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Women Entrepreneurs are Key to Accelerating Growth

Our new Entrepreneurship Policy Digest explores barriers to women entrepreneurs and offers five policy recommendations to address the gender gap.

Written by Emily Fetsch, Chris Jackson and Jason Wiens

Download the Policy Digest

Entrepreneurship fuels economic growth, with new and young businesses accounting for nearly all net new job creation. Increasing the number of entrepreneurs, and creating conditions for them to succeed, has the potential to improve economic opportunities for all Americans.

The influx of women into the labor force ushered in significant gains in economic growth and worker productivity. Research shows this rise in the women’s share of the workforce since just the 1980s is responsible for as much as 11 percent of 2012 GDP. While more women sought and found employment in greater numbers, their participation as entrepreneurs was uneven. Fewer women became entrepreneurs, meaning their potential contributions to job creation, innovation, and economic growth were unrealized.

Today, women remain underrepresented among the ranks of entrepreneurs. In fact, they are half as likely as men to start a business. This discrepancy is not just a gender or a fairness issue—it is an issue of economic growth. By addressing the gender gap in entrepreneurship, policymakers can unleash a wealth of ingenuity and creativity that can spark a new era of entrepreneur-led growth in America.

To the extent that half of the American population and more than half of our educated population are not fully participating in the engine of growth and innovation, it is an opportunity to avoid the ‘secular stagnation’ that is now expected for the American economy.

— Robb, Coleman, Stangler
Sources of Economic Hope

Research Shows Women Make Great Entrepreneurs

Women entrepreneurs bring particular sets of skills that not only set them apart from their male counterparts, but also lend themselves to being successful entrepreneurs.

  • Women entrepreneurs have a more nuanced view of risk, identifying more strongly than men as financial risk-takers while remaining concerned about “foolhardy risks.”
  • Women display greater ambitions to become serial entrepreneurs than their male counterparts.
  • More broadly, an increase in the number of women in business leadership positions is correlated with increased business returns and payout ratios. 

Women Face Unique Barriers to Entrepreneurship

Mentors are in Short Supply
Nearly half of women entrepreneurs state that a challenge facing their business is the lack of available mentors. Mentorship plays an important role in developing successful entrepreneurs, for both men and women. If women are unable to find mentors, they may fail to reach their full entrepreneurial potential.

Identifying the Gender Financing Gap infographic

Entrepreneurship is Perceived as a Masculine Activity
 Research has shown that there is an implicit bias against women as entrepreneurs, where people are less likely to believe that women have the skills to succeed as entrepreneurs. This perception makes it harder for women entrepreneurs to secure funding. In addition, this cultural assumption that entrepreneurship is a masculine activity might dissuade women from considering entrepreneurship in the first place.

Women Face Additional Hurdles Maintaining a Work-Life Balance
 Nearly three-quarters of births are to women between the ages of twenty and thirty-four. Women face additional pressures due to parenthood that result in lower rates of entrepreneurship. Research also has shown that women with STEM PhDs are significantly less likely to engage in entrepreneurship if they have a child under age two, while there is no statistical difference in entrepreneurial rates of male STEM Ph.D.s with a child under age two.

Rate of Entrepreneurship by Gender and Age chart

Pave the Way for Women Entrepreneurs 

Develop and Report Metrics for Entrepreneurship Programs and Initiatives

  • To understand how entrepreneurship programming serves women, attendance, participation, drop off rates, and entrepreneurial outcomes should be collected and reported by gender. Armed with this information, program coordinators and funders can make adjustments to better assist women entrepreneurs.

Increase the Number of Women Represented in Entrepreneurship Programs

Increase Small Business Innovation Research (SBIR) Funding to Women-owned Businesses

Celebrate Successful Women Entrepreneurs

  • Stories of entrepreneurial success tend to be male-dominated. Government leaders can help deconstruct the false narrative that only men are successful entrepreneurs by lifting up stories of successful women entrepreneurs.

Decrease the Risk of Becoming an Entrepreneur

  • Explore how various policies can help alleviate pressures and risks facing women, particularly those with young families, which can deter them from entrepreneurial ventures. For example, policymakers should examine whether subsidized child care or preschool or other related policies, could create a stronger environment for entrepreneurship.

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