Information needs of female entrepreneurs.

INFORMATION NEEDS OF FEMALE ENTREPRENEURS

Past research has suggested that women approach the entrepreneurial experience with disadvantages rooted in education and experience. A past tendency for women to study non-business school subjects and to work as employees in "soft skill' areas

1 Donald W. Bowen and Robert D. Hisrich, "The Female Entrepreneur. A Career Development Perspective,' Academy of Management Review (April 1986), pp. 393-407.

The effect of such barriers might be expected to be greatest during the start-up phase, when knowledge of a vast array of topics is vital to the launching and survival of a venture. Those who lack background in the language and methods of business may be doubly penalized by not knowing which questions to ask, and of whom to ask them.

The purpose of the present study was to assess the experience of a group of 50 female entrepreneurs who, in the early stages of their business experience, fell into the "disadvantaged' category in terms of educational background and work experience. A survey questionnaire asked about the business information needs they rated most pressing, and the most useful sources they pursued in addressing these needs. The survey responses offer insights into the needs of female entrepreneurs when first launching a business.

RELATED RESEARCH

The small business literature depicts start-up as a time of near chaos, in which entrepreneurs often grasp at information from sources closest at hand. Franklin and Goodwin's extensive survey of Atlanta small business owners found that "small business people tend to use and consider most important those sources that are convenient . . ..'2 Stoner found a similar pattern in a study of Illinois small businesses.3 Peterson's nationwide survey of 793 small business owners and managers uncovered the same unsystematic approach to information and assistance. Assistance most wanted --though least available--concerned such problems as long-range planning. However, sources such as accountants, who dealt largely with current operations, were those most often consulted.4

2 Stephen G. Franklin and Jack S. Goodwin, "Problems of Small Business and Sources of Assistance: A Survey,' Journal of Small Business Management (April 1983), pp. 5-12.

3 Charles R. Stoner, "Planning in Small Manufacturing Firms: A Survey,' Journal of Small Business Management (January 1983), pp. 34-41.

4 Robert A. Peterson, "Small Business Management: Needs and Sources,' American Journal of Small Business (Fall 1984), pp. 35-45.

Studies of female entrepreneurs indicate that they seem to want more information than their male counterparts. An analysis of a sample of female entrepreneurs from Atlanta, Baltimore, and Richmond attributed this need to the women's non-business backgrounds and limited managerial experience.5 Pellegrino and Reece, sampling a group of female entrepreneurs in Virginia, found few start-up problems which the respondents attributed to gender, but 25 percent said that getting information was a critical problem, and 40 percent cited major difficulty in locating sources of assistance.6

5 Richard Cuba, David Decenzo, and Andrea Anish, "Management Practices of Successful Female Business Owners,' American Journal of Small Business (Fall 1983) pp. 40-46. A similar finding is reported in Robert C. Hisrich and Candida Brush, "Women Entrepreneurs: Management Skills and Business Problems,' Journal of Small Business Management (January 1984), pp. 30-37.

6 Eric T. Pellegrino and Barry L. Reece, "Perceived Formative and Operational Problems Encountered by Female Entrepreneurs in Retail and Service Firms,' Journal of Small Business Management (April 1982), pp. 15-25.

METHOD

The present research dealt with the following issues:

Do female entrepreneurs seek different types of information than entrepreneurs in general, and do they consult similar or different sources?

What perception do female entrepreneurs have of the usefulness and cost of different information sources? Do these factors influence the use made of these sources?

Do those with less business-related education and experience have different information needs?

Data was collected from a sample of 50 members of the Dallas Women Entrepreneur's Association. At the time of the survey, the group consisted of about 100 women business owners or co-owners who sought membership in an urban networking club. Subgroup characteristics of the sample are shown in table 1.(7)

7 Note that in table i, the group comprised both women who showed classical entrepreneurial behavior--starting several businesses in sequence, undaunted by lack of indepth experience in any one field--and those who began a business in a familiar field and stayed committed to that one venture. For purposes of this study, the term "entrepreneur' is synonymous with "small business owner.'

Participants were asked their reactions to listings of information needs and sources derived from previous studies and small business management texts.8 Members rated the start-up value of each of the 13 information needs, listed in table 2, as extremely, moderately, or slightly useful.9

8 Chief sources were Peterson's "Business Decision Areas' for needs and "Source' listings for sources. Since these were developed for a study of ongoing, rather than start-up firms, additional needs were included: preparing and packaging a business plan, and making presentations to investors. Networking and "advice of a significant other' were added to Peterson's list of sources in view of the findings of R. D. Hisrich and C. Brush, "The Woman Entrepreneur. Implications of Family, Educational, and Occupational Experience,' in Frontiers of Entrepreneurship Research, ed. R. Hornaday, J. A. Timmons, and K. H. Vesper (Wellesley, Massachusetts: Babson College Center for Entrepreneurial Studies, 1984), pp. 255-270.

9 Although the variables "Needs,' "Usefulness,' and "Cost' were measured on three-point scales, data was reduced for analysis using nominal effects variable coding to expand each point into a variable in its own right. Multiple regression was used to ascertain significant relationships.

Data on 17 information sources was also collected from three perspectives: start-up usefulness, usage, and cost. Usefulness was measured on a scale similar to that used for needs. Cost was based on each participant's ratings of the source's affordability as part of a start-up budget as high, moderate, or low. Usage reflected either some use or none at all. Table 3 lists the 17 sources.

Needs and sources were analyzed by first ranking them by mean score. Each need and source identified in this study was then compared to the table 1 subgroups, using linear regression to seek significant relationships (p .05). Needs and sources were treated in this aspect of the analysis as dependent, and subgroups as independent variables. The rankings of overall usefulness, use, and cost of sources were also compared using regression analysis.

