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Does Gender Matter for Small Business Performance? Experimental Evidence from India

Delecourt, Solène, and Ng, Odyssa. “Does Gender Matter for Small Business Performance? Experimental Evidence from India.” Published by authors as a working paper( November 2019).

Abstract

Many well-known studies have shown that female-owned micro-enterprises are less profitable and have lower returns to capital than their male counterparts. This raises an important question: what drives the estimated gender gap in business performance? We examine this question in the context of vegetable sellers in Jaipur, India, a context where observationally women make less than men. We conduct two field experiments that keep every business aspect the same except for the gender of the owner, business aspects such as location, goods supplied, and hours of operation. In Experiment 1, we isolate demand-side constraints by training confederate sellers to sell packaged goods at fixed prices using a standardized script, thereby additionally controlling for seller behavior. In Experiment 2, we only control for supply-side characteristics. In both experiments, we find that women earn at least as much as men. Our results demonstrate that the estimated gender earnings gap in this context is not due to differential demand- side constraints or seller behavior, but instead is likely driven by differences in access to capital.

Do buyers discriminate against female-owned businesses? Two field experiments

Solène Delecourt, O. Ng. (2019). “Do buyers discriminate against female-owned businesses? Two field experiments. ” Working Paper, Stanford University.

Abstract

Gender inequality manifests itself at every step of the entrepreneurial process. By the time a woman is running her business, multiple factors have already constrained her profitability. How much of the gender gap can be explained by buyer’s behavior in the marketplace as against supply-side differences? Buyers might behave differently based on 1) a seller’s gender or 2) differential business characteristics by gender. To address this problem of confounding, we ran two field experiments that hold constant business characteristics and vary the owner’s gender, thus separating supply from demand factors. Before our randomized experiments, we collected data in India showing that men earn 50% more than women, men’s inventory is 40% larger than women’s and buyers are more likely to buy from male sellers. We set up our own market stalls in three different markets, keeping hours worked, location, size and setup constant, and provided the same type, quantity, and quality of goods to 272 owners–regardless of gender. To further test for demand-side discrimination, we also set up two shops in a large vegetable market and recruited confederate sellers to sell packaged goods using a standardized script. Our results show that providing men and women with the same business closes the gender gap in profitability, ruling out buyer’s discrimination. Women can earn as much as men, if given equal opportunity to do so. This finding challenges existing conclusions about the causes of the gender gap in business ownership and performance. 

Gender, small firm ownership, and credit access: some insights from India

Chaudhuri, K., Sasidharan, S. & Raj, R.S.N. ” Gender, small firm ownership, and credit access: some insights from India,” Small Bus Econ 54, 1165–1181 (2020)

Abstract

Using a comprehensive dataset on micro, small, and medium enterprises in India, we examine whether the gender of the owner matters in firm perfor- mance and in credit access from institutional sources. The study finds significant underperformance in the size, growth, and efficiency of firms owned by women when compared to those owned by men. In line with the evidence in the existing literature, our findings also support the view that women-owned firms are disad- vantaged in the market for small-business credit. These findings suggest that addressing gender discrimination in the small-business credit market could help, partly, in bridging the performance gap between male- and female-owned firms.

Household Matters: Revisiting the Returns to Capital among Female Microentrepreneurs

Bernhardt, Arielle, Erica Field, Rohini Pande, and Natalia Rigol. (2019) “Household Matters: Revisiting the Returns to Capital among Female Microentrepreneurs.” American Economic Review: Insights, 1 (2): 141-60.

Abstract

Multiple field experiments report positive financial returns to capital shocks for male and not female microentrepreneurs. But these analyses overlook the fact that female entrepreneurs often reside with male entrepreneurs. Using data from experiments in India, Sri Lanka, and Ghana, we show that the observed gender gap in microenterprise responses does not reflect lower returns on investment, when measured at the household level. Instead, the absence of a profit response among female-run enterprises reflects the fact that women’s capital is typically invested into their husband’s enterprise. We cannot reject equivalence of household-level income gains for male and female capital shock recipients.

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