Export Propensity of Canadian SMEs: A Gender Based Study

Abstract

SME exporters constitute a critical economic force that contributes significantly to national productivity and job creation in the Canadian economy. However, the academic literature suggests that female-owned SMEs are less likely to export. With lower export propensity, the potential of female-owned SMEs for organic growth, economic self-sufficiency and wealth creation could be comprised. This paper applies logistic regression to study factors that influence SME owners’ export propensity with particular reference to the moderating effect of gender in the context of the Ajzen and Fishbein ’s (2005) theory of Reasoned Action and Planned Behavior. We improve the methodology of prevailing research by redefining “gender” in a more appropriate way and by computing gender interaction effects more accurately. Based on this analysis, we found that, although male- and female-owned SMEs show different likelihoods of exporting, gender does not have a direct residual impact. Instead, systemic gender differences account for most differences in the export propensity between male-owned and female-owned SMEs. Specifically, female-owned SMEs may be systemically disadvantaged because their firms are smaller, more limited in management capacity with younger and less-experienced managers. The lack of resources and market knowledge become constraining factors for them with respect to becoming “export-ready”. Additionally, female SME owners show a higher perception of risk and financing difficulty (although they do not encounter higher rejection rates of financing applications). Their subjective perceptions of potential barriers may contribute to their reluctance to export.