exploration of MOB and WOB's success measures, i.e., longevity, sales turnover and

growth in business size through a process-oriented perspective, i.e., owners' managerial

performance.

1 GEM, 2004, 2005, at: http://www3.babson.edu/CWL/upload/GEMWomensReport_Mar82005.pdf These numbers apply to the 34 countries participating in the GEM project. .

http://www3.babson.edu/CWL/upload/GEMWomensReport_Mar82005.pdf


Theoretical Background

Managerial behaviors and gender in the entrepreneurial context The management

practices of business owners have been repeatedly found to be positively associated with

business success (Barney, 1991, 2001; Zahra,). But in the emerging literature on management

and entrepreneurial business there is a relatively limited number of studies addressing

comparative cultural assessments, whether of gender (Brush, 1992; Merrett & Gruidl, 2000;

McGregor & Tweed, 2002); or across countries (Kolvereid, Shane & Westhead, 1993;

Mueller, 2004; Smith, Dugan & Trompenaars, 1997). Moreover, there is a much smaller body

of existing research on women entrepreneurs relative to that on men entrepreneurs, especially

with respect to managerial performance (Chaganti & Parasuraman, 1996; Sonfield, Lussier,

Corman, & McKinney, 2001). This may be the result of the difficulty in determining

managerial performance, as this is a multifaceted, diverse concept that encompasses several

managerial aspects, such as managing people, setting goals, stimulating creativity and

innovation, establishing networks, and more (Whetton & Cameron, 2005).

In this study managerial performance is defined as management know-how, which is

assumed to reflect management-specific skills and knowledge, without regard to the kind of

business. Several managerial functions will be included to represent the management

performance of entrepreneurs; i.e., managing innovation, people-orientation in managing

employees, leading change, and others. Previous studies on entrepreneurship have shown that

men and women differ in their managerial skills and performance (Gundry & Welsch, 2001;

Lerner, Brush & Hisrich, 1997; Morris, Miyasaki, Watters & Coombes, 2006; Naffziger,

1995; Perry, 2002), but most of those studies did not adequately address the

multidimensionality of managerial performance but rather treated 'management' as an


inclusive, one-dimensional concept (Dumas 2001; Fischer, 1992; Morris, et al., 2006; Sadler-

Smith, Hampson, Chaston, & Badger, 2003; Rosa, Carter & Hamilton, 1996). Some studies

examined a few functions of managerial performance, e.g., decision-making, risk-taking or

leading change, but investigated them separately, thereby overlooking the holistic dimension

of managerial performance in entrepreneurial businesses. Most of these studies have shown

that women entrepreneurs are less successful in turning their managerial performance into

successful and profitable enterprises (Carter, Williams, & Reynolds, 1997; Du Reitz &

Henrekson, 2000); however, the explanations for these gender-based relationships are mixed.

Some studies tend to portray women as being at a disadvantage in certain critical managerial

behaviors, i.e., in exhibiting financial performance; less likely than men entrepreneurs to use

lines of credit, bank loans or supplier credit; among others (Carter & Rosa, 1998; Carter, et

al., 1997; Powell & Ansic, 1997; Sonfield, et al., 2001), some other studies point to lack of

skills such as self-confidence to lead change in their businesses, to set goals or to generate

alternative solutions in order to make adequate decisions or to overcome the problems they

face, especially in risky situations (Johnson & Powell, 1994; Zinkhan & Karande, 1991).

Overall, these shortcomings are suggested to be the cause of gender gaps in the development

of their businesses. On the other hand recent studies provide empirical evidence that men and

women do not perform differently in managing their entrepreneurial businesses and that their

managerial performance and attitudes correspond in many aspects (Chaganti & Parasuraman,

1996; Menzies, et al., 2004; Orser & Riding, 2004; Watson, 2002); while a third group of

studies addresses the advantages women have in specific functions in management. The body

of studies focusing on the managerial performance for which women are at an advantage

compared to men includes managerial functions related to people; women more than men

focus on their teams' development, empower their subordinates and encourage their workers'

achievements and perseverance (Bruni, Gherardi & Poggio, 2004; Brush & Hisrich, 2000;


Brush, et al., 2004; Gundry, Ben-Yoseph & Posig, 2002). Other studies report that women

entrepreneurs spend more time in networking, more engaged in conducting market research

and typically demonstrate advantages in strategic planning, leading change (Greve & Salaff,

2003; Lerner, et al., 1997; Lerner & Almor, 2002; Morris, et al., 2006; Walker & Webster,

2006) and innovation (e.g., Hisrich & Brush, 1984; Goldsmith, Stith & White, 1987;

Goldsmith, Freiden & Eastman, 1995 Sexton & Bowman-Upton 1990).

The research on male entrepreneurship, which is more comprehensive than the research on

female entrepreneurship, depicts men as initially having a more advantageous position in the

general management of their new firms, in managing sales (Du Rietz & Henrekson, 2000),

and in being more oriented to their businesses' financial goals ( Carter & Rosa, 1998;

Coleman, 2002; Orhan, 2001; Tullous, 2002). They are more likely to emphasize

customization or cost efficiency (Chaganti & Parasuraman, 1996), and are in a better position

to manage networking more effectively (Aldrich, 1989), even though women entrepreneurs

are more involved in networking in quantitative terms (Greve & Salaff, 2003).

In each of these cases, women are considered to perform their managerial role differently

from men, and this leads their businesses to a different course of development and success

(Watson, 2002; Watson & Robinson, 2003). However, none of these studies provide

satisfactory explanations for why WOB are less successful in some measures than MOB; do

women entrepreneurs form a unique culture ((Hofstede, 2001; O’Reilly, Chatman &

Caldwell, 1991) differentiated that the culture of men entrepreneurs? One would expect such

explanations in view of the burgeoning studies showing more gender similarities than

differences in management, or that several aspects of women’s managerial performance

surpass either in quality or magnitude, that of men .


Entrepreneurial success and gender Although there is robust theory on entrepreneurial

success and gender (e.g., Alsos, et al., 2006; Birley, 1989; Boden & Nucci, 2000; Chaganti &

Parasuraman, 1996; Grilo & Irigoyen, 2006; Kjeldsen & Nielsen, 2004), studies on this

relationship and managerial performance are scarce. With the exception of a study by

Kalleberg and Leicht (1991), we could not locate any recent studies addressing the multiple

indicators of managerial performance and success measures of MOB and WOB.

Entrepreneurial success is complex and difficult to measure (Shane & Venkataraman, 2000)

and this could explain the dearth of research in this area; moreover, the measurement of

'business success' draws from different approaches (e.g., Sexton & Bowman-Upton, 1990),

with each approach introducing different limitations in terms of evaluation, validity,

reliability, availability, accuracy, etc. Of the existing studies on entrepreneurial success and

gender, some findings show gender-related differences in sales, financial assets, profitability

(Chaganti & Parasuraman, 1996; Kjeldsen & Nielsen, 2004); survival (Cooper, Gimeno-

Gascon, & Woo, 1994; Robb, 2002; Srinivasan, Woo, & Cooper, 1994); and growth in size

measured by number of employees (Bhide, 1999, 2000; Flamholtz & Randle, 2000; Greiner,

1998; Watson, 2006), where WOB are found to be less successful than MOB. Some other

studies found no gender-related differences in success measures, i.e., longevity, turnover, and

growth, among active entrepreneurial businesses (Fagenson, 1993; Kalleberg & Leicht, 1991;

Menzies, et al., 2004; Sonfield, et al., 2001; Verheul, Risseeuw & Bartelse, 2002; Verheul &

Thurik, 2001; Watson, 2002).

