6 Global Trends Reveal How Women Are Redefining Entrepreneurship
Tiny specks form a massive ocean. The adage couldn’t be better represented than the scenario in the small and medium business sector today. In 2016, nearly 98 percent of all importers in the U.S. were small and medium-sized companies with fewer than 500 employees, and the percentage of exporters was only marginally lower at 97 percent, according to the Small Business and Entrepreneurship Council. An estimated $556.2 billion in goods were traded with 15 foreign countries by early 2016, with about 96 percent of the SME consumers living outside the U.S.
Most women-owned businesses are SMEs, yet women-owned firms seem to be lagging in tapping their vast foreign consumer base. Despite studies showing that women-owned businesses that engage in the export of their goods and services earn exponentially higher than women-owned firms that do not, only 12 percent of businesses that export are owned by women.
The Global Entrepreneurship Monitor(GEM) Report for Women 2016/17 reports that 274 million women were already running their own businesses across 74 economies, of which 111 million were running well-established businesses by 2016.
As globalization is breaking down the barriers that limited businesses by cultures, gender and geography, many partnership and trade agreements have been developed in an attempt to encourage global economic activity among women. Women are known to give back about 90 percent of their earnings to the health and education of their communities and families, contributing to development directly, so it’s easy to see why it is critical.
Understanding women’s entrepreneurial attitudes, trends and activity from all over the globe will help shape government policies at various levels along with the numerous educational and training programs aimed at improving the business environment for women.
Here are some interesting findings -- and paradoxes -- from the GEM Women report:
1. Developing economies see a higher male-female parity among entrepreneurs than developed economies.
Asia and Latin America showed the highest parity between male and female entrepreneurs, resulting in higher Total Entrepreneurial Activity (TEA) in factor-driven economies. Economies at the innovation-driven stage of development saw women start businesses at 60 percent the rate of men -- a surprisingly sharp decline from factor-driven economies. Despite the advantage of technology in a typical innovation economy, fewer women were inclined towards entrepreneurship.
2. More women than men cite opportunity motives for business.
More women than men, about 20 percent more, cite opportunity as the primary reason for venturing into business even in factor-driven economies. This only becomes more pronounced in the innovation-driven group, where women are three and a half times more likely to cite opportunity motives rather than necessity motives.
The increased opportunity perception is associated with the higher TEA. Also, the report shows that women entrepreneurs have a 5 percent greater likelihood of innovativeness than men across all 74 economies.
3. More women than men never start their business.
Though the number of women who aspire to start their businesses is closer to the number of men, the gap widens among business-owners, indicating that women are less likely to start their business and also more likely to exit at early stages or between phases of transition (4 out of 10 in factor-driven economies). This trend slightly improves in innovation-driven economies where there are two exits for every 10 businesses owned by women.
Business discontinuance among women is associated with lower growth expectations and dealing with their expected roles as primary caregivers for their families.
4. Women gravitate towards community-driven initiatives.
In the developed economies, more than half of women-led businesses are seen to be clustered around government, health, education and social services. The report shows that women are geared towards sectors typically dependent on human capital -- possibly due to women’s inherently greater emotional appeal.
5. Entrepreneurial activity declines as economic development increases.
Surprisingly, entrepreneurial activity among women showed a decline when economic development improved, resulting in a wider gender gap.
While developing countries showed higher entrepreneurial activity, fewer enterprises were likely to transition to a mature stage. Innovation-driven economies were seen to be more conducive for sustainable businesses but registered slower growth than men-owned businesses. Interestingly, women in innovation-driven economies displayed a less favorable view of their own capabilities than women in developing economies.
Laurel Delaney, founder of Women Entrepreneurs Grow Global and author of the bestselling book “Exporting: The Definitive Guide to Selling Abroad Profitably,” says “Even in a developed economy, women business owners are less likely to explore and expand their products or services because they think they can’t do it, or that they don’t have access to the right training, education, advisory networks, mentorships and community programs. This perceived deficiency makes it difficult for women to access markets, conduct marketing and establish relationships.”
6. Entrepreneurial activity declines as education level increases.
Entrepreneurial participation was seen to decline with an increase in the level of education, suggesting that general education is less relevant for building entrepreneurial skills or competencies.
This fact is demonstrated by the emergence of entrepreneurial activities in the most unexpected of places. A refugee camp in South Sudan was found to be flourishing with micro-enterprises and small businesses, mostly led by women. Technology, the massive gamechanger is crushing barriers between geographies and cultures, and unifying businesses with the perfect customer to get them hooked without prohibitive costs.
“A global mindset starts with self-awareness, reflects an authentic openness to and engagement with the world, and employs a heightened awareness to the sensitivity of cross-cultural differences,” noted Delaney.