The Financing of Small Business potx

The Financing of Small Business


A detailed empirical study of how small business owners finance their
enterprises, this volume compares the experiences of women with
those of men. The author redresses an over-reliance on subjective
and anecdotal evidence of discrimination in this area with a controlled
study of forty matched pairs of male/female owners, and their
strategies for raising finances.
The book finds considerable similarities between female and male
entrepreneurs in the type and amount of finance used in the business.
It also uncovers some significant differences in the banking
relationships and networking behaviour of the two groups. The
implications of this for academics, policy makers and the financial
community are also considered.
Lauren Read studied for her Ph.D. at the University of Southampton.
She is currently a senior policy advisor at the Confederation of British
Industry, responsible for small firms policy in the SME Unit.

Routledge Studies in Small Business
Edited by David Storey
1. Small Firm Formation and Regional Economic Development
Edited by Michael W.Danson
2. Corporate Venture Capital: Bridging the Equity Gap in the Small
Business Sector
Kevin McNally
3. The Quality Business: Quality Issues & Smaller Firms
Julian North, Robert A.Blackburn and James Curran
4. Enterprise and Culture
Colin Gray

5. The Financing of Small Business: A Comparative Study of Male
and Female Business Owners
Lauren Read
The Financing of Small
Business

A comparative study of male and
female business owners
Lauren Read
London and New York

First published 1998 by Routledge
11 New Fetter Lane, London EC4P 4EE
This edition published in the Taylor & Francis e-Library, 2002.
Simultaneously published in the USA and Canada
by Routledge
29 West 35th Street, New York, NY 10001
© 1998 Lauren Read
All rights reserved. No part of this book may be reprinted or
reproduced or utilised in any form or by any electronic,
mechanical, or other means, now known or hereafter invented,
including photocopying and recording, or in any information
storage or retrieval system, without permission in writing from the
publishers.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British
Library
Library of Congress Cataloguing in Publication Data
Read, Lauren, 1971–
The financing of small busines: a comparative study of male

and female busines owners/Lauren Read.
p. cm.
Includes bibliographical references and index.
1. Small business—Finance. I. Title.
HG4027.7.R397 1998
658.15’92–dc21 97–40388
CIP
ISBN 0-415-16956-9 (Print Edition)
ISBN 0-203-02494-X Master e-book ISBN
ISBN 0-203-20637-1 (Glassbook Format)
This book is dedicated to Mum, Dad, Lindsay and Kevin.
Thank you for all your love and encouragement.

Contents

List of figures ix
List of tables x
Preface xii
Acknowledgements xiii
1 The growth and characteristics of female entrepreneurship 1
1.1 Increasing numbers of women-owned businesses 1
1.2 Explaining the growth of female entrepreneurship 2
1.3 The problems faced by female entrepreneurs 16
1.4 Summary, research rationale and overview 23
2 The financing of women-owned businesses: an empirical
overview and theoretical framework 26
2.1 Problems faced by women in the financing of their
businesses 26
2.2 The financing of women-owned businesses: a theoretical
framework 31

2.3 Explaining the problems faced in the financing of
women-owned businesses: a contextual approach 40
2.4 Conclusion and research agenda 59
3 Research into the financing of women-owned businesses:
methodological considerations 62
3.1 Introduction 62
3.2 The methodological shortcomings of existing research 62
3.3 The financing of women-owned businesses in the UK:
research method 69
3.4 Data collection: practical and conceptual difficulties 79
3.5 Sample overview 86
3.6 Summary and conclusion 92
viii Contents
4 Raising finance: the use of and attitudes towards sources of
small business finance 94
4.1 Introduction 94
4.2 The characteristics of small business finance 95
4.3 Explaining the reliance on internal sources of finance 108
4.4 Raising bank finance: an in-depth analysis 113
4.5 Conclusion 117
5 The characteristics of the banking relationship 120
5.1 Introduction 120
5.2 The small business-banking relationship: an overview 122
5.3 The use of banks 128
5.4 The banking relationship 136
5.5 Conclusion 155
6 The role of networking in the financing of male and
female-owned businesses 158
6.1 Introduction 158
6.2 Networking behaviour and the size of small business

networks 166
6.3 Network profiles 170
6.4 Conclusion 177
7 Conclusions, implications and an agenda for future research 180
7.1 Introduction 180
7.2 Research implications 187
7.3 Limitations and an agenda for future research 195
Notes 199
Bibliography 202
Index 225

