A substantial amount of gender inequality exists in entrepreneurial activity. Barriers to women’s entrepreneurship are commonly studied and include access to financing, culturally constructed perceptions on abilities, and stereotypical traits of entrepreneurs. This section discusses some of the existing and emerging research in this field of study.
There is a substantial amount of gender inequality in entrepreneurial activity, and this form of inequality persists across all national contexts studied to date. First, most women are about half as likely as their male counterparts to start a new business, to be the owner/manager of their own businesses, or to describe themselves as "self-employed." Second, when comparing men and women entrepreneurs, women's businesses tend to be smaller on average, are financed at a lower rate, generate less profit, grow more slowly, are more likely to be home-based, and are more likely to be in female-typed industries such as retail and interpersonal care (see Jennings and Brush 2013 for a comprehensive review of these trends). At the same time, there is a need to recognize the sheer numbers. It’s true that women own 36 percent of businesses in the United States; however, another 9 percent of U.S. businesses are equally owned by women and men, meaning that 45 percent (almost half) of all U.S. businesses are owned at least half by women.
Scholars have established several sources of this inequality. Some of the most critical sources include:
- Gender differences in key forms of human, social, and financial capital,
- Differences in men's and women's culturally constructed perceptions about the abilities and risks associated with entrepreneurship,
- The widely held stereotype of entrepreneurship as associated largely within technology-based industries and as a male-typed or masculine activity, and the power of this stereotype to discourage women from pursuing entrepreneurship and/or detract from their ability to garner support for a new venture, and
- Differences in the opportunities and incentives that men and women experience in workplaces and in families to become entrepreneurs.
There is a lot we still don't know. For instance:
- How do institutional arrangements, such as government policies and workplace practices, affect men's and women's motivations to become an entrepreneur?
- If the activity of entrepreneurship were explicitly disassociated from gender, would more young women decide to pursue it? If they did, how might this change the contours of the modern economy?
- Is entrepreneurship always a "good" thing for men, women and the economy, and if not, then when and why is it not?
- When and how do gendered patterns of entrepreneurship and innovation emerge within the confines of established organizations?
The research topics under the domain of gender and entrepreneurship are large and varied. A number of approaches have been made to develop a conceptual framework, or at least an umbrella, to allow learnings in one area to be more readily applied to other questions about women business owners and their businesses (Fischer, Reuber and Dyke 1993) (Gatewood, Carter, Brush, Greene, and Hart 2003) (Greer and Greene 2003) (De Bruin, Brush and Welter 2007) (Tedmanson, Verduyn, Essers, and Gartner 2012) (Ahl and Marlow 2012). Here, we split the field into broadly defined "earlier" and "later" approaches, although the chronology is imperfect.
Early Approaches: The "Deficiency" School
More than 30 years ago, the earliest research focused primarily on characteristics of women business owners located primarily in the United States, Canada, and Western Europe. These studies of women business owners (Schwartz 1976) (DeCarlo and Lyons 1979) (Hisrich and O'Brien 1981) (Sexton and Kent 1981) were almost entirely descriptive in nature, summarizing women-owned businesses as smaller than those owned by men and largely located in either retail or service industries. The description extended to the women business owners themselves, finding that they were usually college graduates (Hisrich and Brush 1983) (Bowen and Hisrich 1986) (Hisrich and Brush 1987) (Brush 1992) (Devine 1994) (Greer and Greene 2003), started their businesses in areas in which they had previous work experience, and were largely motivated by their frustration with workforce opportunities (Hisrich and Brush 1983). Much of this work has now been categorized as the "deficiency" school since it focused on what women seemed to lack (when compared to men) in order to grow start and grow businesses (Ahl 2004) (Ahl 2006). Jennings and Brush recently summarized the primary questions explored in the field (Jennings and Brush 2013):
- Are men and women equally likely to engage in entrepreneurship?
- Do female and male entrepreneurs tend to differ with respect to financial resource acquisition?
- Do female and male entrepreneurs tend to enact different strategic organizational and managerial practices within their firms?
- Do female-led and male-led firms perform equally well?
The search for answers to each of these questions persists today and has expanded to include most parts of the world. Findings are largely consistent globally.
