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08 Apr

The Role of Women Entrepreneurs in the Economy

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The '70's brought with it a freedom for women to enter into the workplace in higher numbers than ever before and over the past 20 years women have increasingly contributed towards the economy through establishing new business start-ups. Yet despite this positive trend, encouraged by a global move to empower women, they still remain on the periphery of the economy. This is clearly reflected when looking at the number of women in executive positions worldwide. Research conducted by Dow Jones in 2012 supported the Credit Suisse Research Institute's study that showed how companies with women on their Boards, tended to perform better.

Global Entrepreneurship Monitor (GEM) project

The Global Entrepreneurship Monitor (GEM) project is an annual assessment of the entrepreneurial activity, aspirations and attitudes of individuals across a wide range of countries. The latest GEMS report published in 2012 examined three entrepreneur profile categories related to women, namely;

  • inclusiveness, (more specifically, the distribution of entrepreneurship by sex and age);
  • industry, (the participation of entrepreneurs in key sectors), and;
  • impact, (the entrepreneurs' growth aspirations, international market reach and the degree of innovation in their products and services).

In 8 of the 54 economies surveyed, the rates of early-stage entrepreneurial activity were comparable to those of their male counterparts. The rest of the economies sampled, exhibited much lower levels of entrepreneurship amongst women than men. Efficiency-driven economies, such as Brazil and Thailand, had high female entrepreneurial participation rates, whilst some of the lowest were found in the Eastern European economies.

The Gender Gap

The Global Entrepreneurship Monitor also conducted a worldwide survey during 2010 on women in entrepreneurship. Here it was highlighted that although entrepreneurial activity among women is highest in emerging economies, the proportion of all entrepreneurs who are women varies considerably amongst the economies. A multi-year analysis also showed that this gender gap had persisted across most economies from 2002 until 2010. Overall, it seemed as if women were less likely to venture into entrepreneurship than men. In most economies, more women than men were motivated by necessity when starting a business. In emerging and developing economies during this period, women tended to start more new businesses rather than managing established ones. This reverses in developed economies where, like their male counterparts, more women are established business owners than entrepreneurs.

Fewer Women Entrepreneurs

Similarly to men, women are just as likely to see entrepreneurship as attractive; yet they are less likely to believe that there are many opportunities for them to start a business in their area. The report also showed that between 2002 and 2010, women's positive perceptions regarding entrepreneurial opportunities declined in most developed economies. Women, who are more achievement orientated, are also more likely to be dissuaded from entrepreneurship due to a fear of failure and; they are less likely than men to display intentions for starting businesses. Some of the major reasons for fewer female entrepreneurs, especially in developing economies, may be put down to old-fashioned gender stereotyping. Women in some of these countries also have far less access to financial resources than men - with some discrimination from financial institutions playing a role. Interestingly, the report further indicates that education levels of entrepreneurs rise in proportion to their country's phase of economic development. Women entrepreneurs in wealthier economies tend to be older, well educated, and just as likely to create innovative products as their male peers; yet they have half the growth expectations of men.

Why Women Entrepreneurs are a Vital Source of Growth in our Economies

Despite the tremendous hardships faced by women entrepreneurs, they seem to be better at fighting poverty than men. This can be attributed towards them using the profits from their business to improve their family's living conditions and lifestyle. They also tend to invest in their children's education in order to better their lives. Ultimately, this helps to stop the generational poverty cycle – thus stimulating economic growth.

Business Networks for Women

The number of business networks for women entrepreneurs is increasing as there is a great need for these women to connect with other business women for guidance and motivation, through the sharing of their experiences. However, guidance and mentorship from their male counterparts is just as valuable. Corculture plays a major role in assisting and encouraging women entrepreneurs to become investment ready.

"As women continue to emerge as key participants in the entrepreneurial phenomenon, they will contribute increasingly to economic development, innovation and the societal value of their communities and the world." (Professor Donna J. Kelley, Associate Professor of Entrepreneurship at Babson College and the lead author of the GEM Women's Report).