Driving Gender Inclusiveness:An Innovation Ecosystem

Approach

December 4, 2018OECD: New Approaches to Economic

Challenges Seminar

Prof Fiona MurrayMIT School of Management

Basic Argument*

• Innovation ecosystems are of central importance to building our innovation economy today - not only in the US, but also Europe, Middle East, Africa & Asia.

• Within innovation ecosystems, human capital plays a central role…with the next generation of human talent looking to the innovation economy for opportunity.

Frictions remain in the degree to which diverse individuals - especially women - are included in the innovation economy and universities play an important role in the

vanguard of overcoming these frictions.

* Thanks to key collaborators - Dr. Phil Budden (MIT), Dr. Lars Frolund (MIT), Prof Mercedes Delgado (MIT/CBS), Profs Toby Stuart (UC Berkeley) & Waverly Ding, Profs Allison Wood & Laura Huang (HBS), Prof Ed Roberts (MIT), Danny Kim (MIT).

Innovation

• MIT’s Innovation Initiative (MITii) defines innovation as the “process of taking ideas from inception to impact”;

• Emphasizing that an ‘idea’ is the match between a problem and a solution, not just tech;

• Focusing on process (not products/services), highlighting the entire journey;

• Observing that a range of different organizations are engaged, from universities and startups, to corporations & even governments.

An innovative ‘idea’ usually startswith a problem or a solution…

…but eventually requires the match between a problem and a solution

In today’s innovation economy, the world of innovation is NOT flat…..

…instead there are a growing number of ‘innovation ecosystems’-

characterized by interactions and inter-dependencies between key

stakeholders and their resources - supporting ‘innovation-driven

entrepreneurship’.

Innovation Ecosystems are characterized by five key Stakeholders

Entrepreneur

Risk Capital

CorporateGovernment

University

Entrepreneur

Corporate

Risk Capital

Government

University

InnovationEcosystem

StakeholderModel

Growing role of new enterprises in the innovation process (especially in the earliest phases)

Corporations e.g.Production/distribution

University

University

Entrepreneursand IDE Startups

Corporations e.g.Research Labs

1 42 3 5 6 7 9 108

1 42 3 5 6 7 9 108

Income over Time

Inco

me

Time

Inco

me

Small-/Medium-sizedEnterprise (SME)

Innovation-DrivenEnterprise (IDE)

Income over Time

Time

Innovation-driven Enterprises are especially optimized for the early stages of the innovation process

Human capital is especially critical to innovation-driven enterprises & is often highly concentrated within ecosystems.

Innovation & entrepreneurship in MA is highly concentrated within the Greater Boston area and specifically around “Kendall Square”

• 250,000 university students• R&D spend ~5.86% GDP• > $25Bn in R&D funding• ~ 20% R&D by academia• > 10% of US VC investment

- over $8Bn in 2017• > 3000 start-ups

But even in innovation ecosystems, human capital is not fully utilized leading to lack of diversity, inclusion challenges & sub-optimal outcomes

http://qz.com/656436/silicon-valleys-gender-gap-problem-is-all-about-the-culture/http://qz.com/641223/rampant-wealth-inequality-in-silicon-valley-could-make-san-francisco-a-ghost-town/

Given the importance of human talent in innovation ecosystems what are the barriers to diversity?

• Women entering the STEM pipeline

• Women choosing to, and being involved in, patenting

• Women as entrepreneurial founders

• Women founders engaging in effective fund raising

Useful to examine the evidence from a traditional ‘pipeline’ perspective:

2000 2015 2000-2015

Female MaleFemale Ratio Female Male

Female Ratio

Female Ratio

% % Change

STEM PhDs Flow 5,285 13,054 28.8% 10,611 19,271 35.5% 7%

STEM PhDs Stock 78,870 367,760 17.7% 162,100 464,650 25.9% 8%

STEM PhDs in S&E Occupations 57,750 255,930 18.4% 122,300 356,350 25.6% 7%

US Unique Inventors 7,422 90,457 7.6% 16,165 153,932 9.5% 2%

US Patents (Proportional) 3,662 61,152 5.6% 8,071 108,267 6.9% 1%Notes: NSF Survey of Doctoral Recipients. Estimated PhD holders residing in the US. We define STEM to include thefields in Biological & Agr. Sciences; Physical Sciences; Mathematical Sciences; Computer & Info Sciences; andEngineering. We excluded Social Sciences, Psychology, or Health Sciences since these fields are less likely to patent.

