Arm's‐length or give‐and‐take? Gender differences in the relational orientation of new ventures in Sub‐Saharan Africa

Abstract

Research Summary Women entrepreneurs in emerging economies face significant constraints in operating their businesses. Leveraging two samples of new ventures in Nigeria and Ghana, we explore gender differences in the relational orientation of entrepreneurs in their market interactions with customers. We observe that female entrepreneurs are more likely than their male counterparts to apply a relational approach in the receipt of payments for goods and services and in the structure of purchase contracts. These stylized findings are considered against the backdrop of existing literature and offer insight into the ways women entrepreneurs approach transactions with customers, especially in the context of emerging market ventures in Sub‐Saharan Africa. Managerial Summary Women entrepreneurs in emerging economies are confronted by significant resource challenges. But women entrepreneurs could also have an advantage in customer relationships. Our study uncovers two types of relational mechanisms that women entrepreneurs in emerging economies utilize in their engagement with customers. First, we find that female entrepreneurs are more likely than their male counterparts to utilize relational payments, in the form of prepayments or post payments from their customers. Second, female entrepreneurs are more likely to utilize relational contracts, in the form of unwitnessed oral purchase contracts with customers. Our study highlights the virtue of incorporating relational mechanisms in policies and practices aimed at fostering female entrepreneurship in emerging economies.