IWPR Report: Innovation and Intellectual Property among Women Entrepreneurs
By Emma Williams-Baron, Jessica Milli, Ph.D., Barbara Gault, Ph.D.
July 20, 2018
ID: IWPR #C472
About This Report
This report investigates differences in women- and men-owned firms’ intellectual property holdings (including patents), their research and development activities, product innovations, and the relationships between innovative activities and business outcomes such as revenues and access to capital and start-up funding. The report also presents analysis of the characteristics of female and male- owned employer firms, including their size and industry locations.
Analysis presented in the report rely on data from the Annual Survey of Entrepreneurs, a relatively new dataset available through the U.S. Census Bureau, that includes data on businesses’ innovation activities disaggregated by gender, and by race and ethnicity.
This report is part of a series of IWPR reports on women and innovation, including Closing the Gender Gap in Patenting, Innovation, and Commercialization: Programs Promoting Equity and Inclusion, which profiles programs working to increase gender diversity in patenting, innovation, and entrepreneurship. Both were produced with support from Qualcomm, Inc.
Intellectual property rights recognize unique “creations of the mind” and give inventors the exclusive right to use creations for a specific period of time. At the most fundamental level, intellectual property rights are intended to help foster innovation—they are founded on the assertion that individuals are more likely to develop and disclose inventions if they can be sure their hard work will yield competitive advantage. Yet the benefits of intellectual property are not always equally shared across U.S. society and are often less accessible to women and communities of color.
Women make up growing share of U.S. entrepreneurs, with much of that growth driven by women of color (American Express Open 2017). Women are far less likely than men, however, to hold patents (Milli et al. 2016), which has important implications for their business success, particularly for those in STEM industries, where patents are more common. Similarly, Bell et al. (2016) show that children from minority racial and ethnic groups, apart from Asian children, are much less likely to grow up to be inventors: White children are three times as likely as Black children, and eight times as likely as Hispanic children, to become inventors as adults.
Previous research has found that intellectual property rights, including patents, can play an important role in business success. Many lenders consider patent ownership, or at least having a patent application filed, an important factor in making their funding decisions: patent holders are more likely to receive private equity financing from venture capitalists and typically receive funding more quickly than entrepreneurs who do not hold patents (Häussler, Harhoff, and Mueller 2012; Graham et al. 2009). Patents have also been linked to greater market value among established businesses (Hall, Jaffe, and Trajtenberg 2005). Higher rates of patenting or other intellectual property holdings among women business owners could improve their access to financing and help them achieve their growth aspirations and maximize revenues.
Progress toward gender and racial/ethnic equity in innovation would also benefit society. Diverse contributions are essential to identifying and developing solutions to the pressing problems confronting individual communities and the world more broadly. An array of unique standpoints offer invaluable perspectives for innovation. By integrating more women and people of color into the innovation ecosystem, we will benefit from the contributions of more talented inventors and the ideas, products, and solutions they can develop if provided the opportunity.
Until recently, data on the intellectual property (IP) holdings and other research and development (R&D) activities among entrepreneurs were limited. New data from the Annual Survey of Entrepreneurs, a new survey on employer firms gathered by the Census Bureau, however, provide an unprecedented opportunity to examine a broad array of IP holdings, patenting activity, and R&D activities among entrepreneurs by gender, and by race and ethnicity. This report documents participation in these activities among women- and men-owned employer firms and explores how these activities relate to business outcomes, such as funding, revenue, and survival. The report also uses data from the 1997-2010 waves of the Survey of Business Owners to discuss women’s representation as entrepreneurs over time.
This report begins with an overview of trends in women’s business ownership and women business owners’ demographic characteristics and the types of businesses they own. It then explores differences in women’s and men’s IP holdings and R&D activities. Finally, it examines their business outcomes, linking them to innovative activities where possible.