According to Watson (2002), this conflicting evidence may be explained by the fact that all of

these studies fail to relate input to output, this relation being essential to adequately assessing

performance and success. His results, derived from research conducted on a large sample of

men and women business owners in Australia, showed no difference in men's and women's

business performance when measured by return on equity (ROE) and return on assets (ROA),


after taking into account industry and age of the business. Similar results were found when

risk measures were included in the analysis (Watson & Robisnon, 2003). However, a recent

study conducted by Johnsen and MacMahon (2005) with the same sample concluded that

there were no statistically significant differences between the success of MOB and WOB,

even in terms of business growth. The scarcity of recent studies addressing these issues (e.g.,

Menzies, et al., 2004; Du Rietz & Henrekson, 2000) can be attributed either to the complexity

of defining entrepreneurship success or the different ways in which each gender defines

business success (Van Auken, Rittenburgm, Doran & Hsieh, 1994). For example, women

entrepreneurs perceive business success as being in control of the business processes, building

ongoing relationships with clients, doing something fulfilling and achieving goals, while men

describe success in terms of achieving goals and financial profitability (Moore & Buttner,

1997; Romano, 1994). The documented differences in motivations to entrepreneurship

(Hughes, 2006) can explain these divergences in the perception of business success. If women

choose entrepreneurship to balance family and work, for example, the measure of success

might not be stated in terms of financial profitability.

The measures chosen to be included in this study and representing business success are

longevity, turnover from sale and increase in size as measured by the number of employees.

Business longevity – Age and size variables consistently exhibit significant relationships with

the firm’s success (Low & MacMillan, 1988; Pugh, et al., 1968). From the process-oriented

perspective the relationships between business longevity and entrepreneurs' managerial

performance is twofold. Taking the organizational change perspective, managerial

performance represents the internal processes that develop over the course of the firm's life,

among other existing routines (e.g., Bates, 1990; Baum, 1996 ; Hannan & Freeman, 1984);


thus entrepreneurs’ managerial performance evolves and is shaped through the business'

resources, needs and constraints. As such, not only does the existing managerial performance

in a business enhance the business' success over time, but in fact, a firm lacking effective

management may die (Watson, 1995). A different aspect of this theory suggests that age of

the business – longevity - means a loss of agility and responsiveness over time; thus while the

pressures imposed on the business increase with age and size of the business, new

opportunities are missed, and current dangers are not avoided (Barron, West & Hannan,

1994). It may suggest that such rigidity induces entrepreneurs' managerial performance to

become fixed and this in turn may reduce the likelihood of making any changes in order to

ascertain an adaptation between the business and the external pressures it encounters (Barron,

et al., 1994; Baum, 1996). Some findings show that business growth decreases with the firm’s

age (Jovanovic, 1982); thus from this aspect over the years the owner's managerial

performance may turn into a potential hindrance to the success of his or her business.

Some functions of managerial performance such as goal setting (e.g., Noel & Latham, 2006),

innovation and adaptation of new technology (Gagnon, Sicotte & Posada, 2006; Sinetar,

1985) are considered to positively affect business longevity. Again, the effect of gender on

this relationship between managerial performance and business success has been

insufficiently investigated.

Turnover from Sales - this measure is usually assessed against the benefits from alternative

courses of action (Shane & Venkataraman, 2000).Consistent with opportunity cost arguments,

entrepreneurs with relatively higher levels of managerial performance – whether as a result of

their managerial experience, education and training in management, or their personal traits -

are likely to pursue entrepreneurial activities with potentially larger returns (Bhide, 2000;

Cassar, 2004; Covin, et al., 2006; Covin & Selvin, 1991).

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Both managing innovation, R&D and change (Chakrabarti, 1990; Deeds & Rothaermel,

2003), and networking (Anand & Khanna, 2000; Duysters, de Man & Wildeman, 1999;

Walter, Auer & Ritter, 2006) are found to stimulate sales.

Business Growth - Based on both the process-oriented perspective and the resource-based

view, the entrepreneur's managerial performance (i.e., capabilities, personal abilities) are

associated with business growth, (Barney, 1991, 2001), i.e., number of employees. Employees

are a critical resource in the achievement and maintenance of any growth (Bhide, 1999;

Flamholtz & Randle, 2000; Greiner, 1972, 1998; Watson, 2006), thus effective management

of their employees enhances entrepreneurs' business success.

Studies show that the most important managerial functions for achieving growth in number of

employees relate to effectively managing people in terms of empowerment, feedback,

personal development and rewarding the employees. (e.g., Landau & Leventhal, 1976;

Weitzman & Kruse, 1990; Zenger, 1992).

Cross-cultural management performance

In the last decade, a number of empirical studies have suggested that differences among the

genders in managerial performance can be explained by cultural factors, such as nationality.

Managerial performance has been found to differ across nationalities, both in terms of

perceptions of what determines managerial performance and in terms of management

practices (Atuahene-Gima & Ko, 2001; Neelankavil, Mathur & Zhang, 2000; Steensma,

Marino, Weaver & Dickson, 2000). Some studies have found that nationality has a greater

impact than gender in terms of contextual influences and thus suggest that nationality, to

some degree, moderates gender differences among entrepreneurs (Kolvereid, et al., 1993;

Mueller, 2004; Smith, et al., 1997). Neither the prevalence nor the substance of entrepreneurs'


managerial performance is uniform across countries (Shane, 1992; Smith et al., 1997; Mueller

& Thomas, 2001). Innovativeness, managing subordinates, authority imposed within the firm,

decision-making processes, conflict resolution (Lam, Chen & Schaubroeck, 2002; Shane,

1993; Tinsley & Brett, 2001), among others, have been found to differ across countries

(Thomas & Mueller, 2001). However, despite these findings, cross-cultural assessments of

entrepreneurs' managerial performance and its effect on their business' success have been

insufficiently investigated in the research on entrepreneurship, and the exploration of these

multinational relationships in the context of gender has been neglected for many years. A

large-scale, cross-cultural study including different countries was conducted by Williams and

Best and published in a book in 1982, and then in 1990. However, in these times of rapid

change, especially in the era of budding international entrepreneurship, research from a cross-

national perspective should be the standard rather than the exception.

The relationships between managerial performance, gender, and nationality in the context

of entrepreneurship led to two key research questions concerning the prospects for women

entrepreneurs in turning their management performance into successful businesses; these

questions regards again the inquiries about cultures (Hofstede, 2001; O’Reilly, et al, 1991).

