When a crisis hits: An examination of the impact of the global financial crisis and the COVID-19 pandemic on financing for women entrepreneurs

Crises have significant implications for entrepreneurs' businesses. Female entrepreneurs are often found to suffer from crises due to their marginalized positions. Despite the increasing research at the nexus of crisis, entrepreneurship, and gender, how a crisis may influence investors' funding decisions concerning female entrepreneurs and whether different macro crises bring with them different implications remain under-explored questions. Drawing on role congruity theory and the crisis and strategic decision-making literature, this paper proposes that macro crises can shake the perceived incongruity between traditional stereotypes of the female gender role and masculine stereotypes related to the entrepreneur's role, thereby affecting financing for female entrepreneurs. We further compare two specific crises having different associated implications: the global financial crisis (GFC) and the COVID-19 pandemic. We conducted two studies, one emphasizing experimental manipulation and the second based on observational data. We found consistent evidence that investors were more likely to invest in female-founded ventures after the GFC; however, the opposite phenomenon occurred after COVID-19. Our experiment demonstrates that changed perceptions of gender role incongruity are a critical underlying mechanism driving our results. Our research has implications for both the entrepreneurship literature and role congruity theory. Amidst the expanding body of research on crisis, entrepreneurship, and gender, there is a predominant focus on the entrepreneur, leaving a discernible gap in our understanding of how macro-level crises specifically influence investors' funding decisions related to female entrepreneurs, and whether different types of crises lead to varying outcomes. This paper aims to bridge this gap, drawing insights from role congruity theory and integrating perspectives from crisis and strategic decision-making literature. We suggest that macro crises have the potential to shift investors' perceived incongruities between female gender roles and the masculine stereotypes commonly associated with entrepreneur roles, consequently affecting funding decisions for female-founded ventures. To test our hypothesis, we conducted two comprehensive studies within the contexts of two different crises, each with unique implications: the Global Financial Crisis (GFC) and the COVID-19 pandemic. Our first study employed experimental manipulation, while the second relied on observational data. Across both studies, the results were consistent: post-GFC, investors demonstrated an increased propensity to invest in female-founded ventures; conversely, after the onset of COVID-19, this trend reversed. Crucially, our findings underscore the pivotal role of perceptions of gender role incongruity in shaping the observed outcomes. Our framework enriches the existing body of literature, offering nuanced insights into how various crises may impact investors' funding decisions based on gender. Moreover, our results underscore the importance of aligning actions with macro-level shifts as we strive to cultivate more inclusive entrepreneurial ecosystems.