Women's Entrepreneurial Activity Up 10 Percent, Closing the Gender Gap by 5 Percent Since 2014

WELLESLEY, Mass., Sept. 7, 2017 /PRNewswire/ -- Over the past year, 163 million women were starting businesses across 74 economies worldwide—this according to the Global Entrepreneurship Monitor (GEM) 2016/17 Women's Report released today with sponsors Babson College, Smith College, Korea Entrepreneurship Foundation, Tecnológico de Monterrey, Universidad Del Desarrollo, and Universiti Tun Abdul Razak.

"This not only shows the magnitude of impact women entrepreneurs have across the globe, but highlights the contribution they make toward the growth and well-being of their societies," said Babson College Professor and report co-author Donna Kelley. "Women entrepreneurs provide incomes for their families, employment for those in their communities, and products and services that bring new value to the world around them."

Among the 63 economies surveyed in both this and the last report, GEM found that Total Entrepreneurial Activity (TEA) among women increased by 10 percent, and the gender gap (ratio of women to men participating in entrepreneurship) narrowed by 5 percent.

These same economies show an 8 percent increase in women's ownership of established businesses, and a near 10 percent increase in women's opportunity perceptions across Europe, North America, and Asia.

The 2016/17 GEM Women's Report also adds a new consideration—that of women as entrepreneurial investors. While participation rates vary, the participation of women as investors suggests a strong resource foundation from which business owners may build.

GEM economies in the 2016/17 survey cover 69 percent of the world's population and 85 percent of the world's GDP. In its 18^th consecutive year, GEM continues to serve as the largest and most comprehensive single study of entrepreneurship in the world.

According to the Global Entrepreneurship Monitor (GEM) 2016/17 Women's Report:

Entrepreneurial intentions increased among women by 16 percent from 2014 to 2016 across all economies that participated in both this report and the previous one.

Although intentions increased globally, self-perceptions around opportunity and capability vary significantly between development levels.

• 57 percent of women in factor-driven economies believe there are good opportunities around them for starting a business, while only 39 percent of women in innovation-driven economies hold these same beliefs.
• 67 percent of women in the factor-driven group believe they have the capabilities to start a new venture. Under 35 percent of women in the innovation-driven group feel the same.
• On average, women exhibit a 20 percent or greater likelihood of citing necessity as a motive for starting a new business when compared to men. However, opportunity still accounts for the majority of entrepreneurial motives. 
•  In the innovation-driven group of economies, women are over three and a half times as likely to cite opportunity versus necessity motives.

Interestingly, GEM found that women entrepreneurs have a 5 percent greater likelihood of innovativeness compared to men. The highest level of innovation occurs in North America, where 38 percent of women report having innovative products and services.

Women in sub-Saharan Africa and Latin America are more likely than men to state they had exited a business in the past year, and around 56 percent cite either unprofitability or lack of finance as a reason. Discontinuance levels among women are lower than men in Asia, Europe, the Middle East, and North America—this is consistent with lower startup levels compared to men in these regions.

Ten percent of all women entrepreneurs operate their businesses solely and have no intentions to add any employees in the next five years. Europe has the highest frequency of one-person female business activity, while North America has the lowest.

Sub-Saharan Africa maintains the highest regional average TEA rate and strong average growth expectations, which translates into a lot of employment by women entrepreneurs in this region.

The MENA region reports the highest average female growth expectations at 37 percent. Over half of the women entrepreneurs in UAE, Qatar, and Tunisia expect to hire six or more employees in the next five years. Moreover, women in Saudi Arabia and Morocco are more likely than men to have these ambitions.

North America shows the highest education rates among women entrepreneurs, with 84 percent having earned a post-secondary or higher education. Europe is notable for having more highly educated women than men entrepreneurs: 22 percent more, on average.

"Although the gender gap in education and labor force participation decreases at higher stages of economic development, we find that the entrepreneurial gender gap not only persists but increases," says Smith Economics Professor and report co-author, Mahnaz Mahdavi. "By providing entrepreneurial education, colleges and universities can improve women's competencies and increase their rate of business startup to more closely match that of men."

Women participate in entrepreneurship at equal or higher levels than men in Indonesia, Philippines, Vietnam, Mexico, and Brazil.

About the Report

Seventy-four economies are profiled in this report: 65 that participated in the 2016 GEM cycle, and nine that participated in 2015, but not in 2016. It provides both a broadly global and a comprehensively detailed foundation for guiding future research, policy decision making, and the design of initiatives and programs that can enhance awareness about women entrepreneurship. As such, this report brings a greater understanding of women's entrepreneurship to a diverse audience of researchers, policy makers, educators, and practitioners. Its ultimate aim is to foster recognition about the value women entrepreneurs bring to society and to bring about improvements in conditions that encourage and support their aspirations.

