The severity of specific problems faced by small and medium-sized entities (SMEs) differs, owing to the business sector, SME owner’s/manager’s gender and experience, size of the business, legal structure as well as age of the firm (Fatoki & Asah 2011; Omiunu 2014). Without controlling for any variables, evidence from Cameroon, an emerging economy, reveals that gender is not associated with business outcomes (Akinboade 2015). Extant literature from established economies shows that performance of SMEs is strongly linked to prior business experience of the owner/manager (Delmar & Wiklund 2008; Dyke, Fischer & Reuber 1992; Richbell, Watts & Wardle 2006). Soriano and Castrogiovanni (2012) and Popescu, Deaconu and Popescu (2014) pointed out that most firms underperform because of a lack of managerial skills and experience. In small firms, the owner often assumes the role of a manager (Popescu et al. 2014). Owing to this condition, the performance of the entity relies heavily on the experience of the owner/manager. This implies that business-related experience plays a significant role in a firm’s performance. In addition, literature suggests that business-related experience varies between male and female firm owners (Fischer, Reuber & Dyke 1993; Gottschalk & Niefert 2012). In light of this debate, this study sought to establish whether or not performance between male-owned and female-owned SMEs differs significantly, and to assess the extent to which the gender gap in SME performance (if any) could be allocated to gender differences in levels of business-related experience.

Evidence provided by Fapohunda (2013) from Nigeria, an emerging economy, highlights that business-related experience of SME owners is mixed, thereby leading to mixed business outcomes. Gottschalk and Niefert (2012) as well as Eikhof, Summers and Carter (2013) pointed out that female-owned businesses are not only fewer in number but are also characterised by lower outcomes compared with their male-owned counterparts. This is in contrast to earlier evidence, also from Nigeria, provided by Mba (2006). Mba (2006) revealed that women entrepreneurs possess less valuable, managerial and self-employment experience; thus suggesting that women-owned firms are likely to underperform owing to lack of business-related experience. Conversely, Amobi (2006) provided evidence that female entrepreneurs have similar, and sometimes more, business-related experience than male entrepreneurs.

The mentioned issues imply that gender plays a pivotal role in disclosure of differences, thereby leading to an observed performance gap. However, there is no consensus among researchers on this topic, and research is necessary to help our understanding. There is little research from a South African perspective focusing on gender differences and SME performance. Therefore, studies carried out in developed countries such as Germany (Gottschalk & Niefert 2012) and the USA (Fairlie & Robb 2009) are not fully adequate to substantiate theories related to gender differences. After a thorough review of literature, it became evident that literature with regard to gender differences and SME performance, particularly from emerging economies, is limited when compared with evidence from developed countries. However, Terjesen and Hessels (2016) argued that it is important to reveal the diverse nature of entrepreneurship across countries, specifically its role in explaining business outcomes at micro- and macrolevels. In an attempt to contribute to entrepreneurship literature, this study adopts a different dimension and focuses on gender differences and SME performance from an emerging economy’s perspective.

The literature review section is organised as follows: the influence of gender on SME performance, gender differences in SME performance and contributing factors to the gender gap in SME performance.

The positivist approach was adopted in undertaking this article. Positivism, as a research paradigm, is objective and independent of the researcher’s influence (Myers 2009). In positivism, researchers take note of the view that only logical reasoning is allowed to reinforce the assumptions guiding the study. This article is descriptive by design. Zikmund and Babin (2009) pointed out that in undertaking descriptive research, the researcher relies on some previous understanding of the problem at hand. However, conclusive evidence in the form of primary data is required to answer the research problem and to determine the appropriate course of action (Wiid & Diggines 2015). Hence, to gather primary data, a quota sample of 109 SMEs based in King William’s Town in the Eastern Cape Province, South Africa, was derived. Data were collected from SME owners through a survey. Due to low respondent rates associated with SME owners, 120 self-administered questionnaires were issued. To arrive at conclusions, recommendations and findings, this quantitative study relied on a 61% respondent rate.

The self-administered questionnaires were initially pretested on 20 SME owners who were also included in the study. Questionnaire pretesting through a pilot study of 20 respondents was undertaken to serve two crucial purposes, as pointed out by Schwab (2013). First, it was carried out to evaluate whether the targeted respondents were able to interpret and understand each item of the questionnaire correctly. This evaluation helped the researchers to identify errors of assumption about participants’ frames of reference and items that were difficult to understand. This led to changes in the design of the research questionnaire, which may have resulted in an increased response rate, reduction of missing data and obtaining of more valid responses to the final questionnaire. The second purpose for carrying out the pilot study was to assess whether scores behaved as per the researchers’ expectations. The researchers, at this phase, determined whether the generated average scores were reasonable and that the score items were varying as expected. In addition, the Cronbach’s alpha was used to test for reliability of the study. The alpha coefficient value for the performance measurement scale (growth in sales, growth in market share, growth in employees, growth in profitability, increase in profit margin on sales and the SMEs’ ability to fund growth from profits) was 0.9, suggesting that the study instrument was reliable. The stated performance measures were adopted from Fatoki (2012) and were measured on a five-point Likert scale. Business-related experience measures were adopted from Cliff (1998). Participants were asked whether they had, in the past, owned a business venture, managed a business venture or worked in an industry similar to the one in which they had a business. These were dichotomous questions which were later summed to derive a business-related experience score for each participant.

