Book reviews, Monthly Labor Review Online, Mar. 1998

March 1998, Vol. 121, No. 3

Book reviews

Moving ahead
Can cutting hours add jobs
Balancing federal budgets

Moving ahead

Women Entrepreneurs Moving Beyond the Glass Ceiling. By Dorothy P. Moore and E. Holly Buttner. Thousands Oaks, CA, Sage Publications, Inc., 1997, 262 pp. $46, cloth; $19.95, paper.

In Women Entrepreneurs Moving Beyond the Glass Ceiling, Dorothy P. Moore and E.Holly Buttner present findings of a study drawn from focus interviews with 129 women entrepreneurs, and from responses to questionnaires that the women provided the authors.
There has been a dearth of information about successful women entrepreneurs, given that most small business research had centered on entrepreneurs who were men. How are women who start businesses different from men who start businesses? This research may be useful on two levels. It meets an academic need for insight into the characteristics of women who start businesses. It may also be helpful for women wishing to start their own businesses because the narrative provides detailed personal insights into problems and solutions that struggling start-up firms face.

The profile of the survey entrepreneurs indicates that most were operating an incorporated service business-ness with annual sales in the $250,000–499,000 range. Most were white, college-educated, and married with at least one child. The profile suggested a rather homogeneous group. The findings, then, may not be expected to reflect the characteristics of a wider group of women entrepreneurs.
The authors’ research strategy is to present a rich variety of findings from previous studies which were then used as test hypotheses for this group of respondents. The technical tools used to analyze the data seem statistically sophisticated and thorough. Factor analysis appeared to be successful at getting to the heart of the reasons for women starting their own businesses. The content analysis of the focus groups appeared to ferret out the respondents’ real opinions on the research topics. The colorful incidents surfacing in the focus group conversations provided the feast of information which added to the readability of the book.

In introducing the subject, the authors points out that "Traditional" women entrepreneurs before the 1980s tended to be proprietors of small, slow-growing service businesses with low earnings and equity.

"Second Generation" women entrepreneurs started to appear in the 1980s; these were women who met Drucker’s definition of one who "drastically upgrades the yield from resources and creates a new market and a new customer." Many were women who had left corporations to start their own firms and were in nontraditional female businesses. Researchers often linked their leaving a previous organization to career frustration; the corporate environment was stifling. However, women who recently became business owners who have worked in the corporate environment seemed to have benefited from the variety of their experiences there.

The study suggests that women who started their own businesses from a desire for self-determination and for the challenge, with the concomitant respect, recognition, and self-esteem that both self-determination and challenge provide. And, moving from a large organization to one’s own business reflects a strong desire to be one’s own boss. This research failed to support the assumption that women with families started businesses to help balance work and family responsibilities.

Findings outline the differences between women who always intended to start their own businesses and those who had originally hoped to move up in a corporate environment. Women entrepreneurs used their previous organizations as "incubators" to acquire skills which were useful in start-up firms. The survey data suggested that women hoping to move up in the corporate environment placed a higher value on developing managerial skills than did those who had always intended to start their own businesses at some point in their lives. This latter group placed a higher value on marketing and technical skills, and each group tended to underestimate the value of the skills they did not pursue.

Findings from the research suggest that rather than a top-down management style, women entrepreneurs’ management style could be thought of as a wheel with the owner at the hub connected to each subordinate by a spoke and the employees linked around the rim. Female leaders often used a style which encouraged participation, shared power and information, enhanced others’ self-worth, and excited others about their work. Women tend to pay less attention to formal power and rely more on personal power.

It’s interesting that the model for both women’s management style and communication style is described as a wheel with the woman business owner at the center reaching out to others individually along the spokes of the wheel. It might be interesting to speculate whether or not this style, both in communication and in management, may be closely related to the size of the enterprise. It is difficult to see how a relatively large organization could be run in this fashion. It would seem that a large organization would have to depend on more hierarchical management and communication styles while smaller organizations could function in this way.

