ERIC Identifier: ED363799 Publication Date: 1993-00-00
Author: Kerka, Sandra Source: ERIC Clearinghouse on Adult
Career and Vocational Education Columbus OH.
Women and Entrepreneurship. ERIC Digest.
Women-owned businesses (WOBs) have increased 62.5% since 1980. Including full
corporations, women own 5.4 million businesses (National Foundation for Women
Business Owners 1992). Employing 11 million workers in 1990, WOBs were projected
to surpass Fortune 500 firms in 1992 in numbers employed. Women own 30% of small
businesses, a share projected to increase to 40-50% by 2000 (Aburdene and
Naisbitt 1992). In 1987, total receipts of WOBs were $477 billion; they
contributed $37 billion in federal taxes and $13 billion in state and local
taxes (Godfrey 1992).
At a time when permanent job loss is increasing, women-owned businesses are
clearly important to realizing the nation's economic potential. However, in
addition to challenges typically faced by most entrepreneurs, women often
encounter other barriers to business ownership. This ERIC DIGEST looks at the
types of businesses started by women and the characteristics of female
entrepreneurs. It considers the barriers they face and emerging approaches that
are helping women succeed in business.
FEMALE ENTREPRENEURS: WHO AND WHAT
The spectrum of WOBs
ranges from full corporations to microenterprises--small, often home-based
businesses that can mean self-sufficiency to those traditionally left out of the
economic mainstream. Why do women become entrepreneurs? Women business owners
share many of the characteristics and motivations of business owners generally:
desire for independence and control, risk-taking personality, exposure to
entrepreneurial role models. Other factors enter the picture for women: many are
dissatisfied with "glass ceiling" limits on their earnings and advancement; the
percentage of women who earn more than men is higher among self-employed women;
women seek job flexibility because they usually bear a higher proportion of
family responsibilities; older women may face age discrimination in continuing
in or entering the labor force (Gould and Parzen 1990).
OBSTACLES WOMEN FACE
Women entrepreneurs often face
barriers not usually encountered by men (Gould and Parzen 1990): lack of
socialization to entrepreneurship in the home, school, and society; exclusion
from traditional business networks; lack of access to capital and information;
discriminatory attitudes of lenders; gender stereotypes and expectations, such
as the attitude that women entrepreneurs are dabblers or hobbyists; socialized
ambivalence about competition and profit; and lack of self-confidence. WOBs
receive only about 1% of federal contracts (Godfrey 1992).
Low-income women, seeking self-sufficiency through business ownership, run up
against barriers in the system. For example, restrictions on the amount that
recipients of Aid to Families with Dependent Children (AFDC) can save, the hours
they can work, and the amount of health care and other assistance they receive,
as well as regulations that do not distinguish between personal and business
assets, make it extremely difficult to start a business or to invest the time it
takes to make it profitable enough to become self-supporting (Goldoftas 1992;
Gould 1992). Women of color also face discrimination and cultural bias both
within their cultural group and in the larger society. Although minority-owned
businesses are growing in numbers, the numbers of minority women business owners
are small: of all women business owners, African American women represent 3.8%,
Hispanic American women 2.1%, and Asian American women 1.6% (Ando et al. 1988).
In an increasingly global economy, it is also not good news that 88-93% of
businesses owned by women of color did not export any goods or services (ibid.).
SUPPORT FOR WOMEN BUSINESS OWNERS
Federal support for women
business owners includes the following programs and services of the Small
Business Administration (SBA 1990): (1) the Women's Business Ownership Program;
(2) the Women's Network for Entrepreneurial Training, a national mentoring
program; and (3) the Women's Business Ownership Act of 1988, which offers
incentives to banks to make loans of less than $50,000, authorizes eight
demonstration counseling and training centers, and establishes the National
Women's Business Council. "However, the SBA has typically not focused on very
small businesses, nor has it offered the type of training needed by relatively
inexperienced or seriously disadvantaged business operators" (Guy et al. 1991,
New approaches are emerging from strategies being used in less developed
countries to support women in development. These strategies are arising from
international initiatives in self-employment as a solution to welfare dependence
and poverty and from a focus on new ways to combat gender discrimination in
employment and to empower low-income women (ibid.). The primary strategies are
stimulation of microenterprises, microcredit lending (making small loans
available for start-up), and peer-group lending, "which makes borrowers
accountable to one another as well as to their bank for loan repayments"
(Blakely 1992, p. 20). The following are examples of U.S. projects that use
these emerging strategies.
One of the oldest and most successful programs for low-income women is the
Women's Economic Development Corporation (WEDCO) in St. Paul, Minnesota, which
recently merged with an employment counseling program to form WomenVenture
(McKee et al. 1993). WEDCO/WV stresses self-pacing and self-selection throughout
the process so that participants continually reevaluate the self-employment
decision, allowing them to screen themselves out if for some reason they cannot
commit to business ownership. The Women's Economic Development Project in Boston
(Goldoftas 1992) helps women organize worker cooperatives and provides start-up
assistance while they continue to receive AFDC. The program teaches basic
economic literacy, provides 6 months of business training, and continues support
throughout the first year of operation. Cooperatives are used because they are a
"middle way" to business ownership, enabling "women to control their labor, gain
experience in work skills and leadership, and have flexible working conditions"
Another type of worker-owned business is the Cooperative Home Care Associates
(CHCA) in the South Bronx. Now owned and governed by over 200 African American
and Latina home health workers, CHCA features family health insurance, a
profit-sharing plan, and higher hourly wages than the industry average (Gould
1992; Steinem 1992). The holistic assistance new entrepreneurs need is
illustrated by the Lakota Fund, a South Dakota microlending program based on the
vision of development of the Oglala Lakota Tribe (Blakely 1992). Its loan
recipients are required to attend workshops on money management, sales
techniques, self-esteem, networking, and alcohol and drug education.
