Breaking barriers or maintaining status quo? Female representation in decision-making group of venture capital firms and the funding of woman-led businesses

We examine whether and when female representation in decision-making groups of venture capital firms affects the firms' decision to fund woman-led businesses. By developing an intra- and inter-group categorization framework for group decision-making, we argue that, in the maledominated venture capital industry, decision-making groups with higher female representation are less likely to fund woman-led businesses. However, this negative effect is mitigated when the decision-making group has more politically neutral members or when members have more shared prior employment affiliations. Using a longitudinal panel dataset of funding decisions by 151 U. S.-based venture capital firms, the empirical analyses support our theoretical predictions. We also enriched and complemented our empirical findings with qualitative evidence.

Automated summary

This study examines the influence of female representation in decision-making groups of venture capital firms on the firms' decision to fund woman-led businesses. The findings suggest that in the male-dominated industry, decision-making groups with higher female representation are less likely to fund woman-led businesses. However, this negative effect can be mitigated when the decision-making group includes politically neutral members or members with shared prior employment affiliations.