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Women Entrepreneurs: Are They Any Different Than Men?

Despite recent gains, women still lag behind men on key measures of startup activity, and their firms tend not to grow or prosper nearly as much. Research has shown that startups are the keys to job creation and leadership in new industries. With nearly half of the workforce and more than half of all college students in the US now being women, their lag in building high-growth firms has become a major economic deficit. Women-owned businesses only account for 28% of all businesses in the US and are showing only modest rates of growth in revenue and size in comparison to men-owned businesses.

Women are smart, creative, and educated just as much as men, but something is stopping them from achieving the same success men do as entrepreneurs. Recent research on entrepreneurship conducted by Kauffman Foundation attempts to explain those differences. The report sheds light on the factors that stand in the way of women being just as successful as men.

The Importance of Human Capital: women, more than men, believe that prior experience is crucial to entrepreneurial success, especially in technical fields that are usually dominated by men. The reason suggested for this finding is “stereotype threat”; women suffer from reduced self-confidence and anxiety due to the fear that they will confirm a negative stereotype about themselves—in this case, the stereotype that women have inferior capabilities in computing- and technology-related fields.

The Importance of Social Capital: Social capital is defined as the benefits derived from an individual’s personal and professional networks. A supportive network of friends and family can support the entrepreneur emotionally, while a team of professional advisors can provide her with legal, logistical and financial and advice and funding. The research reveals that women put greater emphasis on the importance of supportive and encouraging social networks in business success. With that said, it is also found that women have less access to social capital than men.

The Importance of Financial Capital: The majority of the entrepreneurs surveyed for Kauffman’s study founded their current company with money from personal savings. Even though other studies show that women have less access to capital then men, this study did not find any differences. However, it was found that women were twice as likely as men to secure their main funding from business partners. This is further support for the findings suggesting that women perceive social and professional networks as more important; while men are more solitary when it comes to funding, women look for financial support from partners.

Some go against government taking affirmative action to support women in business and believe the market should be freed from regulation and policies that are intended to influence it. I think they are wrong. You cannot ignore the psychological, financial, and social factors that are discouraging women from following an idea or a dream and becoming entrepreneurs. Only governments have the power to create real change that everyone will benefit from.

Based on: Cohoon, J. McGrath, Vivek Wadhwa, and Lesa Mitchell. “The Anatomy of an Entrepreneur: Are Successful Women Entrepreneurs Different from Men?” The Kauffman Foundation. May 2010. Web. 1 September 2012.

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