Under New Management : The feminization of California’s economy

At a time when California’s male-dominated aerospace and big-company economy is losing its luster, women entrepreneurs are picking up the slack and becoming shapers of the state’s new-business culture. And it’s not just in California. According to a 1992 congressional study, women across the country are starting enterprises at twice the rate of men.

California already boasts, by far, the nation’s largest concentration of women-owned businesses. Eleven are among the top 50 in the country, including Jenny Craig Weight Loss Centers, Mrs. Gooch’s Natural Foods and Discovery Toys. According to the most recent census, Los Angeles-Long Beach ranks No. 1 in women-owned businesses, while Santa Ana-Anaheim is third.

The growing female role in the region’s economy, says Geoffrey Kessler, a Northridge-based small-business expert, has dramatically expanded with the decline of the aerospace-oriented economy. Companies owned and operated by women are growing chiefly because of their skills at adjusting to rapid changes in markets and customer needs.

Fortunately, California is home to a corps of women entrepreneurs who have been steadily moving up the corporate and professional ranks since the 1970s and are now coming into their most productive years. Today, for example, about one-third of the almost 100,000 women entrepreneurs in Los Angeles County possess professional backgrounds in fields as diverse as marketing, engineering, software and medicine.

These women are moving beyond traditional service-oriented professions into male-dominated fields like manufacturing. Nationwide during the 1980s, the percentage of women owning industrial enterprises rose from 16% to 22%.

Women business-owners contend they enjoy advantages that can overcome such hurdles as access to capital and the hostility of male-dominated business networks. Jon Goodman, director of the USC entrepreneurship program, says that many female entrepreneurs, by necessity, gravitate to non-traditional fields and new markets. They often tend to be, as she puts it, “less consumed by tradition. They worry less about what is the right and proper thing to do in a business context.”

This flexibility is well-suited to the new realities facing California business. Today’s successful companies, no matter who owns them, operate in an environment in which a well-established market niche may suddenly come under attack from a domestic or international rival armed with lower costs, a new product or faster delivery service.

Ironically, these nimble, niche-oriented companies--the core of women-owned firms--have attracted relatively little attention from those who should be their natural allies: female politicians. Their preoccupation with large aerospace companies, it may be argued, has slowed the region’s job-creating momentum in fashion-oriented fields, including apparel, home appliances, toys and entertainment, where women’s adaptability to rapid market shifts is strongest. Entrepreneurs like Brenda French, founder of French Rags, and Barbara Rodstein, head of Harden Industries, have grown rapidly and been able to stay in Southern California because of their willingness to break with industry traditions and exploit niches ignored by male competitors.

French, for example, has built her French Rags knitwear company into an industry leader by circumventing traditional retail outlets, which tend to more than double the manufacturer’s price, and selling customers custom-made garments direct through regional “trunk shows,” facsimile and telephone sales. In contrast to most department-store executives, she believes women are too busy to “shop till they drop” and desire clothing that fits their real shape rather than conform to fashion designers’ fantasies. French Rags’ West Los Angeles factory now employs more than 100 workers.

But the reasons for women’s success in running companies are not restricted to their fine sense of markets or consumer tastes. USC’s Goodman points out that women are quicker to adopt management methods that promote collaboration rather than competition within the company. With an increasingly diverse work force and an ever-expanding need to share information, this kind of management approach has become critical to success.

“I’m not autocratic,” says Harden’s Rodstein, whose bathroom-fixture company expects sales in excess of $25 million this year. “I try to create an environment in which ideas can be exchanged and in which those people around me who have better skills than I do in certain fields can rise in those levels and achieve. If I find out that I am a problem, I tend to move out of the way.”

To be sure, women entrepreneurs in manufacturing, although rapidly growing, still represent only a small minority of all female-owned companies. Most women-owned businesses are small and concentrated in the service area. Yet, their companies, often denigrated by big-company-oriented economists and policy professionals, are serving as major avenues of upward mobility for women, particularly minorities.

Indeed, women of immigrant backgrounds, who constitute about one-third of all Angelenos, see entrepreneurship as both an economic and sociological plus. It provides an ideal way to break out of the more restrictive, traditional roles of their home countries while providing needed income for their recently arrived families.

Similarly, the remarkable success of minority women engaged in such programs as the Coalition for Women’s Economic Development, which has financed hundreds of enterprises, underscores the enormous potential of the historically ignored ranks of minority entrepreneurs. Thousands of women like Mary Flowers, owner of Sturdi-quick Building Systems, have risen in male-dominated industries, only to collide head-on with a glass ceiling of racial and gender prejudice.

But rather than sue discriminatory employers, Flowers and other entrepreneurs have followed the old adage that living well is the best revenge. With assistance from the women’s coalition, she has built a successful construction firm that has five full-time employees and has ties to scores of subcontractors throughout Southern California.

New telecommunications technology will open up other opportunities for women entrepreneurs. Along with the growing use of faxes, modems and computer networks, the number of home-based businesses has been rising at 10% a year since 1988. About 70% of them are owned by women. California, according to New York-based Link Resources, accounts for one of every six of the nearly 24 million home-based businesses in the country.

Home-based businesses are critical for women with children. Although about 66% of adult women are in the work force, most still have primary responsibility for their children, all too often without much economic assistance from their male partners. Home-based businesses offer women an ideal way to balance the roles of mother and wealth creator.

Many of these businesses perform important jobs--from arranging company parties to keeping company records--that used to be done at corporate offices. At the same time, their relatively low operational costs enable these companies to charge less. As specialist firms, they can manage supplier relations to maximize leverage, thus allowing them to reduce costs further and boost efficiencies.

The feminization of company ownership in California presents the state with yet another way to leverage its strengths--openness to new social forms and innovation--and replace the dying structures of its economic past. Far more than any prospective female political triumph, women entrepreneurs are providing the kind of economic elixir the state so desperately requires.