Tuesday, March 5, 2019

Women’s Entrepreneurship: One More Form of Disadvantage

How easy is it to start a new venture? The graph shows how people answer this question across many European countries. To the right, there is a surprise for those who listen to Fox News, because the Scandinavian countries (all of them supposedly socialist and anti-business) are where people believe businesses are easiest to start. From left to right, there is a big non-surprise for those who study entrepreneurship, because in all nations shown here, men consider it easier to start ventures than women do. Indeed, the graph is disappointing for those who think that Scandinavian gender equality extends to entrepreneurship, because it clearly does not. More on that in a moment, because this finding makes more sense after looking at some recent research.

The graph is from a recent article in Administrative Science Quarterly by Vartuhi Tonoyan, Robert Strohmeyer, and Jennifer E. Jennings, who have investigated the source of gender differences in the ease of entrepreneurship. Their idea is simple and powerful: because entrepreneurship starts with experience in the labor force, different treatment of men and women in the workplace is the origin of their different sense of how easy it is to form a venture, and also of their success in forming and growing new ventures.

We know from research on the labor market that the following are true: 1) women are less likely to be promoted into management positions, 2) women are concentrated in certain occupations with less pay and independence than typically male occupations, and 3) women are concentrated in certain industries that are less connected to the market economy than typically male industries. These patterns hold across levels of worker education and job prestige. The plumbing contractor is more likely to be male. The municipal administrator (especially at the bottom level) is more likely to be female.

These labor market patterns form beliefs about entrepreneurship because our experiences at work help prepare us for entrepreneurship—or don’t. There is a distinction between a manager and an entrepreneur, but the distinction is smaller than that between a low-level worker and an entrepreneur. Managers (many of them, at least) and entrepreneurs obtain and allocate resources, formulate goals and pursue them, hire employees, define their roles, and evaluate their work. Having experience as a manager gives people confidence in their ability to start a venture, as well as a useful comparison point: management can be just as stressful and time-consuming as entrepreneurship but in support of someone else’s venture, not your own.

Stereotypes about what women can and should do have held them back from such management roles, as well as from certain parts of the labor market. Many women have been directed into typically female roles – caring and serving roles – and positions supervised by others, usually men. This has led to a list of occupations and jobs in which workers accumulate less experience relevant to entrepreneurship. For example, even though restaurants are famously easy ventures to found (and usually quick to fail), I have met only one restaurant owner who started as a waiter, and he was a man. And women are heavily weighted in certain industries, like public administration, which are remote from the markets in which entrepreneurs form new ventures.

So it is hard for women to escape discrimination in the workplace by pursuing entrepreneurship. They are found in exactly those roles and workplaces with the hardest paths to entrepreneurship, so they are disadvantaged in both games. No wonder women have to do more than men to succeed.

Oh, and the Scandinavian gender equality I mentioned at the start? Scandinavian nations are relatively good at avoiding underpayment in stereotypically female industries like public administration, and in stereotypically female occupations too. But that does not mean that people think differently in those nations than they do elsewhere in Europe. So in the absence of strong economic reasons to go against the flow, men and women have done more gender sorting in the Scandinavian labor market than in many other nations. As one would expect, the result is that Scandinavian women find it much harder to start a venture than men do, though still easier than a man in France or Germany.

Tuesday, February 26, 2019

My Brother Is Bigger Than Yours: The Power Dynamics of Alliance Expansions

Interorganizational collaborations exist because organizations are compatible with each other and have complementary resources. That starting point makes collaborations sound friendly, as the word collaboration suggests, but things are never that simple in business. Each organization also has its own interests, and there may be enough conflict among them that power relations matter. How does that influence who gets added to an alliance when more members are needed? This is a very interesting and practical question answered by Lei Zhang and Isin Guler in a recent article in Administrative Science Quarterly.