Among the lessons these projects have learned about the wide range of needs
women business owners have are the following: the need to assess results from a
long-term, flexible perspective; flexible financing tailored to individual
needs; and small amounts of working capital to enable them to test ideas, make
repayment, and build up their business without substantial debt (McKee et al.
1993). NFWBO (1992) identifies other critical skills women entrepreneurs should
acquire: using information strategically, having a global perspective, and
creatively employing technology, especially telecommunications.
WOMEN AND THE FUTURE OF ENTREPRENEURSHIP
business owners are part of "a new breed of entrepreneur whose goal is to
identify a social cause, cultivate an opportunity, and turn it into a profit"
(Aburdene and Naisbitt 1992, p. 274). This "social entrepreneurship" is leading
women to form businesses for asbestos removal and other environmental
construction projects, environmentally based drug companies, and banks for
low-income people. The philosophy of Anita Roddick, founder of the Body Shop
International, a London-based cosmetics firm, exemplifies this new breed: (1)
information/education to establish credibility, humanize the company, and make
its values known; (2) motivational training to empower employees with company
knowledge; (3) corporate activism, to demonstrate the belief that business
should also help solve social problems; and (4) preservation of the
entrepreneurial "start-up" spirit (Burlingham 1990).
Steinem (1992) notes that women's communal enterprises tend to take a
holistic approach, balancing work, family, economic, and cultural values. They
integrate economic techniques such as job training, job creation, marketing, and
management with workplace innovations such as flexible scheduling, child care,
language workshops for immigrants. "These women are bringing their values, many
of which have been unrecognized in this culture as 'business values,' into the
processes of creating and operating their businesses" (Agora Forum 1993, p. 12).
However, realizing the enormous potential of small business depends on "the
existence of political, social, and cultural climates that encourage the
formation of businesses by women and minorities" (ibid., p. 1). Godfrey (1992)
advocates "investing in the future" by properly and accurately counting WOBs,
ensuring their access to federal contracts, fostering diversity, developing
girls (especially aged 10-15) as entrepreneurs), and having women invest in
other women. It is especially important that girls be exposed to
entrepreneurship and to role models in K-12 curricula, so that they approach
business ownership with appropriate skills, awareness of their strengths, and
confidence that they can explore any type of business.
As women of all colors and at all economic levels find it difficult to have
their needs met in the workplace, they are turning to entrepreneurship to create
their own opportunities. Small businesses tend to have the flexibility and
innovation that are critical business needs in the coming century. As women form
microenterprises and bring their values and concerns to the marketplace, they
are changing the face of the nation's business.
Aburdene, P., and Naisbitt, J. MEGATRENDS FOR
WOMEN. New York: Villard Books, 1992.
AGORA FORUM. Dryden, NY: Tompkins Cortland Community College, Winter 1993.
Ando, F. and Associates. MINORITIES, WOMEN, VETERANS AND THE 1982
CHARACTERISTICS OF BUSINESS OWNERS SURVEY. Haverford, PA: Faith Ando and
Blakely, M. K. "Quilting New Networks." MS 11, no. 5 (March-April 1992):
Burlingham, B. "This Woman Has Changed Business Forever." INC., June 1990,
Godfrey, J. OUR WILDEST DREAMS. New York: HarperCollins, 1992.
Goldoftas, B. "Women Helping Women." DOLLARS & SENSE no. 182 (December
Gould, S. "Women Building a Future." EQUAL MEANS 1, no. 2 (Spring 1992):
Gould, S., and Parzen, J., eds. ENTERPRISING WOMEN. Paris: Organisation for
Economic Cooperation and Development, 1990. (ED 335 463)
Guy, C. A.; Doolittle, F.; and Fink, B. L. SELF-EMPLOYMENT FOR WELFARE
RECIPIENTS. New York: Manpower Demonstration Research Corporation, 1991. (ED 336
McKee, K.; Gould, S.; and Leonard, A. "Self-Employment as a Means to Women's
Economic Self-Sufficiency." SEEDS no. 15. New York: SEEDS, 1993.
National Foundation for Women Business Owners. WOMEN OWNED BUSINESSES: THE
NEW ECONOMIC FORCE. Washington, DC: NFWBO, 1992.
Small Business Administration. WOMEN BUSINESS OWNERS: SELLING TO THE FEDERAL
GOVERNMENT. Washington, DC: SBA, 1990. (ED 350 478)
Steinem, G. "Creating Jobs We CAN'T Be Fired from." MS 11, no. 5 (March-April
1992): 21, 23.
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