Though it’s widely known that women own just 30% of US firms, the reasons why remain unclear.
Yet new research, spotlighted on NPR, yields some insight into the qualities that may make men more inclined to launch their own companies.
According to the research, men are significantly more overconfident and less humble than women. Even after they have failed once — or multiple times — they’re still willing to dust themselves off and try again until they succeed.
The study, led by researchers at the University of North Carolina at Chapel Hill and the Wharton School at the University of Pennsylvania, looked at more than 90,000 entrepreneurial projects on the crowdfunding website Kickstarter.
Project creators on Kickstarter ask for small donations to back their product or service. If the project reaches its funding goal in the time allotted, all backers are charged and the creator gets the money. If the project doesn’t reach its funding goal in time, no one is charged and the creator doesn’t receive any money.
Thirty per cent of the project creators were women, and 70% were men.
The study was driven by a few key questions, including: How likely were people to launch a second venture? And would men be more overconfident than women, as opposed to optimistic?
Optimists might try again because they only failed by $US100 the first time, and they think they have got a good chance of success. Overconfident people might try again even though they failed by $US10,000 in their initial attempt.
Results showed that, on average, female creators were significantly less likely than men to launch a second attempt — regardless of whether they’d succeeded or failed the first time. They were also more dissuaded than men by big failures, like missing the mark by thousands of dollars.
That led the researchers to believe that women had both lower levels of hubris, or overconfidence, and higher levels of humility.
In other words, when men fail the first time, they may see it as a simple stumbling block on their path to success. And when they succeed, they take it as a sign of their tremendous skill.
Women, on the other hand, may view failure as a sign that they’re not cut out for entrepreneurship. On the other hand, they view their success as a result of luck.
“On both sides of that coin, you have women who have less hubris, and you have women who have more humility. On both ends as a result, women may be just less likely to found businesses, compared to men,” study co-author Venkat Kuppuswamy, Ph.D., told NPR.
In a way, women are being rational in not becoming serial entrepreneurs, since most ventures fail in the long run. In 2014, Bloomberg reported that one-third of new businesses close within two years, and only one in four is still operating after 15 years.
But other research, also reported by Bloomberg, suggests that, if you keep at it, eventually you’ll find something that works. And that’s what seems to be happening with men — they’re so confident that they will eventually succeed that they continue trying until they do.
It might not be a great idea to tell women that they need to be more overconfident that they will succeed in the future when they just failed. Instead, says NPR’s Shankar Vedantam, female entrepreneurs should be more confident when they succeed and not interpret their achievements as mere flukes.
In fact, if women were as “immodest as men,” as the researchers say (i.e., if they continued their entrepreneurial activity after a success), they’d be the founders of about 16% more businesses.
In the paper’s conclusion, the researchers write that policy makers should take into account women’s high levels of humility in order to help them pursue their high-quality ideas. In doing so, they may end up increasing the total number of successful entrepreneurs.
Business Insider Emails & Alerts
Site highlights each day to your inbox.