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Women Hold Key to Economic Growth

Posted by: Mark Marich on October 03, 2011 Source: Policy Dialogue on Entrepreneurship

Women who are capable of starting growth companies that serve global markets may be the nation’s secret weapon for achieving sustained economic growth.

Research shows that startup companies – particularly high-growth startups – are the most fruitful source of new U.S. jobs and offer the economy’s best hope for recovery. However, despite the fact that about 46 percent of the workforce and more than 50 percent of college students are female, and that women have risen to top positions in corporate and university hierarchies, they represent only about 35 percent of startup business owners. Their firms also tend to experience less growth and prosperity than do firms started by men.

“Overcoming the Gender Gap: Women Entrepreneurs as Economic Drivers,” a new paper from the Ewing Marion Kauffman Foundation, explores the reasons behind lower business startup rates among women and proposes actions that would help to realize the promise of female entrepreneurs in escalating the economy.

“There are plenty of highly qualified women in science and technology – industries from which the majority of high-growth companies are born,” said Lesa Mitchell, Kauffman Foundation vice president, advancing innovation, and the paper’s author. “More women are entering these fields than ever before. However, while women have broken through the glass ceiling, they seem to encounter ‘glass walls’ that keep them from venturing out of big companies or structured academic settings to launch their own firms at the same rate men do.”

In fact, early in the startup process, women take fewer steps to position themselves to start high-growth companies, according to “Gender Differences in Patenting in the Academic Life Sciences,” a landmark study released in 2006 that tracked the careers of more than 4,000 life science research faculty at U.S. universities over 30 years.

While women tended to produce research that was equal to or slightly better than men’s, on average, female faculty patented their research at only about 40 percent of the rate of their male colleagues, the study showed. They also tended to rely on formal university conduits to help them commercialize their research, rather than making connections and seeking guidance from private industry. In addition to more actively reaching out to establish new networks – a critical step for would-be entrepreneurs – men had more exposure to industry earlier in the process, with 93 percent of them serving on science advisory boards of high-tech companies, as compared to only 6.5 percent of women.

Other studies show that women might be more inclined to seek work/life balance and therefore shy away from establishing innovative firms that aim for global scale. On average, they also have greater difficulty raising investment capital than men do.

Nevertheless, Mitchell says, these gaps do not represent innate gender differences. They are subject to change and already may be changing.

“Women’s entrepreneurship is an economic issue, not a gender-equity issue,” Mitchell said. “As more women engage as entrepreneurs to build on their discoveries, new jobs and economic prosperity will follow.”

Mitchell recommends three steps to boost female entrepreneurship in the United States:

  • Not-for-profit initiatives that advance opportunities for high-growth women entrepreneurs need greater funding and support from women executives, philanthropy leaders and industry. Networking and collaborative events between startup founders and big companies are critical to provide women entrepreneurs access to networks that can produce potential customers.
  • Successful women entrepreneurs and inventors should make themselves visible and available. Role models are critical to young women considering entrepreneurship.
  • Women must be invited at a much higher rate to join science advisory boards of high-tech companies.

Gender Gap Infographic
[source: Kauffman Foundation press release]

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