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Debunking misconceptions about women entrepreneurs

Underrepresentation in entrepreneurship results in untapped potential that could contribute significantly to the global economy
June 26, 2023
By Faiqah Ahmed

Three people meet in front of a wall of windows in a a high-rise office building. They are cast in silhouette. Photo by Charles Forerunner on Unsplash

This research was presented at an event by the John Molson School of Business' Barry F. Lorenzetti Centre for Women Entrepreneurship and Leadership.

Women’s path to entrepreneurship is fraught with misconceptions and challenges that create barriers to entry and success, according to new research published in Canadian Diversity, a publication of the Association for Canadian Studies by Ingrid C. Chadwick and Alexandra Dawson, professors in the Department of Management in the John Molson School of Business.

Chadwick and Dawson’s article indicates that women are often seen as less motivated, less successful and less capable of handling risk, which limits their participation in and contribution to the entrepreneurial space.

These beliefs have a real-world impact on women's economic and social opportunities. Women's underrepresentation in entrepreneurship results in untapped potential that could contribute significantly to the global economy. This is supported in a report by the Boston Consulting Group that shows that, if women participated in entrepreneurial activities as much as men, the global economy would see a 3-6% increase, adding up to $2.5-5 trillion in value. In Canada alone, an estimated $150 billion would be added to the GDP by increasing women's participation.

By debunking these misconceptions, Chadwick and Dawson assert that more women will feel empowered to become entrepreneurs. This will create more opportunities for them to succeed and will contribute to the global economy.

...a 2018 study by the Boston Consulting Group showed that startups co-founded by women yield better performance, and up to 10% higher revenue, over time than other ventures.

Here are five common misconceptions about women and entrepreneurship from Chadwick and Dawson’s article:

  1. Motivation
    The belief that “women are not motivated to become entrepreneurs” is largely unfounded since women have been reported to make up 37% of self-employed Canadians in 2019. Unfortunately, self-employed women are less likely to label themselves as entrepreneurs, exacerbating the gender gap in the enterprising space. Considering the language surrounding entrepreneurship is also inherently masculine —frequently describing risk-loving behaviours and competitive personality traits — the appeal for male entrepreneurs is far greater than that for women. Combined, these factors can explain the question of women’s entrepreneurial motivation.
  2. Success
    Women’s success as entrepreneurs is largely understated due to the disconnect between venture objectives and traditionally masculine metrics of entrepreneurial success, including business size, profitability, growth and international presence. This is in contrast with other, more socioemotional goals, such as societal impact, employee well-being and family relationships, that are often at the heart of women-led businesses. Despite this, a 2018 study by the Boston Consulting Group showed that startups co-founded by women actually yield better performance, and up to 10% higher revenue, over time than other ventures. A broader, more gender-inclusive conceptualization of entrepreneurial success can prove to be more effective in capturing the true impact of female entrepreneurs.
  3. Funding
    The fact that women entrepreneurs receive less financial backing has more to do with gender bias in the financial allocation process than with their lack of capabilities for securing capital. For example, women face discouragement and fear of rejection when dealing with investors asking them “prevention-focused” questions centered around failures, as opposed to men who are presented with “promotion-focused” questions geared to potential success. These findings ultimately highlight the need for fairness during evaluation of ventures and their need for funding.
  4. Risk propensity
    Although research has debunked the misconception of risk aversion as a “typical trait” for women resulting in fewer women entrepreneurs overall, there are plausible explanations for why this perspective exists — cultural norms and definition of risk. Cultural socialization has often led to higher levels of confidence and optimism in men regarding financial gains, compared with women. Additionally, the definition of entrepreneurial risk has often been limited to financial return, without accounting for the risk associated with doing the “right” thing at the expense of monetary success. Women tend to take the latter risk more frequently than men. A broader view on entrepreneurial risk and cultural bias is essential to boost the number of women entrepreneurs.
  5. Network management
    Lastly, women have been reported to develop mostly formal mentoring networks, compared to men who also have access to informal networks that provide additional career and psychosocial advantages. Informal networks are personal networks made up of friends and acquaintances, while formal networks are officially created by organizations or governmental institutions with the goal to increase contacts among certain individuals. Instead of believing that women do not, or are not able to, establish the right networks, more women entrepreneurs need to be promoted into the space, allowing for increased opportunities for formal and informal interaction and support.

Practical implications

By identifying five critical misconceptions that are harmful to women’s motivation and ability to succeed as entrepreneurs, Chadwick and Dawson provide evidence-backed insights and urge policymakers, investors and support organizations to make necessary efforts to eradicate gender biases in the educational, social and financial contexts. Through this research, they stress the importance of a perspective shift in the social norms and beliefs surrounding entrepreneurship to promote gender inclusivity for women to ultimately realize their entrepreneurial potential.

Read “Five Common Misconceptions about Women and Entrepreneurship” in Canadian Diversity.

Ingrid Chadwick

Ingrid Chadwick is an Associate Professor of Management and the Academic Director, Barry F. Lorenzetti Centre for Women Entrepreneurship and Leadership in the John Molson School of Business. She has a PhD in Organizational Behaviour and a Master of Education in Organizational Learning from Queen’s University. Ingrid’s research focuses on the gendered nature of leadership and entrepreneurship and has been published in leading academic journals. She is an active speaker at academic conferences and women in leadership and entrepreneurship events. Prior to her academic career, Ingrid worked with employee and organizational development initiatives in corporations in Sweden and Canada.

Alexandra Dawson

Alexandra Dawson is a Professor of Management and holds the CIBC Distinguished Professorship in Entrepreneurship and Family Business in the John Molson School of Business. Alexandra’s teaching and research interests are in entrepreneurship and family business. She has published in several leading academic journals and regularly presents at international conferences. Alexandra has a PhD in Management and Business Administration from Bocconi University, where she was also a post-doctoral fellow and an MSc in Economics from the London School of Economics. Prior to academia, Alexandra was a manager with a UK strategy consulting firm.

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