By Preethi Rao
Ease of Doing Business for MSMEs: There are a number of recognizable patterns in women’s business ownership that need to be considered in designing development interventions. Firstly, women are less likely to own formal businesses compared to men. In India specifically, they are more likely to own an informal micro-enterprise. Women-led businesses contribute to only around three per cent of the total industrial output at present. Secondly, women-led businesses are typically in consumer-oriented sectors that are less capital-intensive such as textile, apparel, tobacco and retail. These industries are characterized by low barriers to entry, as well as lower productivity, as compared to industries with high male concentration. Thirdly, women-led businesses employ fewer people compared to businesses owned by men.
According to the Sixth Economic Census, over 83 per cent of women-run establishments function as sole proprietorship, without any hired workers. Women-led businesses are characterized by subsistent, home-based, conventional businesses accounting for over 80 per cent of enterprises, as opposed to men-led businesses (40 per cent). There are also intrinsic differences in the type of enterprises that women own and control. A study conducted by the British Council finds that less than nine per cent of for-profit companies in India are led by women, while they contribute to over 24 per cent of social enterprises in the country.
Given the multi-faceted nature of women-led businesses, a segmented approach is warranted in promoting and supporting them. Segmentation allows for concentration and effective utilisation of resources. Women-led enterprises can be segmented or grouped according to the type and sectors, as mentioned above, or according to the motivation levels of the entrepreneurs. Creating ‘personas’ of such enterprises and entrepreneurs allows supply side institutions to capture the commonalities in needs and behaviors, and thus customise the support extended to them as a cohort.
In some of the studies undertaken by LEAD at Krea University, we have created personas of women entrepreneurs running home-based businesses including Millennial Entrepreneur (young, educated, independent, risk tolerant), Striving Entrepreneur (middle-aged, makes own decisions, not risk-taking, mature business), and Latent Entrepreneur (long-running business, aspirational, risk-taking). Personas were also based on their level of income (subsistent, conventional, steadfast and opportunity/aspirational). The personas either depict the readiness or business acumen of women entrepreneurs or their ability to scale their businesses.
As supply-side actors, investors, philanthropists or the government can extend support according to such readiness or aspiration, enabling utilization of resources to create the highest impact. For instance, mature businesses at the micro level will need connections to networks and incubation programs to graduate to being small or medium enterprises, while entrepreneurs who are subsistent or conventional are more likely to appreciate subsidies or schemes aimed to enable a stable flow of income for their families. The level and type of support required varies considerably across segments. Subsistent or striving entrepreneurs are tackling normative barriers which requires a change in attitudes and patriarchal behaviors, best addressed by NGOs and community-based organizations. Whereas, growth-oriented enterprises will require support in accessing finance and linking to markets which can be catered to by the private sector.
Segmentation can also help recognize early adopters of innovations or technology, who can then act as a role model for other women entrepreneurs to be onboarded to newer ways of running businesses. Therefore, there is a need to recognize the variability in women-led businesses and to use a segmented approach to cater to their needs.
Preethi Rao is Associate Director at Krea University’s research centre LEAD. Views Expressed are the author’s own.