The authors suggest that the key to successfully starting a business is simply moving from "know-how" to "know-who." Separate theories of career development may be needed for women and men because women are often excluded from formal network structure and even informal networks, the grapevine. It appeared that because of these constraints, women’s networks differed from men’s networks. Researchers agree that networks are most vibrant when people value them without expecting benefits.

Success, measured in terms of business size, sales, and growth, is not the yardstick to measure success for women owners in this survey. There are multiple dimensions of success for women business owners; internally, personal growth, professional development, and improving one’s skills seemed more important than external measures, such as profits and business growth.

A statistical factor analysis of nine measures yields three factors: self-actualization (composed of self-fulfillment and achievement of goals); business performance (composed of profits and business growth); and a web effect (including employee satisfaction, helping others, balancing family and work, and social contributions) that were of underlying importance in measuring success for women.
Women saw starting a business not as a career, but as a life strategy. This book may shed light into the corners exposing the reasons for the quickening pace of women’s business ownership.

—Arline Easley
Women’s Bureau
U.S. Department of Labor
Top

Can cutting hours add jobs?: The Microeconomics of the Shorter Working Week. By Marcus Rubin and Ray Richardson. Brookfield, VT, Ashgate Publishing Co., 1997, 155 pp. $55.95.
Cutting hours of work to create jobs is prominently on the agenda in Europe, and more quietly discussed in the United States. This monograph is very timely for economists working in this field. The book’s essential concern is the contentious issue of whether cutting hours of work will lead to additional employment. The impact that cutting hours has on productivity is the focus of the research. The answer is important, obviously, for both sides in labor negotiations, and, more importantly, is critical to national policy debates on the question of shortening the work week. The authors conclude that reduced hours at individual workplaces do increase employment, while stressing that such findings cannot be generalized to the overall economy.

The book is rich with reference to the United Kingdom’s broad literature on working hours, beyond the productivity question. Major virtues are the extensive bibliography, including the U.S. literature, and a discussion of surveys on worker preferences for hours of work.

The book opens with a description of competing views of what fuels the drive for shorter hours—institutions such as labor unions or individual choice for more leisure. What the authors call the economic approach sees productivity growth raising living standards, resulting in individuals choosing shorter working hours. The institutionalists stress two explanations, fear of unemployment or, alternatively, joint labor/management anticipation of productivity gains as a result of cutting hours. Productivity gains are stressed by both, but are they a cause or a consequence of cutting hours?

Addressing the theory that individual choice drives the shortening of hours, the authors report that a number of surveys asking what hours people want show a dominant preference for the same hours already worked, rather than reductions. The authors here point out that the neoclassical theory of labor supply uses the same approach as neoclassical consumption theory. Neither deals with the phenomena of habit persistence, revealing the limited value of surveys in determining individual choice.

Chapter two’s review of research on the impact that cutting hours has on productivity focuses on the United Kingdom but includes U.S. research. This chapter is stimulating because the need for further work is apparent. A reader not already acquainted with this research, however, may be lost in the strong terse criticism Rubin and Richardson offer. The reader is left wanting new studies which might control for the business cycle and other variables, for example, in estimating the impact of cutting hours. The work by Michael White and others from the Policy Studies Institute in London comes in for more detailed criticism. White’s conclusion that shortening hours leads to significant offsetting gains in productivity is made to sound implausible.

Rubin and Richardson’s own two studies, done in 1991 and 1992–94, are reported with details on both technique and results. Their approach is "micro" in that they interviewed or surveyed at the plant level, hence the "microeconomics-" of the title. The 1991 research found (among other things) that "Nearly all managers reported that shorter hours agreements had increased productivity." They are to be commended for reporting that, based on their later work, they now reject that result. Their view that the later study, with repeat interviews with multiple sources is more reliable, is convincing.

The detailed report of interviews reveals the unreliability of answers by both management and labor in response to surveys and interviews. Managers saying that cutting hours was self-financing because of productivity gains may do so to satisfy concerns of higher management, rather than basing the claim on data or studies. The detailed discussion of the interview results is instructive. The authors report on corporate data shortcomings, on the disinterest of some managements in knowing whether cutting hours has any impact on productivity, and offer suggestions on how to strengthen survey and interview research.