Rising engagement of women in the (US) STEM pipeline

Technology Class No. FemaleInventors

2015

% FIs/Total Inventors

% Female Patents (Proportional)

% Patents with a FI

Chemical 2, 134 12.1% 9.7%Computers & Comm 5,488 7.8% 6.1%Drugs & Medical 5,342 16.4% 12.6%Electrical & Electronic 1,741 6.2% 5.0%Mechanical 897 4.9% 3.8%Other 1,614 8.0% 6.2%U.S. Total, 2015 17,206 9.2% 6.9% 16.9%

Note: Based on 2015 granted patents. Tech Classes def. are from Hall/Jaffe/Trajtenberg (2001).

• Drugs & Medical has the highest inclusivity with 16% of female inventors, and 12.6 % of patents• But these numbers are lower than expected since the participation of women in PhDs in biological

and agriculture sciences is much higher >50%

Presence & Patenting of Female Inventors in the U.S. by Technology Class, 2015

Female Inventor Inclusivity appears to be higher in key innovation ecosystems% of Female Inventors in the U.S. in 2015 is 9.2%

Role of STEM women in innovation & entrepreneurship in universities?

• Universities generate only about 5% of the patents filed in the United States but…

• Those patents are disproportionately of high quality

• Play a critical role in shaping the skills, capabilities and expectations of women (and men) –especially those trained in STEM fields - in the innovation economy.

• Dual role in teaching and research suggests that if universities successfully promote inclusivity of female inventors, women will have the relevant experiences for future patenting

• Thus universities are at the forefront of breaking some of the barriers women face in becoming fully engaged as productive inventors in their future careers.

Why universities?

Patenting in academia: A stepping stone to innovation & entrepreneurial activity in the broader innovation economy.

http://science.sciencemag.org/content/313/5787/665

Women faculty are engaging in patenting at lower rates than male faculty counterparts

While female faculty patenting rates may be lagging their male colleagues what about inclusion in patenting for universities overall?

24.0%

34.0%

14.0%

16.8%

8.0%

10.0%

5%

10%

15%

20%

25%

30%

35%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Female STEM PhDs and Female InventorsUniv25 % Female STEM (5lag)

Univ25 % Female Inventors

US % Female Inventors

We focus on the top universities because they have a large number of patents and account for more than 60% of all top academic inventors making the comparison across these universities and their inventors more meaningful.

%

% Female Patents at Top 25 UniversitiesComputers & Communications Tech Class 2011-2015

Mean % Female Patents for Computers & Communications Tech Class = 9.5%l5tco_tc_cpat_fp_shr_p80, t0615co_stem_fphd_shr

2.6%4.3%

4.7%4.9%

5.3%6.2%

7.0%7.7%7.8%

8.1%8.4%

8.7%8.7%8.8%9.0%

9.2%9.3%

10.3%11.0%

12.4%12.6%

15.1%15.1%

17.4%23.0%

-2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5

University Of Southern California 31.2%University Of Central Florida 24.2%

New York University 36.5%University Of Wisconsin 35.1%

Johns Hopkins University 42.9%University Of Maryland 32.9%

Columbia University 36.5%California Institute Of Technology 29.0%Case Western Reserve University 35.7%

Purdue University 28.4%Northwestern University 36.4%

University Of Texas 33.2%University Of Washington 38.6%

University Of Illinois 28.5%University Of Michigan 32.7%University Of California 35.1%

University Of Florida 32.6%University Of South Florida 37.9%

Stanford University 29.0%Harvard College 39.9%

Cornell University 37.6%Georgia Institute of Technology 23.4%

Massachusetts Institute Of Technology 26.9%University Of Utah 27.5%

University Of Pennsylvania 39.6%

Standard Deviation from Mean

Female STEMShare

Do some universities do better than others? Yes, although almost all do better than the US average but worse than their STEM share.

