Small Business

The New Mothers of Invention


By Norean R. Sharpe It's a little known fact that the originator of one of the world's most popular board games was a woman. According to government records, Lizzie McGee of Maryland applied for a patent on "The Landlord's Game," which bears a striking resemblance to what we now know as Monopoly.

However, it was another individual, Charles Darrow of Atlantic City, N.J., who sold the game rights to Parker Brothers in 1935, more than a decade later. In fact, a records search reveals that Parker Brothers actually honored two patents when they registered the board game, one of them McGee's. While Darrow continued to earn commissions on each game sold, McGee was bought out for a paltry sum -- and her name and contribution were forgotten.

Perhaps the mismatch between reality and published (or marketed) history should not be surprising, given that women were not permitted to obtain patents for many centuries. They resorted to using their husband's names, hiding behind their initials, or simply abandoning their inventions. Certainly, the inability of married women to control property, money, and investments inhibited them from starting businesses.

REDRESS FOR SUCCESS. J.E. Bedi researched female innovators for the Lemelson Center at The Smithsonian Institution, and what she found is summarized in her eye-opening paper, Exploring the History of Women Inventors. According to Bedi, during the 20th century, women patented an ice-cream freezer, a transmitter for torpedoes, a feeding device for amputees, and Kevlar, which is used in bullet proof vests. Can our children name any of these women? Are their contributions taught in schools?

Today, women have their names on approximately 10% of all patents -- a tenfold increase over 1910 (when less than 1% of all patents were by women). Despite this increase, the gender gap in entrepreneurship continues to widen. In 2003, two men were involved in entrepreneurial activities for every woman, according to the research by Global Entrepreneurship Monitor (GEM).

Despite this gender gap, entrepreneurial activity among women continues to grow. The number of women-owned businesses in the U.S. has increased by 14% in the last five years, according to the Center for Women's Business Research (CWBR). Today, nearly half of all privately held businesses in the U.S. are women-owned.

Consider that there are currently 10.6 million privately held women-owned firms in the U.S., and that they generate $2.5 trillion in sales and employ 19 million people. Between 1997 and 2004, the growth in the number of these women-owned firms was over 17%, while their combined workforce expanded by 24% and revenues grew 40%. Although on a statewide basis California, Texas, and Florida top the list for women-ownership in 2004, other regions of the country are catching up.

STATE OF CHANGE. The 10 fastest-growing states for women-owned outfits are: 1) Utah; 2) Arizona; 3) Nevada; 4) Idaho; 5) Kentucky and New Mexico (tied); 7) South Carolina; 8) North Carolina; 9) Arkansas; and 10) Oregon. While these states may be seeing an explosion of sorts in women entrepreneurship, women continue to face challenges in these areas of the country. Look harder at the rankings, and only two of those states -- Arizona and North Carolina -- also appear in 2004's top 15 states for women-ownership. In those two states, not only is the number of women-owned businesses at an all-time high, but the growth rate also is impressive: approximately 30% growth in each instance.

If only family businesses are examined, an interesting picture emerges. Women-owned family businesses are more than twice as likely to employ women family members full-time; are more likely to choose a female as a successor chief executive; and are more likely to achieve a greater gender balance in the composition of their boards of directors. These are the findings of the Center for Women's Leadership (CWL) at Babson College in 2003.

Clearly, today's female business owners are a positive influence on future women entrepreneurs. The CWL study also found that women-owned family firms are more than six times as likely to have a woman CEO as men-owned firms. Men, it seems, remain reluctant to put women in charge.

Babson College, where I teach, is both a leader in entrepreneurial education and an institution that places a solid emphasis on narrowing the gender gap. Take for example, Alison Barnard -- a recent graduate from Babson, who has spent the past year trying to start a women's retail store in downtown Boston.

HASSLES AND HISTORY. She came to Babson with the germ of an idea for an innovative retail company, but wasn't quite sure how to make it all happen. As Alison explained, "I have always had the desire to start my own company. Growing up, I watched my father start several companies, which inspired me to do the same." As seasoned business owners know, starting your own company is not without hard work. However, while excited to be pursuing her dream, Alison has found her experience both "frustrating and challenging."

"Many vendors informed me that they would not be opening any new accounts.... They want to keep solid relationships with current accounts that are potential competitors for my store," explained Alison. This is one student that is not giving up, however. Alison is currently scouting locations in and around Boston and continues to meet with realtors and building owners in commercial districts. Bearing in mind the sad fate of Lizzie McGee and her board game, let's hope that Ms. Barnard persists, creates a successful brand, and makes an enduring mark on retailing -- an outcome that would help to balance the scales of history.

(Editor's Note: This is the first in an irregular series of commentaries, analysis, and research papers from academics and small-business researchers.)) Norean Radke Sharpe is associate professor of statistics and operations research at Babson College.


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