The Impact of Human Capital Measures on the Performance of Small, Women-Owned Firms

Previous research has indicated that women-owned firms tend to trail men-owned firms in various performance areas.The influence of human capital variables--e.g., education, experience--on the performance of women-owned firms was investigated to see if levels of human capital are positively correlated with levels of firm performance. The sample was drawn from the Federal Reserve Board’s 1998 Survey of Small Business Finances (SSBF), which provided balance sheets and income statements on 3,561 small U.S. firms with fewer than 500 employees.The data were analyzed using a variety of multivariate models.The findings revealed that women-owned firms were smaller than men-owned firms in total sales and total assets.However, when controlling for sales level and industry sector, women-owned firms, when compared to men-owned firms, were found to have no fewer employees, were much more profitable in terms of return on sales, showed a higher year-to-year growth rate in sales, and were less likely to show zero or negative growth. In spite of the smaller size of women-owned firms compared to men-owned firms, it was found that women-owned firms did not trail men-owned firms in terms of profit and growth. (AKP)