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Women entrepreneurs are one of the most powerful global economic forces of the 21st century. This leading-edge wave of talented, creative entrepreneurs is being followed by more than a quarter of a million next-generation women business school students who are ready to make their mark. This passionate, educated cohort represents an unprecedented opportunity for higher education to catalyse women’s entrepreneurial potential into worldwide entrepreneurial impact. Unfortunately, most business schools just don’t get it.
In 2012 there were over 224m women either starting or running businesses in 67 economies around the world. Of these women, more than 100m employ one or more people in addition to themselves and their co-founders. In the US alone, women own more than 8.6m businesses that generate more than $1.3tr in revenue and employ almost 7.8m people.
US women entrepreneurs are on fire. They lead the world in the number of businesses they start each year with a launch rate twice that of other countries. They are educated: 70 per cent have at least a four-year degree. They also out-innovate all other women entrepreneurs globally and beat their US male counterparts. Collectively, women entrepreneurs are a formidable economic force that creates new products and services, disrupts entire categories and remakes the entrepreneurial landscape in their own images. On the surface, this all looks like a reason to break out the bubbly: record levels of women entrepreneurs, exciting innovations, and amazing female-infused, high-growth companies. So what’s the problem? The staggering amount of entrepreneurial potential being left on the table.
According to the 2013 US Report of the Global Entrepreneurship Monitor, men in the US are still 50 per cent more likely than women to engage in entrepreneurship. When women do start businesses, they are more likely to start as a sole founder rather than with a partner. This limits their access to the ideas, abilities, resources and connections of co-founders. When women exit businesses, they are twice as likely as men to cite problems with finance as a cause. Just think about how many high-potential, women-owned businesses die due to lack of resources.
Resources such as networks and finance are vital to growth. While the absolute number of women-owned businesses continues to increase, they represent only 30 per cent of all companies. The vast majority of these companies have limited growth. In 2011 only 1.8 per cent had $1m or more in revenues and only 1.9 per cent of women-owned firms had 10 or more employees. Among US entrepreneurs, men are 30 per cent more likely than women to state that they expect to add more than five employees over the next five years. Women also appear to face difficulties moving from one growth phase to another. The challenges of growth are taxing for any business and research on access to capital, network formation and social expectations of gender finds that women may face a unique set of barriers. Education and coaching that sets a context for high growth expectations while reflecting sensitivity to women business owners’ specific needs is largely missing from the entrepreneurship ecosystem.
Gender is by no means the whole story behind the growth challenges of women-owned firms; but, it is part of the story and worthy of attention. Entrepreneurs engage in venture creation when they have an idea and are confident that they can be successful bringing it to life. A key stimulus to transform intent into action is self-efficacy: a belief that one can be successful. Unlike competence, self-efficacy is about confidence and here we find a disconcerting difference between men and women. In all 67 economies studied in the Gem report, women have lower capabilities perceptions than men. In the US, nearly two-thirds of men surveyed believe they have the abilities to start a business while less than half of the women shared those perceptions. The good news is that these perceptions of capabilities can be addressed. Two important ways this happens are through providing opportunities to try out new skills and behaviours in a safe environment and through watching role models who look and sound like you and are successful. The bad news is that the dominant culture of entrepreneurial ecosystems is decidedly unfriendly to building women’s self-efficacy as entrepreneurs. The 80/20 split of men to women who participate as both entrepreneurs and supporters make role models scarce.
In 2012 we founded the Women Innovating Now (Win) Lab at Babson College as a model for higher education to meet the significant opportunities ahead for women. Win provides the education, role models and support women need to fulfil their entrepreneurial destinies and launch successful, high-potential businesses.
The rationale behind focusing on the business school environment was obvious:
•Women in business schools benefit from venturing out at an earlier age when they have fewer financial obligations.
•The pool of talented women in a business school is enormous and opens the opportunity to invest in human capital early by providing a framework that leads directly to business creation.
•Women can be shown that starting a business is do-able, self-fulfilling and has a significant return-on-investment – often as good, or better, in the long term than working for someone else.
Initiatives such at the Win LAB should be an essential model for business schools worldwide. The time is right to provide women with the resources, role models and support they need to launch their businesses and fulfil their entrepreneurial potential. When that happens, we all win.
Susan Duffy is chief learning office and co-founder the Win Lab and Sharon Kan is chief visionary officer and co-founder the Win Lab