Wednesday, August 20, 2008
Global Female Entrepreneurs - a cursory glance
With more women now in education, training and full-time employment, and with new technologies available for greater choice, it is expected that second and third generation females are more likely to surpass their (first-generation) parents in the field of commerce and industry.
This essay aims to review some of the evidence on female self-employment in both the developed and developing world. It is hoped that this article will add to new knowledge for a better understanding of the necessity for a more gender-balanced approach to global entrepreneurship.
The definition of entrepreneurship includes concepts such as owners, managers, directors, self-employed and employers, though different approaches are used when these concepts are defined to put into the context of entrepreneurship.
A female entrepreneur may be defined as the founder-owner or manager of an enterprise, its executive director, or a member of its managing board. Self-employed people are also commonly considered to be entrepreneurs. Different countries pursue different objectives through entrepreneurship – whether male or female, and so there is no single definition for female entrepreneurship, for instance.
Despite the persistent income level gaps, it is estimated that women comprise a high proportion of the workforce in almost every country. The gender gap is prevalent in new venture creation and business ownership. It is argued that these differences are mostly common in the developing countries and/or emerging democratic states.
In the Beijing Platform for Action, one of the means of improving women’s employability, in the context of increasing flexibilities in labour markets, is fostering women’s access to self-employment and entrepreneurship. Policies aimed at supporting entrepreneurship in most countries tender to be gender neutral.
While it is noted that women still represent only a minority of all entrepreneurial and SME owners, female-led businesses are mainly concentrated in the areas of small-scale entrepreneurship, which primarily includes retail and service. The situation however, is changing with more women opting for business and professional services, the creative industries, healthcare and other sectors which were once the preserve of male-dominated firms. Even so, the growth of female enterprise development is a reflection of the determination of either unemployed or poorly paid women to change their life circumstances through active self-employment. It is this situation that has given rise to the claim that such obstacles do not necessarily prevent women from either being engaged in business start-ups or managing successful firms in their chosen field or sector.
Nevertheless, the presence of women’s enterprises does have a strong and measured effect on global economies. In the early part of this century, Canada reported that there were more than 821,000 female businesses and they contributed more than 18 billion dollars. The number of firms increased by 208% compared with a 38% increase for men. In Germany, there were a total of 1.03 million women-owned firms with a total turnover in excess of 232 billion in currency. In the US, women firms represented 28% of the 23 million firms and they provide jobs for over 9 million people. Women-owned businesses across the UK currently generate between £50 and £70 billion for the economy.
A recent US study showed that women contributed to over 70% of the world’s population and 93% of the global Gross Domestic Product (GDP). Only in Japan and Peru in 2007, were women more active in setting up businesses than men, and the gap narrowed in Latin America and the Caribbean. Interestingly, in spite of these drawbacks, the authors of the study observed that it was surprising that “developing countries in Eastern Europe have low rates of women’s entrepreneurs, closely resembling their highly developed European neighbours, while Latin American and the Caribbean have rates of women’s entrepreneurship two and three times higher.” (OECD 2006, p.1)
In addition, 40% of the world’s active population are women and this share according to the International Labour Organisation, has not changed over the last 10 years. The share of women above the working age (15 years and over in most countries) who are employed was 49.1% in 2007 compared to a male employment-to-population ratio of 74.3%. Overall, there were equal numbers of women and men above the age of 15 years in 2007 (2.4 billion of each), but among these only 1.2 billion women were employed as opposed to 1.8 billion men.
Between 1997 and 2007 the share of global self employment (`own-account workers’) activity for women rose from 21.8% to 26.9%. Below are samples of female self employment rates from selected regions around the world: -
• Developed states - the EU had a reduced market share from 6.8% to 5.8%.
• South East Asia/Pacific increased from 23.2% to 28%.
• Latin America and the Caribbean 21.7% to 25.5%.
• The Middle East from 25.7% to 17.9%.
• Sub-Saharan Africa 48% to 46.9%. (ILO, April 2007)
Reasons for self-employment
By nature women have enterprise instincts – the majority are very good at managing homes particularly in the case of nuclear and extended family units. In instances where household income is in short supply, they tend to `cut and contrive’ to make `ends meet’. There are of course notable exceptions whereby highly trained professionals have the `luxury’ of being able to cope better because they are more financially well-off. In high-income countries, there is no gender difference in the survival rate of women’s business versus those of men. Women’s levels of optimism and self-confidence contribute essentially, to start-ups. Many are highly influenced by the culture and social norms of their native countries, parents, friends and colleagues, as well as former employers or reputable business people. The reasons for women opting for self-employment are wide and varied, and they include:-
• Being one’s own boss.
• A desire for independence.
• The need to for greater self-reliance.
• Want to make a `positive difference to society.
• Interested in introducing a new product or service.
• Sole possibility to carry out a profession.
• Continuing family tradition.
• Reach out to international markets; and
• Working as sub-contractor for former employer.
The level of education and training plus previous knowledge and experience, all play a critical part in the decision of women to be engaged in self-employment activities. The fear of failure though, is ever present among the majority of (potential) female entrepreneurs. It is a symptom that is associated with indecision and uncertainty especially if there is no access to quality support for new start-up ventures. European women and Asian low/middle income countries had the highest fear-of-failure (40%0 compared with women in Latin America and the Caribbean (34%) and women in high-income countries (27%). This situation probably has to do with the type of technical assistance and enterprise support each country has in place for new and emerging firms (Babson College, US: May 2008).
As women become more conscious about their duties, rights and responsibilities in the 21st century, law makers and governments will have to think harder about new approaches to tackle disparities in the field of female entrepreneruship. Issues around promotion of women entrepreneurs, access to loans and premises, business support and information centres, and facilitating appropriate networks are all vital to the development and sustainability of firms in general. The following questions therefore need to be addressed.
• Is there sufficient recognition for the achievement of women entrepreneurs?
• Are media houses interested in promoting the successes of entrepreneurs?
• Are there role models of women entrepreneurs particularly budding ones?
• Do women have equal access to financial services and premises for start-up?
• Can women access finance beyond micro-credit as individual entrepreneurs?
• Are there any financial programmes especially for women entrepreneurs?
• Is there a dedicated system of business support for women entrepreneurs?
• Are there many women business advisors in specialist sectors?
• Do women have access to business and industry association networks?
• Is it easy to join a women’s business association?
• Is business networking publicised widely/
• Do women’s networks lobby government on behalf of women enterprises?
From all indications, the increase in the number of women in various areas of enterprise is set to continue, but their ultimate success will depend very much on how their contribution is perceived by respective governments and the rest of civil society. Undoubtedly, this is probably one of the most formidable challenges facing Corporate Governance and Gender Diversity in the 21st century.