Gender Differences in the Causes of Business Failure

Journal of Global Entrepreneurship Research, Winter & Spring, 2011, Vol.1, No.1, pp.95-106

Gender Differences in the Causes of Business Failure Zahra Arasti1

Abstract Entrepreneurship is a newly developed topic in Iran. The main purpose of the current empirical study is to compare unsuccessful men and women with the help of a questionnaire implemented face to face on a sample of 62 failed business-owners managers in Iran. The results point out the similarities and differences in characteristics of failed-business-owners managers by gender. Accordingly, it shows that men and women have different perceptions about the causes of business failure. The results produced in the context of an Iranian community with a high level of unemployment among women can provide critical information for individual entrepreneurs, venture financiers, and government policymakers.

Keywords: Entrepreneurship, Business Failure, Gender Differences, Failed Entreprenurs

Introduction ew firms create new jobs, open up opportunities for upward social mobility, foster economic flexibility, and contribute to competition and economic efficiency (Liao et al., 2009). Business discontinuation is an important feature of dynamic economies, and entries and exits of businesses are closely linked (Bosma et al., 2009). Our understanding of entrepreneurship will never be completed until we have a clear understanding of what caused its discontinuation. Developing a deeper understanding of new venture failures, would provide critical information for several key stakeholders in a new venture -individual entrepreneurs, venture financiers, and government policymakers (Liao et al., 2009). There is a limited but growing body of knowledge on the topic of failure on which researchers can base their investigations, especially in the small business domain. The research articles are, however, published in business, management, financial, psychological, entrepreneurial and many other journals and no proof could be found that these investigations have ever been comprehensively reviewed. There is no specific body of science to which failure exclusively belongs (Pretorius, 2009). The health of a firm in a highly competitive business environment is dependent upon its capability of achieving profit and financial solvency. This means that a firm becomes unhealthy, or deteriorates to the point where it is in danger of suffering business failure, when it loses its competence to maintain profit and financial solvency. Business failure is not only

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1. Assistant Professor, University of Tehran; Corresponding Author's email: [email protected]

common with new start-ups but also with listed companies, and it can easily happen to firms of any kind and of all sizes (Wu, 2010). An important issue in research on organizational survival and success is the relevance of gender to the business failure. Many researchers have studied the impact of gender on business performance, but very few studies have focused on the role of gender in business failure. Most of them have found that gender plays a negligible role in determining survivability and success at closure, while other studies detected the differences in survival by gender. While there are very rare studies on the impact of gender on business failure, this study helps to fill this gap in our knowledge. The annual report of Global Entrepreneurship Monitor (Bosma et al., 2009) shows that there are significant inter-country differences in the SME failure rates. On the other hand, most of the researches in business failure have been done in the developed countries and there is a limited knowledge on the causes of business failure in other countries with economic, political, social and cultural differences. The purpose of this study is to examine the impact of gender on business failure. Literature review related to entrepreneurial failure, including a wide range of factors that influence business failure is presented in section two. Then, we discuss the impact of gender on the survival and failure of business. Section three details research methodology, including sample description, measures, and data analysis. The next section presents the results. Finally, the paper is concluded with discussion and implications for future research.

Literature Review t has been widely recognized that a business growth and survival will depend both on external and internal factors. While most of the challenges which a business will face may be foreseeable, some will be completely unpredictable. However, if a business is to succeed, its management must be mindful of all matters which are likely to have a material impact on its viability and must then demonstrate skills both in exploiting opportunities and mitigating threats (FEE1, 2004). There is an extensive literature review of business failure, mostly related to prediction of failure by using the financial models, but this paper focuses on the internal and external factors that are conducive to a business failure. The term “failure” in the Oxford English Dictionary is defined as “to become deficient, to be inadequate”. In general, many different terminologies are related to business failure, such as firm closures, entrepreneurial exit, dissolution, discontinuance, insolvency, organizational mortality and bankruptcy. Ordinarily, entrepreneurial failure is referred to as the cessation of an operation for financial reasons. Since we examined nascent entrepreneurs during the firm’s gestation process, one type of entrepreneurial failure is the discontinuance of venturing efforts by entrepreneurs (Liao et al. 2009), but business failure can be defined as wanting or needing to sell or liquidate to avoid losses or to pay off creditors or general inability to make a profitable go of the business (Gaskill et al., 1993). Pretorius (2009) at the end of his review of business failure definition proposes a universal definition of the failure phenomenon. A venture fails when it involuntarily becomes unable to attract new debt or equity funding to reverse decline; consequently, it cannot continue to operate under the current ownership and management. Failure is the endpoint at discontinuance (bankruptcy) and when it is reached, operations cease and judicial proceedings take effect. The literature on entrepreneurial failure suggests that 1) venture failure can be caused either by individual mistakes made by the entrepreneur or by external problems beyond of the entrepreneur's control that brought about their venture's misfortune; 2) whether failure leads to productive or destructive outcomes varies; and 3) that there are differences in how individuals

