Running head: TECHNOLOGY AND ENTREPRENEURIAL FINANCE OPTIONS

Technology and Entrepreneurial Finance Options for Women Joy Carter Walden University

TECHNOLOGY AND ENTREPRENEURIAL FINANCE OPTIONS Technology and Entrepreneurial Finance Options For Women

Technology impacts and influences every aspect of the lives of most people of the world. The term technology has come to be used and applied frequently while still remaining obscure and difficult to define. It is common to ask what is technology? The answer, however depends upon context and to whom the question was posed. Merriam-Websters online dictionary (2011) broadly defines technology as the practical application of knowledge, especially in a particular area, and a manner of accomplishing a task especially using technical processes, methods, or knowledge. Whether directly or not, every facet of life and business is impacted and influenced by some form of technology. This extends, of course, to the field of entrepreneurial finance. An analysis of how technology can be utilized to enhance and even create entrepreneurial finance options reveals unique opportunities for women to improve their rates of success in business ventures and capital procurement. This brief study will examine current trends in both technology and entrepreneurial financing and how such trends can improve financing options for women-owned businesses. Analysis of the Field The field of entrepreneurial finance is at once broad and very narrow. With multitudinous theories on entrepreneurship, including social entrepreneurship and entrepreneurial innovation theories, there is evidence of debate over how even to study entrepreneurism. Financial management, economic fluctuations, credit worthiness, and global competition further muddy the waters of the field of entrepreneurial finance. Researchers Busenitz, West, Shepherd, Nelson, Chandler, and Zacharakis (2003) assert the need for a separate and more

TECHNOLOGY AND ENTREPRENEURIAL FINANCE OPTIONS comprehensive discourse and research in the area of entrepreneurship. They purport that focusing entrepreneurship research at the intersection of the constructs of individuals, opportunities, modes of organizing, and the environment will define the field and enhance

legitimacy (Busenitz et al, 2003), and they further suggest the need for scholarly investigation of decision theory, start-up factors of production, information processing and network theory, and temporal dynamics in relation to the field of entrepreneurial study. In the currently sagging global economic climate, scholars and researchers are beginning to recognize the need for more focused study in this area. Carter(2011) suggests multiple areas worthy of investigation to accommodate more relevant and accurate research and data in this area. In a review of current literature on entrepreneurial finance, she noted important gaps and makes the following key suggestions: Micro level data and analysis of regional and specifically rural rates of entrepreneurship, access to capital, and access to technology need to be examined. Information on entrepreneurial finance comparisons and success rates along lines of ethnicity, race and industry are also missing from the assigned literature. Gender-based data, assumptions and comparisons abound, but there is much to learn by examining the intersections of these other factors.

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Assessments for determining the right amount of startup capital needed by entrepreneurs, as well as the accuracy of anticipated growth funding needs are necessary (Carter, 2011).

Overall, the field of entrepreneurial finance is far more nuanced and intricately connected to other areas of business and global economic fluctuations than current research and data encompass. Current Trends in Technology Among the current technological trends are virtual office administration, outsourcing, and cloud computing. Each of these trends offers a significant advantage for business owners who take advantage of them. According to Microsoft (2011), cloud computing offers a paradigm shift in cost savings, agility, scalability, and global reach that is simply too powerful for any enterprise to ignore. In his article on outsourcing, Elango (2008) asserts the value and necessity of small to medium sized firms viewing and utilizing outsourcing as part of a strategic plan rather than merely as a cost reduction measure. In reality, outsourcing offers value on both of these fronts, by not only reducing costs and raising the financial leverage of a firm, but also by improving the overall strength of a firms strategic plan. Sen & Hag (2010) point out in their article, that outsourcing is key to process management. Wherever a process can improve a firms bottom line as well as their product and service offerings, it is a step in the right direction. In a review of the Sen & Hag article, Aberdeen (as cited by Buchanan, 2010) states that:

TECHNOLOGY AND ENTREPRENEURIAL FINANCE OPTIONS Despite their limited resources, the survey results show that over the last 10 years outsourcing by SMFs (small and medium firms) have increased in the areas of

research and development, product development, manufacturing, marketing/sales, and distribution (Buchanan, 2010, slide 22). Improving effectiveness, efficiency, and cost savings makes any business a more favorable financing candidate. Internet and software technologies in particular offer firms multiplied opportunities to improve their bottom line and growth opportunities, and for women-owned firms, theses advances in technology offer new and exciting ways to level the playing field and in some instances, if properly leveraged, gain an advantage. Current Trends in Entrepreneurial Finance Seed funding, commercialization, and government-back loans are just a few of the current entrepreneurial finance trends in the marketplace today. According to Carter (2011): The on-going evolution of the knowledge-based, global economy is making it necessary for this public-policy influencing group to review its methods for spurring innovation as well as reaching and sufficiently supporting the businesses that it serves. Amongst the challenges pointed out are expansion of assistance, preparing SBIR award recipients for commercialization of their businesses, while also offering federal seed money for such commercialization growth opportunities. Carter(2011) also suggests that:

