"Legitimacy, Ties and the Performance of Female Entrepreneurs: Evidence from Kenyan Microcredit"

Abstract

Networks are important for a range of entrepreneurial outcomes. However, literature often makes implicit assumptions about the immediate benefits of network size for venture performance. Building on Status Expectation State Theory and network perspective, we argue that female entrepreneur’s legitimacy is an important consideration in understanding the extent to which network ties translate into venture performance and examine several of its aspects that may affect this relationship. We build and test our model in the microfinance context, and explore microcredit group ties’ effects on the outcomes of female entrepreneurs where microcredit has historically focused its efforts. Using three distinct data samples from microcredit agencies in Nairobi, Kenya, we find that firm performance for female clients is a function of increasing number of ties within the group and its interrelationships with both individual and group level factors. We discuss implications and future research directions for networks, microcredit, and gender literature.