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1. Fédération des Experts Compatables Européens

Gender Differences in the Causes of Business Failure

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and communities of individuals clustered within a geographical region, experience failure and its consequences (Cardon et al., 2009). Internal causes of business failure may, in many cases, be capable of being foreseen in advance, while, on the other hand, some external causes are not so predictable. In most cases, a complex mixture of causes contribute to business failure; it is very rare for one single factor to be involved (FEE, 2004). Earliest empirical studies on business failure, examined the role of various owners and firm characteristics to explain business failures. The numerous characteristics shared by failed firms, are directly related to personal decision-based characteristics of the owner (lack of insight, inflexibility, emphasis on technical skills, etc.), managerial deficiencies (lack of management skills and appropriate managerial training, etc.) and financial shortcomings (no accounting background, cash flow analysis, financial records, etc.). Many aspects of poor management are reported to be connected with several related issues, such as poor financial circumstances, inadequate accounting records, limited access to necessary information, and lack of good managerial advice (Gaskill et al., 1993). Berryman (1993) mostly focused on the managerial causes of failure and listed some 25 causes and categorized them simply as poor management and concluded that this combined with the personality traits of the ownermanager and external factors to cause failure. A business failure may happen as a result of poor management skills, insufficient marketing, and lack of ability to compete with other similar businesses. It can also be the result of a domino effect caused by business failures of suppliers or customers (Wu, 2010). In the annual report of GEM, financial problems were cited as the reason for quitting the business by no more than 55% of all respondents; it was cited more often by respondents in the factor- and efficiency-driven economies (just over 50%) than in innovation-driven countries (just over 40%) (Bosma et al., 2009). The effect of the environment depends upon the time period, geographical area, and market sector in which the firm operates (Burns, 2001). Government and government-related policies are also important factors affecting business failures, and are discussed in some studies. They found that failure rates were increased due to the heavy burden of taxation and regulations, while the growth in money supply (higher growth decreased the failure rate) and the volume of bank lending (higher volume of bank lending reduced the rate of business failures) as significant factors (Gaskill et al., 1993; Burns, 2001; Oparanma et al., 2010). Ooghe and De Prijcker (2006) in a conceptual failure model expounded the causes of failure and the mutual relation between the general and immediate environment of the company as external causes and the company’s management and policy as internal causes of failure. In this model, the causes of failure can be grouped into five interactive aspects. These include general environment: economics, technology, foreign countries, politics, and social factors, immediate environment: customers, suppliers, competitors, banks and credit institutions, stockholders, and misadventure, management/entrepreneur characteristics: motivation, qualities, skills, and personal characteristics, corporate policy: strategy and investments, commercial, operational, personnel, finance and administration, corporate governance, and company characteristics: size, maturity, industry, and flexibility. Liao (2004) has also mentioned the effects of four groups of factors on business failure : individual characteristics of founders, resources, structural characteristics and strategies of the firm, and environmental conditions in which a firm operates. The European Federation of Accountants (FEE, 2004) has identified the internal and external causes of business failure. Accordingly, internal causes include poor management, deficit in accounting, poor cash flow management, inappropriate sources of finance, dependency on customers or suppliers, impending bad debt, fraud/collusion and external causes of business failure are economy, catastrophic unpredictable events, governmental

