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Female ownership, firm age and firm growth: a study of South Asian firms

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Abstract

This study investigates the role of female ownership, and its moderating role in shaping the effect of firm age and access to finance on firm growth. We use a sample of 7203 firms in Bangladesh, India and Pakistan and a mixed effects model, where both firm and regional characteristics are included. First, we test how women’s ownership affects two measures of firm growth (employment growth and Birch Index). Second, we investigate how women’s ownership influences the relationship between firm age and access to finance for firm growth. Our results indicate that gender is an important determinant of firm growth, but this is closely tied to firm age, access to finance, and varies with region and country. We conduct a robustness check using firm productivity instead of growth and we find largely opposite results for productivity compared to employment growth ownership. We also identify questions that emerge from our findings for managers and policy makers interested in women-owned firms.

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Notes

  1. To some extent, the three countries in our sample offer a type of natural experiment, as all were under British rule: India and Pakistan were partitioned in 1947, followed by independence of Bangladesh (formerly East Pakistan) in 1971. Since and during the period 1947–1971, the countries diverged tremendously, not only in economic performance but also in social environment, governance and political conditions. Institutional transition has not been smooth or homogeneous across the three countries and their regions, cities and industries.

  2. World Bank (2019) assesses reforms across and within regions for the period 2007–2017, and tracks a wide range of indicators related to the legal gender gap, including measures related to business and employment participation of women. Improvement by region could reflect both action taken as well the baseline of protections in a country.

  3. It is also relevant to note more broadly that venture capital serves few entrepreneurs, even in countries where volume and size of the industry is large. For example, less than 1% of employer firms (firms with employees) in the United States reported using venture capital in the 2016 Census Bureau Annual Survey of Entrepreneurs.

  4. There is the limitation of not able to estimate with three levels, by adding random effects equations at the firm level with nesting going to biggest (country) level. However, with three countries, a three level model has small added power. Our dependent variable is already captured at the firm level, nested within a region in one of the three countries.

  5. Results are available from the authors upon request.

  6. The microfinance industry in Bangladesh came out of Mohamed Yunus’ experiment with the traditionally unbanked, least creditworthy asset class – including poor women. High repayment rates and the social gains assumed with microfinance led to rapid popularity of the industry, demonstrated by the proliferation of microfinance in Bangladesh, leading to massive and artificial injection of capital into the economy. It is not surprising that access to capital was not a significant negative factor for growth of women owned firms in Bangladesh, in this context.

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Authors and Affiliations

  1. Henley Business School, University of Reading, Whiteknights Campus, Reading, RG6 6UD, UK

    Maksim Belitski

  2. Icd International Business School, 12 Rue Alexandre, Parodi, 75010, France

    Maksim Belitski

  3. School of Public and Environmental Affairs, Indiana University Bloomington, 1315 E. 10th Street, Bloomington, IN, 47405, USA

    Sameeksha Desai

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  1. Maksim Belitski
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Correspondence to Sameeksha Desai.

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Appendix

Appendix

Table 5 Robustness check - mixed effects multivariate regression (DV: difference in logarithms of sales per employee in a current year and 3 years ago)
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Fig. 1
figure 1

Women-owned firms in five stage of growth – Bangladesh, India, and Pakistan (2007–2014). Source: World Bank (2014)

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Belitski, M., Desai, S. Female ownership, firm age and firm growth: a study of South Asian firms. Asia Pac J Manag 38, 825–855 (2021). https://doi.org/10.1007/s10490-019-09689-7

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