Women entrepreneurs who take a scientific approach to decision-making find new markets, study suggests

New research co-authored by Bayes Business School suggests that women entrepreneurs who take a scientific approach to decision-making are more likely to find new uses and target markets for their product or service, making them more likely to translate into actual ventures.

The study “Female entrepreneurs targeting women: Strategic redirection under scientific decision-making” is published in the journal Organization Science.

It is common for entrepreneurs—particularly less experienced ones—to develop value propositions for audiences they are familiar with or indeed part of. These so-called ‘user’ entrepreneurs generate ideas based on specialist knowledge of a market need—such as young parents developing products or services to fulfill parental needs.

The advantages of doing this lie in a deep understanding of the target market. However, such specialisms can also lead to inertia and incorrect assumptions about a target audience. This often leads to overlooking the best way to integrate an idea into a value proposition, or reluctance to accept that a product may satisfy the needs of broader audiences.

The paper, by Elena Novelli, Professor of Strategy at Bayes Business School, and Luisa Gagliardi, Bocconi University in Italy, explored the impact of strategic decision-making training on female entrepreneurs with female-targeted value propositions. This training would encourage them to clearly articulate the logic underlying their business proposition and validate it with evidence.

From the final sample of 172 female entrepreneurs, these value propositions included ventures into coaching for women or online travel platforms targeted at women clients. A control segment of this sample was also exposed to business training and evidence gathering techniques, but not actively asked to use the material to articulate their business logic, form hypotheses or validate them.

Key findings from the study showed:

• Treated female entrepreneurs with female-targeted value propositions were more likely to make a radical change to their value proposition or customer segment (a “pivot”) after exposure to training guidance than those without female-targeted propositions.
• Treated female entrepreneurs with a female-targeted value proposition who pivot perform better in launching and sustaining their ventures, compared with those who have not pivoted.
• Entrepreneurs with limited experience benefited more from guidance around scientific decision-making than those with higher levels of prior managerial experience.
• Results were replicated across different groups of user entrepreneur and value propositions—for example, ethnic entrepreneurs with an ethnic-focused target audience.

Data collection for the study consisted of three randomized control trials involving 593 entrepreneurs in Italy and the UK, from which the final sample of 172 women entrepreneurs was selected.

Professor Novelli said the study had a number of key implications for entrepreneurs and policymakers.

“Our study shows the real difference training on scientific decision-making can make in improving entrepreneurial performance,” she said.

“User entrepreneurs possess deep knowledge of a very particular audience segment, but learning to articulate and validate the logic behind their business proposition can help them identify blind spots and open up other avenues for business ideas. This might include new use-cases and audiences for a product or service.

“Our study also contributes to research on the importance of supporting entrepreneurs from underrepresented demographic groups, such as females. Whereas prior research has talked about how they can effectively present their ideas to receive more favorable evaluations, in our study we show a mechanism that can help them address potential limitations and enhance the very commercial value of their propositions.”