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Journal of Global Entrepreneurship Research, Winter & Spring 2011, Vol.1, No.1, pp. 95-106

measures and international developments, environmental protection and other regulatory requirements, bankruptcy of main customers or suppliers. Lee et al. (2007) suggest that phenomena such as entrepreneurial failure and levels of entrepreneurial activity cannot be aggregated and generalized across contexts, but instead, different institutional frameworks found in different regional areas need to be considered. Some inter-country studies show that there are significant inter-country differences in the SME failure rates and causes of business failure. In an inter-country studies of business failure in Malaysia and Australia, Ahmed and Seet (2010) found that some reasons for business failure were given more emphasis in one country than in the other. Australian participants attributed their failure to reasons such as inability to manage large numbers of employees, inability to manage the fast growing firms, and inability to administer large firms. This may perhaps provide an insight into why the participants would prefer to stay small in business. Malaysian participants, by contrast, highlighted softer issues such as lack of personal contacts and failure to maintain close personal relationships with customers, providing evidence of the importance of maintaining good personal relationships with others. Table 1. Business Discontinuation Rates by Country Group Country Factor-Driven Economies EfficiencyDriven Economies InnovationDriven Economies

Uganda Lebanon Yemen Average Dominican Republic Iran Panama Average United Arab Emirates United States Denmark Italy Average

Early-Stage Entrepreneurial Activity 33.6 15.0 24.7 17.7 17.5 12.0 9.6 11.2 13.3 8.0 3.6 3.7 6.3

Established Business Ownership 21.9 16.0 2.9 8.9 11.4 6.5 4.2 7.9 5.7 5.9 4.7 5.8 6.8

Discontinuation of Business 24.2 4.6 2.0 6.9 12.0 6.0 1.4 4.9 6.5 3.4 1.1 1.1 2.5

According to the annual report of GEM, business discontinuance rates are relatively high in factor-driven economies (in Uganda, for example, the reported rate is as much as 24%) and relatively low in innovation-driven economies. The businesses which are not profitable on their own had reportedly financial problem. Problems with raising finance were considerably lower in innovation-driven countries where the “Entrepreneurial Framework Conditions” and “Entrepreneurial Finance” are generally more developed. “The opportunity to sell” and, in particular “retirement” were mentioned more often in innovation-driven countries as the most important reason to discontinue the business. Personal reasons caused around 20 – 30% of all discontinuation. In factor-driven countries, failure rates are quite high as a proportion of discontinuation, and almost all non-failure discontinuations are for personal reasons. These are likely to be mainly due to illness, bereavement, civil unrest and other reasons associated with relatively unfavorable basic requirements. Failure rates are somewhat higher in efficiencydriven countries as a proportion of discontinuation, reflecting the increasing importance of scale and efficiency in business in these countries. Failure rates, both in absolute terms and in proportion to all discontinuations, are lowest in innovation-driven economies, because entrepreneurs have better skills and environments are more favorable (Bosma et al., 2009). Table 1 illustrates the highest and lowest as well as the average rate of discontinuation by the


