Snellman, K.* and Solal, I.* (2023) Does investor gender matter for the success of female entrepreneurs? Gender homophily and the stigma of incompetence in entrepreneurial finance. Organization Science 34(2):680-699. Open Access
Abstract: Female support of other women has been promoted as a potential remedy to the gender gap across many domains. Yet the potential costs associated with gender homophily remain understudied. We propose that homophily aggravates negative gender bias in evaluation. Focusing on venture-backed startups, we theorize that future investors will discount a female entrepreneur’s competence as the key factor in an early-stage investment decision, when the investment comes from a female investor. Consequently, female-backed female entrepreneurs may struggle to raise additional funds from new investors. In a field study of venture-backed startups, we find that firms with female founders who received funding from female rather than male VCs are two times less likely to raise additional financing. We find no equivalent investor gender effect for male-founded firms. In an experimental study, we find that pitches by female-backed female entrepreneurs receive lower evaluations compared to all other pitches, and that this is driven by perceptions of entrepreneur competence. Our findings suggest that well-intentioned calls for women to invest in women not only place an undue burden on female investors but may also undermine the long-term success of female entrepreneurs.
*denotes equal contribution
Selected media mentions: Forbes, Financial Times, Newsweek
Hafenbrack, A., LaPalme, M., and Solal, I. (2022) Mindfulness meditation reduces guilt and prosocial reparation. Journal of Personality and Social Psychology 123(1), 28-54 https://psycnet.apa.org/doiLanding?doi=10.1037%2Fpspa0000298
Abstract: The present research investigates whether and how mindfulness influences the guilt-driven tendency to repair harm caused to others. Through a series of eight experiments, we demonstrate that state mindfulness cultivated via focused breathing meditation can dampen the relationship between transgressions and the desire to engage in reparative prosocial behaviors. Experiment 1 showed that induced state mindfulness reduced state guilt. Experiments 2a-2c found that induced state mindfulness reduced the willingness to engage in reparative behaviors in normally guilt-inducing situations. Experiments 3a and 3b found that guilt mediated the negative effect of mindfulness meditation on prosocial reparation. Experiment 4 demonstrated that induced state mindfulness weakened the link between a transgression and reparative behavior, as well as documented the mediating role of guilt over and above other emotions. Finally, in Experiment 5, we found that loving kindness meditation led to significantly more reparation than focused breathing meditation, mediated by increased other-focus and feelings of love. We discuss theoretical and practical implications..
Apouey, B., Roulet, A., Solal, I., and Stabile, M. (2020) Gig workers during the COVID-19 crisis in France: Financial precarity and mental well-being. Journal of Urban Health 97(6), 776,795 https://link.springer.com/article/10.1007/s11524-020-00480-4
Abstract: We set out to explore how precarious workers, particularly those employed in the gig economy, balance financial uncertainty, health risks, and mental well-being. We surveyed and interviewed precarious workers in France during the COVID-19 crisis, in March and April 2020. We oversampled gig economy workers, in particular in driving and food delivery occupations (hereafter drivers and bikers), residing in metropolitan areas. These workers cannot rely on stable incomes and are excluded from the labor protections offered to employees, features which have been exacerbated by the crisis. We analyzed outcomes for precarious workers during the mandatory lockdown in France as an extreme case to better understand how financial precarity relates to health risks and mental well-being. Our analysis revealed that 3 weeks into the lockdown, 56% of our overall sample had stopped working and respondents had experienced a 28% income drop on average. Gig economy drivers reported a significant 20 percentage point larger income decrease than other workers in our sample. Bikers were significantly more likely to have continued working outside the home during the lockdown. Yet our quantitative analysis also revealed that stress and anxiety levels were not higher for these groups and that bikers in fact reported significantly lower stress levels during the lockdown. While this positive association between being a biker and mental health may be interpreted in different ways, our qualitative data led to a nuanced understanding of the effect of gig work on mental well-being in this population group.
Solal, I. and Snellman, K. (2019) Women don’t mean business? Gender penalty in board composition. Organization Science 30(6), 1270-1288. Open Access
Abstract: We examine investor responses to board diversity and highlight a previously unexplored mechanism to explain negative market reactions to senior female appointments. Drawing on signaling theory, we propose that an increase in board diversity leads investors to update their beliefs about firm preferences. Specifically, we argue that a gender-diverse board is interpreted as revealing a preference for diversity, and a weaker commitment to shareholder value. Consequently, firms with more female directors will be penalized. We test our argument using 14 years of panel data on U.S. public firms. We find that firms that increase board diversity suffer a decrease in market value, and that this effect is amplified for firms that have received higher ratings for their diversity practices across the organization. These results suggest that observers respond to the presence of female leaders not simply on their own merit, but as broader cues of firm preferences, and that firms may counteract any potential signaling effect through careful framing.
