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Suggested Citation:"1 Entrepreneurial Careers of Women." National Research Council. 2012. From Science to Business: Preparing Female Scientists and Engineers for Successful Transitions into Entrepreneurship: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13392.
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1

ENTREPRENEURIAL CAREERS OF WOMEN

E. J. Reedy, Manager, Research and Policy, Kauffman Foundation

E. J. Reedy, Manager in Research and Policy at The Ewing Marion Kauffman Foundation

“When we put a gender lens on where the barriers are, it is around growth opportunities.”

E. J. Reedy, Manager, Research and Policy, The Ewing Marion Kauffman Foundation

The opening workshop address was designed to provide an overview of women’s status and participation in entrepreneurial careers. E. J. Reedy presented findings from a Kauffman Foundation study titled “Sources of Financing for New Technology Firms: A Comparison by Gender” (2009)1 and noted that a relatively small number of studies have specifically examined the experience of women in high-tech entrepreneurship.2 The Kauffman Foundation study shows that among all surveyed startup firms, only 15 percent of those in the biotechnology and high-technology sectors reported having a female primary owner as compared to 30 percent female-owned startup firms in all other sectors. In the initial start-up year, among the high-tech start-ups examined, 20 percent of male-owned firms reported obtaining formal equity (primarily venture capital or angel funding), compared to 7 percent of female-owned firms. Reddy suggested that this occurs because the venture capital industry is relatively closed and male-dominated. His studies show that women-owned firms represent a small minority of the overall venture capital backed firms, which may contribute to the lack of initial formal equity. He noted that an

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1 Robb, A. and S. Coleman, (2009), Sources of Financing for New Technology Firms: A Comparison by Gender: Fifth in a series of reports using data from the Kauffman Firm Survey. Retrieved August 15, 2009, from http://www.kauffman.org/uploadedFiles/ResearchAndPolicy/Sources%20of%20Financing%20for%20New%20Technology%20Firms.pdf.

2 Since this August 2009 workshop, “From Science to Business,” the Kauffman Foundation has produced the following reports on scientific women in entrepreneurship:

Robb, A. and Coleman, S. (2009,), “Characteristics of New Firms: A Comparison by Gender,” The Kauffman Foundation. Retrieved from http://www.kauffman.org/uploadedFiles/kfs_gender_020209.pdf.;

Cohoon, J. M., V. Wadhwa, and Mitchell L. (2010). “Are Successful Women Entrepreneurs Different than Men?” [Working Paper] Retrieved from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1604653, and

Mitchell, L. (2011), “Overcoming the Gender Gap: Women Entrepreneurs as Economic Drivers,” The Kauffman Foundation. Retrieved from

http://www.kauffman.org/uploadedFiles/Growing_the_Economy_Women_Entrepreneurs.pdf.

Suggested Citation:"1 Entrepreneurial Careers of Women." National Research Council. 2012. From Science to Business: Preparing Female Scientists and Engineers for Successful Transitions into Entrepreneurship: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13392.
×

additional factor may be that female owners of high-technology firms have less overall managerial experience than their male counterparts and are less likely to have previously owned start-up companies in the same field, since 55 percent of male owners have previously owned a high-technology start-up compared to 12 percent of females. Reedy pointed out that venture capitalists view this serial behavior—and even serial failure—as a mark of an entrepreneur being tested, because investors value an entrepreneur’s willingness to start over again and again.

Reedy further elaborated on the gender gap in the high-tech industry by quoting similar findings by other researchers. A 2006 study by Cross and Linehan found that in established high-tech organizations, women are often excluded from formal and informal networks that would otherwise provide access to managerial or technical leadership positions in those firms.3 Similarly, a 2005 study by Tai and Randi L. Sims4 found that women had difficulty gaining senior management experience that would make them attractive to external capital providers, should they start their own companies. Reedy considered the pervasive culture in such enterprises as a plausible reason for this gap, where issues such as work-life balance and family-friendly policies affect gender equity.

Despite the existing gaps, Reddy noted that women-owned firms represent a growing component of the small-business sector. According to a U.S. Census Bureau report,5 there were 6.5 million privately held women-owned firms in the United States in 2002. These firms generated an estimated $940 billion in sales and employed 7.1 million people. He continued to comment that women-owned firms now account for 30 percent of all firms, including self-employment and larger businesses. From 1997 to 2002, the number of women-owned businesses increased 20 percent. However, he noted that revenues from women-owned businesses increased less than 15 percent during this period, compared to a 22 percent revenue increase for all businesses.

A study on women-owned high-tech firms in four metropolitan regions in the United States—Silicon Valley, Boston, Washington, D.C., and Portland, Oregon— found that in all four regions women-owned high-tech firms were smaller in terms of average revenue and employment.6 Reddy suggested that women are more likely to form companies alone than in partnership with men, even though studies indicate that the success rate for new companies increases as the number of company founders increases. Women entrepreneurs are also more likely to participate in high-tech sectors such as software publishing, computer systems design services, research services, and management and consulting services; whereas men are more likely to establish companies in the manufacturing sector. Interestingly, Reddy noted both male-and female-owned start-ups were initially shown to be based out of the home, 50 percent of the time for males and 60 percent of the time for females, suggesting a focus on consulting efforts.