The key to answering this question is to look at all the organizations that could enter an alliance as one big network and consider all the connections among them. Have two organizations collaborated before? If so, they may have had a conflict in the collaboration, but it is even more likely that they have learned to get along and have benefited from each other. That builds trust, as well as friendships among their executives. Have they collaborated many times? If so, they are especially likely to trust each other more than they trust others. They can be seen as political allies even when they operate along with other organizations in a collaboration. It’s a lot like the politics seen when children play. The closest friends are allies when playing in larger groups, and some groups prefer not to add such pairs of friends.

Take that one step further, and we can see how firms might be careful about who they add to a collaboration. Add a firm that you have not collaborated with but another partner has collaborated with many times, and there is a risk that the partner has gained a close ally to use against you. Adding a firm that has collaborated with many partners seems safer. Adding a firm that has collaborated with you but not others is ideal – but is unlikely to happen unless the other firms are na├»ve.

This was exactly how U.S. venture capital syndicates grew. Syndicates regularly add members because they need more money and the members prefer not to concentrate too much funding in a single venture, but every addition is a political calculation. Many prior collaborations with partners made an addition more likely, but not if the collaborations were with some members but not others. So, the syndicate members strengthened the collaboration by recruiting trusted new partners but were careful not to strengthen any one member’s power too much by adding members that were too closely tied to one member and weakly tied to others. Interestingly, there was an exception. A syndicate member with high status could influence new member additions so much that it could recruit friendly firms that were not close to the others.

Why all these politics when putting money into a firm? The neatest part of this study is that Zhang and Guler interviewed the venture capitalists and heard them explain why they cared who they collaborated with. It starts with the role of venture capitalists in advising and governing the firms they finance, which is a much closer relation than many other forms of financing. Because they support the firms so much (or meddle so much, depending on your point of view), they have strong views on what should be done with each firm, and they vary greatly in how much they trust the advice given by other venture capital firms. Venture capital syndicates resemble cars driven with many hands on the wheel and many feet on the accelerator pedal, so trust and agreement among the members matter greatly.

Zhang, L., and I. Guler. 2019.
"How to Join the Club: Patterns of Embeddedness and the Addition of New Members to Interorganizational Collaborations." Administrative Science Quarterly, forthcoming.

Monday, February 18, 2019

Maternal Leave and Stalled Careers: Considerate Discrimination

In Norway and Sweden, the paid parental leave after childbirth has one component that is exclusive to the mother and one shared between parents. Advocates of gender equality in the workplace have been critical of the parents’ ability to give all the leave to the mother and encouraged by the fact that most parents decide to let the father take some time off to care for the child. But think about this for a moment: If paid maternal leave is a major accomplishment of the movement for equal rights and opportunities for women in the workplace, does it make sense to let fathers take some of it?

Research by Irene Padavic, Robin Ely, and Erin Reid in Administrative Science Quarterly suggests that sharing family leave benefits across genders is exactly the way to achieve greater equality in the workplace. Yes, much research has shown that women have disadvantages and that these grow greater after childbirth. The idea of a work-family conflict that needs to be addressed by providing various benefits to women and especially mothers is grounded in this observation. But firms unwittingly use these benefits in ways that stall women’s careers and prevent changes that could create less-demanding work conditions for both men and women as well as greater equality in opportunities.

First, the various benefits to make the workplace more flexible and adapted to provide work-family balance are typically oriented toward making it easier for working women to fulfill the wife and mother roles, which in a typical family handle much more of the housework than the husband and father roles. In practice, that means that the workplace allows women to work fewer hours and move to internal-facing roles, which in turn makes them less promotable and even stigmatizes them as recipients of benefits. In Padavic, Ely, and Reid’s research from a global consulting firm, women took 11 years to be promoted to partner, while men took 9 years. And this disparity applies only to those women who got as far as promotion: at the partner level, only 10 percent were women.