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country group. In Iran, the business discontinuation rate (6%) is almost higher than average of efficiency–driven economies (4.9%). Denmark and Italy in innovation-driven economies have the lowest business discontinuation rate (1.1%). Gender and Business Failure Women-owned businesses are on the rise all over the world. In the US women are majority owners for approximately 40 percent of all privatively held firms. 10.1 million firms are owned by women (50% or more), employing more than 13 million people, and generating $1.9 trillion in sales as of 2008 (Center for Women’s Business Research, 2009). Women have traditionally started businesses in retail sales or administration, but today’s female entrepreneurs are gradually entering fields that were once male dominated (e.g., construction and manufacturing). Despite the growth of women-owned businesses, females still face challenges compared to men (Katz & Green, 2007). Although no studies have directly focused on the effects of gender on business failure, some researchers studied the performance of businesses headed by women and investigated the influence of gender on business success and survival. Entrepreneurship researchers have attempted to find critical performance differences between male- and female-owned firms. Some researchers attributed these performance differences to factors such as firm size, management experience and type of firm (Loscocco & Robinson, 1991; Verheul & Thurik, 2001; Collins-Dodd et al., 2004). Others suggest that these differences are probably due to training or background experiences rather than just gender (Catley & Hamilton, 1998). The study of Knotts et al. (2004) found that despite the similarities between male- and femaleowned firms, they took different routes to success based on the owner’s preference. Knotts et al. (2008) examined potential gender differences in strategic orientation to determine the impact it had on survival for potential mass merchandising suppliers. They found that male and female entrepreneurs achieved similar success rates by different means although the difference between production and marketing activity reliance was not as great for females as it was for males. A key supposition in entrepreneurship research is that a firm's resources at the start-up are critical determinants of success and survival: intangible assets in the form of human capital, and tangible resources from the environment (e.g., capital, partners, employees, suppliers). To the extent that deficiencies in human capital render new firms vulnerable, those started up by women are more likely to have higher odds of discontinuation than those started by men (Carter et al., 1997). Another determinant of business success and survival is managerial capability of entrepreneur. Knotts et al. (2004) suggested that managerial capabilities were essentially the same for each gender; however, success was achieved in different ways by male and female owners. Menzies et al. (2004) indicated that the managerial capabilities of the two genders are not significantly different, although the study did find that female respondents seemed to lack the educational background needed to start large firms. Marlow and Carter (2004) suggested that the difference in performance or success is often due to differences in the industries that are chosen most often by each gender. This choice is often a consequence of differing interests or concerns between males and females, not structural barriers, and results from a higher proportion of males seeking profit goals and females seeking social goals. They agree that women may have a different motivation for entrepreneurship, which leads to a different choice of industry. It is this choice of industry that seems to be the factor that most influences the profit potential of the venture and, in turn, the financial attractiveness sought by investors. These motivational differences may be the reason that males and females concentrate on different industries, at least to some extent, and these industry differences may account for some performance disparities (Menzies et al., 2004). For 99


Knotts et al. (2008) the inconsistency in finding gender-specific faults or weaknesses suggests that performance and capability variations between male and female entrepreneurs may be minor. While there is a gender difference in many aspects of entrepreneurial process such as motivations and preferences, type of business, size of business, background experience access to resources, the study deals with the following research questions: • Do failed women entrepreneurs differ from failed men entrepreneurs in personal characteristics? • Do failed women entrepreneurs differ from failed men entrepreneurs in business characteristics? • What are the main causes of business failure for women entrepreneurs and are these gender-specific?

Methodology ome of the researchers have mentioned the difficulties to study the failed ventures (Liao, 2004; Bruno et al., 1987). They argue that it is difficult to locate ventures that failed because of poor performance and homogenous samples are hard to come by. On the other hand, entrepreneurs are reticent about failure and they are more likely to attribute failure to external causes than to internal ones. As it is extremely difficult to obtain a feedback from entrepreneurs who have experienced business failure, this approach is hardly utilized by researchers. In this research, we have adopted this approach to obtain the feelings of failed business-owners/managers concerning the causes of business failure. This is a survey implemented face-to-face based on the questionnaire. In the first part, the failed business-owners/managers were questioned about their background, experience, education, and family. Then a personal characteristic test examined six entrepreneurial characteristics including tolerance of ambiguity, need for achievement, risk taking, creativity, locus of control, and independence. The questionnaire on the personal characteristics was obtained from the Entrepreneurship Development Institute of India and had been used many times in the Iranian context (Ahmadpour & Moghimi, 2006). The participants finally reported their causes of business failure. The questionnaire on causes of business failure was obtained from a previous study on causes of business failure in the Iranian context (Gholami, 2008) in which both of the two authors were involved. This questionnaire was developed based on a literature review and interview with 13 Iranian entrepreneurs whose businesses had failed. The validity of the questionnaire was significantly revised by 7 experts in entrepreneurship. Reliability or internal consistency of the items within the structure of this study was assessed by indication of Cronbach’s alpha that was 0.81 for the questionnaire on causes of business failure. Each item in the questionnaire was accompanied by a Likert-type scale, allowing perceived indication of the extent to which the item contributed to the business failure. The Likert-type scale ranged from 1 (to very little extent) to 5 (to great extent). Responses to this measure were based on perceptions of ex-business owners.