Likelihood of Starting a Business
Historically, evidence shows that women start businesses at slower rates than do men. Today, numbers are rising in most countries but still substantially lag the rate of men. The latest Global Entrepreneurship Monitor reports that 11 percent of women in the U.S. were in the process of starting or running a new business, compared to 16 percent for men (Amoros 2013). This translates to one out of every ten U.S. women becoming an entrepreneur (Brush, Greene, Balachandra and Davis 2014). Again, the numbers differ globally, yet can be summarized to say that in 2012, approximately 126 million women were starting or running new businesses across the 67 economies studied by the GEM project, with an additional 98 million women running established businesses (Amoros 2013). What we see is a consistent rise in the numbers of women starting and growing businesses around the world. The growth in global interest in women starting and growing businesses is largely an outcome of entrepreneurship recognized as a leading driver of economic development and women as active contributors in that area.
Central to the study of entrepreneurship has been a focus on the acquisition of resources, especially financial resources needed to start and grow the business. In comparing the experiences of men and women, the access to capital question is one that needs the important caveat of differentiating between types of capital. Research studies across the years in the Western part of the world consistently find no differences in access to debt capital between women and men, if—and this is a big if—other factors are controlled, such as the type of business (Fabowalke, Oser, and Riding, 1995) (Buttner and Rosen 1988) (Buttner and Rosen 1989) (Coleman 2000) (Fay and William 1993); however, studies generally do show that women are more likely to receive somewhat more onerous terms (Carter, Shaw, Lam, and Wilson 2007) (Marlow and Patton 2005).
Access to equity capital is quite different for women, with early studies revealing that fewer than five percent of all venture capital investments were made into companies with a woman on the executive team (Brush, Carter, Gatewood, Greene, and Hart 1999) (Carter, Brush, Greene, Gatewood, and Hart 2003) (Becker-Blease and Sohl 2007). The most recent study finds that some progress has been made. Between 2011-2013 more than 15 percent of the companies receiving venture capital investment had a woman on the executive team (Brush, Greene, Balachandra, and Davis 2014). While it's true that equity investments are a fit with only a small proportion of businesses, women around the world are far less likely to participate in this type of funding for their businesses. Most of the studies on equity capital to date are based in the U.S.
Moving beyond considering women and men as demographic variables, early gender stereotype studies focusing on the socially prescribed roles of women have examined differences in financing and concluded that in some cases, bankers may have discriminated against women (Buttner and Rosen 1988) (Riding and Swift 1990). Whether as an outcome of perceived difficulty in accessing financial resources or strategic perspective, research shows women may be less likely to apply for various forms of financing (Orser, Riding, and Manley 2006) (Becker-Blease and Sohl 2007).
In line with gender stereotype studies, research on entrepreneurial self-efficacy has suggested gendered differences (Gatewood, Shaver, and Gartner 1995) (Chen, Greene and Crick 1998) (Wilson, Kickul, and Marlino 2007). Self-efficacy is an area is of growing importance, given that one of the inhibiting factors identified for women business owners around the world is a lack of confidence (Dempsey and Jennings 2014). Entrepreneurial self-efficacy provides an individual's self-perception of their confidence in performing specific tasks and skills related to starting and growing a business; therefore, understanding where and why women believe they lack confidence is an area of interest.
In addition to resource acquisition, researchers have examined whether motivation and managerial style differs between men and women. Findings are consistent across time, with more recent studies again showing that while women are more likely to be motivated by necessity than opportunity to start businesses, especially in developing economies (Kelley, Brush, Greene, and Litovsky 2013), women and men tend to run their businesses in fairly similar ways (Chaganti and Parasuraman 1996) (Coleman and Robb 2012), with some of the differences attributed to differences in the types of businesses. While the strategies vary, again dependent on type of business, managerial approaches are more likely to be similar between men and women (Jennings and Brush 2013). Two differences to consider are that women-led businesses are less likely to be active in exporting (Orser, Spence, Riding, and Carrington 2012) and more likely to pursue a social as well as an economic mission (Hechavarria, Ingram, Juston, and Terjesen 2012). In addition, there is also evidence that women pursue goals beyond economic gain (Du Rietz and Henrekson 2000) (Orser and Hogarth-Scott 2012). Some studies show that women are more likely to have hybrid goals (both economic and non-economic in nature (Hechavarria, Ingram, Juston, and Terjesen 2012) (Meyskens, Allen, and Brush 2011).
