Missing women entrepreneurs

Globally, women are under-represented in entrepreneurship. Estimates suggest that only one in three small, medium and large businesses worldwide are owned by women. In south Asia, the share of small, medium, and large firms with a woman among the principal owners is even lower, at 18%. It is noteworthy that while a vast majority of women are self-employed in the region, an overwhelming majority are engaged in own-account work or in unpaid family work. Such self-employed people are referred to as ‘subsistence entrepreneurs’ and are dominant in developing economies, where, in the absence of unemployment insurance, they are compelled to resort to self-employment. Opportunity-driven women entrepreneurs are few in the region. 

It is a well-known fact that when barriers faced by opportunity-driven women entrepreneurs are eliminated, it results in substantial gains in growth, productivity, and welfare. Importantly, empirical evidence suggests that enterprises headed by women entrepreneurs create more steady employment opportunities for other women as compared to their men-headed peers. Regardless of the positive outcomes, women entrepreneurs face a range of obstacles. Many of the constraints confronting women entrepreneurs are the same as those pertaining to all businesses. The issues largely centre on access to finance, inability to access markets and networks, inadequate business and technical skills, small and less effective entrepreneurial networks, and the lack of a conducive regulatory environment for doing business. However, it is noteworthy that most of these challenges are far more intensive for women entrepreneurs, with some impediments being faced exclusively by them. Predominant amongst these are the cultural and social norms that disadvantage women in their entrepreneurial ventures. Regressive gender norms and biases, in turn, tend to result in limited endowments vis-à-vis education, asset ownership, networks, discrimination (both legal and financial), and restrictions on mobility, thereby exacerbating the challenges faced by women in operating a business and expanding it. 

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While identifying the factors that constrain women entrepreneurs is important, it is also crucial to understand what factors enable them to succeed. A recent study by Talentnomics India has sought to do so by examining the experiences and journeys of 20 successful first-generation women entrepreneurs in the South Asian region, who have managed to launch and grow very successful businesses over the last few years. The case studies in this analysis focus on opportunity driven women entrepreneurs in South Asia, and not necessity driven entrepreneurs who have turned to self-employment due to dearth of gainful employment opportunities.

Against all odds, the journey of these successful women entrepreneurs has been marked by resilience, determination, assiduity and a strong sense of purpose to create an identity for themselves and their businesses. They have been found to possess common traits of action-mindedness, ability to adapt to changing business needs, self-confidence, and problem-solving abilities. Apart from their personality traits, the success of the female entrepreneurs in the study has been enabled by a confluence of factors. First, a good education has enabled most of these women to see greater entrepreneurial opportunity, overcome barriers, and adapt to changes in their business environment. Second, successful new-age women entrepreneurs have often been found in non-traditional or sunrise sectors, for instance in STEM (science, technology, engineering, and mathematics) industries, manufacturing and agro-industry, and not in low-productivity and low-profitability sectors where women entrepreneurs typically tend to concentrate. Third, the set of case studies suggests that many of these successful women entrepreneurs appear to have followed a model of structured experimentation and iterative design in managing and building their business by experimenting, testing, and iterating while developing products based on findings from tests and feedback. Fourth, family support has been a crucial factor in enabling women entrepreneurs to succeed.  

Fifth, the case studies also highlight the importance of both human and social capital as key facilitators for success. While the former refers to the range of valuable skill sets and knowledge a person accumulates over time, the latter refers to the social relationships cultivated by an entrepreneur, particularly through networks and mentors that play a crucial role in setting up a firm and accessing resources in each phase of the business process. In this context, the importance of effective networks cannot be overstated. Often, many of the challenges faced by women entrepreneurs such as access to markets or finance can be navigated with the help of social capital, which can be created by networking in the business world.

These case studies also indicate that the gender gap in social entrepreneurship is much smaller than the gender gap in ‘mainstream’ entrepreneurship, suggesting that social entrepreneurship can be a powerful tool to encourage female entrepreneurship and participation of women in the labour market. Global evidence also suggests that social enterprises led by women and men tend to be very similar in size, profitability, and growth, but women-led social enterprises are more innovative and more likely to open up new markets by providing a product/service which no one else at that time has provided. It is, perhaps, due to their specific sensitivity towards social needs that women social entrepreneurs are notable ‘lead innovators’ when it comes to social innovation.

Understanding how best to support female entrepreneurs is an important part of the policy agenda to promote growth and productivity in developing countries. Given the multiplicity of constraints faced by women entrepreneurs and the enabling factors that allow them to succeed, policy intervention packages to promote female entrepreneurship need to tackle multiple barriers concomitantly. Unshackling entrepreneurship amongst women calls for a multidimensional strategy that facilitates access to finance through financial literacy and a range of financing instruments, builds entrepreneurial networks and develops entrepreneurship skills through training courses, mentoring and women-dedicated business incubators and accelerators. Importantly, it requires promoting a positive attitude around female entrepreneurship through role models and ambassadors and addressing regressive gender norms embedded in discriminatory laws and regulations, in particular, unequal property and inheritance rights which impede women’s ability to start and grow businesses.