Report authors include Babson College Professor Donna Kelley; Smith College Assistant Professor Benjamin S. Baumer; Babson College Vice Provost of Global Entrepreneurial Leadership Candida Brush; Babson College Professor Patricia Greene; Smith College Professor Mahnaz Madavi; Associate Professor Madhi Majbouri; Assistant Director of Special Projects, Global Entrepreneurship Monitor Marcia Cole; Administrative Director of the Jill Ker Conway Innovation and Entrepreneurship Center Monica Dean; and Program Director of the Conway Center René Heavlow.

"Smith College's participation as a report sponsor complements the new Jill Ker Conway Innovation and Entrepreneurship Center's activities, and reflects the importance of Smith's involvement in research efforts showcasing the contributions women make globally to entrepreneurial activity," reported Monica Dean.

Key Findings

Entrepreneurial Activity

Total Entrepreneurial Activity (TEA)

• Among 63 economies (out of 74) featured in both this report and the previous one issued two years prior, overall female TEA rates have increased by 10 percent and the gender gap (ratio of women to men participating in entrepreneurship) narrowed by 5 percent.
• This continues the positive trend revealed in the previous report, which showed an average increase in female TEA rates of 7 percent and a narrowing of the gender gap by 6 percent over the prior two-year period among 61 economies.
• The 74 economies examined in this report show substantial differences in women's TEA rates, ranging from 3 percent in Germany, Jordan, Italy, and France, to 37 percent in Senegal.
• In five of the economies, women participate at equal or higher levels than men.
• These high-parity economies come from two regions: Asia (Indonesia, Philippines, and Vietnam) and Latin America (Mexico and Brazil).
• None of these economies are at the innovation-driven stage of development, where, on average, women start at 60 percent the rate of men.
• The gender gap is greatest in Jordan, an efficiency-driven economy, where female entrepreneurship rates are about one-fourth the male level.
• On average, at all development levels, women exhibit a 20 percent or greater likelihood of citing necessity motives compared to men.
• However, opportunity motives account for the majority of entrepreneurs. Even in the factor-driven economies, there are over one and a half times as many opportunity as necessity entrepreneurs.
• This is even more pronounced in the innovation-driven group, where women are over three and a half times as likely to cite opportunity versus necessity motives.

Entrepreneurial Intentions

• Entrepreneurial intentions increased among women by 16 percent from 2014 to 2016 across the 63 economies participating in both this report and the previous one.
• However, the gender gap is slightly narrower for entrepreneurial intentions than it is for TEA. This suggests that women's intentions are closer to that of men compared to TEA.
• While not everyone's intentions translate into action, the implication is that more women than men may be dropping off in this transition between phases.

Established Business Ownership

• Across these same economies, established business rates increased by 8 percent, on average.
• Additionally, the gender ratio improved by 9 percent.
• Like TEA, as economic development increases, established business activity among women declines and the gender gap increases.
• However, while there is greater demand for entrepreneurship in developing economies than in developed economies, comparatively fewer enterprises have transitioned to the mature stage.
• Women in innovation-driven economies, on the other hand, are less likely to start businesses than those in economies at earlier stages of economic development, but women who start are more likely to have sustainable businesses.
• Established business ownership among women is lowest in MENA.
• This region also reports the widest gender gap, where women are running established businesses at one-third the rate of men.
• Latin America also exhibits a wide gender gap in established business activity, which contrasts with a relatively narrow gender gap in TEA.
• The opposite effect can be seen in North America, which reports the narrowest regional gender gap in established business activity, despite showing a wide gap relative to men in TEA rates.
• In three Southeast Asian countries—Thailand, Vietnam, and Indonesia—established business ownership rates among women are equal to or higher than TEA rates.
• Additionally, there are equal or greater proportions of established business owners among women compared to men.

Business Discontinuance

• Relative to TEA, the highest level of exits per entrepreneur is in the factor-efficiency transition stage, where there are four exits for every ten women starting or running a new business.
• This declines to a little over two exits for every ten female entrepreneurs in the innovation-driven economies.
• The female discontinuance rate exceeds that of males at the first three levels of development, although only by about 10 percent more.
• But given that women are less likely than men to be starting businesses, this means that, despite a smaller pool of businesses, there are more exits for women.
• On the other hand, very few women in innovation-driven economies have exited businesses, and at only two-thirds the rate of men.
• From a regional perspective, discontinuance is highest in sub-Saharan Africa, followed by Latin America.
• This is, of course, related to the fact that more women start businesses in these regions. But it appears that these women often struggle with unprofitability, and slightly more often than men.
• Sub-Saharan Africa also cites the highest level of finance issues associated with closing a business, compared to other regions.