Second, it was widely recognized that women in this firm had less successful careers than men, but management in the firm emphasized that this stemmed from the nature of the work, which simply did not fit women’s needs to achieve a good work-family balance. Indeed, the firm was seen as accommodating these needs quite well because it offered women alternative job paths involving less demanding work schedules and less travel. The implication was that if women did the same work as men (putting in the same hours and accepting the same heavy travel requirements), they could do equally well.

Third, managers did not recognize that the firm’s work schedules, unrealistic deadlines, and demand for employees to be available 24/7 were as burdensome for men and equally disruptive to their family lives as they were for women. The belief that the bond between mother and child is special and much more important to maintain than the bond between father and child was so firm that evidence showing how the work hours and travel schedules disadvantaged male workers too was dismissed. Everyone “knew” that this was “women’s problem,” so the firm was doing enough by catering to women’s needs for family time.

Discrimination is actions based on beliefs. There is a distinction between the belief that women are not fit for work and the belief that women have greater needs for a work-family balance than men, but it is a small distinction. In both cases the result is discrimination and stalled careers, and it doesn’t help anyone that the second kind of belief and discrimination seems more considerate than the first.

Padavic, I., R. J. Ely, and E. M. Reid
2019. "Explaining the Persistence of Gender Inequality: The Work–family Narrative as a Social Defense against the 24/7 Work Culture." Administrative Science Quarterly, forthcoming.

Monday, February 4, 2019

Self-driving Cars and Surgery: Up with Robots, Down with Skills

Imagine that you have just purchased the latest self-driving car and you are on your way to work. The car is in control because the route is familiar and the car has all the modern sensing and decision-making functions. You assure yourself that you can take control of it at any time. But if there is a sudden dangerous situation—someone darts into the road or another vehicle is moving erratically—will you do so? I venture that the answer is yes if you are an experienced driver of old-fashioned cars that need to be driven—your instinct will be to rely on your own skills to avert problems. If you learned to drive after the self-driving technology was the standard? I’m guessing the answer might be no. And the answer could be very consequential.

Research by Matthew Beane published in Administrative Science Quarterly explores a situation with similarities to this one. He examined what’s happening in operating rooms around the world, where robots are increasingly used to perform surgeries. At least for the moment, the most effective robots do not make their own decisions, but they can be controlled quite effectively by a single surgeon at the control panel. That single surgeon often no longer needs a team performing different surgical tasks for the operation to go smoothly. And that surgeon is not likely to give up the controls during a challenging operation to a medical intern who needs to learn how to perform the surgery.

If you’re the intern, that leaves you in a position of scrambling for any opportunity you can get to practice with the new technology so you can gain the necessary skills to guide the robots. At the same time, you aren’t (as often, at least) part of a surgical team performing traditional surgeries, so you aren’t building the skills that are essential backups if something goes awry during the robotic surgeries you’re observing.

Surgeons don’t live forever. What happens when they are replaced by the interns who are currently receiving less hands-on training than they had? I guess we’re all going to find out.

We immediately understand that less training of surgical interns is a very bad idea, but that does not solve the dilemma. Surgeries using robots are performed best by the most experienced surgeons with minimal help, so actively involving residents adds time and risk. The residents can do little more than observe the surgeon controlling the robot. The onus was on the residents Beane studied to learn the skills with minimal costs to the attending physician in charge. And some of them did, showing significant ingenuity in the process.

Because the robots were only supposed to be used by the most qualified surgeons, only two approaches to learn were open to the residents. They could learn when the surgeon was not there, or they could learn as a favor from the surgeon. Learning when the surgeon was away could be done before they even became residents at the hospital, if they were lucky enough to be in a place with the right equipment and surgeons who allowed them to practice. It could also be done by watching recordings of earlier surgeries, though this type of training only showed what the robot did, not how to use the actual controls.

The other option is to learn from the surgeon during an actual operation. Usually that means getting control of the robot during the less critical part of the operation, and being watched over by the surgeon at every step. This approach is fast and accurate, but it also means that any mistake becomes very visible, and usually leads to the surgeon taking over the controls right away. It is the best way of learning, but also the scariest one. The risk was real because residents would be compared based on very few operations, and surgeons would prefer to continue working more with those who had done best – whether it was because of skill or because of luck.