First, is there a 'universal' pattern, i.e., culture of gender differences such that specific

functions of managerial performance are more prevalent among women entrepreneurs than

among men entrepreneurs, regardless of their nationality? Some studies strongly suggest the

existence of common, gender-related patterns across cultures (Hofestede, 2001; Williams &

Best, 1990; Zinkhan & Karande, 1991). The second question addresses nationality-related

behaviors, raising inquiries into whether there are functions of managerial performance that

are prevalent among entrepreneurs of one nationality more than of another, i.e., culture,

regardless of their gender. For example2, in a multinational study conducted by Smith, Dugan,

2 A different inclusive study conducted by United Nations Economic Commission for Europe Geneva and New York, 2004, provided empirical evidences that the situation of women entrepreneurs differs from country to


and Trompenaars (1997), it was found that across countries, men consistently exhibit higher

"entrepreneurial traits", than women; but when controlled for nationality, the 'modernity' of

the country moderated the gender effect on these traits.

Although the above cited researchers addressed gender and entrepreneurship from a

multinational perspective, not one of these studies included managerial performance in their

theoretical models.

Why Canada vis-à-vis Israel?

While several significant similarities have been noted in the entrepreneurial trends of the

Canadian and Israeli advanced economies at the aggregate level, i.e., the output-oriented level

of analysis, there seem to be major differences in government support of entrepreneurial

initiatives and in the higher education programs in entrepreneurship between these nations

that may play a significant role in determining, at least in part, entrepreneurs' managerial

performance.

Canada- Canada is ranked as having one of the world’s most entrepreneurial economies.

Entrepreneurship is opportunity-driven, with an average of 8.8 to 9.5% of the adult population

engaged in entrepreneurial activities in the years 2003 to 2006. In demographic terms, twice

as many men as women are involved in the start-up or early growth period of a new business

or firm, but the average annual growth rate of self-employed women and/or women

entrepreneurs is more than double that of men (GEM 2002,3 4 2004, 2005, Royal Bank of

Canada, Government of Canada5). The entrepreneurial market in Canada is relatively stable;

country and depends on progress in the process of building a market economy. Available, series: entrepreneurship and SMEs access to financing and ICT for women entrepreneurs in the UNECE region - challenges and good practices, http://www.unece.org/oes/gender/documents/Overview.pdf 3 GEM 2002; Canadian Report, 2002, Riverin, N. 4 GEM 2005; Report on High-Expectation Entrepreneurship, 2005 by Erkko Autio. 5 Canada Business for Entrepreneurs, at: http://www.cbsc.org/

http://www.unece.org/oes/gender/documents/Overview.pdf

http://www.cbsc.org/


in the first quarter of 2006, Canada’s business bankruptcies dropped by 10.9 percent over the

same period in 2005 (Industry Canada, 20066).

The Canadian government has affirmed that entrepreneurial ventures form the strategic

backbone of the economy. In order to turn knowledge and innovation into successful

operations, many institutions - governmental, private, academic, educational - are committed

specifically to helping entrepreneurs realize their full potential,7 and a very large number of

entrepreneurial educational and training programs are available (Menzies, 2004).

Israel- In the year 2000, the GEM ranked Israel third in the world in entrepreneurial

activity. Investors are attracted by Israel's highly educated and trained workforce and by its

concentrations of technology parks and technology incubators. Israel is highly ranked as an

entrepreneurial economy, yet it is also characterized as a 'restless' economy, with very high

annual rates of business closures (Sharabani, 2004; Eden, Horesh, Almor & Kariv, 2005). The

results of several studies show that in terms of infrastructure and drive for high technology

innovation, Israel is similar to Silicon Valley (Dana, Korot & Tovstiga, 2005; Nijkamp,

Guldemond & Teelen 2004) and that most of its high-tech companies are relatively successful

in terms of sales (Mirom, et al., 2004; van Beuzekom & Arundel, 20068), though

comparatively small in size9. However, due to insufficient encouragement and commitment of

resources from government (Phan & Foo, 2004), Israel's high-tech entrepreneurship has not

reached its potential level of success. Entrepreneurship in Israel is three times more

opportunity-driven than necessity-driven. In terms of demographics, as in Canada, there are

twice as many men as women involved in the start-up or early growth period of a new

business or firm. The Israeli entrepreneurial market is characterized by intensive networking

6 Small Business Quarterly, 8(2), August, 2006, at: http://strategis.gc.ca/SMEquarterly 7 See, Industrial Research Assistance Program http://irap-pari.nrc-cnrc.gc.ca/main_e.html; Canadian Federation of Independent Business http://www.cfib.ca/default_E.asp?l=E. 8 OECD BIOTECHNOLOGY STATISTICS – 2006, By Brigitte van Beuzekom and Anthony Arundel, at: http://www.oecd.org/dataoecd/51/59/36760212.pdf

http://strategis.gc.ca/SMEquarterly

http://irap-pari.nrc-cnrc.gc.ca/main_e.html

http://www.cfib.ca/default_E.asp?l=E

http://www.oecd.org/dataoecd/51/59/36760212.pdf


(Haour, 2004; Shoham, Baruchson-Arbib & Gouri-Oren, 2006). However Israel has fewer

and less-developed entrepreneurship education and training programs than most other

industrialized economies (Berry, 2005; Eden, et al., 2005).

Attitudes towards entrepreneurship are positive in both Canada and Israel. However, the

main contextual differences between the two countries, insofar as the themes of the present

study are concerned, appear in government support, the higher education programs for

entrepreneurs and other programs supporting entrepreneurs. In Canada, these are at very high

levels,10 while Israel has not succeeded, as has Canada, in establishing specific institutions,

governmental or other, which are devoted to the promotion of entrepreneurship or the training

of entrepreneurs (Eden, et al., 2005).

Research Model and Methodology

Based on the extant literature, a conceptual model (Fig. 1) was created to guide the empirical

research. In the model, business longevity; turnover (sales); and growth in number of

employees represent functions of the business' success; and these success measures are

posited to be a function of the entrepreneurs’ managerial performance. Nationality, Canadian

and Israeli, and gender are mediating variables; and characteristics of the business and the

entrepreneur are included as control variables in the model.11 This proposed model should

enable an exploration of the unique relations between each function of the owners' managerial

performance and MOB and WOB success measures among Canadian and Israeli

entrepreneurs.

9 Israel venture capital association 2001: IVA 2001 yearbook: a survey of vc and private equity capital in Israel , edited and published by THCG GIZA Israel. 10 Government of Canada, Western Economic Diversification Canada, at: http://www.wd.gc.ca/

11 Although business success is also undoubtedly affected by nationality, this relationship was not dealt with in this study since our focus was on process rather than output.

http://www.wd.gc.ca/


Managerial performance in five distinct management functions is included. These are:

managing innovation, managing employees through a people orientation as opposed to task-

orientation12 (Blake & Mouton, 1963), leading change, goal-setting, and networking (Whetten

& Cameron, 2005).

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Research Hypotheses and Questions

As shown in the above literature review, women entrepreneurs are at a greater advantage than

men in some functions of managerial performance, i.e., functions related to a people

orientation, engagement in networking, and managing strategic planning and leading change,

whereas men are more financially- and goal- oriented than women. It has been shown that the

Canadian institutional support systems are far more developed than the Israeli, and this might

affect the entrepreneurs’ acquisition and development of the relevant managerial functions,

which are usually studied theoretically and applied practically in institutions and/or courses

devoted to entrepreneurship.

