Study finds female-led firms excel

By Anita Bruzzese
Gannett News Service

Move over, boys. The girls are running the show, and they're doing it better.

"We think that the organizational and leadership style of women may be fueling more productivity," says Nan Langowitz, faculty director for Women Leadership and associate professor of Management at Babson College. "Women tend to be more collaborative, and have more 'people style' firms."

The study, sponsored by Babson College and MassMutual Financial Group, found woman-owned family businesses are showing some financial muscle at a time when many other businesses are floundering.

Specifically, these companies led by women have average family revenues of $26.9 million in 2002, with some reporting annual sales as high as $1 billion.

Interestingly, many of these woman-owned enterprises are relatively new: most are only in the second generation of operation.

"They are active in the same kind of industries as male-owned firms, but what we're seeing is an increasing confidence in women to be leaders in a family businesses," Langowitz says.

The study also found:

• Woman-owned businesses have increased by 37 percent in the last five years.

• Woman leaders direct their companies to be more philanthropic, focusing on education and community organizations.

• Although these companies tend to be smaller in size than male-led counterparts, they generate sales with fewer employees. In fact, woman-owned family businesses tend to be nearly twice as productive. Langowitz explains that some of this may be because of the "inherited" bureaucracy many males are forced to deal with because the businesses owned by men tend to be older. It was reported that the median number of employees for female-owned family businesses was 26, while it was 50 for the male-owned family businesses.

• Woman-owned family businesses tend to focus more carefully on CEO succession planning.

• These businesses have greater family loyalty, agreement with goals and pride in the company. Specifically, they have a 40 percent lower rate of family member attrition.

• Woman-owned family businesses are twice as likely to employ female family members full time and are three times as likely to employ more than one female family member full time. "What this also shows it that these women are in a place to be great role models for other women in that company," Langowitz says.

• Female leaders tend to be more fiscally conservative. They may carry less debt partly because women have a tougher time gaining access to capital, as compared with men.

"Either way, the relatively low debt load gives female business owners strong ability to weather adversity, but may limit their opportunity to fuel potentially higher growth through increasing funding," the study found. Still, these women remain optimistic, with a two-to-one ratio of respondents saying they anticipate a positive future for their companies, despite a sluggish economy.