No Silver Bullet for Women Entrepreneurs

November 7, 2018

By Kate Francis

Women’s entrepreneurship is a top regional concern in Asia, where women own more than half of the small and medium enterprises (SMEs) in some countries. Even where women are starting businesses at relatively high rates, however, their profits and growth are constrained relative to their male counterparts. In Cambodia, for example, less than 1 percent of businesses with more than 10 employees are owned by women, and women’s entrepreneurship rates in South Asia are among the lowest in the world, with less than one in 10 SMEs owned by women. What explains this persistent gender gap in entrepreneurship across the region, how can it be overcome, and does it matter?

First, it absolutely does matter. Asia and the Pacific stand to gain 70 percent in per capita income within roughly two generations by eliminating gender disparities in employment, including in the area of entrepreneurship. Increasing women’s entrepreneurship is good for national banks and citizens’ wallets alike.

But when it comes to how, the answer isn’t so simple. When researchers in the 1980s first began studying women’s entrepreneurship, their analyses hinged on comparisons between the individual characteristics of male and female entrepreneurs, attributes such as age, education, and attitudes that were assumed to explain why men appeared to be “naturally” more entrepreneurial than women and thus more successful in business. These studies were later criticized for committing the “individualistic fallacy,” assuming that individual outcomes are solely the result of individual characteristics while overlooking factors in the environment. More recent research has adopted the concept of an “entrepreneurial ecosystem,” which is the social and economic environment that fosters or frustrates entrepreneurial activity. The picture of women’s entrepreneurship shifts dramatically when socioeconomic factors like legal rights, access to education, national family-leave policies, and cultural and religious norms enter the equation. From this angle, the central question pivots from “what’s wrong with women” to “what’s wrong with the system?”

A growing body of research is now exposing how gender inequality is a ubiquitous feature of entrepreneurial ecosystems around the world. This is certainly the case across Asia, where women entrepreneurs in every country face multiple—and often very different—layers of gender-based barriers to starting and growing their own businesses. In a new report, Emerging Lessons on Women’s Entrepreneurship in Asia and the Pacific, the Asian Development Bank and The Asia Foundation examine the growing body of data and information to better guide governments, investors, NGOs, donors, and development partners to effectively support women’s entrepreneurship. It concludes by proposing eight areas for further research on women’s entrepreneurship.

Some of the challenges highlighted in the report, such as access to credit, seem almost universal, with women in virtually every country citing lack of financing as a key barrier to their success. But the remedies required are far from universal. A woman in the Pacific Islands may need to travel over a day to reach the nearest bank, while an aspiring female entrepreneur in Pakistan cannot apply for a loan without listing her father or husband’s name in the presence of a witness. Dramatically expanding mobile banking could be a game changer for women’s access to credit in the Pacific Islands, but it would have little effect on women’s entrepreneurship in Pakistan.

Though women comprise just under half of the total population in Bangladesh, their participation in the formal labor market lags far behind that of men, and the rates of business ownership by women are even lower. Photo/Geoffrey Hiller

This example illustrates a central argument of the report: to close the gender gap and open the door for significantly more women to pursue entrepreneurial ventures, we must better understand the diverse ecosystems in which they work. No single fix will erase the entrenched and often unconscious systems of gender bias across all of Asia—rather, there must be many fixes, tailored to the specific conditions that prevail in each country and each region. To achieve the nuanced understanding of these conditions that will lead to effective solutions, we need more data—data that is both sex-disaggregated and gender-sensitive.

Large global data sets now feature sex-disaggregated data, including Global Findex; Women, Business, and the Law; the Global Entrepreneurship Monitor; the Female Entrepreneurship Index; and the Global Women Entrepreneur Leaders Scorecard. These resources are helpful at a macro level, but more detailed data would give policymakers and practitioners more insight into the local contexts affecting women entrepreneurs. At a very micro level, for example, mixed-gender business associations in Cambodia have no data on women’s membership, which has contributed to a dearth of programs that respond to women’s priorities. At a larger scale, some central banks in the region have started to track, analyze, and publish data on entrepreneurship lending trends, reporting the numbers of men and women who access which financial products and in which industries.

Perhaps more importantly, increased availability of sex-disaggregated data is enabling the development of targets that can push existing boundaries toward necessary reforms. The Bangladesh Bank, for example, now requires all financial institutions to allot 15 percent of their funds to women entrepreneurs and report on their progress toward that goal. Regardless of their size and reach, institutions and programs promoting entrepreneurship, market access, and financial inclusion should automatically track, analyze, and report how their efforts are (or aren’t) serving the different needs of their male and female clients and members.

Women entrepreneurs receive training at the new Women’s Business Center. In the first two months of operation, a total of 721 services were provided.

While sex-disaggregated data will help improve how entrepreneurial ecosystems are evaluated, we still need more sophisticated methodologies for determining what to measure. At a very basic level, definitional challenges complicate our ability to even count the number of women entrepreneurs. The new report notes at the outset that there is no universally accepted definition of a “woman-owned” or “woman-led” business, much less a “woman entrepreneur.” Definitions matter when we’re trying to piece together such puzzles as why women tend to own smaller businesses. Is it because they actively choose slower growth, for example, or could it be that growth is typically accompanied by a loss of control to males, so that women’s businesses that do grow successfully get counted as men’s businesses?

Asia Foundation case studies from Mongolia and China, recounted in the report, also illustrate the current inadequacy of measures such as “success” and “empowerment” in the field of women’s entrepreneurship. Both studies demonstrate that business incubator services and networks can help women start their own enterprises. But even those women who didn’t start or grow a business as a result of the trainings often reported increased influence over household decision-making, improved social status, and higher self-esteem as a result of their participation. Developing more gender-sensitive indicators of success that extend beyond strict financial measures to capture the full impact of entrepreneurship on women’s lives will help ensure that we fully value and invest in policies and initiatives to create a holistic enabling environment in which women can turn their great ideas into successful businesses.

Kate Francis is coauthor of Emerging Lessons on Women’s Entrepreneurship in Asia and the Pacific and specializes in women’s empowerment, child protection, and business and human rights. She can be reached at [email protected]. The views and opinions expressed here are those of the author, not those of The Asia Foundation.

• Previous in blog« Internet Inaccessibility Plagues “Social Media Capital of the World”

• Next in blogMongolia: Increasing Citizen Participation in Local Decision-Making »

Contact

The Latest Across Asia

2024 Lotus Leadership Awards

Thursday, April 25, 2024, New York City

The Lotus Leadership Awards recognize contributions towards gender equality in Asia and the Pacific