Since the relationships between managerial performance and nationality have been

insufficiently explored in entrepreneurship, the first hypothesis compares the relationships of

gender and managerial performance between the two nations.

H1. Women entrepreneurs will rank higher than men in managing people, leading

change and networking. Men will rank higher than women in managing by setting

12 E.g., Task-related characteristics include among others, being driven to excel, accepting of responsibility, having initiative, and being results-oriented – in order to achieve the organization's goals in productive, efficient and effective ways. As such, task-oriented leaders or leading entrepreneurs engage in spelling out the duties and responsibilities to their employees, clarifying roles and task requirements, including telling people what to do, how to do it, etc., mostly in one-way communication. People-orientation is considering employees' needs as most relevant, encouraging two-way communication and helping to build confidence and motivation on the part of the employees; stimulating employees intellectually by empowerment them, providing feedbacks and arousing them to develop new ways to think about problems.


goals. Canadians - men and women will rank higher than their Israeli counterparts

across each one of the included functions of managerial performance.

The effects of managerial performance on some success measures of MOB and WOB have

been insufficiently addressed in previous research. The extant literature revealed positive

relationships between managerial functions related to innovation, business longevity

(Gagnon, et al., 2006; Sinetar, 1985) and turnover from sales (Chakrabarti, 1990; Deeds &

Rothaermel, 2003); and that a greater focus on leading change (Chakrabarti, 1990; Deeds &

Rothaermel, 2003) also stimulated business turnover from sales. Management by goal setting

was found to relate to the higher levels of business longevity (e.g., Noel & Latham, 2006);

and the growth in size of the business has been found to strongly relate to a people-orientation

in managing and leading the staff (e.g., Landau & Leventhal, 1976; Weitzman & Kruse, 1990;

Zenger, 1992). These relationships however, have insufficiently been explored in the context

of gender differences.

On the other hand, the literature provided some insights into the gender differences in some

functions of their managerial performance; but there is still a lack of research into the

association of these relationship and MOB and WOB success measures.

For example, the literature reveals that women entrepreneurs are at an advantage relative to

men in managing their staff through a people-orientation (Brush, et al., 2004; Gundry, et al.,

2002); and compared to men entrepreneurs they are at an advantageous position in strategic

planning and change (Greve & Salaff, 2003; Lerner, et al., 1997; Lerner & Almor, 2002;

Morris, et al., 2006; Walker & Webster, 2006).

The next two hypotheses address the deficiencies described, and based on these streams of

research, attempt to investigate how managerial performance of each gender group affects

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MOB and WOB success measures. These hypotheses delve into the 'gender' culture, thus do

not include nationality in their exploration.

H2 hypothesizes these relationships among women entrepreneurs and H3 – among men

entrepreneurs.

H2. Women entrepreneurs: higher levels of management through a people-orientation will be

positively related to higher levels of growth in business' size; and higher levels of managing

by leading change will be positively related to turnover from sales.

Men entrepreneurs are found to be in a more advantageous position in managing sales (Du

Rietz & Henrekson, 2000); being more oriented to their businesses goals (Chaganti &

Parasuraman, 1996; Tullous, 2002; Orhan, 2001), and to network more effectively than

women entrepreneurs (Aldrich, 1989).

H3. Men entrepreneurs: higher levels of management through goal setting will be positively

related to longevity; and higher levels of management through networking will be positively

related to higher levels of turnover from sales.

Finally, following the findings showing that nationality has been found to affect business

success measures and even to moderate the effect of gender on business success measures

(Kolvereid, et al., 1993; Mueller, 2004; Smith, et al., 1997) and based on the process-oriented

view discussed earlier, the fourth hypothesis attempts to decipher the roles of gender and

nationality in the business success measures; more specifically which 'culture' is most

predominant in determining MOB and WOB success – gender or nationality. This hypothesis

is based on studies showing that the relationship between managerial performance and

business success is pertinent (Carter, et al., 1997; Du Reitz & Henrekson, 2000); as well as

on the findings suggesting that Canadian entrepreneurial businesses survive longer and are

relatively larger in size; while Israeli entrepreneurial businesses are relatively successful in


their financial indicators, but face more bankruptcies and are relatively smaller. Taken

together the last hypothesis proposes:

H4. The business success measures will be affected primarily by entrepreneurs'

managerial performance. Managing by goal setting and innovation will positively affect

business longevity, managing innovation and networking will positively affect turnover

from sales, and managing by a people-orientation will be positively related to growth in

size. Gender will insignificantly affect business success, and nationality will

significantly affect business success – being Canadian will be related to longevity and

growth in size; being Israeli to turnover in sales.

Research design and methods

Sampling procedure: Two national samples were collected, and these included only

entrepreneurs with at least one employee. The Canadian sample consisted of 115

entrepreneurs and the Israeli sample consisted of 120 entrepreneurs.

Data collection – Israel and Canada: In order to ensure the validity and reliability of the

cross-national assessment, the same two-stage sampling procedure was followed in Canada

and in Israel. As a first step, the principal investigators of this study attended several weekly

meetings of entrepreneurs, who are members of an international organization,13 where the

purpose of the study was explained. The study's questionnaires were distributed at these

meetings, and the completed forms were collected at the end of the same meetings. From the

Israeli chapters of this organization, 76 completed questionnaires were collected, an

approximately 90% return rate. In order to enlarge the sample, the respondents were asked to

provide referrals of entrepreneurs who are not members of this organization. In the second

13 Business Networking International (BNI), a private marketing company specializing in word-of-mouth referral marketing. Members represent the major businesses, trades and professions in the community. Presently, there are over 4,100 BNI chapters operating in 26 countries and over 81,000 members worldwide (at: http://www.bni.com/)

http://www.bni.com/


stage, the research investigators contacted these entrepreneurs by telephone and sent the

questionnaires by e-mail or delivered them in person to those willing to participate. In Israel,

44 completed questionnaires were gathered through this procedure, an approximately 43%

return rate. In Canada (Montreal and Toronto areas), 65 completed questionnaires were

collected from members of the organization, and 50 from non-members, in the same two-

stage procedure. The average response rates in Canada from both members and referrals was

about 37%.

T-tests of gender, age, and educational level showed no significant differences in any of

these parameters between members and non-members of this company, in either country.

Sample profiles

Canada: The sample consisted of 115 respondents, all entrepreneurs, 73 (63.5%) men and

42 (36.5%) women. The mean business longevity for MOB was 9.8 years and for WOB, 6.1

years. Of the respondents, 47.1% reported having one employee, 22.1%, two employees,

10.6%, three employees, and the rest, 20.2%, more than four to thirty employees. Most of the

respondents reported having an academic education, with 40 of them (34.8%) having attained

a first degree and 29 (25%) having obtained a professional, non-academic education. The

average age of the male respondents was 46 years and that of the women, 42 years.

