A study by insolvency practitioners, KSA Group Limited, who run the website Company Rescue, has found that women-run companies are less likely to go insolvent than companies run by men.
Over the past decade, the number of women in senior leadership positions in the West has steadily increased. Women in the US make up 29% of C-suite positions, compared with just 17% in 2015. Likewise, as of January 2024, 42% of FTSE100 directorships are occupied by women. This progress raises compelling questions: Does gender play a role in the financial resilience of a business? And as women increasingly occupy leadership positions, does this correlate to improved performance?
Keen to explore these ideas, Insolvency practitioners, KSA Group Limited (who run Company Rescue) have investigated over 4 million businesses, in an attempt to discover a gender bias on the board of companies that become insolvent.
Their research painted a clear picture: women-led UK SME companies have substantially lower insolvency risks than their male-counterparts. This isn’t a fleeting trend, but a robust pattern confirmed through three successive studies by KSA Group spanning 2018 to 2024.
Key findings of the study
- Insolvency rates in male-run companies are 71% higher than in women-led businesses.
- Despite growing representation, the landscape remains male-dominated, with men running 9 times more companies than women.
- There is a small difference in the industry sectors of companies run by men or run by women. Construction is predominantly male-led while education businesses have a higher proportion of women leadership.
What conclusions can we draw from these findings
Kevin Steven, Managing Director at Company Rescue, initially suggested that male-run businesses facing higher insolvency rates might be coincidental:
“It may well be that the businesses that tend to be more likely to become insolvent due to the nature of the industry or recent economic events are coincidently run by men”.
But, after carefully examining the data across multiple studies, Steven noted a pattern. Despite variations in the types of businesses women are running, the consistent results point to something more fundamental.
He identified that “the types of businesses run by women were different to the ones in 2024. This led him to suspect that “the business sector is not that relevant”, instead potentially “pointing to a higher financial competency, or less risk-taking, by women directors.”
The critical observation isn’t about which industries men or women are leading, but how they’re leading them. Steven’s analysis suggests that the gender difference in business survival isn’t about the sector, but about the strategic decisions made within those sectors.
This raises a compelling question: what sectors do male and female-led entrepreneurs fall into in 2024?
The data above demonstrates that:
- Male-run businesses show higher insolvency rates in construction, wholesale retail, and manufacturing. In contrast, women-led businesses in these same sectors demonstrate notably greater financial stability.
- Women entrepreneurs predominantly own companies in admin support, education, and health & social care. Meanwhile, male-run businesses dominate in areas like real estate and IT.
These differences in gendered ownership of businesses are no accident. Lower startup costs and fewer capital-intensive barriers in fields like health and education create more accessible entry points for women entrepreneurs. The disparity in risk appetite may also come into play here; the sectors women-entrepreneurs tend to dominate in have a steadier revenue stream, while tech startups are more susceptible to market volatility.
Are women in the United States better at running businesses?
Unsurprisingly, gender dynamics in entrepreneurship is a very complex picture. A 2017 study initially found no clear difference between male and female business leadership. However, subsequent research has uncovered more nuanced insights.
A study carried out after the financial crisis found a remarkable difference in female-run banks proving far less likely to collapse during economic turbulence. A wide variety of studies in the United States find women to be better entrepreneurs, and, according to the World Bank, women-owned firms in the US are growing at more than double the rate of all other firms. All this is in spite of the significant challenges women face in raising funds.
Why might this be? Well, research suggests that women have a greater aversion to loss, making them less eager to take risks. Moreover, some data shows women to be more productive than men in the workplace. A study by Washington State University adds an interesting dimension, finding women’s employees to be happier, and therefore, less likely to burn out.
This being said, a sensible conclusion to reach is not one of gender superiority, but of balance. Neither men nor women can be categorically named “better” at business. Rather than an all-women or all-men enterprise, we should aim for an environment bringing together male and female employees and their respective traits. As entrepreneurship expert Tatiana Manolova urges, “what we should be striving for is balance” and a corporate workplace in which “everyone’s voice is heard”.
Final takeaways
While this research provides valuable insights, it’s important to recognize that one series of studies cannot definitively explain the entire landscape of gender dynamics in business. Further research remains essential and studies should continue to explore the potential gender influences on business performance.
Despite progress giving women better access to decision-making spaces, it would be naive to suggest that our work is done. Men continue to outnumber women at every level and, unfortunately, negative gender stereotypes prevail on both the macro and micro scale. A recent report by the Young Women’s Trust revealed a stark reality; more than half of young women have experienced workplace discrimination, demonstrating the ongoing barriers women face.
The mounting research makes one thing clear – championing gender equity in the workplace is not just a moral choice. Creating opportunities for women entrepreneurs is the smartest investment countries can make to drive economic success.
Chloe Shaw is a Digital Content Executive, based in Manchester, UK. She has a first class in English Literature from the University of Birmingham, as well as a Master’s degree in Gender, Sexuality and Culture from the University of Manchester. Chloe specialises in crafting impactful content that resonates with audiences, with a particular interest in exploring gender’s intersections with business.