Wednesday, September 26, 2007

SBA Gendered Entrepreneurship Study

By: Karuna Jaggar, Women's Initiative Director of Public Policy and Research


Regarding the new Small Business Administration study, "Are Male and Female Entrepreneurs Really That Different?", several things stand out to me from the report:
  1. Women entrepreneurs have different expectations, reasons for starting a business, and motivations from men;
  2. Women were more likely to start a business to balance work and family life whereas men were more likely to start a business to make money;
  3. Men are more likely to believe that starting a business is more important than spending time with one’s family;
  4. There is no statistically significant difference between men and women regarding motivation to start a business to be innovative and learn;
  5. Male entrepreneurs have consistently higher expectations for their business than female entrepreneurs, both with regard to earnings and number of employees;
  6. Male entrepreneurs had greater confidence that they can attract employees in addition they seek opportunities in different ways and start different kinds of businesses;
  7. Men are more likely to found technologically intensive businesses, biz's that lose their competitive advantage more quickly and businesses that have a less geographically localized customer base. Women are more likely to prefer low-risk/low-return businesses;
  8. Male entrepreneurs more likely to identify business opportunities through research;
  9. Controlling for these factors, gender does not affect new venture performance
The good news is that women-owned businesses are not smaller because the gender of the owner specifically limits business performance. Women are not simply less capable of running a business.
However, it is also clear is that preferences, motivations, and expectations are different for men and women. And the researchers point out that understanding such structural barriers to female entrepreneurship are critical for policy makers.

Experience with our clients confirms that work/family balance is a primary motivating factor for many women entrepreneurs, particularly low-income entrepreneurs, who for example may not be able to afford adequate child care through low-wage work.

While certainly many Women’s Initiative clients cite making more money as a key motivation in starting a business, it is unlikely that many (if any) would agree that starting a business is more important than spending time with family, as men in the study report. This research highlights the role of self-employment and business-ownership for women in balancing financial and non-financial responsibilities to provide for and care for their families.

In contrast to other research, this report finds that women do not lack self-confidence, in comparison with men, in their ability to undertake the firm organizing process and women entrepreneurs do not perceive greater barriers than male entrepreneurs. This finding may be explained by the fact that the study looks at entrepreneurs in the process of starting a business, rather than the likelihood of men and women to choose to start a business. This distinction is important in whether women even consider starting their own business, let alone act on the interest.

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