As Entrepreneurship Thrives, Women Are Starting More Innovative Businesses Than Men

Americans are feeling pretty good about starting companies. More than 25 million Americans were starting or running new businesses in the United States in the past two years, and more than half see opportunities for starting companies, according to the new Global Entrepreneurship Monitor (GEM) 2016 United States Report from Babson College.

More than ever, the people seizing those opportunities are women.

The report, a snapshot of startup activity around the world, found that entrepreneurship rates rose for women by one percentage point, while holding steady for men. While that’s not a big jump, it is notable at a time when headlines have been blaring about sexual harassment in venture capital firms and when women continue to receive only a small fraction of investor dollars.

One key finding counters any idea that innovation is the domain of men. Women were more likely than men to introduce products and services that are new to customers and not generally offered by competitors (40 percent compared to 35 percent).

Though the gap between women’s and men’s perceptions of opportunities and entrepreneurial intentions narrowed in 2016, in some areas the gender gap did increase. Women express less confidence about their ability to start a company, with 48 percent of men expressing concern and 62 percent of women.

The report showed some differences in industry as well. Compared to men, women start a much higher percentage of businesses in wholesale and retail, as well as in health, education, government, and social services. Only 3 percent of women entrepreneurs start information and communications technology businesses, compared to 11 percent for men.

The power of perception is also at play when women describe their companies. Only  3 percent of women entrepreneurs consider their businesses to be in medium or high technology sectors compared to 8 percent of men. But women entrepreneurs are almost as likely as men to use new technology in their businesses–9 percent compared to 10 percent for men.

“The fact that women are adopting new technologies as often as men shows they are tech savvy, though they are not starting companies in traditional technology industries,” says Babson College Professor Donna Kelley, co-author of the report. “But the fields they tend to dominate, such as health care and education, are surely being transformed by innovations, which are facilitated by technological advances. We need to recognize this, and the impact of women entrepreneurs in these fields.”

While women are increasingly following the entrepreneurship path, they are more likely to ramp up more slowly. “They may proceed with some caution,” says Kelley. “This may mean that they grow more slowly or start less risky businesses. But they may also be resourceful in how they go about this—for example, if they have trouble raising large sums of money.”

Overall, U.S. entrepreneurs are driven most by opportunity, with only only 11 percent starting companies out of necessity. Thirty-seven percent are developing and delivering innovative products or services, the highest level on this indicator in 15 years—higher than the average, 31 percent, seen in all 26 of the other innovation economies (31 percent).

American entrepreneurs also skew a bit older. Start up activity is highest among 25- to 34-year-olds in comparable economies, while activity in the U.S. peaks in the next oldest age group, among the 35- to 44-year-olds.

For the first time, the GEM report  zoomed in on entrepreneurship in three U.S. cities—Boston, Detroit and Miami. A high entrepreneurship rates among young people in Detroit, those in mid-career in Miami, and people in their late careers in Boston. Out of the three cities, Boston demonstrates the widest entrepreneurship gender gap. Women in Boston start businesses at around half the rate that men in Boston do, something Kelley suggests may be attributable to a higher percentage of startups in tech and finance, sectors in which fewer women start companies.

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