Whether or not women led businesses perform as well as those led by men depends on your definitions of success. Women-led businesses do tend to stay smaller in terms of revenues and employment, and they are generally less profitable (Coleman and Robb 2012). Studies provide inconsistent findings regarding whether or not they survive longer (Boden and Nucci 2011) (Kalleberg and Leicht 1991). And finally, more recent studies suggest that women-led businesses perform stronger on certain types of financial ratios (Watson and Robinson 2003).
Recent Approaches: Gendered Structural Factors
Scholarship aimed at uncovering the sources of gender inequality in entrepreneurship has developed and widened considerably over the last twenty years.
Initial studies considered gender synonymous with sex as a demographic variable (male/female). Over the following decades, research expanded the perspective, recognizing gender as a socially construed variable dependent on context and role identification. Increasingly gender theories and a greater focus on how women grow businesses emerged. Journals began to offer special issues focused on women entrepreneurs and theory development (De Bruin, Brush, and Welter 2006) (De Bruin, Brush, and Welter 2007).
This gendered perspective maintains that the cultural construction of entrepreneurship, as depicted in the broader culture as well as in some early scholarship on the topic (e.g., Schumpeter 1934) has been implicitly male. That is, entrepreneurship has been linked to personality traits stereotypically associated with men and masculinity, such as aggressiveness, leadership and dominance, risk-taking, and independence (see e.g., Ahl 2006; Gupta, Turban, Wasti, and Sikdar 2009). This male-typing of the activity of entrepreneurship has widespread implications for gender inequality, given that this stereotypic image affects the extent to which women identify with entrepreneurship, view it as a desirable career strategy, and/or experience encouragement and support from others (financial or otherwise) should they decide to pursue it. For instance, a series of recent studies that rely on experimental designs find that lenders, potential lenders, and technology licensing officers systematically favor male-led businesses, and that this bias is a direct result of the agentically masculine stereotype of the ideal-typical entrepreneur (Bigelow, Lundmark, McLean, and Wuebker 2011) (Brooks, Huang, Kearney, and Murray 2015) (Shane, Dolmans, Jankowski, Reymen, and Romme 2011) (Thébaud 2015). Some studies also suggest that this stereotype is responsible, at least in part, for women's lower likelihood of believing that they possess the abilities required to be an entrepreneur (Minniti and Nardone 2009) (Thébaud 2010).
Social and Structural Norms
Beyond the masculine cultural-typing of entrepreneurship, however, is the idea that entrepreneurial activity is embedded in the ongoing system of gendered social relations in the workplace and in families. For instance, women are more likely than men to be "pushed" into entrepreneurship as a result of negative or discriminatory experiences in the workplace, the lack of flexibility in terms of work schedules, and the greater economic strain that many women—especially single mothers—encounter (Brush 1992) (Hughes 2003) (Mattis 2004) (Moore and Buttner 1997). Uncovering women's greater propensity to be motivated by "necessity" and the ways in which these motivations are linked to business outcomes has been an important insight because it challenges prior assumptions in the entrepreneurship literature that all entrepreneurs are motivated by unbridled economic opportunity. Patterns of gender inequality in the labor market more generally, including gender disparities in SOME educational trajectories, work experience, social networking, and income, also map directly onto patterns of inequality in entrepreneurship, given that human, social, and financial capital are often prerequisites for starting a successful business (Loscocco, Robinson, Hall, and Allen 1991) (Marlow and McAdam 2010) (Renzulli, Aldrich, and Moody 2000).
