We frequently hear about women having higher levels of empathy than men but a 20% higher likelihood to found purpose-driven ventures is staggering. Is there more to that stat than the goodness of empathetic women?
In fact, yes. According to Julia, in an interview with Forerunner VC, “A study by Professor Laura Huang at HBS found that framing a company with a social purpose eliminates the negative impact of bias from investors. So investors could be more interested in backing a female founder who’s tackling a social or environmental issue with her company.” Julia continues that she believes this is because the additional purpose “plays into the stereotype that women are nurturing and warm. This can help women behind these purpose-driven companies — but it still perpetuates stereotypes that women have to be caretakers, and are discounted when they’re simply ambitious businesspeople.” The stereotype is harmful, creating additional pressure, and in many ways women face an uphill battle as leaders, founders, and business people. However, let’s focus - if just for the span of this article - on how that empathy really is a superpower. Cause-driven companies have an edge, and so do empathetic leaders.
For any product to be successful, empathy is key. “You can start to intellectually analyze [a persona] and her situation. But what you really need to create a good product is empathy, and empathy isn’t about intellectually knowing - it’s about feeling.” To create products that don’t simply work, but that people love to use–and thus that belong to brands people are loyal to–an empathetic approach must be taken.
Cause, Purpose, and Impact Driven Leaders Drive Meaningful Innovation
Beyond the inherent value of empathy within innovation, women’s increased likelihood to create cause-driven organizations means additional innovation dedicated to meaningful causes; add to that the fact that women are not only more likely to establish and lead cause-driven firms, they’re also more likely to make values-based investments.
52% of women would rather invest in firms making a positive social or environmental impact, and that the investment is adding up. A record $70 billion was invested into funds committed to certain environmental, social, and governance principles (ESG funds). According to Jon Hale, director of sustainability research for the Americas at Sustainalytics of Morningstor, that’s 14 times the amount invested just three years before. There were also three times as many ESG funds in 2021 as there were five years ago, and the funds have performed well. Hale explains, ““For investors and advisors who have been hesitant to invest in sustainable funds because they are under the impression that such funds as a group chronically underperform, [2021] is further evidence that this isn’t true — as are the past five years.”
All this to say, women’s decisions to engage in cause-based business are not only impactful on individual bases, but are adding up to a sizeable impact on the market. High return on investment, high quality innovation, and a positive difference in the world? That’s a win-win-win.
Lauren Lyddon has helped people and organizations to tell their stories for more than a decade. Having tested her love of the creative through the pursuit of an MBA and undergraduate business degrees, she is a writer, editor, and lover of fiction in all its forms (especially theatre, well-written television, and novels). A West coast resident often operating on an East coast schedule, Lauren uses her business background and love of story to serve clients in writing, editing, PR, and more. You can visit her online at L2crtv.com.
