Is there an innovation gender gap amongst entrepreneurs?

Is there an innovation gender gap amongst entrepreneurs?

Professors Strohmeyer, Tonoyan, and Jennings examine the innovation gender gap amongst entrepreneurs, citing the importance of a Jack (or Jill)-of-all-trades skillset

In a previous Open Access Government article, Professors Tonoyan, Strohmeyer, and Jennings summarised findings from their multi-country study of the relationship between sex-based labour market segregation and women’s perceptions of how easy it would be to start a business.

In this article, the researchers share insights from a different yet related study investigating whether, why, and how gendered experiences in the labour market (as well as gendered educational choices) have resulted in an innovation gender gap.

Specifically, the team look at how gendered experiences affect the extent and type of innovation within firms led by female versus male entrepreneurs.

Their analysis reveals the pivotal role played by gender differences in skill diversity – more specifically, the tendency for female entrepreneurs to be less likely than their male counterparts to resemble a proverbial ‘Jack (or Jill)-of-all-trades’.

The presence of an innovation gender gap

Innovation is vital for economic and social development. It is also important for a new venture’s growth and survival.

The notion of ‘innovation’, however, is often male-typed. In particular, it tends to be overly focused on the development of new technology, neglecting other ways in which a firm can be innovative. As a result, prior research suggests that firms led by women entrepreneurs tend to be less innovative than those led by men.

Conceptualisation of a firm’s innovativeness

Responding to the call for a more inclusive and gender-neutral conceptualisation of innovation, Drs. Strohmeyer, Tonoyan, and Jennings, conceptualised a firm’s innovativeness according to two distinct dimensions: innovation breadth and innovation depth.

Measuring innovation breadth

Imagine innovation as a landscape encompassing various domains. While one firm may focus on developing a new product, others might concentrate on creating a new production process, a new marketing approach, and/or a new organising method.

Building on this multi-domain conceptualisation, Professors Strohmeyer, Tonoyan, and Jennings measured innovation breadth by the number of domains – i.e., product, process, marketing, and/or organisational – in which a firm had introduced something new.

Measuring innovation depth

As for innovation depth, Drs. Strohmeyer, Tonoyan, and Jennings conceptualised this aspect as referring to both the frequency with which a firm introduces innovations and the degree to which the innovations are radical in nature (irrespective of the domain in which they occur).

The frequency aspect captures a firm’s commitment to continuous innovation, or, in simpler terms, ongoing experimentation. The radicalness aspect captures how groundbreaking the innovations are.

After all, some innovations may simply enhance what a firm already does, whereas others might completely disrupt the norm by creating something new for the entire market or industry. The researchers measured innovation depth by aggregating indicators of the frequency and radicalness components.

Measuring an en entrepreneur’s skill diversity

When designing their study, Professors Strohmeyer, Tonoyan, and Jennings were interested in shedding light not only on whether firms led by female versus male entrepreneurs differ with respect to innovation breadth and depth, but also on why such an innovation gender gap might occur.

With respect to factors that might contribute to the innovation gender gap, the researchers were particularly interested in the potential role played by an entrepreneur’s skill diversity.

Drawing upon prior arguments that entrepreneurs tend to possess generalist skills characteristic of a Jack (or Jill)-of-all-trades (JAT), the research team developed a nine-item measure of skill diversity. They ensured that the nine items comprising this index reflected a balanced mix of three male-typed, three female-typed, and three gender-neutral skills. The resultant index thus captured a combination of technical, domain-specific skills (such as computer programming, finance, and business) and non-technical, generalist skills (such as negotiating, presenting, and communicating).

You can think of the JAT index like a well-rounded toolbox meant to capture the diversity of an entrepreneur’s skills.

Calculating an entrepreneur’s score on the JAT Index

Professors Strohmeyer, Tonoyan, and Jennings calculated an entrepreneur’s score on the JAT index by summing how important the entrepreneur had deemed each of the nine skills to their role as a business owner-manager.

Recognising, however, that the importance attached to a certain skill isn’t synonymous with an entrepreneur’s possession of that skill, the researchers conducted a supplemental study to assess the validity of their measure. The results provided reassurance in this regard.

