Gender and Firm Performance in Africa: Does the Business Environment Play a Moderating Role?

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Okumu, Ibrahim Mike
Nathan, Sunday
Bbaale, Edward
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African Economic Research Consortium
This paper examines the moderating role of the business environment in the relationship between the gender of the top manager and firm performance (measured as sales per employee), and whether female-managed firms perform better the higher the proportion of female employees in the firm. The paper uses World Bank Enterprise Survey data of 14,561 firms from 29 African countries collected between 2010 and 2016. The descriptive analysis reveals significant variation in the performance and experience of business environment constraints that disadvantage female-managed firms. Controlling for potential endogeneity and country fixed effects, we show that female-managed firms are associated with lower performance compared to male-managed firms. Electricity outages, informal competition and corruption account for the performance gap between female- and male-managed firms. However, we show that large female-managed firms perform better than large male-managed firms. Overall, the results imply that strengthening Africa’s business environment is central to closing the performance gap between male and female managers.