A recent report finds that more than 200 million women across the world are starting and running new businesses. According to the Global Entrepreneurship Monitor (GEM), although men are still 50 percent more likely to become entrepreneurs, women are steadily gaining ground: From 2012 to 2014, this gender gap narrowed by 6 percent, and in ten nations women are now just as likely as men to start new businesses.
These women are bringing innovative products and services to market, creating jobs, driving economic growth and providing for their families and communities. At Babson College’s Center for Women’s Entrepreneurial Leadership (CWEL), we’re working to change the entrepreneurial ecosystem, so that we in the United States can soon join the list of countries that fully harness the innovation and leadership potential of their entire populations.
One gender gap we’re concerned about relates to how men and women see themselves as entrepreneurs. According to the GEM report, while women surveyed were nearly as likely as men to identify potential business opportunities around them, they were significantly less likely to view themselves as capable of starting a business to address those opportunities. And they were more likely to fear failure if they did.
In the United States, for example, only 46 percent of women surveyed said they believed they had the skills and knowledge to start a business, compared to 61 percent of the men surveyed.
These findings are part of a broader trend documented in numerous studies, in which men tend to overestimate their professional abilities and performance, while women underestimate their capabilities. In research about members of the U.K.-based Institute for Leadership & Management, half of women managers surveyed reported feeling self-doubt about their careers and work performance, compared to less than a third of men.
This gender gap in self-perception is important because research shows that confidence and self-efficacy affect performance in school, the workplace and even simple problem-solving tasks. Simply put, if you don’t believe you can do something, you are less likely to try it, and to do it well, regardless of your abilities.
Indeed, the GEM report found that in countries where women are less likely to see themselves as capable of starting a business, they are less likely to become entrepreneurs.
Confidence plays an especially large role in entrepreneurial momentum. Launching a successful business isn’t just a matter of innovative ideas and superior skills; it requires boldness, courage and a tremendous amount of faith in one’s own abilities.
How can we equip women with the courage they need to become entrepreneurs? Much of the conversation over the past few years has focused at the individual level, exhorting women to “lean in” and close the “confidence gap” themselves. At CWEL, we take a different approach. We believe entrepreneurial self-efficacy — a person’s confidence that he or she has what it takes to succeed in launching a business — is cultivated and influenced by the environment and ecosystem in which he or she operates.
Women aren’t less likely to see themselves as entrepreneurs simply because they lack overall confidence. They’re responding to messages they receive from the world around them about who is and isn’t supposed to lead and take risks. Only 15 percent of venture capital-funded companies, for example, have a woman on their executive team, and a mere 3 percent have a woman CEO.
In addition, according to research, people are twice as likely to respond positively to the same pitch given by a man as by a woman. This gender discrimination comes on top of the already-daunting fact that half of new businesses fail within five years. Perhaps women who hesitate to start businesses in such an environment aren’t risk-averse, they’re risk-rational.
For this reason, people in organizations like our own are working to change the entrepreneurial ecosystem and the messages women receive about who can and should start a business. We’re equipping individual women with the courage to transform themselves from individuals with ideas to entrepreneurs with impact. Our Women Innovating Now (WIN) Lab here at Babson cultivates self-efficacy by shifting participants’ sense of what is possible for themselves and their businesses.
Over the course of eight months, participants in the program plan, experiment and learn within a community of fellow entrepreneurs, who provide support, feedback, encouragement and knowledge-sharing. Each “WINner” is paired with a compatibility-matched coach and has access to an expert circle of women industry leaders. These successful women help build participants’ self-efficacy by acting as role models, sharing their stories and offering invaluable insights about their entrepreneurial journeys.
Rather than the traditional accelerator approach of bringing business ideas to market, WIN Lab focuses on preparing potential entrepreneurs to be market-ready and to “go big” with their ideas. For entrepreneurs like Savitha Sridharan, a WIN Lab participant and founder and CEO of renewable energy company Orora Global, the program helps women “believe in [their]dream and commit to act on it.”
Overall, the GEM report and other research suggests that shifting self-perception is a key part of encouraging women’s entrepreneurship. But while confidence is critical, it isn’t an individual problem.
It’s an ecosystem problem. Instead of asking women to lean in, we must give them the tools, support and relationships that all entrepreneurs need to succeed — resources that men often have access to without even realizing it.