Entrepreneurship & Regional Development: An ...

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Women on the verge of a breakthrough:networking among entrepreneurs in the United States and Italy a

b

Howard Aldrich , Pat Ray Reese & Paola Dubini a

University of North Carolina

b

University of North Carolina

c

c

SDA Bocconi Published online: 24 May 2006.

To cite this article: Howard Aldrich , Pat Ray Reese & Paola Dubini (1989) Women on the verge of a breakthrough:networking among entrepreneurs in the United States and Italy, Entrepreneurship & Regional Development: An International Journal, 1:4, 339-356, DOI: 10.1080/08985628900000029 To link to this article: http://dx.doi.org/10.1080/08985628900000029

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ENTREPRENEURSHIP & REGIONAL DEVELOPMENT. l(1989). 339-356

Downloaded by [University North Carolina - Chapel Hill] at 10:11 12 January 2014

Women on the verge of a breakthrough : networking among entrepreneurs in the United States and Italy HOWARD ALDRICH University of North Carolina

PAT RAY REESE University of North Carolina

PAOLA DUBINI SDA Bocconi

The literature on work, marriage and the family, and organized social life irrtplies that women are embedded in different personal networks than men, with potential conseauences for their rates of business formation, sirvival, and growth. We tested this implication b; studying the personal networks of potential and active entrepreneurs in the Research Triangle Area, North Carolina and Milan, Italy. Instead of substantial differences in the networks of men and women, we were surprised by the degree of similarity we discovered, within and between cc~untries.Networking activity is very similar within each country, as is network density. However, the sex composition of networks differs dramatically by sex in both countries. In some respects, the gap between the male and female worlds appears to have dosed substantially, but the personal networks of women in both countries still include few men.

1.

Introduction

Women entrepreneurs are increasing their share of the business population and business receipts rapidly,-but a sizeable gap remains between men and women business owners. Women's businesses are much smaller than men's, and they are concentrated in a limited range of industries, mostly in retail and services. What accounts for the difference? Explanations based on individual differences are not very satisfactory, and we have turned instead to structural or systemic explanations (Aldrich and Zimmer, 1986). We believe that a substantial portiqn of the difference between men and wonnen entrepreneurs' achievements can be traced to the structures of opportunities and constraints open to each. In particular, women entrepreneurs are embedded in different personal and social networks than men, with potential consequences for their rates of business formation, survival, and growth (Granovetter, 1985). How is sex relevant to the apparently generic process of entrepreneurship? The literature on work and careen indicates that women are more likely than men to have access to a limited range of jobs, be shunted to jobs with little chance of promotions to positions of significant responsibilities, and to experience tokenism in upper-level jobx2 The literature on marriage and the family indicates that women are more likely than men to have domestic responsibilities, work part-time, and have interrupted careers. The 0898-5626/89 $3.00 @ 1989 Tavlor & Francis Lrd

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literature on organized social life shows that women are significantly segregated from men in much of their non-work life (Aldrich, 1989). All these literatures suggest that women entrepreneurs may pursue different paths to business formation and operation than men.


2.

Networks and entrepreneurship

The starting point for studying entrepreneurship through social networks is a relation or transaction between two people. Apnsonal network, or role set, consists of all those persons with whom an entrepreneur has direct relations (or, for some purposes, indirect relations via direct relations). For entrepreneurs, we could think of partners, suppliers, customers, venture capitalists, bankers, other creditors, distributors, trade associations, and family members. Typically, these are persons entrepreneurs meet on a face-to-face basis, and from whom they obtain services, advice, and moral support. Direct ties, especially strong ones, are significant not only for the persons directly linked to the entrepreneur, but also for the indirect access they provide to people beyond the entrepreneur's immediate contacts. Including indirect ties takes us closer to the essence of networks, as we begin to see how entrepreneurs can leverage their direct connections by judicious choice of contacts who have access to others.

