The rise of the female entrepreneur

Mar 06 2007 by Nic Paton Print This Article

Women around the world are increasingly likely to strike out and set up their own businesses, but also prefer to keep "the day job" going alongside.

Women now make up a third of all entrepreneurs around the world but tend to have a very different approach to starting up than men, according to a study by The Center for Women's Leadership Babson College.

They are generally more cautious Ė being more likely to want to continue to be employed in a second wage-earning job than men Ė and tend to be less confident than men about whether they will make a success of their start-up.

Nevertheless, the entrepreneurial gender gap is narrowing, the Babson study found, particularly in low to middle income countries.

The report, which looked at entrepreneurial activity in 40 countries, found that low/middle-income countries tended to have the highest rates of female early-stage entrepreneurial activity, while high-income countries reported the lowest.

In high-income countries, men were almost twice as likely to be early-stage or established business owners than women.

Intriguingly, Russia was the only country where the rate of female early-stage entrepreneurship was significantly higher than the male rate.

Women in low/middle-income countries (such as Russia and Philippines) exhibited the highest women's early-stage entrepreneurial activity (39.3 per cent and 22.5 per cent respectively).

In high-income countries such as Belgium and Sweden the rate was the lowest, at 1 per cent and 2.3 per cent respectively, it added.

Dual employment was a critical factor in the creation of these women-run entrepreneurial ventures.

Globally, entrepreneurial activity was highest among women who were also employed in a waged job (whether full or part time).

This, the report suggested, indicated that continuing in an established job provided women with access to resources, social capital and ideas that helped them in establishing their entrepreneurial venture.

For the poorest and least educated, work experience provided a valuable platform toward starting a business.

Globally and at all income-levels, women entrepreneurs exhibited less fear of failure than those who shied away from business start-ups.

Yet they also expressed lower levels of optimism and self-confidence than men.

In both high and low/middle income countries, women with higher levels of education were more likely to transform their new ventures into established businesses.

"Early-stage entrepreneurship in women continues to grow globally," said Babson professor Elaine Allen, principal researcher of the study.

"While overall women still lag behind men in starting a business, for the first time, we see parity or a higher rate in women in some low to middle income countries," she added.

However, the survey stressed that, while women tend to be less optimistic and self-confident about starting a business, once up and running their confidence rapidly built and they were more likely to know other entrepreneurs and exploit viable opportunities, just like their male counterparts.

In both country groups, the gender gap, perhaps unsurprisingly, was greater when it came to established business owners than among early-stage entrepreneurs.

The likelihood that early-stage entrepreneurs would become established was greater in high-income countries, and there was no gender difference in the survival rates between male and female businesses.

Women-run businesses showed many of the same patterns as those of men regarding their industry sector, use of innovation and technology, firm employment and growth potential, the survey also found.

And, when it came to age, the distribution pattern was similar regardless of stage of entrepreneurship or country context.

In low and middle-income countries, women generally became early-stage entrepreneurs between the ages of 25-34 and established between the ages of 35-44.

These age spans broadened in high-income countries; where early-stage women were around 25-44 and established by 35-54 years old.

Education levels also had an impact on survival rates. In low/middle-income countries, more than a third of early-stage women and nearly half of established women business owners had less than a secondary degree.

In high-income countries, this dropped to just over a quarter of early-stage women and nearly three out of 10 of established women business owners.

Across the board, women in higher-income households were more likely to be involved in early-stage entrepreneurial activity.