Israel: The Israeli sample consisted of 120 respondents, all entrepreneurs, 69 (57.5%) men

and 51 (42.5%) women. The mean business longevity was 10.5 years for MOB and 4.96 years

for WOB. Thirty-three respondents (27.5%) had one employee, 10 (8.3%) employed two

persons, 16 (13.3%) had three employees, 12 (10%) had four employees, and the rest reported

having more, with one entrepreneur reporting 50 employees. The average age of the male

respondents was 39 years and that of the women, 35 years.


All of the respondents, in both Canada and Israel, own businesses in the service and

commercial sectors; there were no owners of businesses in the low- or mid- tech industry nor

from the manufacturing sector. Since the distribution of the businesses' occupations was very

large, the business sector was separated into professional versus non-professional businesses

for computations (Longenecker, 2006).

Questionnaires

The research questionnaire was in three parts. (1) Business measures derived from objective

data, i.e., the products/services provided by the company, the age of the business, number of

full-time employees, full-time employee turnover rates in the preceding year, gross earnings

and change from the preceding year (Kalleberg & Leicht, 1991). For this study, the variables

included as success measures were: business longevity (age); growth in turnover from sales

from the preceding year and growth in the number of employees. (2) A self-assessment form

of managerial behavior, modified for entrepreneurs from the Personal Assessment of

Management Skills (PAMS) (Whetten & Cameron, 2005), intended to assess the functions

required for effective management. From the original 85-statement PAMS questionnaire, 50

statements deemed most relevant to entrepreneurial management, all based on the

entrepreneurial literature, were selected for this study. The respondents were asked to rate

their actual perceived managerial performance according to a 4-point rating scale (1- strongly

disagree ----5- strongly agree); (3) Entrepreneurs' personal characteristics: age, educational

attainment, and measures of previous self-employment experience.

THEORETICAL AND OPERATIONAL DEFINITIONS

Dependent variable

Business success - The dependent variable is based on the respondents' self-reports

referring to three success indicators: (a) business longevity (Bates, 1990; Orser & Riding,


2004; Robb, 2002); respondents addressed the question – "How old is your business (in

years)?"; (b) changes in the turnover from their businesses' sales. Building upon prior research

in entrepreneurship, one predominant indicator of a business's financial performance focuses

on sales or growth in sales (e.g., Kalleberg & Leicht, 1991; Fischer et al., 1993; Rosa et al.,

1996; Fasci & Valdez, 1998; DuRietz & Henrekson, 2000). Business turnover was measured

by the owners' responses14 to the question: " Please specify what is the change (in %) of your

business revenues (sales) from its start up point till today? "; (c) growth in the business size,

assessed through the current number of employees compared to the number of employees at

start-up, indicating the growth, stability or reduction in the number of employees over time.

Independent variables Managerial performance – studies have shown that entrepreneurs

have a different set of attitudes about the nature of the management process and business in

general (Baum & Locke, 2004; Gasse, 1977). Based on Whetten and Cameron's (2005)

conclusive model and modified from their PAMS questionnaire on managerial performance,

five managerial functions are included in this study; respondents were asked to rank (1- very

rare ----5-very often) the extent each function characterizes their daily managerial

performance as leading entrepreneurs on the following functions; (a) innovation (Brockhaus

& Horwitz, 1986; Gasse, 1977, 1982; Smilor, 1997), e.g., "I strive to generate new ideas and

activities at work", "I make sure that divergent points of view are represented in every

complex problem-solving situation", "I invest more effort and take more initiatives than

expected"; (b) leading change (Filion, 1991; Lerner, et al., 1997; Lerner & Almor, 2002;

Morris, et al., 2006; Walker & Webster, 2006), e.g., "I work to close gaps between good and

great performance", "I know how to get people to commit to my vision of positive change", "I

express compassion toward employees who experience difficulty in adjusting to change"; (c)

14 Self-reports were chosen as data collection methodology due to entrepreneurs' tendency to avoid the presentation of objective data on their business' sales turnover or any other financial indicators; moreover there is an emerging stream of research in entrepreneurship providing substantial evidence supporting the validity of the


a people-orientation in managing the staff (Brush, et al., 2004; Gundry, et al., 2002)., e.g., "I

frequently give other people positive feedback", "I express gratitude frequently, and even for

small acts", "I avoid using threats or demands in order to impose my will on others", "I help

people feel competent in their work"; (d) goal-setting (Baum & Locke, 2000; Baum, Locke,

& Smith, 2001; Erez & Judge, 2001; Locke, 2001, Locke & Latham, 1990, 2002), e.g., "I set

financial goals based on my vision regarding my business", " I set financial goals and

encourage my workers to accomplish them", " I usually emphasize a higher goal associated

with the work"; (e) networking (Greve & Salaff, 2003; Lerner, et al., 1997), , e.g., " I pro-

actively meet different people in order to expand my networking", " I attend professional

conferences /seminars/forums for networking"

Control variables

Educational level and past managerial experience are known to affect future sales and

revenue (Cassar, 2004); and so id the effect of age, gender (e.g., Johnsen & McMahon, 2005;

Menzies, et al., 2004) and nationality (Atuahene-Gima & Ko, 2001; Neelankavil, et al., 2000;

Steensma, et al., 2000) on several measures of the business success. They were thus included

as control variables. Of the firm's characteristics, two dichotomous variables were included;

sole ownership (0) versus partnership (1) (e.g., O'Connor, Hamouda, McKeon, Henry &

Johnston, 2006); and professional (1) versus non-professional (0) businesses (Longenecker,

2006). The category 'professional businesses' refers to those whose main activities derive

from extensive academic and/or practical training, i.e., law firms, psychology and

psychology-related firms, businesses specializing in architecture, accounting, medicine,

organizational, management or financial counseling, and so on. The category 'non-

professional businesses' refers to those whose main occupation does not require such

academic knowledge and specialized training, i.e., craft- and art-related businesses, fashion,

self-reported measures, including financial indicators, due to the fact that they are anchored in objective criteria, and are thus reliable and valid (Brush & Wanderwerf, 1992; Chandler & Hanks, 1993).

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Results

Table 1 summarizes the descriptive statistics and the intercorrelations between managerial

performance, the included measure of business and the control variables—personal and

business characteristics.

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The estimates in Table 1 indicate positive and significant relationship for each one of the

business' success measures with different managerial functions; for example, longevity is

positively and significantly related to three managerial functions, namely, leading change, a

people orientation and setting goals; turnover from sales is positively and significantly related

to networking and growth in size is positively and significantly related to setting goals.

Gender is significantly related to longevity and growth in size, male entrepreneurs were

significantly related to both measures; and nationality is significantly related to turnover from

sales and growth in size, Canadians are significantly related to growth in size and Israelis - to

turnover from sales. Managerial functions are intercorealted but not to a multicolinearity

level.

The expected versus actual results for H1 to H3 are summarized in Table 2.

