01/30/2015 12:53 EST | Updated 04/01/2015 05:59 EDT

Stop Referring to Female Entrepreneurs as "Risk-Averse"


It's time to challenge the label that women are risk averse. TD bank of Canada published a report this week called "Canadian Women Leading The Charge Into Entrepreneurship" emphasizing the increased number of women starting a business since the recession.

The report indicates that women take a different route than men in choosing to start a business and make different occupational choices in deciding on their business. Women and men often have different motivations for starting a business. For some women creating a business offers an opportunity to better integrate their work and family life. According to the report, women's approach to business is influenced by socialization from early in their lives. We know that societal norms and stereotypes about women have continued to make the road to equality more difficult.

The bottom line in this, and other, reports is that women are still underrepresented in entrepreneurship. Reports, such as TD Bank's keep emphasizing that women are more risk averse, an assumption that is accepted without questioning what it means in terms of outcomes. Does evaluating or taking less risk than men mean women are actually more risk averse, or do women simply look at risk differently than men and we label the difference as being risk averse?

Why do we assume that risk taking as defined by male approaches is always a positive approach in business or anywhere else for that matter? We know there are times when taking risks have great results for business and other times when the consequences are negative.

Recently at a business event that I attended in Toronto, the chair of a respected board spoke about how the women on his board resisted a proposed initiative. After hours of discussion they could not reach a consensus so the board decided not to proceed with the initiative. Subsequent events proved that the women board members concerns were well founded. Speculation following the recession in the U.S. was that if Lehman brothers had been Lehman sisters, the outcomes might have been different.

Here the high risk, high reward behaviour of a small group of male traders resulted in the collapse of Lehman Brothers. What if Lehman Brothers had been Lehman brothers and sisters? We do not have an answer to either question but we know that taking more risk does not always result in positive outcomes.

Continuously re-enforcing the image of women as more risk averse than men hurts women. It is not enough to say simply women are more risk averse without a greater exploration of what different approaches to risk means for an entrepreneur. Does it impact on their likelihood of accessing capital and achieving growth?

Comparing the success and growth rates of women owned entrepreneurship to that of men assumes that the playing field is level. Yes, women's enterprises are not growing as fast as those owned by men. A clear link between risk and growth cannot be drawn without knowing whether women seek to grow their businesses at the same rate and whether they have the same access to financing and knowledge of markets for growth.

If banks and other lenders consider women risk averse, thereby attributing negative consequences, it can impact women owned businesses ability to access capital to promote growth. Certainly, many studies in the past including the Canadian Task Force for Women's Business Growth, have shown that women either do not have the same access to capital or often the information needed to seek the capital or to explore broader markets. Lack of capital and information can certainly impact risk assessments relating to growth or opportunities. A number of women, who owned small retail businesses told me they did not seek to expand because they wanted to keep the unique nature of their product and service that would be lost with growth in size. Secondly expansion would cost them their good work-life integration. Others wanted to expand and were having great difficulty in accessing the necessary capital.

On the positive side, women are innovating according to the TD report. This is good news as Canada is lagging behind other countries in innovation and in taking the innovations to market. During the past three years women entrepreneurs were more likely to have engaged in an innovation activity especially relating to goods or services.

Are women putting their energies into creating better services and goods ahead of growth? In effect are they taking different risks to create better products and services? It is time that we really looked at the whole question of how women see risk and the impact of the differing perspectives and stop simply judging them against male standards.


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