Striking Gold with Women Entrepreneurs
January 2, 2015 Editor
Women don’t know how to manage Small and Medium-Sized Enterprises (SMEs).
Women can only run retail or services businesses.
Women-led businesses don’t create jobs.
Women don’t really want to grow their businesses – it’s just a hobby for them.
How many times have we heard these and similar sentiments?
There are indeed far fewer businesses led by women compared to men; female-led businesses do tend to be smaller and less profitable; and they do concentrate in the low-productivity retail and services sectors. Yet it is a vast oversimplification to underestimate the already-strong and potentially even greater economic contribution of women entrepreneurs. Even worse is the assumption that the underperformance of women-led enterprises is always something done by choice, or due to something inherently female.
A recent World Bank research report on supporting growth-oriented women entrepreneurs adds nuance to the dispiriting facts above. It focuses exclusively on growth-oriented women entrepreneurs and identifies the crucial elements needed to effectively support them. What merits the focus on growth entrepreneurs? Simply put: their ability to generate jobs, enhance national productivity, and stimulate socioeconomic transformation is greater. What merits the focus, specifically, on women growth entrepreneurs? Simply put: their immense untapped potential. There are an estimated 812 million women in the developing world (according to well-researched projections) with the potential to contribute more fully to national economies as workers and job creators, but who are unable to do so.
We find that firms led by women and men survive at the same rate, women-led firms employ more women as a share of their workforce, and far more dramatically, women and men lead equally productive firms . . . as long as the firms operate in the same sectors.
Unraveling these trends allows us to identify the underlying obstacles that result in both the underperformance of women-led enterprises and their comparable performance in specific sectors. We find that women growth entrepreneurs are held back by a complex intersection of factors – driven both by individual preferences and external constraints. These include gaps in management skills and knowledge, limited financial literacy, lack of access to finance, lack of mentoring, over-representation in low-productivity and low-growth sectors, restricted access to networks and supply chains, and legal and regulatory obstacles. While we now know more about what holds women entrepreneurs back, the support programs by the World Bank and others do not always adequately reflect this knowledge in program design and delivery.
What can we, through the World Bank, do to ensure that our programs have greater impact, are more relevant to women growth entrepreneurs, and demonstrate a replicable model for other development actors and client governments?
The answer: We should start by “gendering” our programs.
In the case of business education for example, “gendering” means more than just limiting program participation to women. Program content must explicitly speak to gender-related challenges like interacting and negotiating with buyers and suppliers in male-dominated markets, navigating team dynamics in a culture where women are not considered “leaders,” and managing intra-household dynamics and mobility constraints. In a related concern, program delivery must also be gender-sensitive: That includes offering in-class examples of successful women-led businesses, inviting successful women as guest speakers, and addressing the patriarchal attitudes of the people implementing the program.
- Innovator-in-Chief: The Public Sector – Catalyst of Creativity
- The Impact of Gender on Start-up Capital: A Case of Women Entrepreneurs in South Africa
- Countries Full of Mistrustful People Are Less Entrepreneurial
- How can we better serve women entrepreneurs?
- 7 ways to support the next wave of women-led innovation in Ethiopia
- 8 key approaches to accelerate financial inclusion
Categories: World Bank PSD
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