TECHNOLOGY AND ENTREPRENEURIAL FINANCE OPTIONS Amongst the current topics in Entrepreneurial finance are many gender-based studies, and data based on the impact of globalization and the new knowledge-

based economy. I would propose a particular a focus on the internet/E-commerce technologies that can give businesses a financial advantage, increase their profitability, and decrease their need for or dependence upon outside financing. Many firms do not properly research and our calculate the technology costs which should be included in their budget consideration or their profit generating potential. I believe cost minimizing strategies are available, but because some are newer and non-traditional or less understood, many entrepreneurs and business owners miss great (and inexpensive) opportunities to generate income. How Do These Trends Matter to Women Entrepreneurs? There are numerous articles which deal with the topic of gender in entrepreneurial finance. Becker-Blease & Sohl (2007) looked at whether or not the angel capital field was level for women-owned firms. According to their findings, entrepreneurs demonstrate a strong preference to seek angel funding from angel investors of the same sex. However, with respect to the awarding of angel financing, we find only limited evidence of homophily between 2000 and 2004. Orser, Riding, & Manley (2006) found that on the whole, women-owned businesses tend to be smaller in size and scope, and tend to be less likely to seek outside funding. The current technological trends such as outsourcing and cloud computing have the possibility of multiplying and maximizing the capabilities, reach, and viability of women-owned firms.

TECHNOLOGY AND ENTREPRENEURIAL FINANCE OPTIONS In their article on gender, entrepreneurship, and bank lending, Carter, Shaw, Lam, & Wilson (2007) examined the differences in lending application assessment in terms of gender socialization, considering the gender-based perceptions and socialized norms of both the lenders and the firm-owners. Marlow & Patton ( 2005) went beyond the popular debate about discrimination against women in lending. Instead of simply presenting evidence that gender discrimination against women exists, these researchers asserted that such discrimination subordination limits the accrual of social, cultural, human, and financial capital and so places limitations upon womens abilities to amass personal savings, generate credit histories attractive to formal lenders, or engage the interest of venture capitalists (Marlow and Patton, 2005). With discrimination against women being seen as a social norm of sorts, the current trends in entrepreneurial finance, as well s those in technology are critically important to women entrepreneurs, and to their ability to successfully secure financing for their ventures. Research Topic Many plausible and interesting research topics have come to light in the process of cultivating a scholarly approach to entrepreneurial finance theories, trends, and research. Of particular interest to women entrepreneurs would be the intersection of factors such as access to technology and mentoring opportunities. Proposed research questions could include the following: 1. How does mentorship improve women entrepreneurs access to financing?

2. What kind of mentoring would yield the best results: formal or informal; arbitrary or dedicated mentoring?

TECHNOLOGY AND ENTREPRENEURIAL FINANCE OPTIONS A comprehensive research undertaking would also seek to ascertain how access to technology, particularly internet technologies impacts mentorship, and whether or not it ultimately produces successful, fair, and equitable financing options for women business owners. In a forum discussion on entrepreneurship, Carter (2011b) offers personal insights on the value and frustrating lack of viable mentoring opportunities for women in business:

As an African American entrepreneur, I have often sought for but found it difficult to find an accessible cadre of mentors in my area of business. Mentorship amongst minority business women, especially African American women is an area of great potential (Carter, 2011b). Carte goes on to inquire about any known research studies which highlight the benefits or even the existence of entrepreneurial mentorship networks for African American or other minority women groups. She points out that studies of this nature could be immensely beneficial, and offer greater insights and opportunities for financing options and improved management of financial and operational skills of budding entrepreneurs (Carter, 2011b).

Future Directions As researchers, scholars, entrepreneurs, and consumers continue to shape the marketplace, drive innovation, and spur business growth, expansion, and entrepreneurship, it is important to build on the strides made in opportunities for women, while not resting on them. While women will continue to find ways to innovatively fund their business ventures and circumvent the blockades erected by social norms, gender preconceptions, and outright

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discrimination, the new tools available through outsourcing, cloud computing, networking, direct marketing and globalization offer powerful options for success. These factors, along with internet and software technologies, as well as time and cost reduction and savings are harbingers of a possible sea-change in business as we know it. Future directions are only limited by the imaginations and determination of entrepreneurs, especially those who are female.

TECHNOLOGY AND ENTREPRENEURIAL FINANCE OPTIONS References

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