Not just domestic engineers: an exploratory study of homemaker entrepreneurs.

There are millions of homemakers in the United States, but there is scant research on the entrepreneurial activities of this important segment of the population. Using data collected through the Panel Study of Entrepreneurial Dynamics (PSED), this article explores and discusses the significant differences between full-time homemakers who intend to start businesses and a comparison group of non-homemakers who intend to start businesses. In addition to providing a revealing look at this subset of future entrepreneurs, this study illustrates the power of the PSED to allow exploration of unique entrepreneur groups. Following our data analyses, we discuss implications and future research directions to better understand this unique subset of entrepreneurial individuals who are pursuing new ventures.

Introduction

There are millions of homemakers in the United States. Adapting the definition of homemakers utilized by the U.S. Census Bureau, we define homemakers as individuals who perform duties at a place of residence that include keeping house (making beds, doing laundry, washing dishes) and preparing meals. They may also advise families on such things as nutrition, cleanliness, and household utilities. It is likely that some homemakers are working toward becoming entrepreneurs; however, while the body research and literature that examines entrepreneurs and entrepreneurship has grown rapidly in recent years, there is little research that has examined homemaker entrepreneurs. This may be a result of the significant problems associated with identifying and tracking them. Many of these entrepreneurs are likely to have home-based businesses that are also parttime ventures. It is difficult to gather information on these firms because in many cases they are never formally registered with institutional or governmental entities. While little literature on homemaker entrepreneurs exists, the cumulative importance of these firms to the economy is likely to be great given the importance of home-based businesses to the U.S. economy. Recent research has reported that home-based businesses contribute $314 billion to the U.S. economy (Pratt, 1999). In addition, most homemakers are likely to be female and the National Foundation of Women Business Owners (NFWBO) reports that there are 3.5 million home-based, women-owned businesses in the United States that provide full or part-time employment for an estimated 14 million people. Additionally, approximately 55,000 home-based businesses have sales of more than $1 million and these businesses employed over 3.5 million people both at home and off-site (Pratt, 1999). These figures support the fact that home-based business activity is a significant contributor to the national economy and one segment of this is the under-researched homemaker entrepreneur segment.

The purpose of this exploratory article is to address the gap in the entrepreneurship literature by studying homemakers who intend to found businesses and become entrepreneurs. It is difficult to identify such entrepreneurs because most of these home-based entrepreneurs operate part-time ventures that remain "below the radar screens" of most entrepreneurship researchers. However, using data collected through the Panel Study of Entrepreneurial Dynamics (PSED), we identified 116 full-time homemakers who are considered "nascent entrepreneurs" (NEs). NEs are individuals who are actively involved in attempting to start a new business (see Reynolds, 1999; 2000). We explore issues related to the entrepreneurial activities conducted by these NEs as they consider founding businesses and examine similarities and differences between these NEs and approximately 700 non-homemaker NEs. Comparisons are made on two sets of variables: resources of the potential new ventures and the NEs' expectations regarding their firms. A secondary goal of this research is to demonstrate the power of the PSED to examine unique types of NEs that have not been researched or that have been under-researched in the past. After studying these NEs and examining the differences between them and the comparison NE group, we discuss both practical research implications and future research directions.

Theoretical Framework & Hypothesis Development

Most homemakers are women; however, this trend may be changing as more women enter the workforce and achieve higher positions within organizations. Between 1975 and 1996, the labor force participation of women increased from 46 percent to 59 percent (Hayghe, 1997). Among women with children under 6 years of age the increase was even more dramatic--from 39 percent to 62 percent (Hayghe, 1997). Research has also shown a significant increase in the number of women entering and rising to senior management positions in organizations and that many female senior executives have families (Catalyst, 1996), which is leading to an increase in the number of families with full-time househusbands (Morris, 2002).

Despite increases in their labor force participation rate, women devote much more time than men to homemaking and family care (Robinson & Godbey, 1997) and the distinction between homemaking and breadwinning is becoming more blurred. Referring to U.S. Department of Labor (DOL) statistics which present similar findings about women moving into the working world as stated above, Burton, Dittmer, and Loveless (1992) point out that the statistics create inaccurate perceptions about mothers and working-not because the statistics are incorrect, but because many mothers called "working mothers" by the DOL consider themselves to be "at home." Recognizing that the majority of homemakers are still women and that there is little research in our specific area of study, literature that examines women's career issues is relevant to understanding some of the challenges of homemaker entrepreneurs. The hypothesis development that follows draws from some of the women's career literature.

Homemaker NEs versus non-HE Homemakers: Education and Household Income

Prior research has shown that entrepreneurs are more likely to have higher levels of formal education than non-entrepreneurs (Hisrich & Peters, 2002; Zimmerer & Scarborough, 2002). However, traditionally, women have been more likely to be the homemakers within families, and at the same time have been less likely to earn higher education degrees. While the former is not likely to change in the near future given the time required to change long-standing social norms, women are graduating from educational institutions in increasing numbers (Marklein, 2003). The dramatic shift in women's economic behavior as demonstrated by increased labor force participation (Hayghe, 1997) is likely one of the results of improved educational attainment of women. Since education has been shown to be a factor in new venture creation, but homemakers are typically less educated than non-homemakers, we propose the following hypotheses:

Hypothesis 1: Homemaker NEs will have less education than non-homemaker NEs.

Starting a new business requires investment of financial resources. These resources may come from internal and external sources (Dollinger, 2003). The availability of capital from external sources is limited because of the high failure rates of new businesses, the cost of capital, and the significant time constraints associated with access to capital (Taylor, 1980; Van Auken, 2001). Furthermore, search for capital may be impeded by such factors as information asymmetries, overt discrimination, and high agency costs (Gibson, 1992). Consequently, personal savings are the primary source of initial funding for most new ventures (Dollinger, 2003; Hisrich & Peters, 2002; Zimmerer & Scarborough, 2002).

Since personal savings are the primary source of capital for new businesses, the issue of income and income allocation is raised as homemaker NEs may face the decision of whether these resources should be used for home-related activities or committed to business-related activities. In addition, the opportunity costs associated with the decision to engage in entrepreneurial activity must be considered (Amit, Mueller, & Cockburn, 1995). For homemakers with limited access to capital, the opportunity for founding a firm is likely to be diminished. The lack of capital is compounded by the fact that homemaking activity is often required when children are present in the household. In many cases, one person of a dual-career couple quits working to stay at home when a child is born. Homemaker NEs face competing interests and must balance between the needs of the household and those of the business. Aside from the need to have personal investment capital to found a new venture, the constraints homemaker NEs face are likely to create differences between non-homemaker NEs and homemaker NEs in terms of household income available to invest in the new businesses. These arguments lead to the following hypothesis:

Hypothesis 2: Homemaker NE households will have less income per household member than non-homemaker NEs households.

Homemaker versus Non-homemaker NEs: Business Planning, Firm Size, and Location

Business planning has a favorable impact on performance (Berman, Gordon, & Sussman, 1997; Dollinger, 2003; Schwenk & Shrader, 1993). Through careful planning, entrepreneurs can make decisions about what types of businesses are most feasible, what size of business is appropriate, what resources are needed to pursue the business venture, and perhaps most important, entrepreneurs can determine where resources should be allocated, a function that is especially important given the scarcity of resources in newly established businesses.