First, there was a meaningful correlation between the importance that the entrepreneurs placed on each skill and their self-reported possession of that skill.

Second, in most cases, the entrepreneurs rated their skill possession as equal to or greater than their perceived importance, which suggested that the results from the researchers’ main study were unlikely to overestimate the skills that the entrepreneurs actually possessed.

Third, the findings from the validation study demonstrated that gender did not play a significant role in how the entrepreneurs assessed the importance versus possession of the skills.

This helped to further alleviate any potential concern that the JAT index developed by the researchers favoured either the male or the female entrepreneurs.

Arguments linking the innovation gender gap to differences in skill diversity

Drs. Strohmeyer, Tonoyan, and Jennings formulated and tested two sets of hypotheses pertinent to an entrepreneur’s skill diversity.

In the first set, they argued that this characteristic would be positively associated with the breadth and depth of innovation exhibited by the entrepreneur’s firm. After all, when it comes to creating and introducing something new, entrepreneurs require a mix of skills, such as identifying business opportunities, motivating teams, establishing partnerships with investors, and building relationships with customers and suppliers.

These skills are just as vital as technical ones, such as those needed for developing a prototype or conducting financial and market analyses.

The researchers further argued that entrepreneurs with a broader skillset are more likely to ‘connect the dots’ in unexpected ways. Although entrepreneurs with narrow specialist skills might be able to do this within their specific area, those with broader generalist skills possess a greater likelihood of connecting ideas from different fields, resulting in a greater breadth of innovation.

This reasoning applies to significant breakthroughs as well, which often arise from combining ideas from unrelated fields.

Thus, an entrepreneur’s level of skill diversity is also likely to be positively associated with the depth of innovation exhibited by his/her firm.

The potential role played by gendered educational experiences

In their second set of hypotheses, Professors Strohmeyer, Tonoyan, and Jennings posited that firms led by female entrepreneurs would likely exhibit a lower breadth and depth of innovation relative to those led by male entrepreneurs, as the women would be less likely than the men to possess the diverse skillsets characteristic of a Jack (or Jill)-of-all-trades. The reason for this?

Drawing upon the sociological and economic literature on gender-segregated educational and employment experiences, the researchers conjectured that gendered educational backgrounds and labour market experiences would be part of the answer.

Consider field of study. While women have made progress in traditionally male-dominated fields such as law and business, they are still significantly underrepresented in areas such as engineering and computer science.

Drs. Strohmeyer, Tonoyan, and Jennings argued that this underrepresentation would likely result in gender differences with respect to skill diversity. In turn, this differential would contribute to the innovation gender gap amongst entrepreneurs.

In contrast to fields dominated by women (such as the humanities), fields like engineering are more likely to provide a mix of technical and non-technical skills, resulting in higher-level JAT skills amongst graduates from such fields who subsequently become entrepreneurs.

The potential role of gendered labour market experiences

Gendered labour market experiences are also likely to play a role. Women are often underrepresented in managerial positions, which are known for offering a variety of roles and skills.

Entrepreneurs without previous managerial experience are therefore less likely than those with such experience to possess diverse skillsets characteristic of a Jack (or Jill)-of-all-trades.

Work-life interruptions are also likely to be influential. Women often face career interruptions due to family responsibilities associated with childbirth and eldercare. These career interruptions are likely to limit their exposure to different roles and skills, thereby reducing the skill diversity exhibited by female entrepreneurs, on average, relative to their male counterparts.

In sum, the arguments articulated by Drs. Strohmeyer, Tonoyan, and Jennings can be expressed as follows.

On average, female entrepreneurs will possess a lower level of skill diversity relative to male entrepreneurs. This gender gap in skill diversity can be at least partially attributed to gender differences in educational backgrounds, managerial experiences, and career interruptions.

Consequently, entrepreneurial ventures led by women are likely to exhibit less innovation breadth and depth, on average, than those led by men.

Testing hypotheses through primary survey data

To test their arguments, the research team analysed primary survey data obtained from a research project focused on highly-educated men and women entrepreneurs that had been funded by the German Ministry of Education and Research.