Selected media mentions: Forbes, Financial Times, Bloomberg
Selected working papers
Brenner, S., Solal, I., and Wernicke, G. ‘Not my CEO’: Employee reactions to the threat of female leadership.
Abstract: We explore the impact of gender on employee evaluations of their CEO. Employing the lens of group competition theory to understand the female leadership penalty, we theorize that negative reactions toward women in senior positions are motivated in part by the perceived threat these women pose to the existing gender hierarchy. As women increasingly move into positions previously held by men, and as diversity programs lead to shifts in the balance of power, gender is likely to become more salient and trigger backlash effects. Exploiting data from close to a million employee reviews of U.S. listed firms from Glassdoor.com, we show that female CEOs receive lower employee approval ratings compared to male CEOs, and that this is driven primarily by male employees. Our results are robust to controls for firm performance, reviewer ratings of employment conditions, as well as indicators of managerial quality as measured by educational credentials, board memberships, and other achievements. We further find that the organization’s diversity ratings moderate the relationship between CEO gender and employee approval, such that female CEOs are especially penalized among firms that have made substantial progress in promoting women and minorities. Implications for female leadership are discussed.
Gutierrez, C., Li, C., and Solal, I. How ambiguity reinforces occupational segregation by gender.
Abstract: This paper provides new insight into occupational segregation along gender lines by analyzing career choice as a decision made under ambiguity (an uncertain situation where probabilities are unknown). In an online experiment, participants performed both a male-typed task and a female-typed task. They then chose one of the two tasks to compete in for a chance to win a prize, based on their ranking. Similar to individuals making real-life career decisions, participants had incomplete information regarding their performance relative to others, which creates ambiguity. Using an advanced measurement method from decision theory, we measured participants’ attitudes towards ambiguity concerning their ranking in each task. We found that both men and women were more averse to ambiguity on the gender incongruent task. Controlling for actual performance, this increased ambiguity aversion made people less willing to compete in gender incongruent tasks. Women in particular were less likely to choose to compete in a male-typed task, even when their performance was higher in that task. This suggests that ambiguity is an important factor contributing to gender segregation across occupations. Our findings also point to ambiguity attitudes and the gender typing of jobs as possible channels through which to tackle ongoing gender inequality.
Solal, I. The gender of money: The effect of investor gender in shaping investment preferences Available on SSRN. Runner-up for OMT Best Student Paper Award, 2019.
Abstract: Increasing female representation among the pool of investors has been advanced as a potential solution to the persistent gender gap in startup financing. But do all female founders stand to benefit from an increase in female investment capital? I exploit data on 3,264 investor-entrepreneur pairings from the televised pitch competition Shark Tank to explore the gendered preferences of male and female investors. I find that both male and female investors are more likely to extend investment offers to entrepreneurs of the same gender, consistent with a homophily hypothesis. I also find that male investors are more likely to show interest in male-typed businesses, while female investors are less likely to invest in these businesses, independent of entrepreneur gender. This preference for investing in industry sectors that are gender-congruent, especially for women, suggests a potential limit to increased numeric representation as a driver of greater gender equality. Additional analyses indicate that experience attenuates women’s gendered preferences.
Solal, I. and Snellman, K. The B-team: Team Prototypes and their Consequences for the Success of Gender-Diverse Teams in Academy of Management Proceedings 2020 (1) 21318 https://journals.aom.org/doi/abs/10.5465/AMBPP.2020.106
Abstract: Teams are increasingly encouraged to diversify by bringing in more women and members of underrepresented minorities. Yet studies on the relationship between performance and demographic diversity have yielded mixed findings, and diverse teams often struggle when competing for scarce resources. Extending insights from the professional prototypes literature to teams, we propose a theory to explain why gender-diverse teams may incur a selection penalty. We argue that when quality is uncertain and decision-makers are selecting on potential for exceptional performance, they are more likely to fall back on culturally dominant schemas or prototypes. Thus, when existing models of team success are overwhelmingly male, the presence of women on the team may make the team less successful, not because this drives down objective performance, but because the team is no longer perceived as conforming to the ideal type. We test our theory using data from a university entrepreneurial pitch competition, and find that while teams with female participants receive similar evaluations for their business idea and are no less likely to place second, they are six times less likely to win the competition compared to all-male teams. Implications for diversity and inclusion in organizations are discussed.
Other Writing (selected)
For Female Founders, Fundraising Only from Female VCs Comes at a Cost. HBR.org. February 1, 2023.
Meditating away a guilty conscience. INSEAD Knowledge. January 31, 2022.
Why women (and firms) lose out when we celebrate diversity. WIPsociology.org. January 9, 2020.
Why Investors React Negatively to Companies that Put Women on Their Boards. HBR.org. November 25, 2019.
‘Pink Silos’ in Start-up Funding and How to Avoid Them. INSEAD Knowledge. September 25, 2019.