Paper on gender bias in the start-up funding process wins Academy of Management Journal’s Best Article of the Year
Dana Kanze, Assistant Professor of Organisational Behaviour at London Business School, has just won the Academy of Management Journal’s Best Article of the Year award.
Dr Kanze was recognised for her 2018 paper, ‘We Ask Men to Win and Women Not to Lose: Closing the Gender Gap in Startup Funding’, which examined gender disadvantage in the start-up community.
While men are known to raise more start-up funding than women, the reasons for this phenomenon are yet underexplored.
Dr Kanze and her co-authors, Harvard Business School Professor Laura Huang, Stockholm School of Economics Professor Mark A. Conley and Columbia Professor E. Tory Higgins, examined how the types of questions asked of female and male entrepreneurs by investors influenced the level of funding these entrepreneurs received. Their investigation found that promotion-focussed questions in the domain of gains such as, “How do you plan to acquire new customers?”, were generally put to male entrepreneurs by investors. In contrast, female entrepreneurs were typically asked prevention-focussed questions in the domain of losses such as, “How do you plan to retain your existing customers?"
The research determined that entrepreneurs who were asked promotion-focussed questions were able to raise significantly more capital than those who were asked prevention-focussed questions and that the effect was more pronounced with every additional prevention-focussed question posed. The authors also found that this effect could be countered if the entrepreneur answered prevention-focussed questions with promotion-focussed answers.
Dr Kanze said she hoped the recognition from the Academy of Management would help more female entrepreneurs to secure the start-up funding their ideas deserved.
“I am very excited about the potential for these findings to significantly improve the way start-ups are funded. There are so many accomplished women out there with innovative business ideas worthy of investment,” she said.
“By first and foremost making investors more mindful of the types of questions they ask women versus men and by educating entrepreneurs to respond to prevention-focussed questions more effectively, the playing field can be significantly levelled. This change in the landscape ultimately stands to benefit not only entrepreneurs, but investors as well.”