US average of % female patents ~5%

Women faculty who do patent have higher rates of inclusion in their patenting behavior than male counterparts.

Scores Exclude all Top InventorsInclusivity of co-inventors

Top Inventors

% FIsi % Female Patentsi Patents w a FIi

United StatesAll Female TIs 7,695 21% 32%

All Male TIs 93,977 12% 18%Dif. FTI vs. MTI 10%** 13%**

25-Universities All Female TIs

202 25% 27% 39%

All Male TIs 2,013 18% 18% 27%

Dif. FTI vs. MTI 7%** 9%** 13%**

Notes: Sample of 25 universities. Top Inventors are those with 7 or more patents during 2000-2015. We compute the FII of a top inventor’s patents during 2000-15. Scores exclude all TIs in the same university to measure inclusivity among non-top collaborators of the focal inventor (missing if all patents are co-invented only with TIs).

What about gender differences in taking the next step i.e. in entrepreneurial founding & board membership?

https://journals.aom.org/doi/10.5465/amj.2011.0020

Gender differences in SAB participation

• Data from IPO prospectuses of 511 US biotech companies.

• 720 SAB members identified – only 7% female• Matched sample of 6000 scientists (20% female)

• Gender gap ~ 45% accounting for age, publication rates, citations & patenting etc.

Other factors:• Co-authorship with academic entrepreneurs (x1.3)• Employer Prestige (x2.33)• Networks to academic entrepreneurs (inc chance by

70% versus 27% for men)• Institutional support e.g. TTOs (critical for women but

not significant for men)

Consistent with MIT alumni survey data of MIT alumni transition into entrepreneurship there continue to be strong gender differences.

Pursuing entrepreneurship is important to our alumni but with a strong gender differential:

• 29% men vs. 12% women have engaged in start-up creation;

• 36% vs. 16% for patenting;• 25% versus 13% as an early

employee of a start-up

Roberts, Murray & Kim, 2018

And yet women still wish to engage and participate in entrepreneurship & innovation

Among MIT alumni non-founders that had seriously considered entrepreneurship*, many are women and foreign nationals

* filtered to those who “spent some or a lot of time considering starting a company”

Characteristics Yes % Total Female 568 27% 2,132 Foreign national 446 21% 2,120 Married 1,549 73% 2,133 Children 1,191 56% 2,130

Recall baseline figures: 21% female and 16% foreign nationals

Demand-side or a supply-side problem: Do men & women vary in their interest in engaging in innovation-driven entrepreneurship?

https://academic.oup.com/icc/article-abstract/16/4/657/656123?redirectedFrom=fulltext

Decision to engage in the commercial world seems to be strongly driven by external interest & low demand for female engagement

At least for female faculty there seem to be challenges associated with soliciting interest and engagement from (mostly male) founders and entrepreneurs.

- Interview based analysis at one leading university- S&E faculty –male & female sample, matched by age, field etc.

Is there gender bias in the external market for innovation ecosystem resources?

Definitely bias in other settings where women may not “look the part” e.g. orchestras

As late as 1970, the top five orchestras in the U.S. had fewer than 5% women. It wasn't until 1980 that any of these top orchestras had 10% female musicians.

Boston Symphony Experiment

In the Boston Symphony, the

chances of a woman being selected

increased by 50% after this experiment

In Entrepreneurship, imagine this experiment …

• Entrepreneurial pitch

• Video with slides & voice over.

