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Article Excerpt
Abstract
In recent years, the field of regional economic analysis has focused on the social and cultural environment of a place to explain variations in innovative activity, entrepreneurial dynamics, and economic growth. Richard Florida (2004) argues that regions grow because they are tolerant, diverse and open to creativity which in turn attract certain groups of people, the so-called creative class. Further, new firm formation is positively associated with a creative and diverse environment. Although previous research established the connection between a region's social environment and entrepreneurship, little attention has been paid to the ways in which an open and tolerant regional social environment supports or hinders different kinds of entrepreneurs like women or immigrants. Women-owned businesses grew 19.8% between 1997 and 2002, almost twice the national rate for all businesses which was 10.3% (Lowrey 2006). We hypothesize that a regional social environment that is open to women's career and financial advancements and supportive of women's entrepreneurial capacities facilitates female business ownership. This study explores the connections between the environment and women's business ownership by using data from the 2002 Survey of Business Owners (SBO) and tests the hypothesis for the 50 largest metropolitan statistical areas (MSAs) in the United States. We find that entrepreneurial support is a significant factor in explaining a region's female entrepreneurship. Although the openness of a region to women's financial advancement plays a moderately important role in the establishment of women-owned firms overall, it is not a significant predictor of the level of women-owned businesses with employees. Also tolerance to women's advancement in non-traditional occupations such as high-technology does not have the expected effect. Regions desiring the growth potential of female entrepreneurship should focus on building entrepreneurial capacity.
Resume
Au cours des dernieres annees, le domaine de l'analyse de l'economie regionale s'est concentre sur l'environnement social et culturel d'un lieu afin d'expliquer les variations dans l'activite innovatrice, la dynamique entrepreneuriale et la croissance economique. Richard Florida (2004) suggere que certaines regions connaissent une croissance economique parce qu'elles sont tolerantes, diverses et ouvertes a la creativite, ce qui a son tour attire certains groupes de personnes, la soi-disant >. De plus, la formation de nouvelles entreprises est reliee de facon positive a un environnement creatif et diversifie. Bien que les travaux de Florida ont etabli un lien entre l'environnement social d'une region et l'entrepreneuriat, peu d'attention a 6t6 portee aux differents mecanismes par lesquels un environnement social ouvert et tolerant appui ou au contraire presente des obstacles a differents types d'entrepreneurs tels que les femmes ou les immigrants. Les entreprises dont les proprietaires sont des femmes ont connu un taux de croissance de 19,8% entre 1997 et 2002, presque deux fois le taux national pour toutes entreprises de 10,3% (Lowrey 2006). Notre hypothese est qu'un environnement social d'une region qui est ouvert aux avancements des femmes quant a leurs carrieres et a leur progres financier et qui appuie les capacites entrepreneuriales des femmes va encourager des femmes proprietaires des entreprises. Cette etude explore les liens entre l'environnement et les femmes proprietaires d'entreprise en utilisant les donnees de l'enquete sur les proprietaires d'entreprises en 2002, et presente un test de cette hypothese pour les 50 plus grandes regions metropolitaines statistiques aux E.-U. Nos resultats demontrent qu'un appui entrepreneurial est un facteur significatif dans l'explication de l'entrepreneuriat feminin d'une region. Bien que l'ouverture d'une region par rapport a l'avancement financier des femmes joue un role modeste dans l'etablissement des entreprises dont les proprietaires sont des femmes de facon generale, il ne represente pas une variable significative en termes de prevision du niveau des entreprises avec des femmes-proprietaires et qui ont des employes. De plus, la tolerance par rapport a l'avancement des femmes dans des occupations non traditionnelles telles que la haute technologie n'a pas l'effet anticipe. Les regions qui cherchent un potentiel de croissance d'entreprises avec des femmes-proprietaires devraient mettre leurs efforts sur la construction de la capacite entrepreneuriale.
