The Good, The Gap and The Capable: How Women Entrepreneurs Fare Globally
An increase in women entrepreneurs around the globe is narrowing the gender gap.
Sisters across the globe are doing it for themselves more often and more successfully, new research shows. Yet even though women entrepreneurs in North America have the highest level of innovation, fewer than half of U.S. women entrepreneurs report they have confidence in their capabilities.
“An increase in women entrepreneurs around the globe is narrowing the #gendergap”
More than 163 million women started businesses worldwide and another 111 million women were already running entrepreneurial businesses as of 2016. This accounts for an increase of 10 percent of total entrepreneurial activity by women in 74 countries since last year, according to the newly released Global Entrepreneurship Monitor 2016/2017 Women’s Report.
The report compiled by faculty and researchers from Babson College, Smith College, Korea Entrepreneurship Foundation, Tecnológico de Monterrey, Universidad Del Desarrollo, and Universiti Tun Abdul Razak, shows the encouraging progress “where the gender gap is closing and where women are leading change in some ways. The problems reflect the areas where there are still serious deficits and disparities, where the gender gap may still be significant.“
The two years of data showed the phases of entrepreneurial intentions, established business ownership, discontinued businesses, as well as attitudes, education, perceptions, innovation and more. In the U.S., 14.9 percent of the women said they planned to start a business in the next three years, with 10.5 percent actually starting a business.
The study shows entrepreneurial intentions increased among women worldwide by 16 percent from 2014 to 2016 across all economies.
“Women look to see, if I think I can do it. And they start to look around and see people who can help or be a stakeholder, and ask how much it will cost,” says Donna Kelley, Babson College professor and an author of the study. More women than men drop off at this phase, Kelley says.
Yet, worldwide for women entrepreneurs, established business rates increased by 8 percent.
“Worldwide for #womenentrepreneurs, established business rates increased by 8%”
Some of the other key findings include that women entrepreneurs across the globe have a 5 percent greater likelihood of innovativeness as compared to men. The highest level of innovation occurs in North America, where 38 percent of women report having innovative products and services. North America also shows the highest education rates among women entrepreneurs, with 84 percent having earned a post-secondary or higher education.
“U.S. women tend to be highly educated and highly motivated,” says Kelley, who says the report is done every two years and this year had an increase of nine countries over the 2014-2015 report.
In terms of total entrepreneurial activity, the lowest regional averages are in Europe and Central Asia, with 6 percent of the female population involved, compared to 12 percent in North America. The highest regional averages are in Sub-Saharan Africa with the rate of 26 percent of female entrepreneurial activity.
“While a gender gap persists in many regions of the world, there are five economies in the sample where women participate at levels equal to or higher than those of men. These high-parity economies are located in two regions: Asia (Indonesia, the Philippines and Vietnam) and Latin America (Mexico and Brazil). The highest ratio of female-to-male entrepreneurship is seen in Vietnam, where women are one-third more likely to start a business than men.”
The study also measured necessity driven start-ups, compared to innovation or opportunity-driven companies. Women entrepreneurs exhibit a 20 percent or greater likelihood of citing necessity motives, as compared to men, the study shows.
According to the study, “North America shows the lowest necessity motives, only 13 percent with similar numbers in the United States and Canada. These countries also exhibit gender parity on this measure. Of those who start businesses, women are proportionately as likely as men to identify necessity motives.”
Measuring for attitudes and affiliations showed some surprising results, Kelley says. While 67 percent of those women who are at the factor-driven stage (meaning their businesses are built out of necessity) report they believe they have the capabilities to start a business, this declines to 35 percent for innovation-driven economics. In the U.S., women entrepreneurs report a 47.7 percent capability perception, higher than the global average.
“This is subjectively about the function of your confidence and base knowledge,” Kelley says. “A lot of it can do with your education, training, achievement, role models. Men will be overconfident sometimes, and women will have lower capability perceptions.”
Opportunity perception also plays a role, with 57 percent of women in factor-driven economies believing there were good opportunities, compared to 39 percent believing there are good opportunities in the innovation-driven group. Still, this is a 10 percent increase in women’s opportunity perceptions across Europe, North America, and Asia.
The Middle East North Africa region reports the highest average female growth expectations at 37 percent. Over half of the women entrepreneurs in United Arab Emirates, Qatar, and Tunisia expect to hire six or more employees in the next five years. Women in Saudi Arabia and Morocco are more likely than men to have these ambitions.
One quite surprising result of the study is the personal affiliations with entrepreneurs. Despite high visibility of entrepreneurs in American media and culture, only 27 percent of women in the United States know one, the study shows.
“We are in an advanced economy,” Kelley says, “yet the entrepreneurship rate is low compared to Sub-Saharan Africa, where 88 percent report they know an entrepreneur. Why is it that women are less likely here to know an entrepreneur?”
Kelley says in spite of interventions trying to promote women’s entrepreneurship, this speaks to the need for mentorships, role models and advisors for women.
According to the study, “The findings also suggest pipeline issues, seeing a disconnect in some areas between the number of women who report intentions to start a business and the number of women who actually do start a business. And for those who do start, growth expectations for women entrepreneurs remains a problem.”
The study examined self-employment and whether or not businesses would hire employees. Ten percent of all women entrepreneurs operate their businesses solely and have no intentions to add any employees in the next five years. Europe has the highest frequency of one-person female business activity, while North America has the lowest, the study shows.
Investment in women entrepreneurs is also at a lower rate than for men. Overall, women invest in entrepreneurs at less than two-thirds the rate of men. About 5 percent of women in North America have provided funding to women entrepreneurs.
“Overall, women invest in #entrepreneurs at less than two-thirds the rate of men”
To solve this problem, the study suggests, “Training women entrepreneurs needs to be supplemented with demand-side programming, where bankers, investors, and other resource providers need to examine the extent to which stereotypes or biases are applied in funding decisions or whether policies such as credit scoring or collateral requirements affect women unfairly.”
Take The Lead co-founder and president Gloria Feldt acknowledges that need across all industries and career levels. To address the need, Take The Lead has a mission of gender parity in all sectors by 2020 and is working toward that mission with training programs for individuals, companies, groups and more in a variety of programs and workshops.
On the overall global picture of women entrepreneurs Kelley remains optimistic. “We see all phases of activities of entrepreneurship increasing. The level of education and innovation are also very positive signs. There is lots of positive news and the gender gap is narrowing.”
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About the Author
Michele Weldon is editorial director of Take The Lead, an award-winning author, journalist, emerita faculty in journalism at Northwestern University and a senior leader with The OpEd Project. @micheleweldon www.micheleweldon.com