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Business is open on Venus

Much is made about gender differences, but do those differences transfer to business owners?

May 1, 2004


Ron Wirtz Editor, fedgazette
Business is open on Venus

Is not. Are too. White. Black. Day. Night.

This little interplanetary argument can be heard across almost any kitchen table, assuming a man and a woman are present. Author John Gray widely codified this gender difference into a common phrase with his best-selling book, Men Are from Mars, Women Are from Venus.

Gray's book looks at the gender differences from the standpoint of romantic relationships. Let's move that notion from the bedroom to the boardroom: Do men and women become entrepreneurs for different reasons? Do they have different expectations of their business? And do they run their businesses differently?

In contacts with over 20 women business owners and other experts, few saw big gender differences in entrepreneurial motivations or business expectations. However, most argued that there are very clear gender differences in ownership and managerial style and suggested that these differences have real implications on how businesses are run.

Research on these issues could best be described as spotty—mostly because, as one source put it, women entrepreneurship "has only been around for 30 years." But while there do appear to be entrepreneurial differences between the sexes, there are probably not as many as the Mars-Venus stereotype implies.

Ms. Independence

Sources were mostly in agreement that lifestyle is a major factor for many women entrepreneurs. "I wanted the independence," said Ann Brice, owner of Brice Cohey Consulting in La Crosse, Wis. Brice started her data base design firm in 1995, having previously worked for a private firm and as an instructor at the local technical college.

Her husband "luckily" was employed as a professor at the University of Wisconsin-La Crosse, which gave her the financial security to break off on her own. It also gave her an added incentive to start her own firm because her husband had summers off, not to mention long Christmas and spring breaks. Brice said, "I was tired of having to beg to have a day off" to spend with her husband.

Ultimately, Brice's marriage didn't make it, but her business survived. As to whether she would have pursued her own business without that security blanket, "I like to think I would have, but I don't know," Brice said. "You're struggling all the time. ... It's a lot of work, but it was so worth it."

Milt Toratti counsels would-be entrepreneurs as a master facilitator for the Riverbend Center for Enterprise Facilitation in Mankato, Minn. He doesn't like putting labels on women entrepreneurs because "every woman is different than the next woman. Every man is different from another man. Everything is case-specific to the individual."

Still, Toratti believes that women and men have different priorities toward entrepreneurship. Women see entrepreneurship as a way to express their passion for something they love, to improve family time and lifestyle, and to help support the family—in that order. Men, on the other hand, approach entrepreneurship with the same priorities, but in reverse order. "The pressure's on them to take care of the family first," Toratti said.

Toratti has counseled some 1,200 clients in his career, about 40 percent of them female. He said the trend of two-income families has been the biggest push in women entrepreneurship—not for income reasons, but because of lifestyle. Tired of the day-care routine—taking kids to day care in the morning, picking them up, rushing in between—women seeking counsel from Toratti say, "I'm tired of the rat race and these external controls" on their personal and family life, he said.

He also is seeing more women start businesses after a family-changing event, like divorce or death. Stay-at-home mothers, for instance, become entrepreneurs once the kids go off to college. Faced with an empty nest, they tell Toratti, "What the hell am I going to do now? ... I'm here with the dog and what else is there to do?" he said. "They want to fill that void."

Pam Krank is owner of The Credit Department Inc. in St. Paul and a board member of the Minnesota chapter of the National Association of Women Business Owners (NAWBO). She said via e-mail that many women "think of their companies as lifestyle businesses rather than corporate-building businesses. Part of this is due to the fact that they start service companies that have lower barriers to entry but less investment in infrastructure. Many, many women like working out of their homes and having the flexibility to work around their family schedules."

Research on the motivational differences between women and men is fuzzy, even contradictory at times. A 2001 study by three female professors from the University of Strathclyde in Glasgow, Scotland, reviewed some 400 women business studies from the United States and United Kingdom. "[M]ost studies conclude that the motivations for startup are similar between women and men," the report stated.

But it's not hard to find studies saying otherwise. A 2001 study by the Rochester Institute of Technology looked at gender differences among MBA entrepreneurs, which gave researchers Richard DiMartino and Robert Barbato a group "with similarities in ability, credentialism, education and career stage."

The study concluded that men and women "choose an entrepreneurial career for different reasons." Females put much higher value on lifestyle choices—career flexibility and family-friendliness—than did men, while men were much more concerned with wealth creation opportunities.

Be like Mike or Michelle?

When it comes to operational matters of running a business, it's widely believed that women are "right-brain" owners (stressing creativity and collaborative, values-based decision making), while men are "left-brain" bosses (task-oriented, analytical, rational and methodical). The Center for Women's Business Research (CWBR) studied the matter a decade ago and announced that men and women business owners "think differently, manage differently and define success differently."

Most people tend to agree. "Women run their businesses differently," said Mary Riebe of Metro State University in the Twin Cities. Men depend on a triangular, top-down business model where "everybody knows what everybody is supposed to be doing."

