The Entrepreneurship Gender Gap Isn’t Shrinking

Women still start fewer businesses than men and are less likely to achieve business success, according to a comprehensive new international survey

By Karen E. Klein

Drawing on interviews with more than 175,000 adults and multiple sources of data, the Global Entrepreneurship Monitor 2010 Women’s Report, released earlier this week, is the most comprehensive study to date of women’s business activity, says Donna J. Kelley, associate professor of entrepreneurship at Babson College and lead author of the report. Evaluating 59 economies, it found that more than 104 million women ages 18 to 64 were actively engaged in starting and running new business ventures, and 83 million women were running businesses that were more than three years old.

Despite the impressive numbers, the report reveals a persistent gender gap. Kelley spoke this week to Smart Answers columnist Karen E. Klein about the findings and the policy implications of the report. Edited excerpts of their conversation follow.

Karen E. Klein: This GEM survey is the first to look specifically at women entrepreneurs since 2002. What’s changed?

Donna J. Kelley: We continue to see consistently that fewer women become entrepreneurs than men. In some economies you have ups and downs in entrepreneurship and women follow those trends. But in general, fewer women participate in most of the world’s economies.

In our 2010 data, only one country had more women than men involved in entrepreneurship and that was Ghana. What we see there and in many developing countries is that women participate out of necessity because they need to create income for their families and they have few other job possibilities.

Which countries had the highest participation rates for women entrepreneurs?

The Latin American economies and the sub-Saharan African region had more relative participation from women compared to men and there are higher entrepreneurship rates overall in those countries as well. In the Middle East, Eastern Europe, and Northern Africa, we see both lower entrepreneurship rates overall and less participation by women.

What about Asia?

That’s interesting. Korea has the lowest participation rate for women relative to men even though the country as a whole has pretty good entrepreneurship rates. Japan also has low participation rates for women, and low entrepreneurship rates overall. China has both high rates of entrepreneurship overall and pretty good participation rates for women, with 16 percent of the male population engaged in entrepreneurship and 12 percent of women.

What kinds of factors determine how many women participate in business ownership?

There are a lot of factors, including the availability of employment options for women and the availability of child care. It’s hard to identify specific reasons in specific countries, but culture is really important. Talking with some of my Korean colleagues, they say there are definite role expectations for women and fewer day-care options. In China, women typically have their parents take care of the children so they are empowered to go out and work.

Which countries had the greatest level of equality between men and women?

Australia has equal numbers of women and men participating in entrepreneurship, but more than twice as many men running established businesses as women. In the U.S., 8 percent of the male population and 7 percent of the female population is engaged in entrepreneurship. But again, there are more male established business owners than female business owners.

Interestingly, in Norway we saw a reverse trend. There are three times as many males as female entrepreneurs, but only 1.5 times as many males as female established business owners.

What attitudes hold women back from starting businesses?

For one, we found that women are just as likely as men to see entrepreneurship as attractive, but they are less likely to see opportunities for starting businesses. In fact, since 2002, the perceptions about entrepreneurial opportunities declined among women in developed economies.

One thing that is critical is women’s belief in their own capabilities is far lower than men’s. Less than half–47.7 percent–of women believe they are capable of starting a business, while well over half–62.1 percent–of men believe they are capable. That lack of confidence persists through all economies and cultures we studied.

Fear of failure is another stumbling block that’s more common among women than men.

Yes. Women are more likely dissuaded from entrepreneurship due to fear of failure and they tend to have smaller and less diverse support networks. They are more likely to rely on family members for support and they are less likely to know an entrepreneur. Men have larger business networks, know more entrepreneurs, and they are more likely to rely on business colleagues for help and support than on family members.

What conclusions do those results lead you to?

We think that mentoring and entrepreneurial role models can boost women’s confidence. Also, women are just as well-educated and as likely to create innovative products as men, but they have half the growth expectations for their businesses as men. So, for those female-owned businesses that do have high-growth potential, we need to get them the resources, support, training, and mentoring they need to move to that next level.

Your report reviews some government, nonprofit, and private-sector programs aimed at trying to enhance women’s entrepreneurship. What did you find?

In Ireland, we covered one initiative that is focused on growth entrepreneurs. They get a female mentor to run roundtable forums focusing on growth, where women business owners can share what they’ve learned and do group problem solving. The lead entrepreneur acts as a role model and a mentor, and it has been really successful at helping women with limited resources tap into their own creativity. More than 150 women entrepreneurs have benefited.

[Karen E. Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues.]

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