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Sample Characteristics Sample Group is the business owner/manager who has experienced business failure and has stopped his/her business activities voluntarily or involuntarily. Research samples are not limited to the characteristics of business and entrepreneurship, the business sector, failure phase and geographical location of businesses, to study more cases of failed businesses. One of the greatest barriers to research failures is finding ex-owners/managers and businesses that have failed. In this research, we developed our own sampling frame that sought


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to be as representative as possible of the range of business failure and exit types, rather than rely on one source, such as official receivers’ data that reflects only a limited number of types of closure. A data base of 96 failed businesses was developed. Measures Variables in our study describe the characteristics of failed business owner/manager, characteristics of failed business and causes of business failure. Variables describing characteristics of failed business owner/manager are: age in start-up, age at failure’s time, gender, education level, marital status, previous experience in this sector, previous entrepreneurial experience, employment status, father in the business, welfare of family in childhood and personal characteristics (tolerance of ambiguity, need for achievement, risk taking, creativity, internal locus of control and independence); The variables describing characteristics of failed businesses are: business sector, number of years in the business before failure and failure phase; In order to describe the causes of business failure, these different factors are listed: non financial support from banks and financial institutions, unreal evaluation of projects, unclear determination of business sectors, non-consideration of market issues, problems in product or service supply, non-related experience, expertise and good work relationships, management deficiency, cheating and fraud, substituted products or service, government policies, nonconsideration of legal issues, inadequate financial circumstances, problems of partnership and team-work, lack of interest and dissatisfaction with work or work place, negative influences by the family. Validity and Reliability To validate the research instrument, the questionnaire on the causes of business failure was significantly revised by 7 experts in entrepreneurship. Reliability or internal consistency of the items within each construct of this study is assessed by indication of Cronbach’s alpha that was 0.81 for the questionnaire on the causes of business failure. Data Analysis The data collected from 62 complete questionnaires (45 men and 17 women) were analyzed, using the Statistical Package for Social Science (SPSS).

Results

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he results of this research contains two sub-sections: first, a description of sample, then the results of Friedman’s test on the causes of business failure and the role of gender were presented in the second sub-section.

Personal Characteristics The profiles of the respondents are summarized in Table 2. Most of the respondents started their businesses at young ages (Mean=30.2; SD=6.44), 24.6% had less than 25 years, while women started later (for women, Mean=33.2; SD=5.8 and for men Mean=29.0; SD=6.36). In the period of business failure, they were still young (for women, Mean=35.8, SD=8.32 and for men, Mean=32.5; SD=7.02). Only 5.9% of women and 6.6% 0f men were older than 45 years when their businesses failed. They were well-educated. 76.5% of women and 76.7% of men

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had B.Sc. or M.Sc. degrees. Most of them were married and had employment just before starting their businesses. 58.5% of women and 57.8% of men had previous experiences in the business sector. But only 11.8% of women compared to 37.8% of men had previous entrepreneurial experience. 17.6% of women compared to 28.9% of men had their fathers active in the businesses. Table 2. Personal and Business Characteristics of Iranian Failed Entrepreneurs (n = 62) Variables Characteristics of Failed businessOwner Manager

Description Women (n=17)

Men (n=45)

61% under 30; 4.4% up 45 25% under 30; 0% up 45 Age in start-ups 30.8% under 30; 5.9% up 45 38.5% under 30; 6.6% up 45 Age at failure time 76.5% B.Sc.; 5.9% PhD 46.7% B.Sc.; 20% M.Sc.; 2.2% Education level PhD 64.7% Marital status: married 58.8% 77.8% Previous experience in related 11.8% 57.8% industry: yes 37.8% Previous entrepreneurial experience: 70.6% employee; 5.9% jobless 17.6% 77.8% employee; 8.9% jobless yes 29.4% very good; 47.1% 28.9% Employment status just before startmoderate 15.6% very good; 51.1% up moderate Father in business Welfare of family in childhood Personal Characteristics Tolerance of ambiguity Need for achievement Risk taking Creativity Internal locus of control Independence