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To determine whether the functions of managerial performance are differentiated by gender

for each nation, as posited in H1, a two-step procedure was followed. First, to enable


classification of the included variables, thereby facilitating the detection of structures in the

relationships between the variables (Pedhazur & Schmelkin, 1991), a factor analysis15 was

executed for the 50 variables selected as measures of managerial performance. The results of

this analysis showed that by extracting factors with eigenvalues of 1.0 or higher, five factors,

explaining approximately 50% of the total variance, remained. Looking into the rotated

matrix, the factor with the highest loadings was associated with managing innovation

(Innovation) followed in descending order by factor associated with variables in managing

through a people-orientation (People), leading change (Change), goal setting (Goals), and

networking (Networking). The loadings were computed and the resultant factors were

employed in a one-way ANOVA to identify the gender differences in managerial

performance. The one-way ANOVA was chosen as it provides comparisons by gender of the

means of each factor of the managerial performance. ANOVA was measured separately for

Canadian and Israeli entrepreneurs.

The analysis indicated that women of both nations ranked higher scores than men in each

factor of the managerial performance, but significant differences between the genders emerge

only in managing innovation (F (1,81) = 3.852, p < 0.05*), (women: MEAN = 3.33, SD =

.500; men: MEAN = 3.10; SD = .438) for the Canadian sample; and in: managing innovation

(F (1,101) = 8.251, p < 0.01**), networking (F (1,101) = 3.900, p < 0.05*), and managing the

staff by a people orientation (F (1,101) = 4.100, p < 0.05*) for the Israeli sample. Means and

SDs for the Israeli sample respectively, were as follows: managing innovation—for men 3.01,

.484, and for women, 3.28, .405; networking—for men 3.19, .54 and for women, 3.40, .41;

and managing through a people-orientation— for men 3.19, .50 and for women, 3.41, .53. The

findings suggested that women entrepreneurs, both Canadian and Israeli emphasize more than

their male counterparts some managerial functions; while the expected relationships – of

15 The Principal Components method was chosen since it allows combining two or more variables, which could be correlated, into one factor, and the Varimax rotation was used to maximize the variance of the 'new' factors.


nationality or of men with some managerial functions emerge insignificant; hence partly

supporting the first hypothesis.

The expected versus actual results for H2 and H3 are summarized in Table 2. To explore

the second and third hypotheses, on the role of gender in the relationships between managerial

performance and business' success measures, a multivariate analysis (MANOVA) was

conducted in a custom model with interactions of gender with each managerial factor

separately. The dependent variables included were the three business' success measures

(longevity, changes in the turnover from their businesses' sale, and growth in business' size),

and the covariates were the five factors comprising managerial performance (i.e., innovation,

managing by a people orientation, leading change, setting goals and networking), gender

entered as a fixed factor. The overall multivariate test emerged significant for four variables,

gender (Wilks λ = .729, F (1,180) = 2.673, p < 0.05*), and three managerial functions,

managing by a people orientation (Wilks λ = .750, F (1,180) = 2.420, p < 0.05*), innovation

(Wilks λ = .599, F (1,180) =2.339, p < 0.05*) and establishing networking (Wilks λ = .683, F

(1,180) = 3.339, p < 0.05*). The interactions showed significance for gender with—

establishing networking (Wilks λ = .740, F (1,180) = 2.501, p < 0.05*), innovation (Wilks λ =

.712 F (1,180) = 2.00 5, p < 0.05*) and managing people (Wilks λ = .815 F (1,180) = 2.225, p

< 0.05*). The tests for between-subject effects showed that of the main effects (without

interactions) of gender on business' success measures, significance emerged for growth in

business' size (F (1, 180) = 6.713, p < 0.00**) and turnover from sales (F (1, 180) = 4.689, p

< 0.05*), indicating that in general, the genders differ in these measures. Regarding the

factors of the managerial performance, for networking, the mean for men (Mean = 2.912; SD

= .756; n = 100) was higher than that for women (Mean = 2.833; SD = .902; n = 80), while for

managing through a people orientation, and innovation the mean for women respectively

(Mean = 3.255; 3.100; SD = .491; .222; n = 80) were higher than that for men, respectively


(Mean = 3.148; 2.919; SD = .948; 1.114; n = 100). The interactions of gender with

networking (F (1,180) = 5.355, p < 0.05*) was significantly related to turnover in sales;

gender and innovation (F (1,180) =4.348, p < 0.05*) was significantly related to turnover

from sales; and managing the staff by a people orientation (F (1, 180) = 4.078, p < 0.05*) was

significantly related to growth in the business' size.

The findings for H2 and H3 emerged that for women managing by a people orientation was

significantly and positively related to growth in the business' size, and innovation was

positively and significantly related to turnover from sales, as expected; and that for men

networking was significantly and positively related to turnover from sales, again as expected.

However, the other expected relationships did not emerge significant, thus these findings only

partially support H2 and H3.

To further investigate the forth hypothesis that some functions of the managerial

performance will affect the business' success measures and that overall nationality would

appear more significant than gender in determining the business' success, three hierarchical

regression analyses were conducted for each of the business' success measures separately, i.e.,

longevity, changes in the turnover from their businesses' sale, and growth in business' size16.

Since the factors of managerial performance are predominant in this study's conceptualization,

rather than entering all the independent variables into the multiple regression equations at the

same time, I wanted to consider the influence of the these factors in isolation; thus, the factors

of managerial performance were entered in the first step, gender and nationality were entered

in the second step, and finally, the control variables— the owner's personal characteristics

(i.e., age, educational level and prior experience in management) and the business'

characteristics (sole ownership versus partnership and non-professional versus professional

businesses) were entered in the third step.

16 Only for growth in the business size an additional controlling variables was included – the business' age, due to the partial correlation between them.


LONGEVITY

It appears that the five included factors of managerial performance explained around 6%17

of the total variance in business longevity (step 1); the next step, with gender and nationality,

added a moderate contribution of around 4% to the total variance, meaning that these are

moderate predictors of the criterion variable; and the control variables entered in the third step

contributed an additional 18% to the total variance, the total variance as revealed by the R2 is

around 23.5%, a considerable result. Of the factors representing the managerial performance,

leading change and setting goals emerged positive and significant, as expected, but contrarily

to the hypothesis innovation appeared insignificant in affecting the business longevity. Again

in contrast to the expected relationships, gender appeared significant in predicting longevity,

namely business headed by men are older than businesses headed by women. Of the control

variables – the owner's age and past experience in management have both a positive and

significant effect on longevity.

TURNOVER FORM SALES

The factors of managerial performance explained around 5.5% of the total variance in

changes in business turnover from sales (step 1); gender and nationality contribution to the

total variance by adding around 2% to the total variance, again implying that both are

negligible predictors in determining the dependent variable; while the control variables

included in the third step appeared insignificant in determining the business' turnover from

sales.

The major contribution of the factors representing managerial performance emerged

positive and significant for innovation, leading change and managing by a people orientation;

17 The contribution of self-reports is usually relatively low (Gelman & Hill, 2006); thus the percentages revealed in this study are considerable.


and as predicted, gender appeared insignificant, and nationality appeared significant —

businesses headed by Israelis comparatively to those headed by Canadians had higher and

positive changes in turnover from sales.

