Report reveals how women are redefining entrepreneurship

Written on Jul 16, 2018

Most women-owned businesses are small to medium-sized enterprises, yet women-owned firms seem to be lagging in tapping their vast foreign consumer base. Despite studies showing that women-owned businesses that engage in the export of their goods and services earn exponentially higher than women-owned firms that do not, only 12% of businesses that export are owned by women.

The Global Entrepreneurship Monitor (GEM) Report for Women 2016/17 reports that 274 million women were already running their own businesses across 74 economies, of which 111 million were running well-established businesses by 2016.

As globalization is breaking down the barriers that limited businesses by cultures, gender and geography, many partnership and trade agreements have been developed in an attempt to encourage global economic activity among women. Women are known to give back about 90% of their earnings to the health and education of their communities and families, contributing to development directly, so it’s easy to see why it is critical.

Understanding women’s entrepreneurial attitudes, trends and activity from all over the globe will help shape government policies at various levels along with the numerous educational and training programs aimed at improving the business environment for women.

Report findings:

1. Developing economies see a higher male-female parity among entrepreneurs than developed economies.

Asia and Latin America showed the highest parity between male and female entrepreneurs, resulting in higher Total Entrepreneurial Activity (TEA) in factor-driven economies. Economies at the innovation-driven stage of development saw women start businesses at 60% the rate of men -- a surprisingly sharp decline from factor-driven economies. Despite the advantage of technology in a typical innovation economy, fewer women were inclined towards entrepreneurship.

2. More women than men cite opportunity motives for business.

More women than men, about 20% more, cite opportunity as the primary reason for venturing into business even in factor-driven economies. This only becomes more pronounced in the innovation-driven group, where women are three and a half times more likely to cite opportunity motives rather than necessity motives.

The increased opportunity perception is associated with the higher TEA. Also, the report shows that women entrepreneurs have a 5% greater likelihood of innovativeness than men across all 74 economies.

3. More women than men never start their business.

Though the number of women who aspire to start their businesses is closer to the number of men, the gap widens among business-owners, indicating that women are less likely to start their business and also more likely to exit at early stages or between phases of transition (4 out of 10 in factor-driven economies). This trend slightly improves in innovation-driven economies where there are two exits for every 10 businesses owned by women.

Business discontinuance among women is associated with lower growth expectations and dealing with their expected roles as primary caregivers for their families.

4. Women gravitate towards community-driven initiatives.

In the developed economies, more than half of women-led businesses are seen to be clustered around government, health, education and social services. The report shows that women are geared towards sectors typically dependent on human capital -- possibly due to women’s inherently greater emotional appeal.

5. Entrepreneurial activity declines as economic development increases.

Entrepreneurial activity among women showed a decline when economic development improved, resulting in a wider gender gap. While developing countries showed higher entrepreneurial activity, fewer enterprises were likely to transition to a mature stage. Innovation-driven economies were seen to be more conducive for sustainable businesses but registered slower growth than men-owned businesses. Interestingly, women in innovation-driven economies displayed a less favorable view of their own capabilities than women in developing economies.

6. Entrepreneurial activity declines as education level increases.

Entrepreneurial participation was seen to decline with an increase in the level of education, suggesting that general education is less relevant for building entrepreneurial skills or competencies.

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