47.1% low; 29.4% high 52.9% moderate; 41.2% high 70.6% high; 23.5% low 47.1% high; 47.1% low 94.1% high; 5.9% low 52.9% low; 41.2% high

53.3% low; 28.9% high 48.9% moderate; 28.9% high 37.8 % moderate; 33.3% low 51.1% high; 31.1% low 77.8% high; 11.1% moderate 42.2% low; 28.9% high

41.1% 47.1% 11.8%

48.9% 44.4% 6.7%

57.1% 92.9% 5.9%

21.4% 73.8% 8.9%

35.2% 47.1% 11.8% 5.9%

14% 37.1% 41.9% 7%

Characteristics of Failed Business Business sector Manufacturing Service Agriculture Number of years in business before failure ≤ 1 year ≤ 3 years ≥ 10 years Failure phase; Start-up Establishment Growth Innovation


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As far as their personal characteristics are concerned, there are differences between failed men and women, business owners/managers. Women had a higher level of need for achievement and risk taking. 41.2% of women compared to 28.9% of men had a high level of need for achievement. Also, 70.6% of women had a high level of risk taking, while 71.1% of men had a low or a moderate level of risk taking. The level of internal locus of control and independence is higher for women. Business Characteristics The number of business in manufacturing and service is almost equal for two genders (22 and 20 for men; 7 and 8 for women, respectively). Most of women’s businesses (57.1%) failed before 1 year, while 26.2% of men’s businesses work still after 3 years. The majority of women’s businesses failed at the stage of start-up and establishment, while it is at the stage of growth that many of men’s businesses failed (see Table 2). Table 3. The Ggender Differences in The Causes of Business Failure Total Database

Mean Rank

Management deficiency Non-financial support from banks and financial institutions Inadequate economic circumstances

10.13

Government policies Non-consideration of market issue Problems in product or service supply Lack of interest and dissatisfaction with work or work place Unreal evaluation of projects Non related experience, expertise and good work relationships Problems of partnership and teamwork Substitute product or service Unclear determination of business sector

10.02

Non financial support from banks and financial institutions Inadequate economic circumstances

Mean Rank

Men

Mean Rank

10.81

Management deficiency

10.64

10.16

Inadequate economic circumstances Non financial support from banks and financial institutions Government policies Non-consideration of market issue Problems in product or service supply Lack of interest and dissatisfaction in work or work place Non related experience, expertise and good work relationships Problems of partnership and team work

9.90

8.69

9.04

Non-consideration of market issue Management deficiency Government policies

8.49

Problems in product or service supply

8.56

7.96

Substituted product or service

8.50

7.72

Unreal evaluation of projects

8.19

9.97 9.23

7.45 7.44 7.25 6.96

Negative influences by the family

6.57

Non-consideration of legal issues Cheating or fraud

6.02

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Women

5.75

Lack of interest and dissatisfaction in work or work place Problems of partnership and team work unclear determination of business sector Negative influences by the family Non related experience, expertise and good work relationships Non-consideration of legal issues Cheating or fraud

8.88

8.69

8.16

9.73 9.42 9.10 8.47 7.89 7.78 7.57

7.09

Unreal evaluation of projects

7.56

6.97

6.96

6.78

unclear determination of business sector Substituted product or service

6.53

Negative influences by the family

6.50

6.13

Non-consideration of legal issues Cheating or fraud

5.99

5.88

6.80

5.70


Main Causes of Business Failure Given the fact that our data regarding causes of business failure is in Likert scale, we used non-parametric Friedman analysis of variances on total database of men and women as well as on the separate database of men and women in order to identify the main causes of business failure. The results indicate that the variable differences in mean rank is significant for total database of men and women [χ² (2, N=62) =100.454, p=0.00], for men [χ² (2, N=45) =82.137, p=0.00], and for women [χ² (2, N=17) =25.773, p=0.028]. As Table 3 illustrates, there is a gender difference in the causes of business failure. Namely the mean ranks of causes of business failure are not the same for the two genders.

