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    Diversity in Innovation
    13 Feb 2017Working Paper Summaries

    Diversity in Innovation

    by Paul A. Gompers and Sophie Q. Wang
    This study discusses a systematic and persistent lack of female, Hispanic, and African American labor market participation in the innovation sector, through both entrepreneurs and the venture capitalists that fund them.
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    Author Abstract

    In this paper we document the patterns of labor market participation by women and ethnic minorities in venture capital firms and as founders of venture capital–backed startups. We show that from 1990 to 2016 women have been less than 10% of the entrepreneurial and venture capital labor pool, Hispanics have been around 2%, and African Americans have been less than 1%. This is despite the fact that all three groups have much higher representation in education programs that lead to careers in these sectors as well as having higher representation in other highly compensated professions. Asians, on the other hand, have much higher representation in the venture capital and entrepreneurial sector than their overall percentages in the labor force. We explore potential supply side explanations including both education attainment as well as relevant prior job experience. We also explore the correlation between diversity and state-level variations. Finally, we discuss how these patterns are consistent with homophily based hiring and homophily induced information flows about career choices. We end the paper by discussing areas for future research.

    Paper Information

    • Full Working Paper Text
    • Working Paper Publication Date: January 2017
    • HBS Working Paper Number: HBS Working Paper #17-067
    • Faculty Unit(s): Finance; Entrepreneurial Management
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    Paul A. Gompers
    Paul A. Gompers
    Eugene Holman Professor of Business Administration
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