Hostname: page-component-78c5997874-t5tsf Total loading time: 0 Render date: 2024-11-15T20:44:31.744Z Has data issue: false hasContentIssue false
  • English
  • Français

Gender Gaps in Venture Capital Performance

Published online by Cambridge University Press:  05 January 2021

Paul A. Gompers Open the ORCID record for Paul A. Gompers [Opens in a new window] ,
Vladimir Mukharlyamov ,
Emily Weisburst  and
Yuhai Xuan
Paul A. Gompers*
Affiliation:
Harvard Business School and National Bureau of Economic Research
Vladimir Mukharlyamov
Affiliation:
Georgetown University McDonough School of Businessvladimir.mukharlyamov@georgetown.edu
Emily Weisburst
Affiliation:
University of California–Los Angelesweisburst@ucla.edu
Yuhai Xuan
Affiliation:
University of California–Irvineyuhai.xuan@uci.edu
*
paul@hbs.edu (corresponding author)
Get access Rights & Permissions [Opens in a new window]

Abstract

We explore gender differences in performance in a comprehensive sample of venture capital investments in the United States. Investments by female venture capital investors have significantly lower success rates than investments by their male colleagues when controlling for personal characteristics, including employment and educational history, and portfolio companies’ characteristics. The gender differences in investment outcomes are not due to female investors being less skilled but, rather, are largely attributable to female investors receiving less benefit from the track records of their colleagues. Performance differences disappear in older, larger firms and firms with other female investors. This supports the view that formal feedback mechanisms and hierarchies are potentially useful in ameliorating the female performance gap.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 57 , Issue 2 , March 2022 , pp. 485 - 513
Copyright
© The Author(s), 2021. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

We thank an anonymous referee, Robin Ely, Boris Groysberg, Jarrad Harford (the editor), and seminar participants at Harvard Business School for helpful comments and suggestions. Daniel Kim and Natee Amornsiripanitch provided excellent research assistance. This article was previously circulated under the title “Gender Effects in Venture Capital.” This research was supported by the Division of Research at Harvard Business School. Gompers has invested in and consulted for venture capital firms.

