Tracking the Pathways: Explaining Gender Differences in Performance among Small Business Owners in a Transition Economy

Abstract

There is growing confidence among researchers in the ability of small businesses to play a vital role in economic development. This role is manifested through their contribution to innovation, job creation, and income generation. In transitional economies such as Ghana, small businesses comprise about 90 per cent of all registered enterprises and are recognised as a crucial and integral component of economic development policies aimed at sustained poverty reduction. The ability of the small business sector to contribute to economic development is influenced by the performance of individual firms, which is in turn influenced by their strategic capabilities. Strategic capabilities are determined by the owner-manager's personality and demographic and environmental characteristics. Owner-managers' personality characteristics originate from the prevailing cultural and socialisation processes to which they are exposed. In Ghana, women form the majority of operators in the small business sector, but their educational levels and managerial experiences are lower than those of their male counterparts. There are also gender differences in the socialisation of girls and boys in Ghana. It is expected that these differences in personality and demographics between men and women affect their strategic capabilities, and ultimately the performance of their businesses. This study accordingly examines the direct and indirect effects of gender on owner-managers' characteristics, strategic capabilities, and performance of small retail firms in Ghana. A multi-method approach employing both quantitative and qualitative research methodology was utilised. Face-to-face interviews using structured questionnaires were employed to collect information from 674 owner-managers of small retail shops in the Accra Metropolis in Ghana. In all, 600 useable responses were obtained. In addition, focus group discussions were used to support the findings obtained from face-to-face interviews on issues relevant to business success. Structural equation modelling using partial least squares was employed to examine the relationships between gender, owner-managers characteristics, strategic capabilities, and firm performance. Results revealed that the gender of the owner-manager has a direct influence on performance, firm resources, business owner's skills, personal values, business experience, and education. In addition, a partial influence was observed for business strategies, but not for owner-manager's age.