Figures

2.1 The entrepreneur’s search for and acquisition of capital
(proposed relationships between variables) 39
2.2 Diagrammatic representation of the Pecking Order
Hypothesis applied to sources of small firm finance 51
3.1 Model of factors influencing the credit terms extended to
small business owners 68
3.2 A continuum of survey methodologies 71
4.1 Frequency distribution of start-up costs 95
4.2 Total number of sources used at start-up (per respondent) 99
4.3 Total number of sources used post-start-up
(per respondent) 99
4.4 Size of overdraft limit 114
4.5 Size of bank loans 115
5.1 The development of banking services for small businesses 126
5.2 Distribution of firms by bank 129
5.3 Importance of key factors in the banking relationship:
breakdown by sex of respondent 138

5.4 Performance of banks on key factors in the banking
relationship: breakdown by sex of respondent 144

Tables

1.1 Self-employment (Great Britain, winter 1994/5) 2
2.1 Theory bases used in research on female business owners 32
2.2 The traditional view of the financial life-cycle of the firm 55
3.1 Business characteristics 87
3.2 Business characteristics by sex of respondent 89
3.3 Business owner characteristics by sex of respondent 91
4.1 Amount of finance used to start the business 96
4.2 Types of problems associated with undercapitalisation 97
4.3 Sources of finance used by respondents at start-up 100
4.4 Sources of finance used by respondents post-start-up 101
4.5 Total use of bank finance and type at start-up and post-
start-up 102
4.6 Reasons given by finance providers for refusing to
finance businesses 109
4.7 Reasons for non-use of bank finance 111
4.8 Security/guarantees required on bank finance (overdrafts
and loans) 116
5.1 Reasons given by respondents for choosing their bank 129
5.2 Type of assistance provided by banks 131
5.3 Reasons for non-use of bank advice 132
5.4 Frequency of contact with account manager 133
5.5 Reasons for decrease in frequency of contact with bank 134
5.6 Importance of key factors in the banking relationship 136
5.7 Male-female comparison of the four most important
banking relationship factors 138

5.8 Performance of banks on key factors in the banking
relationship 141
5.9 Performance scores of banks on key factors in the
banking relationship 142
5.10 Satisfaction with the banking relationship 143
Tables xi
5.11 The six most commonly cited bank-related problems 146
5.12 The relationship between sexist treatment by the banks
and satisfaction scores 150
5.13 Ways in which respondents deal with banking problems 152
6.1 Sources of assistance used by respondents 167
6.2 Membership of external associations or local business
groups 175

Preface

This book is based on research carried out for a Ph.D. thesis between
October 1992 and October 1995. It reports on the experiences of eighty
business owners in the UK in raising finance to start and grow their
businesses. In particular it examines the complex relationship between
small businesses and their banks. Interviews with the businesses were
conducted in 1994, during a period of recession and great uncertainty,
and only one year on from the peak in small firm failures. Anyone looking
back at this period will be reminded of the frequent ‘bank bashing’ that
occurred in the media. Readers should therefore bear in mind the impact
of the economic climate on the findings contained in this book.
I started the research with the aim of understanding and comparing
the experiences of male and female owner-managers in financing their
businesses. During the course of the research, however, I found myself
exploring much more than just their accounts or their bank statements.

Indeed, it was a great privilege for me to be allowed an insight into the
whole process of starting and running a business—the stresses and strains,
balanced by the joy of making money and being your own boss. It became
very apparent that the processes involved, such as raising finance or
entering a new market, are not neatly compartmentalised— they are
interlinked and inextricably bound into the entrepreneur’s life as a whole.
Understanding small business is therefore not simply about economics,
it is as much to do with understanding people, their motivations, and the
environment in which they live. My training as a geo-grapher has
therefore been invaluable in allowing me to look at the process of
financing a business from the various perspectives, bringing together
the relevant disciplines and theoretical strands to form a complete picture.
I hope that, as a result, the research is able to offer valuable insights and
information, not only to the financial community, but to policy makers
and business owners themselves.
Acknowledgements

I would like to take this opportunity to thank a number of people,
without whom the completion of this book would have been
impossible:

• My supervisor Professor Colin Mason, for his invaluable advice,
assistance, patience, and encouragement throughout the research
process.
• The Economic and Social Research Council, for its financial support
during the course of my studentship.
• All the small business owners who agreed to be interviewed and who
gave a great deal of their valuable time. To them I am extremely
grateful.
• Everyone who gave me good advice and guidance during the course

of the research. In particular, I am grateful to the ‘team’ from the
Scottish Enterprise Foundation, who helped me formulate my research
questions.
• My family, for their invaluable financial support and constant
encouragement.
• Clare for keeping me relatively sane!
• My final thanks go to Kevin. Without you I would never have made it
through.

