Founding team gender diversity and social entrepreneurship: implications for venture growth and equity acquisition

Abstract

Purpose This study addresses the intersection of team gender composition, social entrepreneurship and new venture performance, aiming to understand the unique dynamics shaping these areas. The authors discuss why female and diverse founding teams often gravitate toward social ventures and explore the relevance of this phenomenon. By investigating the impact on new venture performance, this study examines the effect of team diversity in the context of social entrepreneurship. Design/methodology/approach The study is based on a survey among new ventures in Austria. Data from 326 new ventures were analyzed using linear and logistic regression analysis. Drawing on gender role theory, the effect of diverse and female founding teams on the amount of acquired external capital was tested, emphasizing how social goals may serve as a signaling mechanism to investors. Findings In line with gender role theory, the study confirms that female and diverse founding teams are more inclined to establish social ventures. While the authors find empirical support for this assertion, there was no evidence found for a second assertion by the gender role theory stating that social entrepreneurship can specifically reduce gender bias with respect to external equity funding of new ventures. Contrary to expectations, the tendency of female and diverse founding teams to prioritize social goals hinders their ability to secure external equity. Furthermore, this research indicates that gender-diverse and all-female teams achieve lower levels of employment growth compared to all-male teams. These results provide insights into the relationship between team composition and venture performance. Originality/value Adding to gender role literature, this research expands the current understanding of how team gender diversity and social entrepreneurship affect venture performance. The study indicates a high prevalence of social entrepreneurship among gender-diverse teams and highlights specific challenges faced by female and gender-diverse founding teams. The findings underpin the need for a deeper understanding of the challenges faced by female and gender-diverse teams in the entrepreneurship area. By addressing these dynamics, the study offers valuable insights and recommendations for policymakers, investors and entrepreneurs, laying a foundation for future research into promoting gender equality and fostering inclusive entrepreneurship ecosystems.

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