Organization for Economic Development Conference on Women’s Entrepreneurship
Paris, France
April 1997
It has been a pleasure to participate in this conference designed to boost women’s contributions to the world’s economies and job base. The past three days have been filled with rich presentations, data, anecdotes, and insights. These three days also have reminded all of us how far some of the world’s women have come and how far so many have to go.
In the United States, 25 years ago, Consolidated Edison, a New York Utility, sent female workers into manholes for the first time. 22 years ago, Muriel Siebert became the first woman to own a seat on the New York Stock Exchange. 20 years ago, Barbara Walters became the first female journalist to garner a seven-figure salary. 16 years ago, the first woman was appointed to the United States Supreme Court. 14 years ago, Sally Ride became the first American woman in space. 13 years ago we saw America’s first female Vice Presidential candidate. And, of course, last December, Madeleine K. Albright became the first woman named U.S. Secretary of State, the highest-ranking position a woman has ever held in the U.S. Government.
These achievements, and many others like them, represent barriers broken and glass ceilings shattered. And we should all take great pride in the strides of women throughout the world. And one of the places women are making progress is in the entrepreneurial sector of the economy. In the United States, the percentage of women-owned firms with employees increased from 12 percent of all employer businesses established before 1980, to 18.5 percent of firms established between 1991 and 94. Women-owned firms now account for 15.9 percent of the 4.8 million employer businesses in the United States.
But across the board, the experiences of women in business remain mixed. For example, women business owners throughout the world have similar concerns about profitability, managing cash flow, and labor costs. However, in some parts of the world, women business owners must contend with other problems ranging from poor infrastructure, political instability, and embryonic business infrastructures. Such challenges can easily undermine the most promising business ventures.
Historically, access to capital has been problematic for many women-owned businesses. But we do appear to be making some progress on this issue in the United States. A recent U.S. government survey shows no statistically significant difference between men and women business owners in their access to capital. In fact, only 12.8 percent of women-owned firms said their ability to operate or expand had been hampered by credit difficulty. The percentage for all firms was 12 percent and for male-owned firms, 11.5 percent.
For example, five years ago major venture capitalists rarely saw proposals from women starting high-tech businesses. Today, one New York venture capital firm reports that 15 percent of the new business proposals they get come from women. A San Francisco venture capital firm reports that 5 of the 40 companies in its portfolio have female chief executives.
Women-owned businesses are just as likely as men-owned businesses to invest in and use computers and other information technologies.
And, many women-owned businesses appear to be meeting with success. The previously mentioned U.S. government survey of women-owned businesses reported that, in the next five years, 30 percent of the women-owned firms plan to increase their work force and 28 percent expect to add new products.
Now, I’d like to call attention to one area where women have not made substantial progress, an area which I believe deserves our special attention. That area is businesses based on the development, commercialization, and use of new technology.
Why technology? Most economists now agree that three ingredients are essential to economic growth: capital, labor, and technology. Of these, technology is often the most important. Leading American economists estimate that technical progress has accounted for as much as one half of economic growth in the United States over the past 50 years.
For other countries, the contribution of technology to economic growth has been even greater. For France, technology is estimated to have accounted for 76 percent of economic growth: For West Germany, 78 percent; for the U.K., 73 percent; and, for Japan, 55 percent.
We see the growth-inducing power of technology at the industry level. In the United States, research-intensive industries—aerospace, chemicals, communications, computers, pharmaceuticals, scientific instruments, semiconductors, and software—have been growing at about twice the rate of the U.S. economy as a whole in the past two decades. We also see technology’s growth-inducing power at the firm level. A recent U.S. Department of Commerce analysis shows that firms that use advanced technologies are more productive and profitable, pay higher wages, and increase employment more rapidly than firms that do not.
The evidence is mounting. At the macroeconomics level, the industry level, and the firm level, technology is the engine of economic growth.
Yet, women have barely penetrated the top ranks of technology-based businesses, as executives or owners. A recent study found that women executives comprise only about two percent of women working in technology companies.
One of the most significant barriers to women’s entry and rise in these businesses has little to do with gender. Instead, it has a lot to do with education. Women who make it in high tech often studied computers, math, engineering, or other science and technology disciplines as undergraduate students. Some also have advanced degrees in business, computers, or engineering.
And, that’s the rub. Women are not entering the pipeline that ultimately leads to technology-based businesses in large enough numbers. That pipeline starts early, in the gatekeeping subjects of algebra, geometry, chemistry, and physics. In the United States, we are seeing some major improvements in the high-school years when these gatekeeping subjects are taught. Girls now leave high school in the U.S. as well grounded in math and science as boys.
