Forty-one percent of entrepreneurs are women, according to a new Global Entrepreneurship Monitor (GEM) report on women’s entrepreneurial activity. The report was released today by The Center For Women’s Leadership at Babson College.
“The GEM study on women’s entrepreneurship emphasizes the critical role women have in new venture creation and provides insights to inform policies focused on increasing and extending the scope and reach of their entrepreneurial activities,” said Dr. Nan Langowitz, Director of the Center for Women’s Leadership at Babson College. “These findings support our goal of understanding, featuring and supporting the entrepreneurial efforts of women worldwide.”
Key findings:
– 73 million people are involved in starting a new business in the 34 countries that participated in the study. Of those, about 30 million are women. The average level of female total entrepreneurial activity varied from 39.1% in Peru to 1.2% in Japan.
– In every country in the study, men are more active in entrepreneurship than women. The largest gap occurs in middle income nations where men are 75% more likely than women to be active entrepreneurs, compared to 33% in high-income countries and 41% in low-income countries.
The GEM report shows that across all countries, a strong positive and significant correlation exists between opportunity recognition and a woman’s likelihood of starting a new business. Women who perceived the existence of business opportunities were more likely to make the decision to start a new business.
Additionally, across all countries, a strong positive and significant correlation exists between a woman’s belief of having the knowledge, skills and experience required to start a new business and her likelihood of starting one. Conversely, a strong negative and significant correlation exists between fear of failure and a woman’s likelihood of starting a new business.
“In order to be effective, policies with respect to entrepreneurship need to be tailored to a country’s specific context,” said Prof. Minniti. “This is particularly important for women since they tend to be much more sensitive than men to conditions in their local environment. Nonetheless, across all countries, it is clear that support policies by themselves are not sufficient to increase women’s involvement in entrepreneurship. Women are particularly sensitive to their social environment. Mentoring and network support, especially at the local level, are at least as crucial in boosting women’s attitudes with respect to business leadership and new venture creation as financial support.”
While the findings of this report are fascinating at face value, the “So what?” questions are the where it gets really interesting.
Policy Implications for High-Income Countries
From the Babson Authors: High-income countries need to sustain innovation rates and encourage the involvement of women in entrepreneurship, especially when faced with an aging labor force. Areas of importance for policy makers should include promoting entrepreneurial education at the college and post-graduate level and encouraging more women to pursue technical degrees and to commercialize their ideas. Coordinating policy to encourage equal benefits for women in the workforce, whether in traditional or entrepreneurial business roles, is vital.
While I agree on the critical role that education plays in improving the success rates of business start-ups, I am concerned where the authors are headed with their other recommendation for high-income countries. What do they have in mind in terms of “equal benefits” in “entrepreneurial business roles”? Are we talking mandates or quotas? That would be a sure fire way to stifle entrepreneurial activity overall in these countries. Such governmental social engineering related to economic activity just never has proven to work. In fact, it has the opposite impact over time.
Policy Implications for Middle-Income Countries
From the Babson Authors: More than in other groups, women in middle income countries shy away from starting their own businesses. Areas of importance for policy makers should include to instill fundamental aspects of the entrepreneurial mindset and to increase the attractiveness of entrepreneurship as an income producing activity for women even when they have access to jobs in manufacturing or in the public sector.
I recommend that we avoid the temptation to micro manage public policy based on any particular findings of this report. Why? The devil is always in the details on such research. In this case, the middle-income countries in this study tend toward more socialistic policies, which have been shown to be anti-entrepreneurial.
Policy Implications for Low-Income Countries
From the Babson Authors: Much female entrepreneurship in low-income countries is motivated by necessity, thus starting a new business represents an effective and flexible way for women to emancipate themselves and provide for their families. Areas of importance for policy makers should include literacy and financial assistance.
Amen to the role that entrepreneurship can play in pulling all citizens in these countries out of poverty. My only comment is that we let the private financial markets, both for-profit and non-profit, provide the kinds of micro-credit programs that have proven to be so successful. We don’t need governmental agencies getting into the credit business. Leave it to the experts.
(Source: The Center for Women’s Leadership at Babson College).
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