Mediating Effect of Social Capital: Gender and Microenterprise Performance

Background and Purpose: This research investigates how gender affects microenterprise performance and what kinds of social capitals (i.e., bonding, bridging, and linking social capitals) mediate the relationship between gender and microenterprise performance. Since 1980s, Microenterprise Programs (MEPs) has been proliferated in United States as a tool for poverty-alleviation, especially for low-income women. Many studies also have pointed out that women usually have lack of start-up assets, specialized management, and technical skill (Rajani, 2008; Strier 2009). However, while research indicates that social capital is a robust predictor of microenterprise start-up process (Davidsson & Honig, 2003), there is little research connecting gender differences in social capitals to their microenterprise performance (Tata & Prasad, 2008). Therefore, this research aims to determine the most crucial social capitals that might affect the microenterprise performance of women.

Method: This research analyzes the data (2001-2002) from the Panel Study of Entrepreneurial Dynamic (PSED). PSED has detailed longitudinal survey information on 830 individuals who were identified while they were in the process of starting business. Independent variable in this study was gender. Social capitals were treated as potential mediating variables, and were measured by receiving funding support from family and close friends (bonding social capital), getting helps from others who aren't start-up members (bridging social capital), and hours of programs taken in MEPs (linking social capital). Lastly, dependent variable, microenterprise performance, was measured by microenterprise start-up, household income, and income expectation for the next 5 years. The first set of analysis included several regression models to examine associations between gender and social capitals. The second set of analyses included regression models to examine associations between gender and microenterprise performance. In the third set of analyses, each group of social capitals was entered sequentially into the regression model on microenterprise performances.

Results: Preliminary results suggested that gender was significant related to all three measures of microenterprise performances. Specifically, women had lower performances compared to men. Women were also less likely to receive financial support from family and close friends and less likely to get helps from others. Results also indicate that getting helps from others was found to be positively associated with all measures of microenterprise performances, and the hour of class taken in MEPs was positively related to microenterprise start-up and income expectation. When mediating variables (social capitals) were sequentially entered into the regression model on microenterprise performances, the links between gender and performance was reduced in absolute size but was still significant. These results suggest that getting help from others might mediate the relationship between gender and microenterprise performance.

Conclusion and Implication: The results imply that compared to men, women were less likely to accumulate social capital, which negatively affects their microenterprise performance. Because experience in getting helps from others (bridging social capital) is positively associated with all kinds of microenterprise performance, lack of bridging social capital of women would be a barrier to improve their microenterprise performance. The study findings indicate the importance in providing intervention programs that could help facilitate women's bridging social capital accumulation