But at the undergraduate and graduate levels, the picture begins to change. At the bachelors level, women have increased their rates of attainment of science and engineering degrees by more than 50 percent in the past twenty years. But there are still several key areas where the difference between men and women is great. For example, in 1993, men were awarded 17,629 bachelors level degrees in computer science; women were awarded 6,951. But in the field most closely associated with technology—engineering—the disparity is far greater. Men were awarded 52,714 bachelor’s degrees in engineering; women were awarded 9,981.
Gains made in the academic arena have translated into gains in women’s participation in the science and engineering workforce, though their participation rates are substantially lag behind men. For example, in the United States, the proportion of women scientists and engineers in the non-academic work force increased from 12.6 percent in 1980 to 22.2 percent in 1990. Among computer and mathematical scientists in the non-academic work force, 36 percent are now women. However, in the non-academic engineering work force, only 9.2 percent are women.
From the international point of view, the United States has had more success than other industrialized countries in attracting women into the non-academic science and engineering workforce. It has the highest proportion of female scientists in the labor force (54 per 10,000 workers), followed by Canada (48 per 10,000), Sweden (43 per 10,000), France (36 per 10,000), and the U.K. (32 per 10,000). Among these countries, Sweden has the highest rates of female engineers (16 per 10,000), with the United States second (13 per 10,000).
I have focused on women’s participation in engineering and computer sciences for a number of reasons. First, participation in the high-tech work force. This is where many people begin to understand what running a business is all about, and gain experience in different aspects of the business process. In high-tech businesses, this experience can be a greater determinant of success than the technology itself. Let me also mention that many high-tech start-ups in the United States were founded by individuals—mostly men—who spun-out of larger companies.
Second, engineering. Engineering is a gateway to most high-tech businesses.
And, third, computer science. The Information Age is rapidly emerging and, in its wake, we see an explosion of new businesses developing and providing digitally-based products and services. In fact, in the United States, we are experiencing a severe shortage of information technology workers, with some 190,000 jobs currently going unfilled, and job creation in this area continuing.
What are some of the barriers women face as they move through the science and engineering pipeline from high-school to workplace to high-tech business? A number of them come to mind:
- Few role models and mentors for women in science and engineering—in school, in post-secondary education, in the work force, and among high-tech business owners and executives. How scarce are they? For example, my office at the Commerce Department manages the National Medal of Technology, America’s highest award for technological achievement, given annually by the President of the United States. Of the 106 individuals who have received this award, two, just two, have been women.
- Women are less likely to be encouraged in science and engineering education than men. Educators often demonstrate subtle biases in favor of males. According to the National Science Foundation, 34 percent of high school girls have actually been discouraged by teachers and guidance counselors.
- Fewer and weaker networks. This includes excluding women from informal social interactions between faculty and grad students in graduate education. Women are less integrated into student networks, many of which in the S&T fields are still dominated by men. And, of course, women’s business networks are far, far less developed than men’s business networks.
- And frankly, women are still challenged by the act of balancing work and home lives. As one female high-tech executive put it: “In the fall of 1994, I had three products to deliver. In October, it was the replication server, in November it was my daughter, and in December it was the high-end applications server.”
I am optimistic that many women can succeed as entrepreneurs in high-technology. As one female founder of an American high-tech company put it “In the tech industry, people don’t care how old you are, what color you are or what sex you are.” I think, as the world becomes increasingly competitive, what the business world will care about most is the potential of an idea or technology, and the competency with which executives and managers can exploit it for gain. This is particularly true at the cutting-edge of technology, and in rapidly changing fields, where there is no long-term base of experience from which to draw executives.
But sometimes, just sometimes, something happens that sends a little dark cloud over my vision for a bright future for high-tech women. Let me relate to you the views Russia cosmonauts expressed about American Astronaut Shannon Lucid. Before she flew to the Russian Space Station, the deputy commander of the Gagarin Cosmonaut Training Center explained why he was looking forward to having her aboard Mir. “The ventilation fans will be taken care of in a more timely manner because we know that women love to clean.” Later her Russian cosmonaut co-worker aboard the Space Station Mir said: “She is waiting for us when we come back (from space walks), she helps us out and makes hot tea, and this is perhaps even more important than work. In addition to tea, she also does excellent work in maintaining systems and organizing things aboard the ship.”
American Shannon Lucid: licensed pilot, Ph.D. biochemist, five-time veteran of space shuttle flights, speaker of Russian, deployer of satellites, wife and mother of three.
In closing, in the 1980s, we saw a new breed of young women on the West Coast of the United States. They were called “Valley Girls: and they seemed preoccupied with make-up, hair dos and don’ts, and boy friends. They even made movies and TV programs about them.
In the 1990s, we are beginning to see another new breed of women. We’ll call them “Silicon Valley Girls.” They are preoccupied with digital technologies, software, and the like. Let us hope that we can expand this cadre of “Silicon Valley Girls” around the world, and the cadre of women working at the frontiers of science, technology, and entrepreneurship.
Thank you.