Women Entrepreneurs: the Way Forward

Women entrepreneurs: the way forward

CandidaBrush suggests a new approach to women's entrepreneurship.

(extracted from:- “Mastering Entrepreneurship – your single source guide” FT Prentice Hall, 2000)

Name a successful entrepreneur. First to come to mind are most likely Bill Gates (Microsoft) or Richard Branson (the Virgin Group). If pressed, you may mentionMichael Dell (Dell Computer), Tom Stemberg (Staples) or maybe Ben and Jerry (Ben Cohen and Jerry Greenfield). But did you think of Donna Karan, Meg Whitman or Lillian Vernon?

So often the first image one has of an entrepreneur is a man. Yet increasingly women are succeeding as entrepreneurs. Consider the following:

Meg Whitman, founder of the revolutionary internet auction company e-Bay

Donna Karan, founder of DKNY, a $700 million manufacturer of branded fashions and cosmetics

Sandra Kurtzig, founder of Ask Computer, and the first woman to take a hightech company public

Patricia Gallup, founder of a $700 million direct marketing personal computerand software company

Anita Roddick, founder of a worldwide retail cosmetic chain that advocatesenvironmental and social values .

Bev McMaster, founder of the franchised We Care Health Services Inc. inCanada,that offers an array of health care services at multiple locations

Candice Carpenter and Nancy Evans, founders of I-village, an internet companythat following a $30 million venture capital investment went public within four years of start-up

Yoshiko Shinohara, founder of Tempstaff Co. Ltd, a $369 million company thatprovides employees and business services to companies in Asia and the US

Jean Owen, founder of Owen Healthcare, one of the largest healthcare and pharmacy service providers in the US, with revenues of more than $440 million.

Lillian Vernon, founder of one of the oldest and largest kitchen and householditem catalog companies in the US

Ann Gloag, founder and director of Stagecoach Holdings, which controls about 12per cent of the public transportation in the United Kingdom.

Growth in women's entrepreneurship

One of the most important factors influencing theglobal marketplace is the tremendous growth in the number of women entrepreneurs. Women are founding firms in all industry sectors, growing them in geographic scope and size, and contributing significantly to gross national product (GNP) in many countries. The number of women business owners rose during the 1990s in nearly every OECD (Organisation for Economic Co-operation and Development) country.

The US reports that women own 9.1 million firms, which is 38 percent of all businesses. These businesses employ 27.5 million people and generate more than $3.6 trillion in sales annually. Between 1987 and 1999, the number of women-ownedfirms in the US increased by 103 percent. Approximately 14 percent of all women-owned firms have paid employees compared with 18 percent of all US firms. Although 70 percent of women-owned firms are in services and retail, they are rapidly starting and acquiring businesses in other sectors, including wholesale trade, transportation and communications, agriculture and manufacturing.

In Canada, there are more than 700,000 women-led firms providing 1.7 million jobs, while in Australia, women-owned businesses accounted for about 15 percent of gross domestic product (GDP) in 1996.

What is causing this growth in women's entrepreneurship? There is no single answer, but at a broad level, the environment for women's entrepreneurship is more acceptable today than 20 years ago. For instance, dramatic leaps in information technology make it easier for all entrepreneurs to launch businesses. For women in particular, technology affords them the chance to manage a business and meet family needs, or launch a venture from home.

Furthermore, it(is easier for women to be accepted as entrepreneurs because there are more role models, and there is greater sharing of childcare and household responsibilities between men and women. In addition, publications providing specialized information for women such as Working Woman, women's entrepreneurship networking groups, web sites such as FWEtalk.com, research foundations supporting women such as the National Foundation of Women Business Owners, and increased visibility of successful women entrepreneurs in the media all make it easier for women to explore entrepreneurial opportunities.

Another factor is the availability of education and training for women to gain the necessary business planning skills. For example, in the US more than 700 schools now offer entrepreneurship courses at the MBA and undergraduate levels. More than 35 percent of the students taking these classes are women. In addition, the US Small Business Administration offers specialized resources that target women, such as W.NET (the Women's Network for Entrepreneurial Training).

Besides these trends, there are many reasons why women become entrepreneurs. Individuals are influenced to pursue business ownership by "pushes" and "pulls." "Pushes" are defined as negative displacements (i.e. being fired, divorced, widowed, life transitions) whereas "pulls" tend to be positive (i.e. availability of financial support, offer of a partnership, customer contact). Both men and women are motivated by a desire for independence or achievement1.

However, research also shows men may be motivated by a desire to ''be an entrepreneur" or not to work for someone else, whereas women may wish to have flexibility in balancing work andfamily. Some women are motivated to start a new venture when they reach a corporate glass ceiling, while others believe they can offer a better quality product orserve customers better.