Lauren Read
July 1997


1 The growth and characteristics of
female entrepreneurship

1.1 INCREASING NUMBERS OF WOMEN-OWNED
BUSINESSES
Since the late 1970s, most developed countries have experienced a
significant increase in the number of new businesses
1
started by women.
In Great Britain, between 1979 and 1995, the number of self-employed
women rose from 292,000 to 801,000 (Barclays Bank, 1992;
Employment Gazette, 1995) ( Table 1.1 ). It is estimated that
approximately one-third of all new, small businesses in the UK are
started by women (Barclays Bank, 1992; Guardian, 1992a). A similar
pattern of growth in the number of women-owned businesses can be
seen in other developed countries, including the USA (Clark and James,
1992), Canada (Atlantic Canada Opportunities Agency, 1992), Australia

(Department of Industry, Technology and Commerce, 1991) and the
Netherlands (Koper, 1993). In the USA, between 1977 and 1988, the
number of non-farm sole proprietorships owned by women increased
from 1.9 million to over 4.6 million (USSBA, 1990; 1991). It is
estimated that by the year 2000, 50 per cent of all businesses in the
USA will be owned and run by women (House of Representatives
Report, 1988: p. 2). In former West Germany, 40 per cent of all new
business start-ups are by women (Guardian, 1992a: p. 14).
Curran et al. (1987), however, warn researchers not to overstate
the growth in numbers of female self-employed (p. 13). In particular,
it is important not to overlook the fact that growth has taken place
from a much lower baseline than for men. While the number of
women-owned businesses has increased dramatically, there are still
considerably fewer than men-owned businesses (Rees, 1992). The
relative gender ‘mix’ therefore remains fairly stable in favour of
2 Female entrepreneurship
the male business owner with a ratio of around three men to one woman
(Allen and Truman, 1991: p. 115; Goss, 1991: p. 36). However,
according to a National Opinion Polls (NOP) survey for Barclays Bank,
the proportion of women starting their own businesses has been falling
during the early 1990s from around 33 per cent of start-ups in 1988 to
about 25 per cent in 1994 (Sunday Times, 1994: p. 13). The NOP survey
attribute this, in part, to the more flexible working practices of larger
organisations which have been creating more opportunities for women’s
employment in the labour market.
1.2 EXPLAINING THE GROWTH OF FEMALE
ENTREPRENEURSHIP
1.2.1 Introduction
Every new firm formation decision begins with the decision by an individual
or group of individuals to make a major change to the life path they are

following. Their decision will be influenced by a number of factors. First,
there are ‘push’ factors or negative displacements which might force an
individual to consider business ownership. Second, there are ‘pull’ factors
or positive displacements which might attract an individual towards business
ownership. Third, there are factors associated with the external ‘environment’
which facilitate or inhibit small business start-up (e.g. the availability of
resources, Government policy towards small businesses and the credibility
of entrepreneurship). While most factors are applicable to both male and
female business owners, there are a number which are specific to women or
which have a gender dimension. In an attempt to explain the rise in the
number of female business owners, the remainder of this section examines
the importance of various ‘push’, ‘pull’ and ‘environmental’ factors from
the perspective of a female business owner, recognising that in most cases
an entrepreneurial event is caused by a complex interaction of factors.
Table 1.1 Self-employment (Great Britain, winter 1994/5)
Source: Labour Force Survey, winter 1994/5 (Employment Gazette, 1995)
Female entrepreneurship 3
1.2.2 A reaction to problems in the labour market
The background to women’s participation in the labour market
It has been recognised that the rise in the number of self-employed
women and women owner-managers parallels, but with a time-lag, the
increasing participation of women, particularly married women, in the
labour market (Carter and Cannon, 1992: p. 2). Since World War II,
labour force participation by women in OECD countries has increased
by at least one-third (OECD, 1990: p. 21). In Great Britain since 1977,
the female share of total employment has risen in all occupational groups,
with the exception of operatives and labourers (Equal Opportunities
Commission, 1989). By Winter 1994/5, there was a total of 11.3 million
women in employment, 45 per cent of the total population in employment
(Employment Gazette, 1995: p. LFS33).