A related line of research focuses on how women run their businesses and the impact of family, with many questions raised as to work/family balance and women's roles in family owned businesses (Carney, Chrisman, and Kellermanns 2012) (Aldrich and Cliff 2003) (Firkin, Dupuis, and de Bruin 2003) (James, Jennings, and Breitkreuz 2012). Some research explored how women's business growth is influenced by their family life cycle stage (Davis and Shaver 2012), while other work shows differences in how male and female entrepreneurs manage the work-family interface (Jennings, Hughes, and Jennings, 2010). The most notable and persistent aspect of gendering in families is the common assumption that women will carry greater responsibility for caregiving, regardless of their employment status. For instance, one reason that women have smaller, more home-based businesses than men is because they are more likely to set maximum size thresholds for their businesses (Cliff 1998). This occurs in part because women's business goals are often oriented toward creating a balance between their income-generating activities and their family responsibilities, something which far fewer men than women factor in when considering business size (Loscocco and Bird 2012). These gendered dynamics within families have also been shown to influence who takes the lead in an entrepreneurial team (Yang, Tiantian, and Aldrich 2014).
Institutions and Environment
In recent years, scholars of gender and entrepreneurship have broadened their analysis of the contextual determinants of gender inequality in entrepreneurship to national-level institutional arrangements. For instance, a growing number of studies consider how factors such as the degree of overall economic prosperity or gender inequality in a society may be linked to the opportunities and incentives that men and women experience to pursue entrepreneurship (Elam and Terjesen 2010) (Klyver, Nielsen, and Evald 2012) (Thébaud 2011) (Kelley, Bosma, and Amoros 2010).
Among the contextual determinants gaining research interest are mechanisms for how entrepreneurs not only derive resources from the surrounding community, but how they contribute to and shape development, including the role of philanthropy (Taylor, Strom, and Renz 2014). Although there are some early disagreements about whether women in general are more likely to be involved in philanthropy (Mesch, Rooney, Steinberg, and Denton 2006) (Andreoni, Brown, and Rischall 2003), there is greater consensus that the types of motivations and strategies are similar across gender (Jasper 2005) but different in the types and causes to which men and women contribute (Kottasz 2004) (Coombs, Shipp, and Christensen 2008). Brush, Carter, Gatewood, Greene, and Hart (2014) chart the overlay of gender differences in philanthropy in general to entrepreneurial women and men, which shows the trend of evolving issues, and offer a useful tool to frame the next set of questions on the philanthropic behaviors of entrepreneurial women .
Into the Future
Overall, the quantity of academic research about women entrepreneurs still lags their participation in the phenomenon at between 11-14 percent depending on which measures are used (Jennings and Brush 2013) (De Bruin, Brush, and Welter 2007); however, in terms of topics and research, the field is expanding in several different directions, including a more inclusive international approach stimulated in part by the evolution of Diana International. New attempts to build relevant theoretical frameworks are leading the way into the future.
The rise of a more structural approach to understanding gender inequality in entrepreneurship has proven particularly useful and has moved the literature beyond earlier theoretical perspectives that tend to focus on individual-level factors. Indeed, studies find that gender gaps in business success typically disappear when adjusting for structural factors, such as the venture's financial resources or the industry in which the business is operating (see Jennings and Brush 2013 for a review). This underscores the argument that much of the gender inequality in entrepreneurial outcomes that we observe today is driven by the fact that men and women entrepreneurs tend to be located in different positions in the structure of society, rather than any systematic differences in the tastes or preferences of men and women.
- Moving forward, one important area to continue to develop will be structural and cultural theories of gender and entrepreneurship. Although numerous studies have uncovered the structural and cultural factors that create differences between men and women entrepreneurs and their business outcomes, fewer studies have focused on how they contribute to women's lower propensity to start a business in the first place. This puzzle is particularly important given that women are so much less likely to start a business than men, and may be more likely to be "pushed" into entrepreneurship by poor labor market experiences. That is, we cannot assume that entrepreneurship will be an advantageous strategy for women who pursue it primarily out of necessity. Ultimately, this project will involve identifying the social conditions under which men and women could experience more similar incentives to start a business out of their own personal desire or interest in an economic opportunity, rather than in reaction to a structural constraint, such as a negative workplace.