Entrepreneur Characteristics

Age

• The highest participation in entrepreneurship among women can be seen in the 25-34 and 35-44 year olds.
• This is true, on average, across the development levels and regional groups. It is also the case among men.
• In general, the relationship between the genders with respect to entrepreneurship rates holds throughout the age groups, when viewing averages by development level and geographic region.

Education

• While TEA rates tend to decline with development level, the proportion of entrepreneurs with a college or higher level of education increases. To some extent, this is reflective of the general population.
• A small proportion of female entrepreneurs (14 percent) in the factor-driven stage have at least a college degree, while the majority (61 percent) of those in the innovation-driven stage have this level of education.
• Parity with male entrepreneurs in education levels also increases with economic development.
• In the factor-driven stage, women entrepreneurs are about two-thirds as likely as males to have a post-secondary degree or higher.
• In the efficiency-driven and higher levels of economic development, women entrepreneurs are as likely, or more likely, to have reached this level of education.
• North America shows the highest education rates among women entrepreneurs, with 84 percent having earned a post-secondary or higher education.
• Europe is notable for having more highly educated women than men entrepreneurs: 22 percent more, on average.

Attitudes and Affiliations

Opportunity Perceptions

• Opportunity perceptions range from 57 percent of women in the factor-driven economies believing there were good opportunities around them, down to 39 percent holding these beliefs in the innovation-driven group.
• The gender gap on this indicator is relatively narrow, however; overall, opportunity perceptions among women are at 90 percent of male perceptions.

Capability Perceptions

• While 67 percent of those at the factor-driven stage believe they have the capabilities for starting businesses, this declines to just under 35 percent among the innovation-driven economies.
• Additionally, the gender gap in capabilities perceptions is widest in the innovation-driven economies, at just over two-thirds the level reported in men.

Personal Affiliations with Entrepreneurs

• Despite the high visibility of entrepreneurs in American culture, only 27 percent of women in this country know one.
• A similar percentage is reported in Europe.
• In contrast, over half the women in sub-Saharan Africa personally know an entrepreneur.
• What appears to stimulate personal connections are simply the presence of entrepreneurs in one's community. In the lower economic development levels, with high TEA rates, more than half of women know an entrepreneur personally. This declines to just over 30 percent in the innovation-driven group.

Impact

Self-Employment

• On average, across the entire sample, 10 percent of women entrepreneurs operated their businesses solely and had no intentions to add any employees in the next five years.
• In over three-fourths of the economies, women were as likely, or more likely, than men to have self-employment businesses.
• Europe has the highest frequency of one-person female business activity, while North America, containing two advanced economies, has the lowest.
• In Netherlands, half of the women entrepreneurs were operating solely, nearly two and a half times the frequency of men in this country.

Growth Expectations

• Across the regions, the lowest average female growth expectations can be found in Latin America.
• While there are many entrepreneurs in this region, proportionately few expect to grow their businesses.
• Additionally, there is a wide gender gap, with growth expectations barely reaching 60 percent of the male level.
• Interestingly, although sub-Saharan Africa also has a wide gender gap on this indicator, average growth expectations are higher than in Latin America.
• Together with the highest regional average TEA rate, this translates to a lot of employment by entrepreneurs in this region.
• The MENA region reports the highest average female growth expectations at 37 percent, and with the highest gender parity, where women with growth expectations are just under 80 percent of the male rate.
• Over half of the women entrepreneurs in UAE, Qatar and Tunisia expect to hire six or more employees in the next five years. Moreover, women in Saudi Arabia and Morocco are more likely than men to have these ambitions.

Innovation

• Innovation levels increase with economic development, with the innovation-driven economies exhibiting a substantial jump from the other development levels.
• Overall, innovation represents the indicator with the greatest female-to-male gender ratio; across all 74 economies, women entrepreneurs have a 5 percent greater likelihood of innovativeness compared to men.
• The highest level of innovation occurs in North America, where 38 percent of women report having innovative products and services.
• In sub-Saharan Africa, on the other hand, 18 percent of women state their offerings are innovative. Yet both regions, as well as Europe, show gender parity.
• Among entrepreneurs in MENA, women not only report high innovation levels, but are 60 percent more likely than men to state their offerings are innovative, with seven of the ten countries in this region reporting higher innovation levels among female than male entrepreneurs.