A number of factors have contributed to the increasing number of
women entering the labour market. According to McDowell (1991), these
are best explored within the wider context of social and economic change
which has occurred in contemporary industrial societies this century—
the shift from ‘Fordism’ (or ‘Organised Capitalism’) to ‘Post-Fordism’
(or ‘Disorganised Capitalism’ or ‘Flexible Specialisa-tion/
Accumulation’) (Aglietta, 1979; 1982; Piore and Sabel, 1984; Lash and
Urry, 1987; 1994; Harvey, 1989; Lawton Smith et al., 1991; Cooke,
1992; Malecki, 1995).
From the early 1900s, the dominant economic form in industrialised
economies was Fordism, an era of ‘intensive accumulation’ characterised
by ‘mass production, reduced working hours, relatively high wages (at
least for the labour aristocracy), mass consumption based on the “family”
wage of the male breadwinner and the commodifica-tion of social life’
(McDowell, 1991: p. 402).
In Britain, as in other advanced industrial economies, many women
entered the labour market to help meet the cost of lifestyles based around
consumption. Their entry was facilitated by the provision of care for the
elderly and young children from the welfare state (McDowell, 1991).
These services themselves created more employment opportunities for
women and an increase in the provision of education and training allowed
many women to improve their positions within the labour market.
Since around the 1970s, in response to increasing macro-scale
disorganisation at national and international levels, firms have moved
towards a more flexible approach in the organisation of production, the
utilisation of labour and the organisation of relationships with other firms
4 Female entrepreneurship
(Atkinson, 1984; 1985; Shutt and Whittington, 1987; Gertler, 1992; Miles
and Snow, 1992; Imrie, 1994; Malecki, 1995). It has been argued that
Post-Fordist business organisation involves substantial dependence on

networks of suppliers, a high degree of production flexibility, more
decentralised and less bureaucratic management structures, higher skill
densities in workforces, more flexible working practices and an increased
tendency towards inter-firm collaboration (Cooke, 1992). These changes
have been facilitated by new technologies which have helped to
accommodate the new style of production (Rothwell, 1992).
The increased need for part-time, flexible labour has therefore
increased the number of opportunities for women to enter the labour
market (McDowell, 1991). Corporate restructuring has also meant
that many large companies now subcontract out services that were
previously ‘in-house’ such as catering and cleaning and also white
collar services such as public relations, marketing and computer
support services (Keeble et al., 1991). Furthermore, rising consumer
affluence and the increase in numbers of dual income households
has created a need for ‘quasi-domestic’ services (McDowell, 1991:
p. 416). There has therefore been an increase in the number of jobs
available in those types of occupations and industries that have
traditionally employed women (Massey, 1984). While such factors
are important in explaining the growth of women’s participation in
the labour market, it is important to remember that such a growth has
been an ‘integral rather than a coincidental part of the restructuring
process’ (McDowell, 1991: p. 406).
Another factor which has led to an increase in the number of women
entering the labour market is the break-up of the nuclear family (Moore,
1993: p. 11). There are now more single-parent mothers having to go
out to work. Within the two-parent family, economic stagnation, the
lowering of wages and the threat of unemployment, particularly during
the 1990s, has meant that the concept of a family supported by a sole
male breadwinner is declining in pre-valence. In many cases, the
woman’s income is needed to keep the family above the poverty line

