Untapped Potential for Expanding Women’s Entrepreneurship Holds Promise to Grow the U.S. Economy: Kauffman Report

Sep 28, 2011 | Government News

Media Contacts:
Rossana Weitekamp, 516-792-1462, [email protected] 
Barbara Pruitt, 816-932-1288; [email protected], Kauffman Foundation

Jobs and economic escalation will follow as more women break through “glass walls” to start high-growth ventures

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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.

Access the report here.

About The Ewing Marion Kauffman Foundation

The Ewing Marion Kauffman Foundation was established in the mid-1960s by the late entrepreneur and philanthropist Ewing Marion Kauffman. Based in Kansas City, Missouri, the Kauffman Foundation is among the thirty largest foundations in the United States with an asset base of approximately $2 billion.

Its vision is to foster “a society of economically independent individuals who are engaged citizens, contributing to the improvement of their communities.” In service of this vision, and in keeping with its founder’s wishes, the Foundation focuses on grant making and operations in two areas: advancing entrepreneurship and improving the education of children and youth. Its mission is carried out through four programmatic areas: Entrepreneurship, Advancing Innovation, Education, and Research and Policy.

Learn more here.

[Editor’s note: It really is a fantastic resource!]

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