Newswise — Women entrepreneurs worldwide—in high and low income countries and with varied levels of education—are more than likely employed in a second wage-earning job. Dual employment is a critical factor in the creation of women-run entrepreneurial ventures according to The Global Entrepreneurship Monitor (GEM) 2006 Report on Women and Entrepreneurship released today by The Center for Women's Leadership at Babson College.
Globally, entrepreneurial activity is highest among women who are also employed in a wage job (whether full or part time). This suggests that working provides access to resources, social capital, and ideas that may aide in establishing an entrepreneurial venture. Data shows that for the poorest and less educated, having work experience provides a valuable platform toward starting a business. GEM data suggests that social and economic benefits of working are driving women's entrepreneurship more than increased education or household income.
Also, globally and at all income-levels, women entrepreneurs exhibit less fear of failure than those who shy away from business start-ups, yet they express less optimism and self-confidence than men starting businesses.
In both high and low/middle income countries, women with higher levels of education are more likely to transform their new ventures into established businesses.
"Early-stage entrepreneurship in women continues to grow globally," says Babson College 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." The Global Entrepreneurship Monitor (GEM) 2006 Report on Women and Entrepreneurship, based on data collected through the Global Entrepreneurship Research Association (GERA), directed by Babson College and London Business School, is a comprehensive and up-to-date study of the role played by women in entrepreneurial activity across the world economy.
Key Findings in 2006
GEM Women 2006 estimated more than a third of all people involved in entrepreneurial activity are women. Across the 40 countries in the report, low/middle-income countries showed the highest rates of female early-stage entrepreneurial activity, while high-income countries reported the lowest. Even so, men are more likely to be involved in entrepreneurial activity than women. In high-income countries, men are almost twice as likely to be early-stage or established business owners than women.
Russia is the only country where the rate of female early-stage entrepreneurship is significantly higher than the male rate.
Across all GEM countries, women in low/middle-income countries (such as Russia and Philippines) exhibited the highest women's early-stage entrepreneurial activity (39.3% and 22.5%), while high-income countries (such as Belgium and Sweden) reported the lowest (1.0% and 2.3%). A similar situation exists with established businesses. In no countries is the female rate higher than the male rate of established business ownership.
The gender gap between male and female entrepreneurs narrows among low/middle income countries particularly for early-stage entrepreneurship (27%), but widens to 45% for established business owners. GEM suggests that access to labor markets in middle-income countries actually encourages women to start their own businesses.
In both country groups, the gender gap is greater among established business owners than among early-stage entrepreneurs. Still, the likelihood that early-stage entrepreneurs will become established is greater in high-income countries, and there is no gender difference in the survival rates between male and female businesses.
Motivations and Business Outcome
The ratio of opportunity (exploit a perceived business opportunity) to necessity (work options are absent or unsatisfactory) entrepreneurs is significantly higher in high-income countries than in low/middle-income countries, and this effect is significantly amplified for women entrepreneurs.
Across both country groups, the rate of male opportunity entrepreneurship is higher than that of women. A different picture emerges for necessity entrepreneurship, which reports no difference by gender.
Women's businesses show many of the same patterns as those of men regarding industry sector, use of innovation and technology, firm employment, and growth potential.
Characteristics of Women Entrepreneurs
Age distribution pattern of men and women entrepreneurs is similar regardless of stage of entrepreneurship or country context. In low and middle-income countries, women become early-stage entrepreneurs between the ages of 25-34, and established between the ages of 35-44. These age spans broaden in high-income countries; early-stage women are 25-44 and established 35-54 years old.
Globally, entrepreneurial activity is highest among women who are also employed in a wage job (whether full or part time). This suggests that working provides access to resources, social capital, and ideas that may aide in establishing an entrepreneurial venture. Moreover, the social and economic benefits of working may be driving women's entrepreneurship more than increased education or household income. Data shows that for the poorest and less educated, having work experience provides a valuable platform toward starting a business.
Level of education is positively correlated to survival rates. In low/middle-income countries, 36.5% of early-stage women and 46.9% of established women business owners have less than a secondary degree. In high-income countries, only 25.2% of early-stage women and 28.2% of established women business owners have less than a secondary degree.
Across the board, women in higher-income households are more likely to be involved in early-stage entrepreneurial activity. GEM suggests that the highest levels of early-stage activity are within low/middle income countries because of the prevalence of necessity entrepreneurship
In every GEM nation, women tend to be less optimistic and self-confident than men about starting a business. But once involved in entrepreneurial activity, women's confidence builds, and they are more likely to know other entrepreneurs, and exploit viable opportunities just like their male counterparts.
Fear of failure is also higher for women than men in low/middle-income countries, and 34% of necessity-motivated women expressed such a fear, perhaps because they perceive no other job options. But GEM shows that fear of failure is lower for both women and men who choose entrepreneurship than their peers who shy away from business creation.
Implications for Policy
Whether involved in early-stage or in established businesses, female entrepreneurship is an increasingly important part of the economic profile of any country.
A significant and systematic gap still exists in the entrepreneurial involvement and business ownership of men compared to women. This gap is more pronounced in high-income countries and in more technology intense sectors.
GEM Women 2006 includes four case studies related to women's entrepreneurship in Chile, China, Ireland, and the United States that exemplify the differences and the challenges women entrepreneurs face everyday. This understanding is the first big step to formulating sound strategies and initiatives.
GEM is a major research project aimed at describing and analyzing entrepreneurial processes within a wide range of countries. In particular, GEM focuses on three main objectives: "¢ To measure differences in the level of entrepreneurial activity between countries "¢ To uncover factors determining the levels of entrepreneurial activity "¢ To identify policies that may enhance the level of entrepreneurial activity
Since its inception in 1999, GEM's major activity has been the creation of a large data set and the construction of harmonized measures of entrepreneurial activity. The data used in the report comes from the 2006 GEM adult population surveys, and from standardized cross-national data obtained from sources such as the World Bank, the International Monetary Fund, and the United Nations. The 2006 GEM adult population surveys were conducted by telephone or face to face, and were designed to yield a representative sample of the population within each country. The GEM data set for 2006 includes responses from 152,255 individuals, 49.9% of whom were women.
The 40 GEM countries participating in 2006 were divided into two country groups (low/middle-income and high-income) based on their per capita gross domestic product (GDP) and GDP growth rate. The low/middle-income country group is comprised of 20 countries, they are: Argentina, Brazil, Chile, China, Columbia, Croatia, Czech Republic, Hungary, India, Indonesia, Jamaica, Latvia, Malaysia, Mexico, Peru, Philippines, Russia, South Africa, Thailand, and Uruguay. The high-income country group also is comprised of 20 countries: Australia, Belgium, Canada, Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Japan, Netherlands, Norway, Slovenia, Singapore, Spain, Sweden, United Kingdom, and United States. For each country, data are weighted by gender, age, and in some cases geographical distribution in order to adjust the sample to each population.
Detailed information on GEM data collection methodology can be found in the Global Entrepreneurship Monitor 2006 Data Assessment available through the GEM Consortium Web site at www.gemconsortium.org. In addition, a summary of the statistical properties of the data can be found in the technical appendix at the end of this report.