Women Are In ‘Vicious Cycle’ Of Underrepresentation In Startups, According To New Research

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Women are caught in a “vicious cycle” of underrepresentation in startups, according to new research. If the earliest hiring decisions at a new company exclude women, which they often do, then the organization will have difficulty attracting female talent in the future. As a result, entrepreneurial companies that start with gender disparities have a tough time correcting the imbalance.

The research, published in the Academy of Management Journal, examined over a half million decisions by more than 8,000 job seekers from a job-search app focused on job listings for startup companies. Job seekers could swipe through the app’s Tinder-like interface by deciding whether or not to express their interest in each job ad they viewed. Each job description on the app included the gender makeup of the organization.

The researchers found that male-dominated startups attracted fewer women. When women made up less than 15% of an organization’s workforce, female applicants were almost 30% less likely to apply than their male counterparts. The more gender-balanced the organization, the more likely women were to apply. For organizations where women represented more than a third of the workforce, the gender composition of the company no longer had a significant impact on the gender gap in job applications.

Strikingly, women made up less than 15% of the workforce in more than one in five startups in the study, indicating that female underrepresentation is common in these new companies. And the gender imbalance becomes self-reinforcing. If men represent the vast majority of current employees, then women don’t enter the candidate pool, further exacerbating the problem.

Lead author of the research and professor at the University of Amsterdam, Yuval Engel, explains how this gender imbalance can occur in the early stages of company growth. “Hiring decisions are made by the founders themselves rather than professionals experienced in recruitment and hiring. These founders often gravitate towards recruiting from their personal networks and do not typically invest in any formalized policies or procedures to protect themselves from bias,” he says.

Because startup founders tend to be men, this hiring strategy can lead to a gender imbalance in favor of men. According to Pitchbook, companies founded solely by women were awarded only 2% of venture capital investment in startups in the U.S. in 2021. Those established by all-male teams received more than 82% of the funding.

“Founders are disproportionally white males, and while women are underrepresented in most startups, they are particularly underrepresented among those startups who receive venture capital or other forms of growth capital. So those startups that are most likely to grow and hire employees are also those in which women are most underrepresented. All of this has several downstream implications,” Engel says.

Unlike the women, male job candidates weren’t influenced by the gender makeup of the organization. Men were equally likely to apply to jobs regardless of whether the organization was male-dominated or female-dominated. Engel says, “I think that people are generally aware that startups, overall, represent a male-dominated environment. Women can therefore expect to be a minority in startups, and men can expect to be in the majority. Minority status brings about worries of being undervalued, singled out, disrespected, or mistreated.” Men just don’t have these worries.

Photos like those posted by Elon Musk of his inner circle at the code review at Twitter headquarters reinforce these stereotypes of the all-male startup environment.

Other recent studies corroborate that female job seekers worry about how women are treated in their prospective workplaces. One study of MBA students found that women, but not men, engaged in gender-based “scouting” when they applied for jobs. The scouting involved extra steps female MBAs took “to avoid professional contexts unhospitable to women or their needs and concerns.”

To avoid the vicious cycle of female underrepresentation, Engel suggests that new organizations focus on gender balance from day one. “Our findings indicate that startups should pay attention to gender diversity from the first hire. Without attention and intentional effort to escape the default choices of hiring more men, startups will lack gender diversity as they grow, pushing women away and eventually limiting the talent pools these companies can draw from,” he explains.



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