Internationalization

• The level of international sales varies dramatically, spanning from zero or less than 1 percent in three Latin American countries (Brazil, Guatemala, and Ecuador) and three Asian countries (Malaysia, Thailand, and Vietnam) to over three-fourths of women entrepreneurs in the UAE and over half in Saudi Arabia.
• On average, more than one-fifth of women entrepreneurs in innovation-driven economies state that 25 percent or more of their sales are to customers outside their economies. This is four times the level of the factor-driven group.
• Regionally, only 6 percent of sub-Saharan African women entrepreneurs are internationally-oriented, and this is somewhat more than half the level of men. On the other hand, 29 percent of women entrepreneurs in MENA are considered international, and at a higher rate than men.

Industry

• Wholesale/retail trade accounts for about 60 percent of female entrepreneurial activity among the first three development levels.
• By comparison, at the highest level of development—among the innovation-driven economies—only one-third of women entrepreneurs compete in this sector.
• This is fairly consistent with male participation in this sector; across the entire sample, women entrepreneurs are just 16 percent more likely to be starting wholesale/retail businesses.
• Over half of women entrepreneurs in the innovation-driven group are in government, health, education, and social services.
• This is the business category that women entrepreneurs dominate relative to men at all development levels.
• On average across the entire sample, they are two and one-fourth times more likely to be starting in this sector.

• Where women are less likely to be seen in the entrepreneurship ranks, is in the ICT sector. Overall, fewer than 2 percent are starting business here, amounting to a little more than one-fourth that of males on average.

Entrepreneurial Investors

• Overall, 4.6 percent of women in the 74 economies provided finance to entrepreneurs in the past three years.
• This ranges from 1 percent in Morocco to 16 percent in Cameroon.
• Entrepreneurial investment in the innovation-driven economies is a little more than one third the level reported in the factor-driven group.
• While male investment rates also decline with economic development level, this decrease is not as steep as it is for female investors, leaving a wider gender gap with higher levels of development.
• Overall, women invest in entrepreneurs at less than two-thirds the rate of men.
• About 5 percent of women in North America, Latin America, MENA, and Asia have personally provided funds to entrepreneurs.
• The other two regions, however, show contrasting results. Only 3.5 percent of women are entrepreneurial investors in Europe, while 9 percent in sub-Saharan Africa have funded entrepreneurs.

About the Global Entrepreneurship Monitor

The Global Entrepreneurship Monitor (GEM) was initiated in 1999 as a joint venture of Babson College and the London Business School. It has gained widespread recognition as the most authoritative longitudinal study of entrepreneurship in the world and accomplishes this effort through the collaborative work of a consortium of national teams consisting of academic researchers from across the globe. Each national team oversees an annual survey of at least 2,000 working-age adults (ages 18 to 64). Starting with just ten developed economies in 1999, the project has grown to involve more than 100 economies over 18 annual cycles. GEM is unique because, unlike most entrepreneurship data sets that measure newer and smaller firms, GEM studies the behavior of individuals with respect to starting and managing businesses. At a time in history when individual entrepreneurial activity may hold the key to transforming the global economy and discouraging ingrained economic disparity in countries with minimal economic opportunity, GEM data has influenced national economic policies and continues to expand its collaborative role. For more information, follow GEM on Twitter.

About Smith College

Since its founding in 1871, Smith College has educated women of promise for lives of distinction. One of the largest women's colleges in the United States and the first to offer an accredited engineering program, Smith links the power of the liberal arts to excellence in research and scholarship, developing engaged global citizens and leaders for society's contemporary challenges. Smith educates women to understand the complexity of human history and the variety of the world's cultures through engagement with social, political, aesthetic and scientific issues.

About the Jill Ker Conway Innovation and Entrepreneurship Center at Smith College

Smith College's Jill Ker Conway Innovation and Entrepreneurship Center is an intellectual hub that challenges students, faculty and staff to develop innovative solutions to pressing problems. A catalyst for the acceleration of innovation and entrepreneurial activity at Smith, the Center provides students with tools and experiences to become business leaders, entrepreneurs and innovators. Similarly, the Center provides faculty and staff with resources to facilitate innovative and entrepreneurial activity. The Center hosts and facilitates a slate of programs and activities focused on creative thinking, problem solving and interdisciplinary teamwork.

About Babson College

Babson College is the educator, convener, and thought leader for Entrepreneurship of All Kinds^®. The top-ranked college for entrepreneurship education, Babson is a dynamic living and learning laboratory where students, faculty, and staff work together to address the real-world problems of business and society. We prepare the entrepreneurial leaders our world needs most: those with strong functional knowledge and the skills and vision to navigate change, accommodate ambiguity, surmount complexity, and motivate teams in a common purpose to make a difference in the world, and have an impact on organizations of all sizes and types. As we have for nearly a half-century, Babson continues to advance Entrepreneurial Thought & Action^® as the most positive force on the planet for generating sustainable economic and social value.  

SOURCE Babson College

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