Female-owned high-tech start-ups do show a slightly higher survival rate than those owned by men. However, Reedy noted that women entrepreneurs launch high-technology firms with less financial capital than men, and continue to follow a different financial strategy over

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3 Cross, C., & Linehan, M. (2006). Barriers to Advancing Female Careers in the High-tech Sector: Empirical Evidence from Ireland. Women in Management Review. 1, 28.

4 Tai, An-Ju R., and Randi L. Sims (2005). The Perception of the Glass Ceiling in High-Technology Companies. Journal of Leadership and Organizational Studies. 12 (1), 16–23.

5 U.S. Census Bureau (2006). Women-owned Business Grew at Twice the National Average, Census Bureau Reports. Retrieved August 15, 2009 from

http://www.census.gov/newsroom/releases/archives/business_ownership/cb06-14.html.

6 Mayer, H. (2008), Segmentation and Segregation Patterns of Women-owned High-tech Firms in Four Metropolitan Regions in the United States, Regional Studies. 42 (10), 1357-1383.

Suggested Citation:"1 Entrepreneurial Careers of Women." National Research Council. 2012. From Science to Business: Preparing Female Scientists and Engineers for Successful Transitions into Entrepreneurship: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13392.
×

time. Women’s reliance on internal funding sources (e.g., owners’ savings, loans from family and friends, credit cards) makes a difference such that years after startup, women-owned high-tech firms lag behind men-owned firms in numerous performance measures, including revenues, assets, and employment. However, profits were shown to be higher for female-owned firms.

In addition, Reedy discussed the age at which entrepreneurs usually start their businesses. One of the common misconceptions about entrepreneurs is that these individuals are age 25 to 30.7 In fact, it is more common for those in their late 30s and early 40s to start companies because at that age people have considerable industry experience and starting a business is a strategic part of their overall career goals. This average start-up owner age was not shown to vary significantly between men and women or across sectors. But women owners reported working slightly fewer hours per week than their male counterparts.

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7 Kauffman Foundation Survey. Available at: http://www.kauffman.org/research-and-policy/kauffman-firmsurvey.aspx.

Suggested Citation:"1 Entrepreneurial Careers of Women." National Research Council. 2012. From Science to Business: Preparing Female Scientists and Engineers for Successful Transitions into Entrepreneurship: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13392.
×

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Suggested Citation:"1 Entrepreneurial Careers of Women." National Research Council. 2012. From Science to Business: Preparing Female Scientists and Engineers for Successful Transitions into Entrepreneurship: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13392.
×
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Suggested Citation:"1 Entrepreneurial Careers of Women." National Research Council. 2012. From Science to Business: Preparing Female Scientists and Engineers for Successful Transitions into Entrepreneurship: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13392.
×
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Suggested Citation:"1 Entrepreneurial Careers of Women." National Research Council. 2012. From Science to Business: Preparing Female Scientists and Engineers for Successful Transitions into Entrepreneurship: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13392.
×
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Suggested Citation:"1 Entrepreneurial Careers of Women." National Research Council. 2012. From Science to Business: Preparing Female Scientists and Engineers for Successful Transitions into Entrepreneurship: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/13392.
×
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Scientists, engineers, and medical professionals play a vital role in building the 21st- century science and technology enterprises that will create solutions and jobs critical to solving the large, complex, and interdisciplinary problems faced by society: problems in energy, sustainability, the environment, water, food, disease, and healthcare. As a growing percentage of the scientific and technological workforce, women need to participate fully not just in finding solutions to technical problems, but also in building the organizations responsible for the job creation that will bring these solutions to market and to bear on pressing issues. To accomplish this, it is important that more women in science and engineering become entrepreneurs in order to start new companies; create business units inside established organizations, mature companies, and the government; and/or function as social entrepreneurs focused on societal issues. Entrepreneurship represents a vital source of change in all facets of society, empowering individuals to seek opportunity where others see insurmountable problems.

From Science to Business: Preparing Female Scientists and Engineers for Successful Transitions into Entrepreneurship is the summary of an August 2009 workshop that assesses the current status of women undertaking entrepreneurial activity in technical fields, to better understand the nature of the barriers they encounter, and to identify what it takes for women scientists and engineers to succeed as entrepreneurs. This report focuses on women's career transitions from academic science and engineering to entrepreneurship, with a goal of identifying knowledge gaps in women's skills as well as experiences crucial to future success in business and critical for achieving leadership positions in entrepreneurial organizations.

From Science to Business makes the case that in addition to educating women scientists and engineers in rigorous problem solving, it is equally important to provide exposure and training to impart the skills that will enable more women to move from the role of expert to that of leader in dynamic new business enterprises. This book will be of interest to professionals in both academia and industry, graduate and post-graduate students, and organizations that advocate for a stronger economy.

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