Creative Class and Gender
The question of why businesses locate in certain places more than in others has always been at the centre of regional science. Traditional explanations focused on costs of doing business (such as location and transportation), resource endowments, availability of infrastructure, and proximity to customers or suppliers. Until recently, almost no attention was paid to cultural or social aspects of the environment that may help or hinder business activity. That is, how the intangible characteristics of cities and regions may explain variation in economic performance. Prominent among these studies is Richard Florida's theory of the creative class, in which he asserts that the work force in the U.S. has shifted from manufacturing to creative and knowledge-based occupations (Florida 2002). This dominant work force--the creative class--has different values, norms, and attitudes and desires open, diverse, and tolerant regional environments. As a result, Florida suggests that future urban and regional economic growth and development depend on the location choice of the creative class and places that are appealing to this group will flourish more than others. Traditional location factors such as costs, resources, or infrastructure take a back seat to the intangible characteristics of place. Lifestyle, diversity, quality of life, authenticity, and tolerance may play a more central role in determining the economic fate of places as diverse as Pittsburgh, Portland, and Washington D.C.
The idea that a region's social environment is important to attract a talented work force was extended into the realm of entrepreneurship. Lee et al (2004) showed how creative and diverse regions support new firm formation, which is important given the recent emergence of an entrepreneurial economy (Audretsch and Thurik 2001; Von Bargen et al 2003). The U.S. has seen a large increase in new firm formation by diverse social and ethnic groups. The number of businesses owned by Hispanics, for example, grew by 31% between 1997 and 2002, three times the national average of all businesses in the U.S. (Williams and Kang 2006). Another fast growing group of business owners are women. Women-owned businesses grew at almost twice the national average between 1997 and 2002 (19.8% versus 10.3%) and constitute a significant economic force in cities and regions (Lowrey 2006). Metropolitan areas, however, differ in regard to the growth of new companies and thus would be expected to also differ with respect to the growth of women- and minority-owned firms. This may be a result of a region's cultural and social environment that may support or hinder these entrepreneurs.
On the surface, Florida's ideas on the importance of diversity for regional economic competitiveness are promising especially regarding notions of gender equality and entrepreneurship. The premise of Florida's theories is that if a region's cultural milieu is open to the advancement of those who are different, then the region will experience economic growth because it is attractive to the creative class whose members "defy classification based on race, ethnicity, gender, sexual preference or appearance" (Florida 2002: 79). If diversity is indeed an indicator of economic success, then creative cities may be places where women can break the so-called glass ceiling in corporate management, can enter non-traditional occupations in areas such as engineering, sciences, or computer programming, and find support networks to assist with such moves.
Unfortunately the reality of women's advancement in their professional careers and as entrepreneurs looks quite different. Although female entrepreneurs do not differ much from their male counterparts concerning basic personal characteristics, they still face many challenges including structural barriers such as access to finances, issues related to career advancement and the glass ceiling, and stereotypes that might prevent them from achieving economic success. How a region supports the advancement of women may play an important role in the level and intensity of women's business ownership.
In this article, we examine the question of how the underlying social environment of a region influences women's business ownership. We hypothesize that women's business ownership is positively associated with a regional environment that promotes women's financial and career advancements but also allows women to enter non-traditional occupations and to gain critical entrepreneurial skills. To test this hypothesis, we use measures of openness, tolerance, and entrepreneurial capacity specifically related to female entrepreneurship, and examine the effects of these factors on women's business ownership in the 50 largest metropolitan areas in the U.S. In doing so, we follow emerging research explaining the link between a region's social environment and the attraction and retention of human capital in the form of well-educated individuals and entrepreneurs posited to be essential to the futures of regional economies (Florida 2002; Lee et al 2004).
Women's Business Ownership and Understanding the Regional Environment
In 2002, about 28.2% or 6.5 million of all non-farm U.S. t-n-ms were womenowned (Lowrey 2006). Women-owned firms are among the fastest growing types of businesses. Although rapidly growing, the majority of women-owned firms do not have employees (only about 14% are employer firms). However, they have made substantial contributions to their regional economies. Women-owned employer firms have added about 70,000 employees between 1997 and 2002, while firms owned by men and those jointly owned by men and women lost employees during the same time period (Lowrey 2006). Given the fact that the number of women-owned firms has grown and that those firms that have employees have contributed to their local economies by increasing employment,...
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