But is the entrepreneurial process different for men and women? To answer this question, it is important to understand key elements needed for venture 'creation and the external factors influencing these. For venture creation to take place, three central elements are required: an enterprising person, a perceived opportunity, and resources. The person, or the entrepreneur(s), is the discoverer of the opportunity in whose mind the possibilities for the new idea or venture come together. The opportunity is a perceived or created situation where entrepreneurship might occur. Some might see it as a problem, others might see it as a need that a new product or service can fulfill. Resources include physical (plant, equipment), financial (money, credit), technology (technical know-how), human (achieved attributes, educationand experience), social (social relationships and networks) and organizational (procedures, policies, alliances).

At the start of a venture, the resources are generally those of the "entrepreneur" her social contacts, her personal financial contribution, and her education and experience. These basic individual "endowments" provide the starting point for the venture, from which organizational resources are developed into policies, structures, culture and routines; and external financial, physical and technical resources are acquired. Further, these starting endowments, the perception of the opportunity, and the access to resources are shaped by the effects of social structures - work, family and organized social life. For women, the impact of social structures is different than for their male counterparts.

Factors influencing women's entrepreneurship

The workplace

In every country, women's participation in the workforce is limited to certain industrial sectors, they face occupational segregation, are paid lower wages, and are under-represented in upper-level management positions. In the US, women have made significant progress, now being employed in many non-traditional areas such as manufacturing and construction, but they are still heavily concentrated in services (clerical and sales) and administrative positions. In Europe, more than twothirds of the jobs in health, teaching and domestic service are held by women, and they constitute 66 percent of clerical workers and 12 percent of workers and artisans.2 The average level of women’s pay is below that of men's in all countries because women are employed in lower skill jobs and are paid less for doing the same work. .

Besides occupational segregation, women face barriers in rising to executive management positions. In North America and Europe it is reported that more than 95 percent of secretaries are female and 95 percent of managers are male. According to the United Nations, managerial work is segregated by sex in almost every country. In the US, while 25 percent of all managers of Fortune 200 companies are women, the range of women managers in some sectors is as low as 7 percent, but as high as 40 percent in others.

The effect of occupational segregation may limit women's opportunities to startbusinesses in fast-growing sectors such as high tech, manufacturing, finance or utilities, but it may be a strength in other sectors such as services, communications and education. Salary differentials may impact the amount of money women have available to launch a venture. Less experience at the executive level may limit the leadership skills of women at venture start-up, but greater administrative experience may positively affect their ability to manage people and organizational systems.

Women and the family

Expectations for women's role in the family have changed over past decades, but may still restrict women in terms of time, acceptance as business owners and responsibility for child/dependant care. Most women in OECD countries are expected to manage the household and assume a primary role with the family. In Sweden, women do not receive the same level of support in entrepreneurship from other family members as do their male counterparts, while in Australia women are more likely to perform domestic maintenance and care-giving tasks regardless of involvement in business activities. Young, educated, single Japanese women arehired with the expectation that they will "retire" into marriage and motherhood within a few years. Even in the US the burden of child and dependant care falls on the shoulders of women who are primarily responsible as caregivers and running the household. A United Nations Report (1991, p.83) states that "women everywhere retain the primary responsibility for unpaid housework."

The expectations for women and their role in the family means they may have less opportunity to devote themselves full time to work endeavors, being subject to time fragmentation, career interruption, and frequently lower expectations for success in entrepreneurial endeavors. Yet women may be better at managing family and work responsibilities, being flexible, and responding to career interruptions as a result of their child-raising responsibilities.

Women and organized sociallife

Women's role in organized social life also varies from that of their male counterparts. Around the world women's networks tend to be formalized and sex based,whereas informal networks that involve socializing as part of business activities arefrequently male-oriented. Research shows that women's networks are larger and more gender and racially diverse, while men's networks are less diverse.3 In the US, where there are many female associations and network groups of women owners that provide support and channels of information, women are still left out of the "old boys' networks" comprised of high-level executives of large corporations.

Due to interrupted career paths or occupational segregation, women may be excluded from some informal business networks that can affect their access to resources and information. But on the positive side, they may be better at developing formal networking groups designed to encourage exchanges of information among women, that can lead to information and resources.

Approaches to venture creation

The effect of social structures - work, family and organized social life - on women influences the approach taken in venture creation. Clearly the extent and combination of social structure influences differ by country and life situation of the woman entrepreneur, but these impact the women's starting endowments of human and social capital, access to resources and their perception of venture opportunity in business start-up.

The effect of these social structures suggests a new approach - referred to as an "integrated" approach - to venture creation which is different from the "traditional" approach documented by the literature (see Table 1). The traditional approach is identified by historical research focussing mostly on studies of male entrepreneurs. Certainly most businesses follow some combination of both patterns. However, evidence shows that males tend to approach venture creation following the"traditional". approach whereas women are more likely. to follow an "integrated"approach.

Traditional approach.