The difficulty of learning when robotic equipment takes over a production process but still needs human control is not just in hospitals. The self-driving car is an example, and there are many examples of more subtle processes. The software that recommends whether an applicant can get a mortgage or not, and at what interest rate, is an invisible robot that can be controlled by the bank employee. But as the software gets smarter and the employees get less training, they have less foundation for checking its work, or even to be employed at all. Robots are smart, but organizations need to use them smartly.

that less training of surgical interns is a very bad idea, but that does not solve the dilemma. Surgeries using robots are performed best by the most experienced surgeons with minimal help, so actively involving residents adds time and risk. The residents can do little more than observe the surgeon controlling the robot. The onus was on the residents Beane studied to learn the skills with minimal costs to the attending physician in charge. And some of them did, showing significant ingenuity in the process.
Beane, Matthew. 2019. Shadow Learning: Building Robotic Surgical Skill When Approved Means Fail. Administrative Science Quarterly, 64: 87–123.

There is also a TED talk on this research. 

Friday, January 25, 2019

How Does Knowledge Speak to Power? Friendship First

Here are two facts that should open your eyes. First, more than a decade of Iraq and Afghanistan warfare has increased the mental health diagnoses in the U.S. military by 65 percent. Second, a mental health provider will recommend treatment of an unstable soldier, but the military commander can still send the soldier out on a mission – fully equipped with service rifle, grenades, and sidearm. This sounds like an extreme case, but it is actually an example of a common problem. Organizations use experts for many purposes, including those who control risks to human life, equipment, or finances, but the experts are often just advisors. The actual authority rests with the line manager in charge of operations.

The difficult relation between the non-authority expert and the authority non-expert is important to understand because the whole point of experts is to take advantage of their expertise when needed. Now we know more, thanks to an article by Julia DiBenigno in Administrative Science Quarterly. She investigated the example I just gave: U.S. Army mental health providers and their relationship with line managers (commanders) who decide how soldiers are used or treated. This is a follow-up of an earlier article byDiBenigno showing that organizational procedures can be used to help create a more successful relationship. But even in organizations that are set up correctly, individual experts can still fail to reach the powerful line command.

The main difference between success and failure was timing and speed. The mental health providers had a wide range of tactics to gain access to the commanders and subsequently gain their trust. What tactics they used depended on their resources. Because the army values military experience, anyone with military service or endorsement could use that to be recognized as an insider. Because the army values manhood, participating in rigorous training signaled commitment. Because the army values rank and protocol, learning and strictly following these helped communications. Doing each of these things quickly was essential because any specialist will sometimes make recommendations contrary to a commander’s wishes, and it is essential to build rapport before the first conflict happens.

A worrying implication of this research is that so much depends on the personal characteristics and initiative of each expert. Two-thirds of the provider–commander connections were good enough that the commander often followed the provider’s recommendations. What about the soldiers under the command of the other one-third of the commanders?  One-fifth of the providers were currently serving in the military, giving them a great advantage in gaining commander trust. What about the other four-fifths of the providers? Half the providers were female, in a context where gender is very meaningful. They would start out at the bottom rung of the trust hierarchy but could climb by, for example, participating in training. The men started out higher on the trust hierarchy but might fall quickly if they didn’t prove their manhood.

All these findings suggest that the expert’s path to influence is a complicated one in organizations. My intuition is that it is probably worse in many other organizations than the army, for two reasons. First, the army is a pretty nonpolitical organization if we go far enough down the ranks – its culture of valuing “straight shooter” communication rather than intrigue reduces intra-organizational politics. Second, an army at war has an external enemy and an understanding that all insiders – even mental health care providers – are on the same team.

The best advice to line managers from this research is to pay very careful attention to the experts, because many of them will not know how to gain trust and communicate their concerns. They need managerial attention and help, and you need their expertise.