References

Aldrich, H., and Auster, E. R.. “Even Dwarfs Started Small: Liabilities of Age and Size and Their Strategic Implications.” Research in Organizational Behavior, 8 (1986), 165–198.Google Scholar
Barbezat, D. A. “Salary Differentials by Sex in the Academic Labor Market.” Journal of Human Resources, 22 (1987), 422–428.CrossRefGoogle Scholar
Baron, J. N.; Burton, M. D.; and Hannan, M. T.. “Engineering Bureaucracy: The Genesis of Formal Policies, Positions, and Structures in High-Technology Firms.” Journal of Law, Economics, and Organization, 15 (1999), 1–41.CrossRefGoogle Scholar
Baron, J. N.; Hannan, M. T.; Hsu, G.; and Kocak, O.. “In the Company of Women: Gender Inequality and the Logic of Bureaucracy in Start-Up Firms.” Work and Occupations, 34 (2007), 35–66.CrossRefGoogle Scholar
Beilock, S. “Research-Based Advice for Women Working in Male-Dominated Fields.” Harvard Business Review (Feb. 13, 2019).Google Scholar
Bertrand, M.; Goldin, C.; and Katz, L.. “Dynamics of the Gender Gap for Young Professionals in the Financial and Corporate Sectors.” American Economic Journal: Applied Economics, 2 (2010), 228–255.Google Scholar
Bertrand, M., and Hollack, K. F.. “The Gender Gap in Top Corporate Jobs.” Industrial and Labor Relations Review, 55 (2001), 3–21.CrossRefGoogle Scholar
Bettinger, E. P., and Long, B. T.. “Do Faculty Serve as Role Models? The Impact of Instructor Gender on Female Students.” American Economic Review: Papers and Proceedings, 95 (2005), 152–157.CrossRefGoogle Scholar
Blau, F. D.; Currie, J. M.; Croson, R. T. A.; and Ginther, D.. “Can Mentoring Help Female Assistant Professors? Interim Results from a Randomized Trial.” American Economic Review: Papers and Proceedings, 100 (2010), 348–352.CrossRefGoogle Scholar
Blau, F. D., and Kahn, L. M.. “Gender Differences in Pay.” Journal of Economic Perspectives, 14 (2000), 75–99.CrossRefGoogle Scholar
Blau, F. D., and Kahn, L. M.. “The U.S. Gender Pay Gap in the 1990s: Slowing Convergence.” Industrial and Labor Relations Review, 60 (2006), 45–66.CrossRefGoogle Scholar
Budig, M. J. “Male Advantage and the Gender Composition of Jobs: Who Rides the Glass Escalator?” Social Problems, 49 (2002), 258–277.CrossRefGoogle Scholar
Carrell, S.; Page, M.; and West, J.. “Sex and Science: How Professor Gender Perpetuates the Gender Gap.” Quarterly Journal of Economics, 125 (2010), 1101–1134.CrossRefGoogle Scholar
Daymont, T. N., and Andrisani, P. J.. “Job Preferences, College Major, and the Gender Gap in Earnings.” Journal of Human Resources, 19 (1984), 408–428.CrossRefGoogle Scholar
DeNisi, A., and Smith, C.. “Performance Appraisal, Performance Management and Firm Level Performance: A Review, a Proposed Model and New Directions for Future Research.” Academy of Management Annals, 8 (2014), 127–179.CrossRefGoogle Scholar
Dobrev, S. D., and Barnett, W. P.. “Organizational Roles and Transition to Entrepreneurship.” Academy of Management Journal, 48 (2005), 433–449.CrossRefGoogle Scholar
Ely, R. “The Power in Demography: Women’s Social Construction of Gender Identity at Work.” Academy of Management Journal, 38 (1995), 589–634.Google Scholar
Ely, R., and Padavic, I.. “A Feminist Analysis of Organizational Research on Sex Differences.” Academy of Management Review, 32 (2007), 1121–1143.CrossRefGoogle Scholar
Ewens, M., and Rhodes-Kropf, M.. “Is a VC Partnership Greater Than the Sum of Its Partners?” Journal of Finance, 70 (2015), 1081–1113.CrossRefGoogle Scholar
Ewens, M., and Townsend, R.. “Are Early Stage Investors Biased Against Women?” Journal of Financial Economics, 135 (2020), 653–677.CrossRefGoogle Scholar
Gafni, H.; Marom, D.; Robb, A.; and Sade, O.. “Gender Dynamics in Crowdfunding (Kickstarter): Evidence on Entrepreneurs, Investors, Deals and Taste-Based Discrimination.” Working Paper, available at http://doi.org/10.2139/ssrn.2442954 (2016).CrossRefGoogle Scholar
Geron, T. “CMEA Capital Sued for Sexual Harassment.” Forbes (Mar. 3, 2013).Google Scholar
Goldin, C., and Rouse, C.. “Orchestrating Impartiality: The Impact of ‘Blind’ Auditions on Female Musicians.” American Economic Review, 49 (2000), 715–741.CrossRefGoogle Scholar
Gompers, P.; Gornall, W.; Kaplan, S.; and Strebulaev, I.. “How Do Venture Capitalists Make Decisions?” Journal of Financial Economics, 135 (2020), 169–190.CrossRefGoogle Scholar
Gompers, P.; Kovner, A.; and Lerner, J.. “Specialization and Success: Evidence from Venture Capital.” Journal of Economics and Management Strategy, 18 (2009), 817–844.Google Scholar