2. I .

Dzffc~encesbetween men's and women's nefworkr

Whether just starting a business or trying to keep one alive and growing, entrepreneurs' personal networks and their positions in larger social networks affect their access to information and advice, resources, and social support. Is there any reason to believe that women and men are embedded in networks different enough to affect rates and types of entrepreneurship? A careful reading of the social science literature on sex differences in work and occupations, family life, and organized social life suggests that the answer is a qualified 'yes' (Welch, 1980). In many respects, women inhabit a 'female world' that only partially overlaps the 'male world' (Bernard, 1981). In many important regions of social life, divisions and barriers limit the reach and diversity of women's networks. Some evidence suggests that women even view social relations in a different way than men, leading to different networking behaviours. Men have historically occupied the central economic positions in our society, and have enjoyed dominant positions in other spheres, as well. To analyze women entrepreneurs' network potential, we need to examine the extent to which the female and the male worlds interpenetrate. How high are the barriers between men's and women's networks, and to what extent do they overlap? We will consider key life events that affect women's networks: work, mam'age andfamily, and organized social lifc. 2.1.1. Thc workphce: Almost no one, ,man or woman, enters entrepreneurship fresh out of school. Most people become entrepreneurs in their mid 30s to mid 40s, after a decade or two of working for someone else. During these formative years, employees are accumulating experience and becoming embedded in personal and social networks that they will subsequently draw upon in starting and running their own business. We have overwhelming evidence that sex is crucial to working careers - from choice of college major and subsequent occupation to the level of authority in a firm (Reskin and Hartmann, 1986).


Sex segregation is the norm in most occupations and firmslindust~ries,and few women are at the top. A large proportion of the female labor force is concc:ntrated in a limited number of 'female' occupations and the lower ranks of occupations they share with men. In the United States in 1980,48% of all women worked in occupations that were.at least 80% female (Rytina and Bianchi, 1984). Occupational sex segregation has diminished over the past decade, especially for young white women in professional and managerial jobs (Beller, 1984). Even in these occupations, however, the index: of dissimilarity for occupational sex segregation was about 50.3 Roos and Reskin (1984, p. 245) argued that occupational sex segregation persists in white-collar jobs partly because information networks are sex sepegated. Women are largely outside the informal networks through which men obtain desirable jobs and must rely on formal means, such as intermediary agencies. 'Women, because they have traditionally been concentrated in lower-level sales and servicejobs, share job information with friends and acquaintances looking for work, thus channeling them into similar jobs. Ensel and Lin (1982) found that women use acquaintances and indirect contacts ('weak ties') with males to find higher status jobs. Campbell (1988) found chat men had a s m d but statistically significant advantage in the range of their contacts across occupations (as measured across 9 specific occupations). Women are thus dependent on men's help as sponsors or as intermediaries to advance their careers (Roos and Reskin, 1984, p. 246; see also Marsden, 1987 and Marsden and Hurlbert, 1988).4 2.1.2. Maniage and ihe /&nib: Most women entrepreneurs must balance family and work responsibilities in ways that men do not. Fischer and Oliker (11983) examined the impact of marriage and children on women's networks in an interview study of 1,050 adults living in fifty localities in Northern California. They asked people to name and describe the people from whom they had, did, or could receive social exchanges such as giving personal advice, helping with odd jobs, and lending money.. Men and women tended to name about the same number of persons (18.6 for men and 18.4 for women), but there were substantial sex differences by stage of life cycle. Young, unmarried men and young, unrnariied women had a similar network pattern. However, married women, especially those with children, had significantly fewer persons in their networks, particularly, fewer co-workers and dose associates. The critical life cyde period for entrepreneurs is when they are in their late 20s and early 30s, when resources and contacts are being accumulated that might sustain a business founding. These are precisely the years when married women are disadvantaged, relative to men, as their networks are structured more by their husbands' associations than their own. Of course, under some circumstances, they may make valuable contacts through their husbands' network^.^ Some research suggests that male business owners receive more support from their wives than female owners receive from their husbands (Goffee and Scase, 1985), whereas other researchers have found the husbands of female owners quite supportive (Carter and Cannon, 1988). 2.1.3. OrganircdsocialI$: Informal networks centered around work-related after-hours socializing and non-work related voluntary associations' activities are a n important source of information and alliances.Women often lack full access to such opportunities, putting them at a disadvantage, as numerous studies have documented. Martin's (1978) study of police officers found that male officers discussed opportunities for transfers to desirable assignments in off-hoursactivities when women officers were not present. Ortiz and Cove1 (1978), studying female school administrators, found that 'even womein who used formal


