What is Giving Compass?
We connect donors to learning resources and ways to support community-led solutions. Learn more about us.
For many Americans, starting their own business is the manifestation of the American dream: Take a risk, work hard, get rich. So why don’t more women do it?
Women, despite being about half the labor force, own 36 percent of companies in the United States. Those who do own companies are half as likely as male founders to employ anyone other than themselves, and they generally earn less in revenue, according to census data analyzed in a new report by Third Way, a think tank. In technology, fewer than 10 percent of start-ups are owned by women, according to another new paper, by researchers at Harvard.
The reason, according to the research: People with experience mentor and give money to people like themselves, while those starting out do what they see people like themselves doing. In other words, we all live in bubbles — not just in our politics or our friendships, but also in our careers — and this shapes the ideas we form. Social scientists describe the phenomenon as homophily, or love of the same.
Research shows that women around the world are less likely to consider entrepreneurship as a career path, largely because they don’t see other women entrepreneurs as role models.
“Women are just outside of those established networks, and if you’re outside the networks, you don’t get the knowledge, you don’t get the opportunities, you don’t get the contacts and you don’t get the funding,” said Susan Coleman, a business professor at the University of Hartford and co-author of the Third Way report. She wrote it with Alicia Robb, a research fellow at the University of Colorado, Boulder, and the founder of Next Wave Ventures, for female angel investors.
They’re also less likely to have the management experience that can lead to starting a company. Just 19 percent of top executives are women, according to a LeanIn.org and McKinsey report, and the main reason they don’t rise is that they are less likely to have mentors in senior leadership.