In data analysis, the t-test was used to determine whether a significant difference exists between gender and firm performance. Furthermore, a chi-square test was used to formally examine the study’s control variable (business-related experience) in H2 and H3. The chi-square test allows the formal examination of the control variable, given/assuming that the control variable (business-related experience) is measured.

The results of the study were first undertaken through the independent samples t-test where we sought to investigate whether being male or female had an influence in business performance. Later, we incorporated the chi-square test where we controlled for level of business-related experience between genders to critically examine whether there is an association between gender and performance. An independent samples t-test was conducted to compare firm performance mean scores for male and female entrepreneurs. The results from the independent samples t-test carried out to compare performance mean scores for males and females reveal that there is a statistically signicant difference in mean scores for males (M = 3.15, SD = 1.19) and females (M = 2.31, SD = 1.13, t(68) = 3.06; p = 0.003, two-tailed). The magnitude of the differences in the means was above moderate to large (eta squared = 0.12). The t-test results suggest that gender has an influence on firm performance. In other words, the independent samples t-test results reveal that male-owned SMEs outperform female-owned SMEs. Relying on the independent samples t-test, the null hypothesis H1 is therefore rejected. As pointed out by Klapper and Parker (2011), this finding is well supported in literature, and our findings are consistent with the results obtained by Robb (2008) as well as Fairlie and Robb (2009) who indicated that male-owned firms outperform female-owned business entities. The above-mentioned studies conclude that female-owned businesses are more likely to close operations, are less likely to have profits and are less likely to hire employees than male-owned business entities. This finding, therefore, confirms the existence of a gender gap with regard to SME performance. Conversely, before controlling for business-related experience between genders, the study’s findings dispute the findings of Akinboade (2015) who reported that there is no association between gender and firm performance.

Given this background, we then factored in the chi-square test which allowed for the controlling of business-related experience between genders. The thinking here was that the mere fact that an SME is male owned and will therefore realise superior performance compared with a female-owned SME inadequately answers the debate and could be misleading. Resultantly, we grouped the male and female SME owners into high and low business-related experience categories. This exercise sought to confirm whether the gender gap still existed between the two categories. A cross tabulation and chi-square test were performed. The results appear in partial tables outlined in the contingency table and the chi-square test, as shown in Tables 1 and 2. The descriptive statistics in Table 1 are discussed first, and thereafter Table 2, which focuses on the chi-square test, is discussed.

From the first partial table relating to high business-related experience, it can be noted that 87% of male and 77.8% of female respondents reported high firm performance. In the second partial table relating to low business-related experience, 76.9% of male and 84% of female entrepreneurs with low business-related experience indicated low or poor firm performance. From the partial table relating to high business experience, it can be concluded that firms of both male and female entrepreneurs with high business-related experience are more likely to be superior in terms of performance. However, looking closely at the partial table relating to low business-related experience, it can as well be concluded that firms for male and female business owners with low business-related experience are less likely to perform. Table 2 outlines the chi-square test results to determine whether a significant association can be found between gender and firm performance among SME owners with high/low business-related experience.

After controlling for business-related experience, the results displayed in Table 2 indicate that SME owners with high business-related experience obtained a chi-square value = 0.413, df = 1 and p = 0.52 greater than p = 0.05. This means that there is insufficient evidence against the null hypothesis which claims that no significant association can be found between gender and SME performance among SME owners with high business-related experience in the population from which the sample data was drawn. This article therefore fails to reject the null hypothesis H2. With regard to SME owners with low business-related experience, a chi-square value = 0.285, df = 1 and p = 0.593 greater than p = 0.05 was obtained. The results indicate that there is insufficient evidence against the null hypothesis claiming that no significant association can be found between gender and firm performance amongst SME owners with low business-related experience in the population from which the sample data were drawn. This article therefore fails to reject the null hypothesis H3. The above findings reveal that when controlling for the level of business-related experience between male-owned and female-owned SMEs, there is no difference in the performance of SMEs. The article disputes the findings by Watson (2002) who concluded that underperformance is not a function of experience or skills shortage or lack of competence in managing the firm but is directly attributable to unequal levels of starting capitalisation (finance). For example, a groundbreaking study by Mabaso (2008) conducted on SMEs established by retrenched Telkom workers, who were provided with finance to start businesses in South Africa, concluded that inadequate managerial experience and training were the major reasons for weak performance and failure of SMEs. This study, therefore, provides evidence in support of Mabaso (2008) that when SMEs are capitalised in the same manner in relation to business-related experience, no differences in performance are found in either male- or female-owned firms, considering that there is no change in behaviour of other performance-related factors.

Contrary to evidence provided in literature, the study concludes that when focusing on the impact of gender on entrepreneurship with the aim of comparing business outcomes of male- and female-owned entities, while ignoring the role of key variables such as business-related experience, may yield misleading results. This study provides evidence indicating that when gender is factored in as the only independent variable, performance significantly differs between genders in support of extant literature. However, when other key factors such as managerial experience, prior business ownership and industry experience of entity owners are also taken into consideration, the findings of the study provide evidence to indicate that there is no significant difference in the performance of male- and female-owned entities. This also happens to be the major contribution of this study to literature.