Conclusion he results of this research indicate that the four main causes of business failures in Iran are: 1) management deficiency, 2) non-financial support from banks and financial institutions, 3) inadequate economic circumstances and 4) government policies. These results support the previous studies on the causes of business failure concerning management deficiency (Berryman, 1983; Gaskill et al., 1993; FEE, 2004; Ooghe & De Prijcker, 2006; Pretorius, 2009; Wu, 2010) lack of financial resources (Gaskill et al., 1993; Everet & Watson, 1998; Ooghe & De Prijcker, 2006; Bosma et al., 2009; Liao et al., 2009; Wu, 2010), inadequate economic circumstances (Berryman, 1983; Burns, 2001; Liao, 2004; Ooghe & De Prijcker, 2006;) and government policies (FEE, 2004; Oparanma et al., 2010). The results of Friedman analysis of variances on the causes of business failure in a separate sample of failure for both men and women businesses indicate a significant difference. As for women, the main cause of business failure is non-financial support from banks and financial institutions. Also non-consideration of market issue is one of the main causes of business failure for women, while management deficiency is the most important factor of business failure for men. Contrary to the research that women entrepreneurs, compared with their male counterparts, perceive their lack of management experience and business skills as a major constraint (Heilbrunn, 2004) our finding is that Iranian women do not consider the management deficiency as the main cause of business failure. Although, as cited in different researches, the attribution of failure to financial problems by women in this study proves that access to resources is much of a severe problem for women. Also, as another main cause of business failure for women is non-consideration of market issue, one of the major women’s problems is dealing with market and then providing the entrepreneurial training especially in the related market to help them solve these types of problems. These results point out that the Iranian context is not encouraging to entrepreneurship for both men and women. The respondents attribute their failure more to external factors than internal ones. On the other hand, inadequate economic resources were perceived the main causes of business failure by both men and women entrepreneurs. Most of the entrepreneurship literature has focused on successful ventures, so little is known about business failure. The majority of studies on business failure are done in western countries, therefore, little is known about the causes of business failures in countries with different cultures and governmental policies that could influence the business creation and failures, whereas very limited inter-country studies demonstrate the differences in the causes of business failure in various contexts. Developing a deeper understanding of new venture would provide critical information for individual entrepreneurs, venture financiers, and government policymakers.

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In this research, we have studied the influence of many internal as well as external factors on the different contexts of developing countries by adopting a decisive approach to obtaining feedback from entrepreneurs who have experienced business failures. We have examined the causes of business failure among businesses headed by men and women, using data gathered from the failed business owners/managers. We have found the similarities and differences among failed men and women business owners/managers. Another finding of this research is that the causes of business failure for men and women are not the same. These results help to identify the problematic areas of business and the owner. Some of the entrepreneurial capability variables cannot easily be changed. However, the benefits or risks associated with them can be assessed, with implications both for individual entrepreneurs and for public policy. Entrepreneurs whose resource base renders it less likely for them to succeed should proceed with caution or strengthen their position. Some factors such as venture size, financial capital base, or lack of prior experience in business organizations are more problematic for female and minority entrepreneurs; however, these problems can be identified and actions to acquire specific know-how or capital can be taken to increase the chances of success. Necessary assistance is needed in financial management, competition and growth strategies, and most importantly, in managerial planning areas. Training programs and business support need to focus on equipping business practitioners with the managerial skills necessary for effective business operation. Given the fact that the most important causes of business failure for women is non-financial support from banks and financial institutions, financial facilities for women can help women’s businesses especially in start-ups, as the majority of women’s businesses failed in this phase. The financial growth assistance can help women go through the step of growth as most of them could not achieve it without such supports at least to some extent. Accordingly, entrepreneurial training in all aspects of business especially in market related issue is needed for women entrepreneurs. In this study, we have used numerous samples to study more cases of failed businesses. Research on a homogenous sample can lead to better results. Future research can study the influence of push and pull factors that motivate people to start a business to know whether those who enter business ventures with push factors especially those dissatisfied with previous jobs, are more susceptible to failure. The inter-country study on business failure and postfailure processes are interesting too. Developing the typology of failed entrepreneurs could be another aspect of future study especially associated with the gender of failed entrepreneur.

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