Gompers, P.; Kovner, A.; Lerner, J.; and Scharfstein, D.. “Venture Capital Investment Cycles: The Impact of Public Markets.” Journal of Financial Economics, 87 (2008), 1–23.CrossRefGoogle Scholar
Gompers, P.; Kovner, A.; Lerner, J.; and Scharfstein, D.. “Performance Persistence in Entrepreneurship.” Journal of Financial Economics, 96 (2010), 18–32.CrossRefGoogle Scholar
Gompers, P.; Mukharlyamov, V.; and Xuan, Y.. “The Cost of Friendship.” Journal of Financial Economics, 119 (2016), 626–644.CrossRefGoogle Scholar
Gorman, M., and Sahlman, W. A.. “What Do Venture Capitalists Do?” Journal of Business Venturing, 4 (1989), 231–248.CrossRefGoogle Scholar
Ibarra, H. “Homophily and Differential Returns: Sex Differences in Network Structure and Access in an Advertising Firm.” Administrative Science Quarterly, 37 (1992), 422–447.CrossRefGoogle Scholar
Kaplan, S. N., and Schoar, A.. “Private Equity Performance: Returns, Persistence, and Capital Flows.” Journal of Finance, 60 (2005), 1791–1823.CrossRefGoogle Scholar
Kerr, W. R., and Lincoln, W. F.. “The Supply Side of Innovation: H-1B Visa Reforms and U.S. Ethnic Invention.” Journal of Labor Economics, 28 (2010), 473–508.CrossRefGoogle Scholar
Kim, H. K.; Lee, U. H.; and Kim, Y. H.. “The Effect of Workplace Diversity Management in a Highly Male-Dominated Culture.” Career Development International, 20 (2015), 259–272.CrossRefGoogle Scholar
Kunze, A., and Miller, A.. “Women Helping Women? Evidence from Private Sector Data on Workplace Hierarchies.” Review of Economics and Statistics, 99 (2017),769–775.CrossRefGoogle Scholar
Martel, F. “Venture Capitalists’ Investment Process, Criteria, and Performance.” Working Paper, University of Lausanne Hautes Etudes Commerciales (HEC) (2006).Google Scholar
Martin, P., and Barnard, A.. “The Experience of Women in Male-Dominated Occupations: A Constructivist Grounded Theory Inquiry.” SA Journal of Industrial Psychology, 39 (2013), 1–12.CrossRefGoogle Scholar
Matsa, D., and Miller, A.. “Chipping Away at the Glass Ceiling: Gender Spillovers in Corporate Leadership.” American Economic Review: Papers and Proceedings, 101 (2011), 635–639.CrossRefGoogle Scholar
Noe, R. A. “Women and Mentoring: A Review and Research Agenda.” Academy of Management Review, 13 (1988), 65–78.CrossRefGoogle Scholar
Polachek, S. W. “Occupational Self Selection: A Human Capital Approach to Sex Differences in Occupational Structure.” Review of Economics and Statistics, 63 (1981), 60–69.CrossRefGoogle Scholar
Reskin, B. F., and Bielby, D. D.. “A Sociological Perspective on Gender and Career Outcomes.” Journal of Economic Perspectives, 19 (2005),71–86.CrossRefGoogle Scholar
Reskin, B. F., and McBrier, D. B.. “Why Not Ascription? Organizations’ Employment of Male and Female Managers.” American Sociological Review, 65 (2000), 210–233.CrossRefGoogle Scholar
Rosenbaum, P., and Rubin, D.. “The Central Role of the Propensity Score in Observational Studies for Causal Effects.” Biometrika, 70 (1983), 41–55.CrossRefGoogle Scholar
Rosenbaum, P., and Rubin, D.. “Reducing Bias in Observational Studies Using Subclassification on the Propensity Score.” Journal of the American Statistical Association, 79 (1984), 516–524.CrossRefGoogle Scholar
Roth, L. M. “Engendering Inequality: Processes of Sex Segregation on Wall Street.” Sociological Forum, 19 (2004), 203–228.CrossRefGoogle Scholar
Sahlman, W. A. “The Structure and Governance of Venture Capital Organizations.” Journal of Financial Economics, 27 (1990), 473–524.CrossRefGoogle Scholar
Sorensen, J. B. “Bureaucracy and Entrepreneurship: Workplace Effects on Entrepreneurial Entry.” Administrative Science Quarterly, 52 (2007), 387–412.CrossRefGoogle Scholar
Ulku-Steiner, B.; Kurtz-Costes, B.; and Kinlaw, C. R.. “Doctoral Student Experiences in Gender-Balanced and Male-Dominated Graduate Programs.” Journal of Educational Psychology, 92 (2000), 296–307.CrossRefGoogle Scholar
Economics, Venture. Trends in Venture Capital. Needham, MA: Venture Economics, Inc. (1988).Google Scholar
Weber, M. On Charisma and Institution Building: Selected Papers, Eisenstadt, S. N., ed. Chicago, IL: University of Chicago Press (1968).Google Scholar
Wood, R. G.; Corcoran, M. E.; and Courant, P. N.. “Pay Differences among the Highly Paid: The Male-Female Earnings Gap in Lawyers’ Salaries.” Journal of Labor Economics, 11 (1993), 417–441.CrossRefGoogle Scholar
Supplementary material: PDF

Gompers et al. supplementary material

Gompers et al. supplementary material

Download Gompers et al. supplementary material(PDF)
PDF 90.1 KB