FINDINGS

The composition of the sample used in this research (see table 1) appears to be comparable to that of other studies of female entrepreneurs. A relatively high percentage of the subjects had educational and experiential backgrounds in fields other than business, and 60 percent had been running their own businesses for two years or less.

Information Needs

The 13 needs listed in the questionnaire encompassed virtually all of the information the sample members deemed necessary. Only five of the fifty respondents chose to add a new category --four mentioned market research, and one added computer acquisition. The needs, as shown in table 2, are tightly clustered around a grand mean of 1.77. Statistically significant differences were found only between extremely high and low rankings.

Only two subgroups emphasized needs different from those of the sample as a whole. Those with prior management listed "how to forecast the market' significantly higher than those without such background (t = 2.24). Members who had begun more than one venture rated "how to prepare a budget' significantly more important than those starting their first business (t = 2.29).

Information Sources

Table 3 shows the ranking of each source's usefulness, the percentage of those who actually used the source, and the perceived source cost. As in the case of needs, the list of 17 items appears to fully represent the sources the members actually use. Comparison of perceived usefulness, actual cost, and cost yielded only one significant association; a positive relationship between usefulness and usage (t = 2.88; r2 = .36). Neither usefulness nor usage was significantly related to cost.

Analysis of subgroups yielded significant differences in the ratings of usefulness. Table 4 shows 15 subgroups whose attitudes were more strongly positive toward 11 sources than the group as a whole.

Only two subgroups responded to the question of usage in ways significantly different from the overall group. Former sales persons used attorneys to a greater extent than those whose background was not in sales (t = 2.39). College graduates used banks or bankers more than did nongraduates (t = 2.22). No significantly different relationships were found between subgroups and the cost of sources.

Comparing the perceived usefulness of items to their actual use reveals that several groups indicated strong feelings about the usefulness of information which they in fact-seldom or never used themselves.

An example is a curious situation involving the Small Business Administration rating. The SBA was rated most highly by those with prior management experience and those starting their first ventures. Neither of these subgroups, however, indicated more than a low normal usage of SBA. In effect, those who professed the strongest faith in the source failed to use it. Fourteen of the 15 table 4 subgroups who rated the usefulness of 11 sources most highly failed to show correspondingly high usage of the sources. No pattern of entrepreneurship background --favorable or not--was associated with these subgroups. Cost was not a factor in the lack of use of these sources.

CONCLUSION

The findings of this survey reflect virtually unanimous agreement about the types of information needed by this group of female entrepreneurs and subgroups into which the information was divided. The 13 information categories were rated closely enough in importance that they could be considered an information requirement cluster for use in future research. Indeed, perceptions of the importance of all these needs were so close that placing any theoretical significance in their priority placement would not be appropriate. In view of the sources from which needs reflected in this research were extracted, it can be said that nothing was found to indicate that female entrepreneurs have unique start-up information needs.

Regarding information sources, respondents again showed overall agreement with those sources proposed by the questionnaire. The analysis further showed that members tended to use the sources they thought useful, regardless of cost. Two observations are offered in this connection. First, there may be some sources, such as accountants and attorneys, for which, in spite of their cost, there are simply no substitutes. Second, most of the members of this sample may have been so committed to the entrepreneurship process that they viewed the start-up phase as a time in which they would pay whatever price a new business exacted. The consistency of opinion on usefulness and usage, however, indicates that these female entrepreneurs usually found what they were looking for in the information market, and reflects a certain amount of efficiency in the search process. However, to some degree this was not true for certain subgroups which, for unknown reasons, failed to use the sources they rated highly useful.

Comparing tables 3 and 4 reveals near unanimity about the top four sources. This might be expected in the case of networking, since all of the respondents were members of a group which existed for that purpose. Accountants, too, were expected to rate highly, particularly in view of recent findings by O'Neill and Duker, which showed that accountants play an important role in successful small firms.10 The high rating of business and professional organizations was also unsurprising, since the surveyed group itself could be placed in that category.

10 Hugh M. O'Neill and Jacob Duker, "Survival and Failure in Small Business,' Journal of Small Business Management (January 1986), pp. 30-37.

However, the high ratings of "Advice of a Significant Other' for both usefulness and usage was not anticipated. All of the subgroups rated this source highly, and all reported using it extensively. This category was originally included due to Watkins and Watkins' finding that close current family members strongly influence female entrepreneurs.11 To broaden the possibility of significant influence from beyond the immediate family, the construct of "significant other' was operationalized for this study as: "a current close personal associate, familial or not, whose opinion is of such value it would be specifically sought and could cause one to change a decision.' This construct thus allows for the inclusion of friends and mentors as well as family members.12

11 J. M. Watkins and D. S. Watkins, "The Female Entrepreneur. Her Background and Determinants of Business Choice--Some British Data,' in Frontiers of Entrepreneurship ed. Hornaday, et al., pp. 271-288.

12 See H. Manford, Kuhn, "The Reference Group Reconsidered,' The Sociological Quarterly (Winter 1964), pp. 5-21, for a discussion of some varied types of "significant other' in regard to role theory.

That the significant other's advice rated consistently higher than other sources--even networking--for this sample indicates that this source may have very strong influence on entrepreneurs. Further research is planned to determine just who the significant others are, what (besides advice) they may contribute, whether they are equally important to male and female entrepreneurs, and if their influence is a start-up artifact or continues as owners gain experience and their businesses mature.

Table: 1 SAMPLE SUBGROUPS

Table: 2 RANKING OF INFORMATION ITEMS NEEDED AT START-UP

Table: 3 RANKING OF USEFULNESS, USAGE, AND COST

Table: 4 SIGNIFICANT RELATIONSHIPS BETWEEN USEFULNESS OF SOURCES AND SAMPLE SUBGROUPS