(West, 1982). In other cases, the woman’s salary may be used in order
to sustain a particular lifestyle. This might include private education,
foreign holidays or luxury cars.
Demographic factors have also meant that women are living longer
and having fewer children, often later in their lives. This has enabled
many women to take up full-time paid employment. Furthermore, the
psychological expectations of women have changed so that their
identities are now more frequently related to their experiences in the
workplace, rather than to their role as a wife and/or mother. Women
Female entrepreneurship 5
have been entering the workforce to exercise their rights to an equal
role with men in the world economy. Facilitating factors have included
an increase in women’s access to education, particularly higher
education, and the introduction of laws addressing inequalities in access
to employment opportunities (Malveaux, 1990).
The question is, how has the growth in the number of women entering
the labour market had an impact on the growth of small business
ownership among women?
The problems faced by women in the labour market
Despite their increased participation in the labour market, waged labour
entry has not had a widespread emancipatory impact on women generally
(McDowell, 1991: p. 401). As highlighted by Carter and Cannon (1992),
research on labour market segmentation indicates that there are sexual
divisions in the organisational distribution of the workforce which mean
that women tend to remain at the bottom of the occupational hierarchy
in four main ways.
First, women tend to be concentrated in part-time jobs. Indeed, in
Spring 1993, 45 per cent of female employees were working part-time,
compared to only 6 per cent of male employees (Employment Gazette,
1993: p. LFS2). However, 81 per cent of the part-time female employees

said that this was by their own choice. While only 10 per cent said that
they were forced to take part-time work because they could not find
full-time work, it is quite likely that many of the 81 per cent who had
‘chosen’ part-time work also had domestic responsibilities which would
have made it very difficult for them to have taken full-time employment
(see section 1.2.6 ).
Second, the jobs taken by women in the labour market tend to be less
skilled than those taken by men. Women are more highly represented in
clerical work and other service-related jobs and less so in managerial or
technical jobs. A study of employees by occupation shows that 76 per
cent of all clerical and secretarial employees in Great Britain are women
(Employment Gazette, 1993: p. LFS2).
Third, women often find it much more difficult than men to develop
their careers in larger organisations because of stereotyped ideas about
their ability to succeed in a business environment (Chaganti, 1986)
and because many men perceive women to lack managerial attributes
(Cromie and Hayes, 1988). While women comprise 34 per cent of all
managers, they are still concentrated in traditionally ‘female’
occupations such as the ‘caring professions’ (Employment Gazette,
6 Female entrepreneurship
1993: p. LFS2). Furthermore, for those women who achieve upward
career mobility, advancement past the ranks of middle management is
very often blocked by a ‘glass ceiling’ (Hymounts, 1986). This has
been described as

an invisible but very real barrier, through which women can see the
senior positions for which they have the potential, experience and
qualifications, but which for a variety of reasons, including prejudice,
they often do not achieve.
(Guardian, 1992a: p. 14)

According to Belcourt (1991), less than 3 per cent of the senior positions
in Canadian corporations are occupied by women. A Government report
2
in the UK also points out the fact that although today’s women are
better educated and harder working, their jobs are still lowlier than men’s
and less well paid. The report shows that even in industries that mainly
employ women, for example teaching, while women account for more
than 80 per cent of all nursery and primary teachers, only 57 per cent
are employed as school heads or deputy heads.
Fourth, it is well documented that women earn less than men (Cromie
and Hayes, 1988: p. 88). Not only are women concentrated in the lower
paid jobs, but the Northern Ireland New Earning Survey (1985) found
that, even in the same jobs as men, women are paid less. For example, in
clerical jobs, male clerks were paid 30 per cent more than female clerks.
A Labour Research Department report recently estimated that working
women will have to wait more than fifty years before they earn the same
as men. At present, women’s gross hourly earnings are 79 per cent of
men’s (Wilkins, 1995). In summary therefore, many women in the labour
market lack job security, have poor career prospects and few occupational
rights and benefits (Carter and Cannon, 1992).
Research indicates that dissatisfaction in paid employment causes
many men to start their own businesses (Scase and Goffee, 1980). It is
therefore likely that the experiences of women in the labour market will
have a similar effect (Goffee and Scase, 1985: p. 7). Business ownership
is often seen as an important way for women to avoid ‘a labour market
which confines them to insecure and low-paid occupations’ (Goffee and
Scase, 1983: p. 635). Self-employment and business ownership offer
the potential for career progression (Batchelor, 1987; Hertz, 1987; Rees,
1992) without the ‘supervisory controls of formal employment’ (Goffee