- A second important area of future research will be to uncover the social psychological mechanisms through which the male-centered stereotype of entrepreneurship could become less gendered. One way to do this would be through identifying strategies for change in entrepreneurship education, in public discourse, and in persistently male-dominated networks of entrepreneurs, such as those often found in Silicon Valley. Hopefully, uncovering these strategies would not only encourage more gender parity in entrepreneurial activity overall, but it could also help deter potential stakeholders from falling back onto the unconscious biases that are known to disadvantage women-owned ventures.
- Third, the field would benefit from more work on the ways that current trends in the labor market may influence gender inequality in entrepreneurial activity. For instance, working particularly long hours ("overworking") is prevalent and on the rise, especially among professional workers, a pattern which creates a particularly acute time squeeze for working parents (Cha 2010); yet, in the beginning stages, most entrepreneurs mitigate financial risk by relying on a partner's income. How then might a mother's likelihood of running a large business change if her spouse's job increasingly demands that he overwork? Or, how might a father's tendency to pursue and grow a business change given that his spouse is increasingly required to overwork? Future research would be well-served to pursue questions such as these.
- Fourth, context is a critical component of understanding entrepreneurship. Building on the work of Diana International, studies have grown to include women entrepreneurs around the world. Researchers in the United States and Canada have long contributed to advancing the discussion in Germany (Achtenhagen and Welter 2011), India (Datta, Bhatt, and Gailey 2012), Spain and Scotland (Fuentes-Fuentes, Cooper, and Bojica 2012), Bulgaria (Manolova, Manev, Carter, and Gyoshev 2007), the Ukraine (Isakova, N., Krasovska, Kavunenko, and Lugovy 2006), Ireland (O'Connor, Hamouda, McKeon, Henry, and Johnston 2006), Uzbekistan (Welter, Smallbone, Mirzakhalikova, Schakirova, and Maksudova 2006), and Bangladesh (Zohir and Greene 2012). More international work of this kind would be welcome.
- Fifth is the intersection of women's business ownership and public policy. While there is a trickle of articles appearing on this topic, research is needed to provide guidance for policy makers around the world.
- Finally, future research needs to build on the fact that women are not a homogenous group. For one example, little research has been done on the intersection of race and gender.
- Panel Study of Entrepreneurial Dynamics: This study, carried forward by the Institute for Social Research at the University of Michigan from the Entrepreneurial Research Consortium, follows a nationally representative sample of nascent entrepreneurs over time. It is particularly useful for the study of gender because it includes a large range of demographic variables, such as information on a spouse's employment status and number and age of children, as well as detailed information on the formal and informal social networks in which men and women entrepreneurs are embedded. The PSED is free and publicly available, with the exception of detailed geographic location variables. These can be obtained through an application process, which is associated with a nominal fee.
- Kauffman Firm Survey: The KFS is also a longitudinal study that follows a nationally representative sample of start-ups in the United States over time. Though the KFS does not include as much demographic or network information as the PSED, it begins with a larger sample of firms than the PSED and includes an oversample of high-tech firms. These data are also free and publicly available, but access to more detailed data on, for instance, industry or geographic location, must be obtained through an application process.
- Global Entrepreneurship Monitor: This is a cross-national survey that has been administered in up to 85 countries, and, in some countries, over a period of about 15 years. This survey is useful for understanding gender dynamics in entrepreneurship because it includes a large sample of the adult population across a wide range of countries, which allows one to estimate and compare gender gaps in entrepreneurial activity across countries and over time. It also includes information about entrepreneurial motivations (e.g., opportunity versus necessity), as well as indicators of cultural perceptions about entrepreneurship, such as fear of failure or the social status attributed to entrepreneurs. Perhaps because of its breadth, the primary limitation of these data is their lack of a number of important demographic indicators that are important for understanding gender, such as marital or parental status. GEM data are free and available to the public, but only three years after a survey has been collected. Only members of the national teams affiliated with the GEM consortium may gain access sooner. Moreover, some detailed variables, such as information on geographic region, are only made available to members of the GEM consortium.
- The World Bank: Data available free about development in countries around the globe.
- Longitudinal Establishment and Enterprise Microdata (LEEM): Located at the Center for Economic Studies in the U.S. Bureau of the Census. Data access requires researchers to submit a proposal and become recognized Census researchers (dated but foundational).
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