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GROWTH IN SIZE

The factors in the first step 1 explained around 6% of the total variance in the business'

growth in size; gender and nationality, added a contribution of around 3% to the total

variance, and the control again appeared insignificant as revealed from the results in the third

step; overall the included variables explained around 12% of the total variance. The factors

that emerged positive and significant are managing by a people orientation, as expected and

setting goals. Gender emerged insignificant and nationality emerged significant, Canadian

more that Israeli profited of a growth in size, as predicted. Although partially supporting the

hypothesized relationships in H4, most of the expected relationships and their directions

appeared as expected; overall the results of this study supported most of the hypothesized

relationships.

Conclusions

The relationship between gender and success in entrepreneurial businesses, an emerging

quest in entrepreneurship research, is still unresolved and unclear. The findings to date are

inconsistent and inconclusive, with some studies reporting differences between success

measures, i.e., longevity, changes in turnover from sales and growth in size for MOB and

WOB (e.g., Chaganti & Parasuraman, 1996; Greve, 1999; Kjeldsen & Nielsen, 2004; Robb,

2002; Srinivasan, et al., 1994), while others show similarities in some of these indicators


(Fagenson, 1993; Kalleberg & Leicht, 1991; Sonfield, et al., 2001; Verheul & Thurik, 2001).

In addition, most of the conclusions on business success are drawn from studies largely on

MOBs, rather than from comparative assessments of the different 'cultures' of men and

women entrepreneurs (Hofstede, 2001; O’Reilly, et al., 1991).

Additionally, it should also be noted that as global economies grow, 'local' observations of

business success measures seem limited. Nationality has been found to affect some measures

of business success (Kolvereid et al., 1993), and although cultural assessments of these topics

are imperative (Hofestede, 2001), they are notably lacking in the realm of entrepreneurship.

The present study addresses these gaps and attempts to explore the close and complementary

relationships between managerial performance and business success, using a process-oriented

perspective. Relatively few studies focus on the activities and actions within the business,

such as managerial performance, i.e., take a process-oriented perspective, which corresponds

to this study's basic conceptualization. Most studies on entrepreneurship and business success

measures favor either the resource-based view (e.g., Barney, 1991; Bird & Brush, 2002;

Boden & Nucci, 2000; Brush, et al., 2004; Loscocco, et al., 1991), associated with the owner's

human capital and personal characteristics, or the output-oriented approaches (Alsos, et al.,

2006; Boden & Nucci, 2000; Fielden, et al., 2003; Grilo & Irigoyen, 2006), which address

the differences and/or similarities in MOB and WOB's success measures, but typically do not

attempt to provide empirical explanations for these findings.

In this study the gender of the owner is postulated to play a marginal role in business

success; alternatively, some indirect effects, related to gender, may have a predominant role in

the businesses' success; as such, different managerial functions in which owners, men and

women, engage should affect the success of MOB and WOBs.

In Figure 1 the main variables investigated in this study are presented. The relationships of

gender and managerial performance among Canadian and Israeli entrepreneurs were first


compared. In partial accordance with the first hypothesis, women entrepreneurs, both

Canadian and Israeli, ranked significantly higher in some managerial functions compared to

their male counterparts; Canadian women entrepreneurs were found to rank higher in

managing innovation; Israeli women entrepreneurs were found to rank higher in managing

change, innovation and in managing the staff by a people orientation. These findings show

that each nation has a characteristic managerial performance, especially among women

entrepreneurs, and that no gendered managerial performance emerged. Simply put, in the

cases of both the Canadian and Israeli women entrepreneurs, these findings support previous

ones, for example, the finding on Canadian and Israeli women who rank higher than men in

managing innovation, correspond to those showing that women entrepreneurs emphasize

innovation (e.g., Hisrich & Brush, 1984; Goldsmith, et al, 1987; Goldsmith, et al., 1995

Sexton & Bowman-Upton 1990); and the findings that Israeli women are more focused than

men on managing their employees, again supports previous studies showing that women

entrepreneurs have the advantage in managerial performance oriented to people (Bruni, et al.,

2004; Brush et al., 2004; Gundry et al., 2002). However, the engagement of Israelis in some

functions that are less likely to be used by Canadian women entrepreneurs is surprising in

light of the supportive entrepreneurial environment in Canada18 (Manzies, 2004) compared to

Israel (Berry, 2004; Eden et al., 2005), and induced us to seek different explanations. Based

on Hefstede's model (2001) showing that national cultures stem from consistency in values,

and on the work of O’Reilly, Chatman, and Caldwell (1991) comparing the organizational

dimensions related to innovation, people-orientation and openness to change, a possible

explanation of these findings may be that entrepreneurs in the different nations, especially

women, hold a unique view on what 'management' entails or what is the best managerial

performance to use for their own businesses. These findings may also suggest that although

18 E.g., Industrial Research Assistance Program http://irap-pari.nrc-cnrc.gc.ca/main_e.html; Canadian Federation of Independent Business http://www.cfib.ca/default_E.asp?l=E

http://irap-pari.nrc-cnrc.gc.ca/main_e.html

http://www.cfib.ca/default_E.asp?l=E


Canada and Israel may have different and unique ideas regarding management processes in

entrepreneurial businesses, there still is a general 'idea' or 'value' in both nations that prompts

women entrepreneurs to use some functions of managerial performance more frequently than

men. Intriguingly, this implies, contradicting some previous findings on women’s

disadvantaged position in some managerial functions (Powell & Ansic, 1997; Sonfield, et al.,

2001), that women entrepreneurs are as, if not more, pro-active and 'hands-on' in management

as their male counterparts.

Turning to the second and third hypotheses, on the role of gender in the relationships

between managerial performance and business success measures, the results revealed that a

higher managerial orientation of women towards people and innovation are positively related

to both growth in WOB's size and turnover (correspondingly); and in the case of men higher

levels of reported networking are related to MOB's turnover; suggesting not only that men and

women use different functions in their managerial performance, but that they also transform

these managerial functions into different advantages for their businesses. For example,

turnover from sales is stimulated by networking in MOB and by innovation in WOB. These

findings provide a breakthrough in our knowledge by revealing that although MOB and WOB

were found to demonstrate different success measures (Alsos, et al., 2006; Boden & Nucci,

2000; Grilo & Irigoyen, 2006); it is apparently not the gender of the owner, but rather the

managerial functions used by the owners, (used differently by men and women), which shape

the success of the business. Concurrently, the same business success measures develop, at

least in part, from different managerial performance in businesses headed by men or by

women. Yet, some expected relationship between managerial performance and MOB’s and

WOB's success failed to emerge as significant in this study. Future studies should therefore

re-assess these relationships in larger samples and across more nations.


Finally, in the attempt to decipher the role of the different 'cultures' – gender or national –

in the relationship between managerial performance and business success, as proposed in the

fourth hypothesis, apart from its significant affect on longevity, gender appeared insignificant

in affecting business success measures, i.e., turnover from sales and increase in size, as

hypothesized. Building on the national statistics in Canada and Israel showing that

entrepreneurial businesses in Israel are relatively small but profitable (Eden, et al., 2005; van

Beuzekom & Arundel, 2006), the findings on the advantage of businesses headed by

Canadians in increase in size compared to those headed by Israelis, and of the businesses

headed by Israelis in their turnover from sales compared to those headed by Canadians, are

not surprising; though the statistical contribution of nationality was moderated for both

success measures.