and Scase, 1983: p. 635). It is perceived as being free from the formal
employment selection criteria which often lead to systematic
discrimination against women (Hertz, 1987; Belcourt, 1991),
Female entrepreneurship 7
chauvinistic recruitment officers (Belcourt, 1991), stereotyped
perceptions of women and their abilities (Cromie and Hayes, 1988),
and ‘male imposed identities which are allocated to women via
established societal institutions’ (Goffee and Scase, 1983: p. 625). Recent
studies confirm that many new businesses are started by women seeking
to escape discrimination as employees (The Independent, 1991; Reuber
et al., 1991; Patel, 1994). Other women, especially single parent mothers,
are forced to consider starting their own businesses because of financial
burdens which cannot be met through formal employment (Patel, 1994)
and because as employees women tend to earn less, they face lower
opportunity costs when giving up paid employment to start a business
than men (O’Hare and Larson, 1991).
1.2.3 An outcome of the Women’s Movement
The growth in women’s involvement in the labour market has coin-cided
with the rise of the Women’s Movement and feminist awareness.
According to Goffee and Scase (1983), the Women’s Movement
represents a ‘collective response to gender-related experiences of
subordina-tion and deprivation’ (p. 625). The emphasis has been on
collective action to eliminate gender-based inequalities by breaking down
male-dominated institutions and patriarchal structures. Women, like
many ethnic minority groups and immigrants, are often denied access
to ‘positions of power and authority’ (Devine and Clutterbuck, 1985: p.
65). This ‘social marginality’, as defined by Stanworth and Curran
(1976), is where there is an ‘incongruity between the individual’s
personal attributes or self-image and the role he or she holds in society’
(Goss, 1991: p. 61). Women in a predominantly masculine capitalist

world are also a minority group (Hertz, 1987). Business ownership is
therefore seen as a way of providing women with the personal autonomy
and self-determination needed to undermine or at least query these
structures.
However, the role of business ownership in the Women’s Movement
has been contested. One of the main areas of contention is the fact that
entrepreneurs tend to operate as individuals. Supporters of the role of
business ownership in the Women’s Movement, particularly US
feminists, believe that an ‘individual’ approach can be a good
‘alternative, or supplement, to collective action’ (Goffee and Scase,
1983: p. 626) and has more radical potential because it rejects ‘the
exploitative nature of the capitalist work process and labour market’
(p. 627). Furthermore, female business owners who succeed in ‘male’
8 Female entrepreneurship
sectors of the economy have the potential to undermine ‘conventional
and stereotyped notions of a woman’s place’ (the traditionally defined,
gender-based divisions of labour—Goffee and Scase, 1983: p. 627). It
is seen by many as a chance for women to ‘beat men at their own
game’. According to one of the businesswomen interviewed by Goffee
and Scase (1985), the reason she had started her own business was
because she enjoyed ‘achieving the things men want to achieve— and
doing it better than them’ (p. 43).
The counter-argument, particularly from British feminists, has been
that female business owners may actually be fostering the capitalist
values and institutions which ‘sustain the domination of men over
women’, while ignoring the ‘collective nature of sisterhood’ (Goffee
and Scase, 1983: p. 627). Furthermore, it has been pointed out that
there is frequently a lack of choice underlying the decision to enter
self-employment for women (Allen and Truman, 1991) and that many
women are not necessarily better off out of the labour market

(Belcourt, 1991). For example, female homeworkers often continue
to be subjected to patriarchal divisions of labour and experience very
little economic independence or improved working conditions (Allen
et al., 1992). It has also been found that businesswomen earn less
than their male counterparts (Allen and Truman, 1991; Clark and
James, 1992). White (1984) suggested that female business owners
earn one-third less than male business owners. This may simply reflect
the fact that businesswomen take a smaller salary from their
businesses compared to men or that their businesses are smaller,
younger, or less profitable. However, another theory is that the same
factors which contribute to women in the labour market earning one-
third less than men also apply to small business ownership. These
include sex-linked differences in ability, socialisation processes,
systematic discrimination and differences in education and work
patterns (Belcourt, 1991).
Nevertheless, it has been shown that the independence which many
women gain through business ownership can be channelled back into
collective action. For example, ‘radical’ women business owners, that
is, women who have a low commitment to both conventional
entrepreneurial ideals and traditional gender roles, tend to ‘regard their
business activities as part of a collective struggle which offers services
to other women in ways compatible with feminist ideology’ (Goffee
and Scase, 1985: p. 139). Many such businesses are co-owned and
collectively organised as co-operative enterprises, providing spheres of
autonomy which free their owners from male domination. Co-operative
businesses are particularly popular with women (Rees, 1992) but are
Female entrepreneurship 9
difficult to set up in the UK as financial organisations are suspicious of
non-traditionally managed business ventures.
1.2.4 Increasing numbers of female role models