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networks effectively were barred from informal networks' (Reskin and Hartmann, 1986, p. 55). Kaufman's (1977) research on informal academic networks found that women's networks included fewer highly ranked colleagues than men's. Just as work organizations tend to be highly segregated by sex (Baron and.Bielby, 1984), so too are voluntary associations. McPherson and Smith-Lovin (1986) found that almost one-half of all groups studied in 10 communities in Nebraska were all female, and one-Mth all male. Employed women were much less likely to belong to all female groups than employed men were to belong to all male groups. This finding reflects both strategic networking by women and the dominance of males in the civic and professional groups (e.g., the Chamber of Commerce). The level of cross-sex contact was uniformly low in all voluntary associations studied, but the chances of cross-sex contacts were higher in business and professional associations.

2.1.4. Summav: Thus in three regions within which social networks are constructed the worlds of work, marriage and family, and organized social life - sex divisions and barriers exist, although conditions are changing. When we began our project, our expectations were that the forces we identified in our review would produce substantial differences between the social networks of men and women entrepreneurs. We expected that sex, marital status, age, education, family background, and trade or professional organization membership would make a sizeable difference in the networks of entrepreneurs. We are aware that the gap between men and women is contingent on a particular moment in history, and therefore it may narrow in the coming years as conditions change. Our results, therefore, should be seen as historically contingent, and subject to change.

2.2. Network activity, diversity,

and

denrity

We selected three features of networks for closer examination: activity, diversity and density. These three features of networks are related, with activity potentially affecting both diversity and density. Network activity is expected to widen a network's reach, and therefore network activity could increase diversity, the variety among network members, and reduce the density of networks, the number of strong ties among network members.

2.2.1. Activity: background: Entrepreneurs construct networks by making interpersonal contacts, keeping address logs, phoning contacts to follow up initial meetings, attending meetings, and so forth. Entrepreneurs must put themselves in the path of persons potentially relevant to their businesses, and then occasionally follow up contacts they have made to keep relations fresh or at least semi-active. Developing and maintaining personal networks takes time away from family and friends, but once established, relations may be kept alive by both parties involved, lessening the burden on an entrepreneur. 2.2.2. Activity: hypothEsa: Network activity, the number of people contacted and the time spent cultivating the network, is expected to be higher for men than women, higher for those with self-employed parents, higher for those with more organizational memberships, higher for more educated than less educated persons, and higher for single than for married persons. Network size may be larger for older than younger adults, but the time spent in cultivating the network should be more for younger than older adults. The least network activity is expected of those not actively engaged in operating a

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WOMEN ON THE VERGE OF A BREAKTHROUGH

-t;:

t.1:

,

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business, whereas those running a business will have more network activity. Type of business (product) is not expected to affect network activity, but we examine it as a possible confounding factor.


2.2.3. Diversity in the s a composition of nctworkr: background: The priiiciple of homophyly suggests that we tend to make friends with people similar to ourselves, particularly those with whom we share an activity or an organizational membership. Furthermore, persons we frequently interact with in our personal networks tend to know eadn other. However, if someone's goal is to maximize information, to search for'resources and opportunities, it is advantageous to have diverse networks that contain a variety of peorple. We are especially interested in the sex composition of men's ancl women's personal networks. Men in Western societies hold the lion's share of powerful positions, and thus we would expect that entrepreneurs would find it advantageous to fill their personal networks with men, rather than women. Other things being equal, scjmeone with a set of overlapping ties to men has an advantage when competing for information with someone who indudes mostly women in hislher network. 2.2.4. Diuersity in s a composition: hypolheses: Personal networks are expected to include a significantly higher proportion of cross-sex ties under the following conditions: when an entrepreneur is female, for persons with higher levels of network activity, for those with parents who are self-employed, for those with more organizational memberships, for the more highly educated, for single women and men, &d for older than younger persons.