Overall, this study's findings provide a breakthrough in our knowledge in raising the

premise that MOB and WOB's success measures are not directly related to the owner's

gender, but are more likely to be associated with the genders' use of specific managerial

functions and, apparently, to their ideas or values of how managerial functions assist them in

achieving success for their businesses. By providing evidence on the role of the internal and

operational processes, i.e., managerial performance, in shaping business success (Fagenson,

1993; Kalleberg & Leicht, 1991; Verheul, et al., 2002; Verheul & Thurik, 2001) these

findings reinforce the relevance of the process-oriented approach in the investigation of the

success of MOB and WOB.

The predominant role of managerial behaviors and nationality, and the relatively marginal

role of gender per se in business success measures, imply that the gender gap is decreasing in

some measures of business success.

These study findings also highlight avenues for future research through a process-oriented

perspective, and thus challenge the domination of the traditional line of studies that uses a


resource-based view or an output-oriented perspective on MOB and WOB's success measures.

A more robust measurement of MOB and WOB success measures is thus developed, and fills

gaps in our knowledge of MOB and WOB's success.

Implications and Limitations

The main implication of this study is in the area of training and higher education in

entrepreneurship. With the empowerment of women in small- and medium-size enterprises

(SMEs), gender-based assistance programs have provided training courses, but there has been

concern that women are being channeled into businesses that are smaller, under-capitalized

and labor-intensive, and that they are at a disadvantage in the relevant skills and behaviors

that could promote greater success. Several studies have argued that programs are needed that

focus on the skills and behaviors which could facilitate success and growth (Carter & Allen,

1997). However, since our findings show that 'gender' has limited relevance to business

success, the call for reconsidering the gender issue in education and training programs in

entrepreneurship should be evaluated. Offering such gender-related programs means

inculcating the gender issue in entrepreneurship, thus marginalizing women entrepreneurs

rather than moving them into the mainstream of the entrepreneurial economy. In their efforts

to promote and support local entrepreneurship, education programs in this area should focus

more on process-oriented perspectives, and should be more integrated, both conceptually and

in practice, with management programs, but adapted to the entrepreneurial realm in order to

acknowledge the role of management in the outputs of the entrepreneurial ventures. These

programs should be offered to active and potential entrepreneurs of both genders and should

focus on the acquisition and development of the managerial skills and behaviors relevant for

achieving the various goals of an entrepreneurial business.


The results of this study are subject to some limitations. First, the sample was gathered

through a non-random, convenient sampling procedure. Acknowledging the difficulties in

gathering random samples of entrepreneurs, and given that this study's sample is fairly large,

the value of understanding more about entrepreneurs' managerial behaviors and their role in

MOB and WOB success measures outweighs the technical limitation of using a non-random

sample. As the business world becomes more sophisticated and increasingly differentiated,

and as entrepreneurship abounds and SME competition becomes more aggressive,

management behaviors constitute an increasingly large and important component of

entrepreneurial business success.

This study addressed entrepreneurs only in the services and retail sectors; the

manufacturing and industrial sectors are not represented at all. This is due to the limitation

imposed by collecting a non-random sample and the inherent difficulties in gathering a

satisfactory number of women entrepreneurs in the manufacturing and industrial sectors,

where they are under-represented. Further investigations should address this limitation,

possibly by asking for assistance from government associations engaged in industry and

manufacturing, in order to amass a sufficient research sample from these sectors. Finally,

future research should sample entrepreneurs from different nations in order to enhance the

knowledge on the role of national culture in the success of MOBs and WOBs.


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Figure 1

The Research Model: Effects of managerial behaviors on business success—Canadian and

Israeli

Mediating variable

Control variables

Business success

a. Business survival (Longevity)

b. Turnover (Sales)

c. Growth in number of employees

NATIONALITY (Canada-Israel) GENDER

Management behavior

Innovation (Innovation)

Managing people (People)

Leading change (Change)

Goal setting (Goals)

Networking (Networking)

Firm's characteristics Sole ownership/Partnership Professional/Non-professional businesses Entrepreneur's personal attributes Educational level Past experience in management Age


Table 1

Means, standard deviations and correlations a,b Means SD 1 2 3 4 5 6

Managerial performance: (1-5)

Innovation 3.165 .469

Change 3.230 .514 .534**

People 3.283 .516 .643** .600**

Goal-Setting

3.213 .806 .210** .404** .271**

Networking 2.884 .805 .342** .210** .150 .220*

Bus. Age

8.302 10.943 .038 .260** .217* .247** .029

Turnover -sales (%)

115.247 232.727 .014 .041 .008 .026 .203* .010

Growth (in number of employees)

4.513 12.024 .055 .032 .064 .239* .003 .419*

Gender (1-women, 2-men)

.154 .148 .189* .028 -.047 .212*

Nationality (Canada-1; Israel-0)

.002 -.092 .018 .208*- .475* .014

aCorrelations greater ; than 0.15 indicate p < 0.05; bn = 235


Table 2

Summarized expected and actual results from examination of H1-H3

H1. Gender and managerial performance split by nationality

Managerial behavior Canada and Israel Women Men Women Men Expected Results-Canada Results-Israel Women Men Innovation High High High People High High Change High High Goals High Networking High

H2, H3. Managerial performance and gender by business' success

Managerial behavior Women Men Women Men Expected Results Innovation Turnover Turnover People Growth in size Growth in size Change Turnover Goals Longevity Networking Turnover Turnover

Entrepreneurship, managerial performance and business success

52

Table 3 Regression analyses for business success measures -by managerial performance, gender and

nationality and control variables—personal and business characteristics

Independent variables Block 1a,1 Block 2b,1 Block 3c,1 Block 1a,1 Block 2b,1 Block 3c,1

Longevity Turnover

A. Managerial performance

Innovation -.053 .214*

Change .235** .212*

People .021 .200*

Goal-Setting .212* .079

Networking .007 .029

B. Moderating Variables

Gender (1-women;2-men) .197* .017

Nationality (0-Israeli; 1-Canadian) .025 -.172*

c. Control variables

Age .454** .078

Educational level .006 .126

Past experience(management) .216* .100

Ownership (1-sole; 2-partnership) -.097 -.015

Professional (0-non prof.; 1- prof) .057 -.038

n =235; 1 Beta coefficients are displayed; *p < 0.05 ; **p < 0.01.

Longevity- aR2 = 0.061; adj. R2 = 0.035**; bR2 = 0.094; adj. R2 = 0.066; ∆R2 = 0.040*; cR2 = 0.275; adj. R2 = 0.235; ∆R2 = 0.181*.

Turnover- aR2 = 0.056; adj. R2 = 0.034**; bR2 = 0.079; adj. R2 = 0.050; ∆R2 = 0.024*; cR2 = 0.097; adj. R2 = 0.048; ∆R2 = 0.019.

Growth- aR2 = 0.063; adj. R2 = 0.060**; bR2 = 0.083; adj. R2 = 0.057; ∆R2 = 0.034*; cR2 = 0.111; adj. R2 = 0.063; ∆R2 =0.020.

managerial performance and business success: gender

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