As the number of female business owners has grown, so has the number
of role models on whom would-be female business owners can model
themselves (Batchelor, 1987; Allen and Truman, 1991). The growing
presence and visibility of female business owners has had a two-fold
effect. First, successful businesswomen demonstrate to other women that
they have a choice in the labour market. In particular, they do not have
to suffer the ‘glass ceiling’ or the poor conditions often associated with
employment in the formal labour market (Godfrey, 1992). Second, they
provide a potentially important pool of mentors. As mentors, existing
female business owners can offer advice and encouragement to
newcomers and introduce them to established networks of useful contacts
which are vital for business survival and growth. Women generally prefer
to use other women for information and advice (Smeltzer and Fann,
1989) and often create their own business networks (Hisrich and Brush,
1985) offering different kinds of support compared to men—social
support as well as practical (Smeltzer and Fann, 1989). UK examples of
female entrepreneurs’ networking organisations are The British
Association of Women Entrepreneurs, The UK Federation of Business
and Professional Women and the parliamentary lobby group (Women
Into Business).
Recent years have witnessed the meteoric rise of businesswomen such
as Anita Roddick of the Body Shop, Debbie Moore (Pineapple) and
Sophie Mirmam (Sock Shop). In the latter two cases, they have also
received public attention over their failure in business. Nevertheless,
the visibility and profile of such role models depends largely on the
country in question. American women entrepreneurs, as with their male
counterparts, tend to enjoy a much higher profile coverage and more
energetic public lives compared with their British equival-ents (Hertz,
1987). This has much to do with the respective business cultures. In
America, being an entrepreneur and running one’s own business is a

common aspiration. There are dozens of magazines devoted to
entrepreneurship in general and a growing number targeting women
entrepreneurs (e.g. Entrepreneurial Woman; Women In Business). In
Britain, however, entrepreneurship has a much lower status and female
entrepreneurs are often seen as somewhat of an oddity. They therefore
tend to be more solitary and isolated in the business world, interacting
10 Female entrepreneurship
little with other female business owners (Hertz, 1987). Indeed,
Clutterbuck and Devine (1987) note that female entrepreneurs need to
be able to ‘develop in a vacuum’ (p. 107).
It is also worth bearing in mind, however, that growing numbers of
women running their own businesses might actually cause more women
to remain in the workplace. As pointed out by Godfrey (1992), if women
know that they have the choice to set up their own business and can
survive outside the corporate workplace, they are no longer ‘victims’ of
their situation and they can use this knowledge to demand change within
the workplace.
1.2.5 The desire for independence
For many women, as for many men, the motivation to start a business is
driven by the desire for independence (Hertz, 1987; Carter and Cannon,
1992; Carter, 1993). The independence of running one’s own business
is usually taken to mean freedom from having to take orders and/or
having control over one’s own destiny. While these are common
aspirations for both men and women, for many women, independence
has additional connotations (Carter, 1993). For instance, many women
see business ownership as offering them the chance to be independent
of men (Goffee and Scase, 1983; Cromie, 1987b; Hertz, 1987). In a
study by Hertz (1987), a property millionairess was interviewed and
explained that she had started her own business because she was ‘fed up
with being trodden on or trodden over by men’ (p. 60). A single female

might consider the independence of business ownership in preference
to the only other alternatives perceived to be on offer (being a dependent
housewife or a low-paid employee) (Goffee and Scase, 1985: p. 43). For
a married woman, business ownership may represent independence in
the form of eliminating domestic sub-ordination.
The desire for independence is therefore a very complex issue and
can mean different things to different women. This is supported by Carter
and Cannon (1992) who demonstrated that women at different stages of
their life and from different backgrounds have different definitions of
independence. They identified five groups of women united by common
experiences and motivations for starting a business. First, they identified
young achievement oriented women who see business ownership as a
long-term career option. Such women will tend to view independence
in terms of freedom from the perceived confines of the formal labour
market and self-employment as offering better career opportunities.
Second, young women who have ‘drifted’ into self-employment, either