The traditional approach views the venture as a separate economic entity and structures the organization as a hierarchy. Decision making will be analytical, and the entrepreneur typically will follow set procedures, being authoritarian in management style. The focus will be on task completion through the use of formalized control systems. Goal achievement. in terms of economic success is veryimportant. Strategically, traditionalists will prefer to follow strategies emphasizing cost efficiency, and values will be based on competition.

Table 1: Approaches to venture creation4

Dimension Traditional (male)Integrated (female)

View of businessseparate economic entityco-operative network of relationships

Motivesbe independentcreate a job, have flexibility in work & family life

Be an entrepreneurrespond to social issues

Management styletask oriented, transactional,people oriented, transformational

command/control

Values / assumptionscompetition, transactionalintegration of family, work, society

Homogeneityreciprocity, diversity

Venture creation processsequential, simultaneous, construction of relationships

series ofplanned steps

Structurehierarchyhorizontal, network

Policies/practicesInstrumentalnurturing, relational, social

Decision makinganalytical,Intuitive, participative

fact based

Goalseconomiceconomic & non-economic

Growth / profitsocial contribution

Performancefinancial, economic financial, equally with employee and customer satisfaction, personal wealth satisfying relationships

Integrated approach.

The integrated approach views a venture as a network of co-operative relationships. This approach structures organizations as flat and team-based where decision making is shared and participative. Strong social and employee policies and practices are common, information is widely shared, and strong social values such as diversity and community outreach are common. Performance measures will be both social and economic, and planning will be informal. Family-friendly work rules are typical and strategies emphasize customer service and quality.

Importantly, the approach chosen by a woman entrepreneur will also be influenced by the industry she enters. As noted above, some industries are heavily male dominated, such as mining, construction or agriculture. Male-dominated industries are more likely to value a traditional approach (i.e. auto manufacturing, gas and oil exploration, venture capital, accounting) whereas female-dominated industries (i.e. educational services, childcare, retail trade, real estate) are more likely to accept an integrated approach. This suggests that the woman entrepreneur should consider the "fit" between the approach chosen and the industry.

For example, a woman entrepreneur pursuing a traditional approach in a maledominated industry may easily be able to identify informal business norms and practices, but she may be perceived as having lower chances of survival. Her success will depend on persistence and adherence to the traditional approach, as well as a strong competitive strategy. For a woman entrepreneur pursuing a traditional approach in a female-dominated industry, there may be a misfit and the woman entrepreneur may be perceived as an anomaly. Her challenge will be to gain acceptance for her traditional approach. Success will depend on successful adaptation of male leadership practices and business policies to the female industry environment.

The woman entrepreneur pursuing an integrated approach in a male-dominated industry must recognize the challenge of trying to break with traditional business practices. Success for this woman entrepreneur is to value her differences, show confident leadership and strong vision. Finally, for the woman entrepreneur following an integrated approach in a female-dominated industry, a fit between the approach and industry is likely. Yet her challenge is to recognize that external stakeholders may consider the venture less serious about economic performance. Success depends on effective environmental scanning and sensitivity to marketplace expectations. Strong publicity and media dissemination of innovative business practices can create further legitimacy.

The future

The domain of entrepreneurship has historically been a male preserve, but this is changing rapidly. While women entrepreneurs in many countries still face significant challenges in launching and growing their ventures, increased social acceptance, influence of technology and targetted assistance programs are making it easier for women to become entrepreneurs. Yet social structures influence personal starting endowments, resource availability and perceptions of what is possible. Women may follow either traditional or integrative approaches, which "in combination with industry choice imply different recipes for success.

The number and strength of women entrepreneurs are expected to increase into the next century, meaning the aggregate impact of women on business and society will continue to grow.

Copyright @ Candida Brush 2000

1 Brush, C. G. (1992) "Research on women business owners: past trends, a new perspective and futuredirections," Entrepreneurship Theory and Practice, 16:4, 5-30.

2 This trend is true in Sweden and Germany where up to 90 percent of the service jobs, such as typists, nurses and housekeepers, are filled by women. Similarly, in Australia, Finland and Denmark, the labor market remains gender segregated and equal opportunity across occupational sectors has not been achieved.

3 Aldrich, H. (1989) "Networking among women entrepreneurs," in Hagan, 0., Rivchun, C. and Sexton,D. (eds) Women-Owned Businesses, New York: Praeger pp.103-132.

4 See Brush, C. G. (1992) "Research on women business owners: past trends, a new perspective and future directions," Entrepreneurship Theory and Practice, 16: 5-30; Brush, C. G. (1998) "A resource perspective on women's entrepreneurship: research, relevance and recognition," Proceedings of the Organization for Economic Cooperation and Development Conference on Women Entrepreneurs in Small and Medium-Sized Enterprises, Paris, France; Brush, C. G. (1999) "Women's entrepreneurship," Proceedings of the Second International Labor Organization Enterprise Forum, Geneva, Switzerland.