They conclude from their latest research that "Very little of the undoubted growth in labor productivity can be attributed to the shorter working week." In light of the frank report of problems, however, the confidence with which Rubin and Richardson state their strong conclusions seems misplaced.

Both advocates and opponents of shorter working hours want to know if job gains will be minimized because productivity jumps as hours are cut, or if the cost will be high because productivity does not respond. The research reported and referenced in this book opens the search for answers.

—Eugene P. Coyle
Economist
Eco-Economics
Top

Balancing Federal budgets: Setting National Priorities: Budget Choices for the Next Century. Edited by Robert D. Reischauer. Washington, The Brookings Institution Press, 1997, 310 pp. $42.95, cloth; $18.95, paper.

Setting National Priorities is the 10th in a series of books by the same title published over various years from 1978 to the present by The Brookings Institution which focus on spending and taxation issues of the Federal budget. Edited by Robert Reischauer, senior fellow at The Brookings Institution, this edition includes eight essays by highly respected economists. The subjects explored are current policies and proposals aimed at reducing the long-term projected budget deficits. While the subtitle, "Budget Choices for the Next Century," suggests a broad consideration of the role and scope of the Federal Government in our economy, most of the articles relate more narrowly to the immediate concern of bringing the Federal budget into balance. Very little consideration is given to broader philosophical questions about equity, justice, or stability of the economic system in relation to the Federal budget. Although these issues are mentioned in the essays, the main emphasis is on obtaining efficiency as defined by cutbacks or restructuring to eliminate long-run estimates of large deficits. Reischauer, in the opening article, discusses the political climate and the slow economic growth rate in relation to the expansion in entitlements since the mid- 1970s that has made the deficit the center of attention of this collection of essays.

In the second essay, Shultze discusses both supply side and demand side options of spurring economic growth in an economy at full employment. He concludes that while some of the supply side options may be desirable as long-run policies, there is very little that can or should be done by either the Federal Reserve to manage demand through money supply or by the Federal Government in terms of deregulation, tax cuts or tax reform, or increased government spending on education or infrastructure to alleviate the immediate problem of deficits. Burtless, Weaver, and Weiner give an overview of the Personal Responsibility and Work Opportunities Act signed by President Clinton in 1996 which "does away with welfare as we know it." They point out that the two major short-run effects of the act are the loss of eligibility by some individuals and the increased role of the State. The fourth article, again by Reischauer, discusses the history of and difficulty in further cutting nondefense discretionary spending. Steinbruner and Kaufmann consider the changing role of international security and suggest that we need to look more intensely at cooperative and preventive alternatives to modify and reduce expenditures on conventional attack strategies. Cutler does a laudable job of explaining the Medicare history and current problems to the uninitiated. While emphasizing the immense popularity of this program, he discusses possible methods of scaling back expenditures. Some of the methods may bring about a one-time ratcheting down of costs, but most options result in a decrease in use of health care by the elderly. Aaron and Gale discuss the popular notion of eliminating the Federal income tax and replacing it with either a flat, consumption, sales, or value added tax. They determine that such proposals are more mirage than miracle. In the final essay, Aaron and Bosworth give a clear and comprehensive accounting of baby-boomers’ retirement funding sources including Social Security, Medicare, and Medicaid, and explore alternative options for funding. To keep future generations from bearing an unmanageable burden when the retirement bulge begins, they suggest switching to a partially funded program, invested in a mixed private-public portfolio to replace the current unfunded Social Security program.

All of the essays are clearly written in highly accessible language. This collection is a valuable resource for citizens eager to bypass media soundbites, journalists who want to understand these issues, and students of public policy, public health, political science or economics.

—Susan Parks
Professor of Economics
University of Wisconsin–Whitewater
Top

Within Monthly Labor Review Online:
Welcome | Current Issue | Index | Subscribe | Archives

Exit Monthly Labor Review Online:
BLS Home | Publications & Research Papers