Women, on the other hand, tend to be "very nonhierarchical," Riebe said, and use a more circular model, with the business owner in the middle, able to reach all movable parts of the business. "Just because it's different doesn't mean it's better. But it is definitely different," Riebe said. With momentum growing behind women business owners, "I think how businesses are run is going to change dramatically," Riebe said.

According to Krank, the NAWBO board member in Minnesota, "Women are much stronger team builders I believe as a whole. We tend to get much more loyalty out of our employees and clients, because we nurture these relationships. Also, we're talented multitaskers. ... Speaking as an employer of men and women, it's the women who can do an amazing amount of things at once." Male-dominated corporations prefer task specialization and delegation, but multitasking "helps us [women] tremendously as entrepreneurs."

Numerous other female traits were noted by sources. One said that for women, "decisions are made differently. It takes a little longer. [Women] get more information. Sometimes that's perceived as hesitancy." Another commented along the same lines. "Women create a space and context to be listened to and cared about."

And another: "Men make decisions quickly. Business is business and guys are clear about this. You keep the personal out of it. Feelings don't matter. ... Men bring a drive and hunt mentality. [They] are here to produce."

Kerri Bandell owns a State Farm Insurance agency in Onalaska, Wis., near La Crosse. She believes it's easier for men to assume authority and instill workplace discipline, and for workers to see men as bosses. Meanwhile, many women—including Bandell—don't want to be seen as a bad boss and are tolerant to a fault. She admitted to having difficulty disciplining and firing subpar workers.

"I'm too nicey-nicey," Bandell said, acknowledging that she's not doing her business any favors. "I'm accepting inferior service [from employees]. ... As a business owner, that's very detrimental to my business."

Then again ...

Despite the widespread anecdotal agreement, research shows that managerial differences between the sexes might not be as stark as most imagine.

In a report awarded "research paper of the year" for 2003 by the CWBR, researchers Jennifer Cliff, Nancy Langton and Howard Aldrich "challenge the assumption" that male and female business leaders exhibit gender-specific traits—like males preferring labor-intensive hierarchies or women being more sensitive bosses. The trio collected data from 229 businesses (all in the same city) and found that gender had no effect on "a firm's bureaucracy or the femininity of its employment relationship." These findings hold, the authors stated, "even in situations theoretically conducive to eliciting gender stereotypes."

The authors added that firms did not adapt the "masculine model of organizing" across the board. Rather, "both male and female owners manage their firms with a mix of masculine and feminine approaches." Maybe the most interesting finding was that many business owners believed they operated their businesses in gender-specific ways. "[B]usiness owners tend to talk as if they organize and manage their firms in different (and gender-stereotypic) ways, even though they don't do so in practice," the report stated, concluding, "[O]ur study clearly suggests that the effect of owner sex on organizational characteristics and managerial practices is more of a myth than a reality."

Theirs is not the first report to suggest the disconnect between gender perception and business reality. Indeed, Cliff, Langton and Aldrich point to a "large body of comparative research" reviewed by Alice Eagly and Blair Johnson in 1990, "which indicated that there are very few significant differences in the leadership behaviors of men and women." The expectation that there are differences "is more reflective of society's persistent belief in the existence of sex differences."

The 2001 literature review by researchers at the University of Strathclyde also challenged some of the supposed psychological differences between male and female entrepreneurs as well as female entrepreneurs and nonentrepreneurs. Research in these areas "has revealed few differences," the authors noted. "[T]he search for differences remains a popular, albeit many believe a fruitless, theme."

It also stated that managerial gender difference "has been under-researched," but nonetheless noted that "[t]he view that women emphasize 'relational dimensions' while men excel at 'task orientation' has been refuted by some research studies. Nevertheless, the stereotypical view persists."

Argument, cont.

Maybe the biggest complicating factor sorting out this battle of the sexes is that entrepreneurs have very different backgrounds and life circumstances, which can dramatically influence the types of businesses they start as well as their underlying motivations for doing so.

However, this complexity is not reflected in current research. Research to date has not done a very good job of comparing entrepreneurs with similar background or types of businesses to tease out the differences that are truly gender based. As a result, what is available is fairly shallow given the breadth of issues to consider and is by no means unanimous in its conclusions.

The Strathclyde report concluded that research in women entrepreneurship is fragmented, "has a lot of ambiguity" and has not built systematically on previous work, which has resulted in "a lack of cumulative knowledge."

Until those research gaps are covered, there will continue to be differing opinions about the myriad issues related to gender and entrepreneurship—though maybe no amount of research will ever bring Mars and Venus to full consensus.

Ron Wirtz
Editor, fedgazette

Ron Wirtz is a Minneapolis Fed regional outreach director. Ron tracks current business conditions, with a focus on employment and wages, construction, real estate, consumer spending, and tourism. In this role, he networks with businesses in the Bank’s six-state region and gives frequent speeches on economic conditions. Follow him on Twitter @RonWirtz.