• Male versus female voice only – identical script.

• Pre-coded attractive vs. unattractive photo

Was it convincing? Would you invest? Did the entrepreneur seem competent

Gender Effects in Pitching

Combining data from real world pitches with experimental analysis in a more controlled on-line setting

http://www.pnas.org/content/111/12/4427

Gender & Attractiveness for online, “pitch-matched” videos

STUDY 1: With gender alone (male vs. female voices) men are 2x more likely to be rated as “funded”/”selected” – two different pitches, male or female voices.

STUDY 2: (see graph) – one video, male/female voice, attractive/less attractive photo. Male voices:

- More likely to invest- More logical- More persuasive

Attractiveness > investment likelihood for men!

MIT Graduates: Career Decision-Making Factors

J. D. Kim, Early Employees of Venture-backed Companies: Evidence from MIT, 2016

New career choices see today’s students looking to start-ups in the innovation economy (& demanding relevant Innovation & entrepreneurship skills)

0%

5%

10%

15%

2006 2007 2008 2009 2010 2011 2012 2013 2014Graduation Year

% of MIT Under-Graduates who join venture-backed, innovation-driven enterprises

And seem to find particular appeal in a variety of more mission-oriented, challenge-based innovation.

Young women are disproportionately interested in entrepreneurship focused on big social goals- but still take a for profit approach

More young women participate in STEM activities that are focused on solving real world problems for real people

This makes a difference because women are catalysts for inclusion of other women & other under-represented groups.

Inclusion in Innovation Ecosystems must be driven by the actions and commitment of all the key Stakeholders

Entrepreneur

Risk Capital

CorporateGovernment

University

Entrepreneur

Corporate

Risk Capital

Government

University

InnovationEcosystem

StakeholderModel

Next Steps: While the evidence is compelling it does point to key actions

• Universities must take a leadership role in driving inclusion so that young women are armed with the skills to integrate into the innovation economy;

• LEVERS: gov’t grant requirements (e.g. UK’s Athena Swan), mandate new metrics e.g. inclusion Index dashboard, IP licensing to corporates

• Prolific women in STEM - as inventors and entrepreneurs - make a disproportionate difference to inclusion;

• LEVERS: retention of senior female leaders, publication of metrics (by corporation)

• Female mentors & selectors make a difference to resource-allocation processes in innovation & entrepreneurship

• LEVERS: composition of selection committees, attention not only to diversity in applicant pools but also in selection panels & processes, considering language in posters, in job descriptions etc.

• Relevance of educational experiences seems to engage & maintain active participation of young women.

• LEVERS: new types of classes, ensuring diverse teaching and mentoring staff, different types of problems

Questions?

fmurray@mit.edu

@Fiona_MIT

Fiona Murray

fmurray@mit.edu

CST Letter on Entrepreneurship Education

1. Universities should consider how to incorporate entrepreneurship education into their core curriculum.

2. National Academies should lead work to provide coordinated guidance to universities on entrepreneurship education (The Quality Assurance Agency for Higher Education (QAA) has started work alongside the National Academies to review its 2012 guidance on enterprise and entrepreneurship education.)

3. Innovate UK, the Catapults and their business networks should extend opportunities for students and researchers to engage directly with entrepreneurs.

4. HESA data to capture additional information, and universities use that data to evaluate the impact of their entrepreneurship education.

5. Universities, working with HESA and the Government, should evaluate the impact of their entrepreneurship education to better understand how to tailor their offer·

6. The Teaching Excellence Framework should include a metric signalling the value and career benefits of entrepreneurship to universities

CST in collaboration with Dr. Tim Dafforn, CSA (now entrepreneurship advisor) at BEIS (then BIS)

Results: MIT graduates & the wage differential in venture-backed start-ups

J. D. Kim, Early Employees of Venture-backed Companies: Evidence from MIT, 2016