Of the 1,667 entrepreneurs contacted for potential participation, 900 agreed to do so (a very high response rate of 54%).

Comparisons between the male and female entrepreneurs revealed commonly reported differences in age, startup capital, and industry focus, providing evidence of the sample’s comparability with others featured in studies conducted outside of Germany.

Statistical analyses of the German survey data confirmed many of the research team’s hypotheses.

With respect to firm innovativeness, the female-led ventures exhibited significantly less innovation breadth and depth than those led by men, demonstrating the existing innovation gender gap.

As theorised by Professors Strohmeyer, Tonoyan, and Jennings, these innovation gender gaps were partially attributable to the significantly lower skill diversity scores exhibited by the female entrepreneurs, on average, relative to the male entrepreneurs.

In turn, the gender gap in skill diversity was partially explained by the gender differences that the researchers had anticipated in regard to the entrepreneurs’ prior labour market experiences.

Relative to the men, the women were significantly less likely, on average, to possess managerial experience and significantly more likely, on average, to have experienced a workforce interruption prior to starting their own business.

There were some noteworthy exceptions, however.

Gender differences for field of study were not significant

One exception was the lack of any statistically significant gender differences for field of study. This meant that this factor was not a significant contributor to the observed gender gap in skill diversity.

Another was the absence of substantial gender disparities within some of the four domains comprising the study’s measure of innovation breadth.

While the female-led firms were less likely than the male-led firms to have introduced product or process innovations, they exhibited an equal likelihood of having implemented marketing or organisational innovations.

In addition, a fine-grained post hoc analysis revealed that in industries characterised by lower levels of innovation, no significant innovation gender gaps were observable in the depth of innovation exhibited between the female-led and male-led firms.

The research team replicated many of their findings using several additional data sources; specifically, a Stanford University alumni panel dataset, two German employment surveys, and an employment survey from the United Kingdom.

Prevailing perceptions around female-led businesses must be questioned

The study conducted by Drs. Strohmeyer, Tonoyan, and Jennings possesses several notable implications for public policy.

On the one hand, it provides some evidence to question prevailing perceptions that firms led by female entrepreneurs are not as innovative as those led by male entrepreneurs. This is because the research team’s findings suggest that this widely held belief does not hold for all forms of innovation.

When the researchers looked more closely into whether the female-led firms were less innovative than the male-led firms across each of the four domains of innovation assessed in their study, they found that the firms led by female entrepreneurs were just as innovative as those led by male entrepreneurs in terms of marketing techniques and organising methods.

These findings thus provide empirical support for the argument that predominant measures of innovation, which tend to focus solely on the development of new products and/or production processes, underestimate the innovativeness of firms headed by female entrepreneurs.

Initiatives to be implemented to address gender gaps in innovation

On the other hand, additional findings from the study conducted by Drs. Strohmeyer, Tonoyan, and Jennings point to initiatives that policy-practitioners can implement to address the gender gaps in innovation breadth and innovation depth that were apparent in their analysis.

In particular, the research team’s findings suggest that increasing the skill diversity of women entrepreneurs will result in a greater range, frequency, and radicalness of innovative activity within female-led firms.

To facilitate this, the researchers’ findings further suggest that policy-practitioners take additional actions to reduce disparities in the labour market experiences that women versus men encounter prior to entering entrepreneurship.

In particular, their findings point to the special importance of addressing the institutional barriers responsible for women’s lower chances of securing managerial roles in salaried employment and greater likelihood of career interruptions.

Such initiatives should help reduce the gender-based differences in skill diversity that the researchers’ study suggests are likely between male and female entrepreneurs, thereby narrowing the gaps in innovation observable between firms led by men and those led by women.

Once more female entrepreneurs resemble ‘Jills-of-all-trades’, more firms led by women are likely to become powerhouses of innovation.

Ultimately, such an outcome might mean that female entrepreneurs and their firms are no longer underrepresented in discourse about entrepreneurship and innovation.

The full academic article by Professors Strohmeyer, Tonoyan, and Jennings can be accessed here.

To read and download this full eBook, ‘Is there an innovation gender gap amongst entrepreneurs? click here’

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