Testing the female underperformance hypothesis

Most previous studies have found evidence at the aggregate level that femal e entrepreneurs underperform relative to their male counterparts. This stud y conducts a comprehensive test of this finding. The test is conducted on a large Swedish sample of 4200 entrepreneurs (405 females) with 1 to 20 empl oyees in all sectors of the economy. Our study confirms the results of seve ral previous studies that female entrepreneurs tend to underperform relativ e to men when the data is examined at the most aggregate level. At the same time our data reveals sharp structural differences between male and female entrepreneurs. In an extensive multi-variate regression with a large numbe r of controls it turns out that female underperformance disappears for thre e out of four performance variables. The only exception is sales. No gender difference is found for profitability. A more detailed analysis reveals th at the evidence of female underperformance is much weaker in larger firms a nd nonexistent in firms with only one employee. If it is true that female e ntrepreneurs on average have weaker preferences for sales growth, while we consistently find that they do not underperform in terms of profitability, our study provides no support for female underperformance given differences in preferences.