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Surprising Way Female Entrepreneurs Are Left Out

A pair of number-crunching economists claim that women-owned small businesses are missing out on the revenue-boosting effects of shops clustering together.

Businesses tend to clump together for mutual benefit.

Put a café next to a couple of boutiques and you might lure shoppers with the promise of a latte--or sell more shoes to the well caffeinated clientele of your neighbor. Home furnishings stores, jewelers, and many other types of establishments often band together in districts designed to attract more business for all.

But are women business owners missing out on the benefits of this clustering effect?

That's what a new study suggests, according to the Wall Street Journal's Ideas Market blog. The research carried out by two economics professors used market research data from Dun & Bradstreet, as well as numbers from the U.S. Census, to examine how male- and female-owned businesses are distributed geographically within 35 metropolitan regions. The WSJ summarizes the findings:

They compared the locations of [female-owned] businesses with those of enterprises not owned by women.  Female owned companies, they found, were less likely to be in business-dense regions (the measure used: how many jobs of all kinds are located within one mile of the business?); female-owned companies were less likely to be near similar businesses (how many jobs in that industry within one mile?); and they were less likely to be near financial institutions, which often have close relationships with entrepreneurs.

In the category of "finance, insurance, and real estate," for example, women-owned businesses had 24% less exposure to other businesses, in general, 29% less exposure to similar companies, and 28% less exposure to banks. Similar levels of segregation--if not always quite that high--were evident in most business categories.

To put those numbers in perspective, the authors note that this level of segregation is roughly equal to and sometimes exceeds the level of racial segregation in many cities. But, of course, while racial segregation is visible, the segregation of female-owned firms is largely invisible--as most customers are unaware who owns the companies they walk or drive past every day.

Why are women's enterprises not located in the densest districts for businesses?

According to the economists the most likely culprit, as ever, is the work-life struggles of women. "Citing Census data on male and female commutes to work, the authors partly attributed these disadvantageous geographic patterns to female entrepreneurs' desire to live closer to their businesses, perhaps because they do the lion’s share of the work at home," reports the WSJ.

Do these study findings surprise you or jive with your personal experience of female-owned firms?

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Last updated: Jul 26, 2012

JESSICA STILLMAN

Jessica Stillman is a freelance writer based in Cyprus with interests in unconventional career paths, generational differences, and the future of work. She has blogged for CBS MoneyWatch, GigaOM, and Brazen Careerist.




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