2.2.5. Density: background: The density of a network refers to the extensiveness of ties between persons, and is measured by comparing the total number of ties present to the potential number that would occur if everyone in the network were co~lnectedto everyorie else. 'people with whom we have weak ties, such as casual acquaintances, are less likely to know one another than are persons with whom we have strong ties, such as close friends. Therefore a personal network made up of a person's weak ties will be a low-density network, with many persons unknown to each other, whereas a personal network made up of a person's stmng ties will be high-density network, with most perr;ons known to each other (Granovetter, 1973, 1982). Network density has been used to explain differential social support (Gore, 1978; Ratdiff and Bodgan, 1988). Network density also affects the speed with which information circulates to network members. The more ties between members, the more quickly information is likely to diffuse, as word of an opportunity or resourc:e can be passed on from several people.

2.2.6. D m i t y : hypotheses: In keeping with the logic of the strength of weak ties argument, we list our hypotheses concerning those factors that inmease the proportion of strungers in an entrepreneur's personal network, i.e. the proportion of persons who are known to the entrepreneur but not to each other. The proportion of st:rangersis expected to be higher for those with more network activity, higher for those with self-employed parents, higher for those with more organizational memberships, higher for the less educated than the more educated, and higher for single women and men than for married women.

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H.ALDRICH ET EL.


3.

Study design

Data for the United States were obtained in a survey of members and associates of the Research Triangle Council for Entrepreneurial Development (CED) of Durham, North Carolina. Data for Italy were obtained from a purposive sample in Milan, Italy. Italy was chosen because of its more traditional division of roles between the sexes, as we wanted to see whether sex differences would be stronger under such conditions. However, the sampled persons lived in and around Milan, and thus forces assumed with urbanization

Table 1: Characteristics of the US and Italian Samples

USA Mcn Mean age S.D. N of cases

Italy Worn

Men

Wom

43 11

39 10

34 13

29 6

101 (137)

100 (22)

100 (19)

100 ( 6)

Marital Siatus

% Married % Single % Divorced, widowed Total % N Education

% high school % some college % assoc. degree % BA, BS % grad work % advanced degree Total % N

% M o t h Selfemployed N

% Business Owncrs

N Owncrs only Business form:

% Proprietorship % Partnership % Corporation Total % N Owners only: years in Bwiness

% 0-4 % 5-9 % 10 or more

Total % N

WOMEN ON THE VERGE OF A BREAKTHROUGH

345

and industrialization will probably decrease US-Italian differences. C:haracteristics of the two samples are shown in table 1. Where possible, we will also make comparisons to a study conducted in Sweden, using the same questionnaire (Johannisson, 1988).


3.1. The CED smnplc The CED was founded to encourage local entrepreneurs and includes active business owners, people who want to start their own businesses, and people whcl have resources and interests in encouraging others to be entrepreneurs. We chose thc: CED because we believed the members would be interested in our topic, and because the association includes business owners and non-owners. We developed and mailed out a questionnaire which asked for detailed information about entrepreneurial networks, including the relationships between members of the networks, and about a variety of personal and business information. The initial study, conducted in February 1986, provided base-line data on 285 respondents, but the sample is reduced to 266 after deleting those cases in which the respondent's sex was not reported (Aldrich, Rosen, and Woodward, 1987). In keeping with findings of most studies of the self-employed, most members of the CED were in their late 30s and early 403, with the women slightly younger than the men (see Johannisson, 1988,'for similar findings on Sweden). Over four-fifths of the men and exactly two-thirds of the women were married. More than half the respondents had pursued post-graduate education, with 45 % of the men and 34 % of the women earning an advanced degree. Clearly, the educational attainments of the sample reflects the heavy concentration of educational institutions in the Raleigh-Durham-Chapel Hill area, and the high-technology nature of many of the businesses in the sample. The high proportion of respondents with self-employed fathers is also in keeping with other studies of entrepreneurs. Self-employed mothers were also in evidence - about onesixth of the women had self-employed mothers. Because we wanted to contrast the networking activities of owners with non-owners, we included persons interested in starting, or thinking about starting, a business in our sample. Thus, about two-thirds of the respondents were owners (64% of the men and 68% of the women). Most had incorporated their businesses; there were very few partnerships. Slightly over half the businesses were under five years old.

