Why Are More Women Seeking Entrepreneurship?

 Given the number of challenges women, especially mothers, continue to face in the workplace, entrepreneurship has become an increasingly more attractive career option. Since 2014, women-owned businesses grew by 21%, accounting for roughly 42% of all U.S. businesses in 2019 (American Express, 2019). Of those businesses 50% were minority owned, with the number of black-female-owned business growing 12% in 2019 compared to an 8% annual rate in previous years (American Express, 2019). 

This growing interest in entrepreneurship has been influenced by a number of push and pull factors that are driving women away from corporate America and towards entrepreneurship (Dawson & Henley, 2011; Foley et al 2018; Kirkwood, 2009). These factors can provide greater understanding around the career needs of women and mothers considering or actively participating in entrepreneurship as an alternative career path. 

Corporate Barriers

According to Kephart and Schumacher (2005), many women are pursuing entrepreneurship in response to a psychosocial phenomenon known as the corporate “glass ceiling.” This is a term used to describe the additional stressors women face in the workplace that prevent them from reaching the top of the corporate ladder (Kephart & Schumacher, 2005). These stressors include workload expectations, work-family conflict, sexual dicrimination, and gender biases/sterotypes (Kephart & Schumacher, 2005).

Kephart and Schumacher (2005) also list unfair pay practices as a key component contributing to the growth of women’s entrepreneurship over the past 20 years. While the U.S. has certainly come a long way since 1973 when women made 57 cents per each dollar earned by men, the gender pay gap has plateaued in recent years (Kephart & Schumacher, 2005). In 2020 white, non-hispanic women made 79 cents per each dollar earned by white, non-hispanic men, with pay perity not predicted to occur until 2059 (U.S. Bureau of Labor Statistics, 2021). For black, hispanic, and native american women the pay gap is even greater. According to Kephart and Schumacher (2005), this lack of progress combined with barriers presented by the corporate glass ceiling has pushed more women to initiate their own organizations.

Lack of Flexibility and Role Congruence

In addition to the challenges mentioned above, researchers have also identified challenges unique to mothers that have contributed to a rise in women’s entrepreneurship. One factor is a lack of flexible employment options that would allow them to balance work and family responsibilities (Thebaud, 2016). This is congruent with existing research that shows mothers who intend to return to the workforce after career interruptions related to motherhood, tend to pursue alternative career paths that are more aligned with their new role as a mother (Lovejoy & Stone, 2011).

Role incongruence and a lack of organizational support in existing positions has also been identified as a major factor pushing mothers towards entrepreneurship (Lewis et al., 2015). This is unsurprising, considering family commitments, or a desire to integrate work-family domains, is discussed frequently in women’s entrepreneurship research as one of the top reasons women pursue self-employment (Dawson & Henley, 2011; Foley et al., 2015; Lewis et al., 2018; McGowan et al., 2012). 

Professional Autonomy

Another commonly cited reason frequently brought up in women’s entrepreneurship research is a desire for greater professional independence and control over scheduling and career interruptions (Kephart and Schumacher, McGowen et al.,2012). In one study conducted by Reitman & Schneer (2005), it was more likely for women to have had an interruption/gap (34%) compared to men (16%), with restructuring and childrearing as the primary reasons for these interruptions among women.

These interruptions have been shown to limit promotion opportunities for women (Cabrera, 2007), as well as impact future wage trajectories (Reitman & Schneer, 2005). In their study, Reitman and Schneer (2005) found that MBA graduates with prior career interruptions/gaps earned 29% less in early career than those continuously employed, even 25 years after the interruption. Through self employment, entrepreneurial mothers believe they can have greater control over how childcare responsibilities impact their work, without the worry of being held back by corporate limitations (McGowen et al., 2012). 

References:

Kephart, P., & Schumacher, L. (2005). Has the 'glass ceiling' cracked? An exploration of women entrepreneurship. Journal of Leadership & Organizational Studies, 12(1), 2–15. https://doi.org/10.1177/107179190501200102

McGowan, P., Redeker, C. L., Cooper, S. Y., & Greenan, K. (2012). Female entrepreneurship and the management of business and domestic roles: Motivations, expectations and realities. Entrepreneurship & Regional Development,24(1-2), 53–72. https://doi.org/10.1080/08985626.2012.637351  

Reitman, F., & Schneer, J. A. (2005). The long-term negative impacts of managerial career interruptions. Group & Organization Management, 30(3), 243–262. https://doi.org/10.1177/1059601104269110 

Thébaud, S. (2016). Passing up the job: The role of gendered organizations and families in the entrepreneurial career process. Entrepreneurship Theory and Practice, 40(2), 269–287. https://doi.org/10.1111/etap.12222