Not all women’s entrepreneurship is created equal

Summary

Do institutional arrangements like paid leave, subsidized childcare, and part-time employment encourage or discourage female entrepreneurship and are differences in these arrangements correlated with the growth-orientation of the ventures women do start? Research suggests that work-family conflict may entice more women to business ownership, but as a “Plan B” relative to standard employment when standard employment options are not feasible/desirable, and predominantly in less growth-oriented ventures, thereby reinforcing the gender gap in entrepreneurial representation and status.

Research

Work-family conflict is well-documented as a key factor in women’s decisions to pursue entrepreneurship as business ownership offers many women greater flexibility and autonomy. The institutional policies that contribute to work-family tensions disproportionately affect women because women are still expected to be responsible for caregiving. Therefore the question of whether these policies are associated with women’s aggregate representation in entrepreneurship is an important one. Of particular relevance is the question of whether women are compelled to entrepreneurship as a fallback or “Plan B” when work-family conflict is severe and what influence this has on the type of businesses women start.

Work-family conflict may entice more women to business ownership but as a “Plan B” relative to standard employment.

Using data from the Global Entrepreneurship Monitor (GEM) surveys conducted in 24 industrialized countries over an eight-year period and matched to several national-level indicators, Thébaud examined; 1) the impact of specific policies around paid-leave, child-care, and part-time work; 2) the motivations of women who choose to pursue entrepreneurship; and 3) the growth-orientation of women-owned businesses.

Thébaud finds that in countries where public childcare is available, fewer women turn to entrepreneurship. However, when women have access to subsidized childcare and ample part-time jobs, they are also far less likely to report choosing business ownership as their fallback given an unsatisfactory employment situation–thus, there is no need for the “Plan B.”

In contexts where women were offered moderate lengths of paid leave and generous childcare provisions, Thébaud also found that women who did pursue business ownership were more likely to build innovative, higher-growth companies that ultimately contribute more to their country’s economic health–thus, increasing women’s relative status among the population of entrepreneurs.

However, when these policies are lacking and work-life conflicts are high, women are far more likely to run lower-growth, lower-status firms. So, while women’s overall representation in entrepreneurship may be higher numerically in this context, their status is not higher.

Research also shows that the types of businesswomen who start companies are often segregated into competitive, crowded, and non-lucrative industries like retail, food service, and interpersonal care. These lower-growth, lower-status companies contribute to significant financial instability in women’s careers, making entrepreneurship a fairly fraught “Plan B.” Additionally, many women shift to entrepreneurship as their fallback career during their childbearing years; when these work-life conflicts are most pronounced (it’s a time when many women have less management experience and fewer network ties which presents further challenges for young business owners).

Thus, women’s entrepreneurship is not always a desirable outcome as many pursue it simply because corporations are not allowing them to achieve a satisfactory work-family balance.

Thébaud also found that not all work-family policies influence gender gaps in business ownership similarily. For example, the relative availability of part-time work, in contrast to childcare and paid leave, is not linked to gender gaps in business ownership, high-growth or otherwise. Thébaud finds that only work-life policies which support women in a way that does not otherwise marginalize them are linked to women’s greater representation in high-growth, entrepreneurial ventures.

Also notable is the relevance of cultural values on these research findings. In countries with policies like paid leave and subsidized childcare, which signal that women’s participation in the workforce is encouraged, women were more likely to report pursuing entrepreneurship as a career-building opportunity versus a “Plan B.” Thébaud also found that business ownership was higher in countries where entrepreneurship was a highly valued pursuit.

Implications

• Recognize the gaps – Not all women’s entrepreneurship is the same and, in fact, increasing women’s entrepreneurship is not always a desirable outcome. In contexts where women’s entrepreneurship is higher risk and less lucrative, safety nets should be implemented. In order to promote women in high growth ventures that contribute to their financial stability (rather than detract from it), government policies that support moderate lengths of paid family leave and generous childcare provisions need to be in place.
• Implement supportive family leave and childcare policies – To resolve persistent work-family conflicts, many women will pursue their own ventures. While women have traditionally borne the caregiving burden, men are increasingly interested in participating equally at home–thus, supportive family leave and childcare policies have implications for a company’s entire workforce (not just women).