3.2. The Italian sarnplc The questionnaire used in Italy was exactly the same as in the Triangle: project, translated into Italian, and the surveys were administered in November ancl December, 1988. Italian entrepreneurs in the sample were all enrolled in the Gemini project, an entrepreneurship training program canied out by SDA Bocconi, the Milan-based business school. Most of the participants had either recently started a business or were planning a start-up. The sample is not representative of all potential or active Its~lianentrepreneurs because of the Bocconi business school's location and its image, which afl'ects the types of persons enrolling in its courses. About 63% of the men and 33% c~fthe women were business owners. Participants in the study did not all come from the :game edition of the course. Women entrepreneurs, most less than 30 years old, were enrolled in an 'all women' special training program carried by W. W. B. Italia (a working women international association), partly taught by SDA Bocconi within the Gemini project.


346

H. ALDRICH ETAL.

Respondents averaged about 10 years younger than the United States sample, and most were single, unlike the US respondents. The high proportion of unmarried persons probably stems from their residence in large northern Italian cities, which attract ambitious, upwardly mobile young persons. The high proportion of young people stems from the Bocconi course specifications (potential entrepreneurs or start-ups) and from strong government support for new ventures launched by persons under 29 years old, in fulmment of EEC regulations. The Italian sample includes a high proportion of persons with education beyond a bachelor's degree, although few actually have earned an advanced degree, unlike the US sample. At present, very few Italian universities offer MBA programs; the majority of highly literate people have a college degree, which in US terms can be considered somewhat between a Bachelors' and a Master's degree. As in the United States, a high fraction of Italian men and women came from families where their father was self-employed (59% of the men and 35% of the women). In Sweden, Johannisson (19881 found that 24% of the men and 29% of the women came from self-employed families. Also, as in the United States, a higher proportion of women than men had self-employed mothers (19 versus 9%). Most of the Italian men had incorporated their businesses, as in the US sample, and most were less than five years old. The number of Italian women reporting their business form (and business age) is too small for really reliable percentages, although the high fraction of partnerships probably results from the small size of Italian women's businesses.

We first describe the main dependent variables, and then the independent variables. In our study, we first asked repondents some general questions about their networking activities over the past six months: how many people they had discussed aspects of starting or running a business with, how many hours per week they had spent developing businessrelated contacts, and how many hours per week they had spent maintaining businesrelated contacts. We then asked about the five persons to whom they were most likely to turn for business a d ~ i c eWe . ~ asked about relations between the five persons named and their personal characteristics: sex, age, relationship to the respondent, and so on.

3.3.I . Network activity: Network activity is measured by the size of the network and the time spent in developing and maintaining the network. Network size was obtained by asking respondents to estimate the number of people with whom they discussed their plans for running a business. The average number reported is 16.3, with a range from 0 to 99 (s.d. = 23.34), slightly less than the 18.5 persons named by the respondents in the Fischer and Oliker (1983) study.' The average number of hours per week spent developing contacts was 6.61 (s.d. =8.8), and the average number of hours per week spent maintaining contacts was 6.86 (s.d. = 9.14). Because the distributions are skewed and peaked, the logged values are used as the dependent variables.

3.3.2. Network diversity - noss sex ties: We assessed one dimension of network diversity: sex diversity, measured by the proportion of cross-sex ties of a respondent, ranging from 0 to 100% with a mean of 20.5 (s.d. 26.29). Higher values mean that a person (man or woman) has a higher percentage of persons of the opposite sex in his or her network than someone with lower values on the variable.

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