Explaining the Gap in Womens Venture Creation

Candida Brush, Donna Kelley, Yana Litovsky & Patti Greene Babson College May 8, 2012

Background
Rate womens venture creation growing world-wide
104 million women in 59 economies started & running businesses 2010 In only 1 economy, did women create businesses at greater rate than men.Ghana On average, 9.8% women were starting businesses compared to 13.8% of men

What explains this gap?

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Background
Venture creation associated three major factors:
Human capital (Davidsson & Honig, 2003, Ucbasaran,
Westhead, Wright & Binks, 2003)

Social networks (Baron, 2006; Aldrich & Zimmmer, 2009;

Minnitti, 2003)

Self efficacy (Bandura, 1982; Chen, Crick & Greene, 1998)

Differences between male and female venture creation across these three factors
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Overview of GEM
First survey conducted in 1999 Over 80 economies studied to date 59 economies in 2010 Academic research teams in each participating economy oversee a survey of at least 2,000 adults Central coordination team closely monitors process and data Range of variables, such as: population-level attitudes about entrepreneurship, participation at different stages of entrepreneurship, profile of entrepreneurs, growth ambitions and many others

GEM Framework
Discontinuation of Business

Total Early-Stage Entrepreneurial Activity (TEA)

Potential Entrepreneur: Opportunities, Knowledge, and Skills

Nascent Entrepreneur: Involved in Setting Up a Business

OwnerManager of a New Business (up to 3.5 years old)

OwnerManager of an Established Business (more than 3.5 years old)

Conception

Firm Birth

Persistence

Across Phases of Economic Development

Factor-Driven Economies Efficiency-Driven Economies Innovation-Driven Economies

Subsistence agriculture to extraction of natural resources.

Basic Requirements

Increased industrialization and economies of scale. Large firms dominate.

Efficiency Enhancers

R&D, knowledge intensity, and expanding service sector.

Entrepreneurship Conditions

Research using GEM Data: Current Studies

Factors influencing rates of womens entrepreneurship Minniti & Nardone (2007) perceptual variables explain gender differences universally Langowitz & Minniti (2007) womens self perceptions are less favorable Wagner (2007) fear of failure explains differences Koellinger et al (2011) women less confident in entrepreneurial skills, different social networks, greater fear of failure Gonzalez-Alvarez & Solis-Rodriguez (2000) opportunities, human and social capital

Factors Affecting Differences in Male-Female TEA

Dependent Variable
TEA rate

Independent Variables
Belief in perceived capabilities to start a business Knows an entrepreneur Post-secondary education

Analyzed overall, by level of economic development, male & female Stepwise regressions
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Results- Overall
Belief in knowledge & skills best predictor of TEA rate overall (55.9% of variance)
Factor- Knowing entrepreneur Efficiency-Belief in knowledge & skills Innovation- Knowing entrepreneur & education

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Results- Male & Female

Male- belief in knowledge & skills (51%) and knowing entrepreneur (12%) Female- belief in knowledge & skills (57%) and knowing an entrepreneur (7%)
Level of Economic Development Factor Efficiency Innovation Males Knows entrepreneur 86% Belief in knowledge & skills 55% Knows entrepreneur 33% Education 20% Females Knows entrepreneur 94% Belief in knowledge & skills 49% Belief in knowledge & skills 25%
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Next Steps in this Research

Networks- sources of advice
Private, Work, Entrepreneurial, Professional, Market

Dependent Variables
Start up, Early stage, Intention

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Future Directions: Unanswered Questions

How are demographic factors related to differences in start up and growth of male and female entrepreneurs? How do self perceptions of capabilities influence perceptions of opportunity between males and females?
How do self perceptions of capabilities influence growth aspirations between males and females?

Thank You

Thank you!
QUESTIONS?
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General Findings 2010

Women entrepreneurs are older than their male peers Women are more likely than men to enter because of necessity Nearly 2/3 women entrepreneurs have consumer oriented businesses Fewer than male entrepreneurs are in consumer
More men in transforming and business services

Less likely to sell internationally As likely to create innovative products

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Research Directions & Implications

Research Implications: Opportunity to do longitudinal and cross national multi-level research Educational Implications: train and coach women differently to develop capabilities in start-up & growth Policy Implications: specific programming for women entrepreneurs, i.e. building networks, child care

Goldman Sachs 10,000 Women

Providing underserved female entrepreneurs around the world with a business and management education through certificate programs, mentoring & post-graduate support.

In 59 economies around the world 104 million early-stage women entrepreneurs This is nearly equal to
the population of Brazil, the fifth largest 83 million establishedeconomy women business in theowners world.

+ =

187 million women starting and running businesses