Newswise — Women's Entrepreneurship matters—women are creating and running businesses around the world, contributing to economies that represent more than 70% of the world's population and 93% of global GDP (2007). Women's entrepreneurship is a key contributor to economic growth in low/middle income countries, particularly in Latin America and the Caribbean according to The Global Entrepreneurship Monitor (GEM) 2007 Report on Women and Entrepreneurship released today by The Center for Women's Leadership at Babson College.
View the report at: http://www.gemconsortium.org/about.aspx?page=special_topic_women
A gender gap persists—both significant and systematic—in new venture creation and business ownership. The gender difference is more obvious in high-income countries but exists throughout all regions, with Europe and Asia showing a greater gap than Latin America and the Caribbean.
GEM data suggests that women who are employed and have built a social network of entrepreneurs are more likely to become entrepreneurs. The social and economic benefits of working are driving women's entrepreneurship more than increased education or household income.
Women's level of optimism and self-confidence in starting a business is highly influenced by the culture and social norms of their native countries. Women entrepreneurs have less fear of failure than women who are not involved in entrepreneurial activity; yet they express a greater fear of business failure than men starting businesses.
"Women's entrepreneurship varies widely across the globe," says Babson Professor Elaine I. Allen, principal researcher of the study, "It's a surprise that developing countries in Eastern Europe have low rates of women's entrepreneurship, closely resembling their highly developed European neighbors, while the countries of Latin America and the Caribbean have rates of women's entrepreneurship two and three times higher."
The Global Entrepreneurship Monitor (GEM) 2007 Report on Women and Entrepreneurship, based on data collected through the Global Entrepreneurship Research Association (GERA), directed by Babson College, and is a comprehensive and up-to-date study of the role played by women in entrepreneurial activity across the world economy.
Key Findings in 2007
This year GEM grouped countries into two, low/middle-income groups, Europe/Asia and Latin America/ Caribbean; and one high-income group. GEM 2007 found that countries with similar levels of per capita GDP tend to exhibit broadly similar patterns of entrepreneurial activity. On average, low/middle-income countries have modest per capita income and faster-growing economies compared to high-income countries. Regardless of gender, entrepreneurial activity is higher in both of the low/middle-income groups; and significantly higher in Latin America and the Caribbean. This group also showed the highest rates of female early-stage entrepreneurial activity.
In all three country income groups, a gender gap exists for both early-stage entrepreneurship and established business ownership. This gap is greatest in high-income countries where men are almost twice as likely to be early-stage or established business owners. Only in Japan and Peru in 2007 are women more active in starting a business than men.
The gender gap narrows in Latin America and the Caribbean where early-stage entrepreneurship is 24.0%, widening to 47.1 % for established business owners.Early-stage entrepreneurs in high-income countries are more likely to become established entrepreneurs than those in both low/middle-income groups. And in high-income countries, there is no gender difference in the survival rate of women's businesses versus those of men. In stark contrast, women entrepreneurs in low/middle income countries are less likely than their male counterparts to keep their businesses thriving beyond 42 months.
Motivations and Business Outcome
The rate of opportunity (as opposed to necessity) entrepreneurs differs significantly by gender in all country groups. Globally, the rate of male opportunity entrepreneurship is higher than that of women.
By contrast, there is no gender gap with respect to necessity entrepreneurs. Regardless of country group, no significant difference by gender is apparent in the rate of necessity entrepreneurship. For Latin America and the Caribbean, the rate of female necessity exceeds that of males.
The industrial focus of women's businesses—extraction, transformation, business services, and consumer-oriented products—differs somewhat from that of male counterparts with a significantly higher percentage of women's businesses in the consumer-oriented sector. Latin America and the Caribbean countries show the highest level of women in the consumer industry.
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.
Regardless of gender or country group, employment matters to entrepreneurial activity. The likelihood of being involved in entrepreneurial activity is three to four times higher for women who are employed in a wage job (whether full or part time) compared to women who are not working, are retired, or are students. This suggests that working provides access to resources, social capital, and ideas that may aide in establishing an entrepreneurial venture.
On average, women entrepreneurs in high-income countries are better educated than those in low/middle income countries. But surprisingly, in all country groups, the level of educational attainment is not consistently higher for women who are established business owners. In fact, the level of education is the same or higher for early-stage entrepreneurs compared with established business owners. GEM findings suggest that this new pattern may indicate a generally higher level of education for women in all countries.
Women and men in households with the highest incomes are more likely to be involved in early-stage entrepreneurial activity. But early-stage activity is four times higher among women in Latin America and the Caribbean than women in high-income countries, regardless of income level.
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 in all country groups compared to their male counterparts. Women in Europe and Asia low/middle income countries had the highest fear of failure rates (40.3%) compared to women in Latin America and the Caribbean (34.2%), and women in high-income countries (27.1%). GEM suggests that rise in fear of failure may be linked to the necessity-driven perception of fewer job options.
Implications for Policy
GEM 2007 points to the need for customized or targeted policies to accommodate the diversity of circumstances among GEM nations. Research and policy must be focused on how to effectively change the business environment and social institutions to support women through employment, access to social and financial capital, and by raising self-confidence.About GEM
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 2007 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 2007 includes responses from 145,248 individuals, 49.9% of whom were women.
The 41 GEM countries participating in the GEM 2007 Report on Women and Entrepreneurship 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. Nineteen countries comprise the low/middle-income country group. They are Argentina, Brazil, Chile, China, Colombia. Croatia, Dominican Republic, Hungary, India, Kazakhstan, Latvia, Peru, Romania, Russia, Serbia, Thailand, Turkey, Uruguay and Venezuela. The high-income country group is comprised of 22 countries: Austria, Belgium, Denmark, Finland, France, Greece, Hong Kong, Iceland, Ireland, Israel, Italy, Japan, Netherlands, Norway, Portugal, Puerto Rico, Slovenia, Spain, Sweden, Switzerland, 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 http://www.gemconsortium.org.
About GEM 2007 Report on Women and Entrepreneurship
Directed by The Center for Women's Leadership, Babson College; and the Lawrence N. Field Center for Entrepreneurship, Baruch College, The GEM 2007 Report on Women and Entrepreneurship is authored by Elaine I. Allen, Research Director, the Arthur M. Blank Center for Entrepreneurship, Babson College; Nan Langowitz, Associate Professor, Management and Entrepreneurship, and Founder, Center for Women's Leadership, Babson College; Amanda Elan, Visiting Scholar, the Arthur M. Blank Center for Entrepreneurship, Babson College; and Monica Rivera Dean, Administrative Director, the Lawrence N. Field Center for Entrepreneurship, Baruch College.
A formal launch of GEM 2007 Report on Women and Entrepreneurship will be held in New York City, Friday, May 2, 2008; at 9:00 am during the full-day symposium for thought leaders, Growing Sustainable Businesses: Best Practices for Women Entrepreneurs sponsored by Ernst & Young LLP, 5 Times Square NY, NY.
The symposium brings together entrepreneurial thought leaders to discuss an array of issues critical to women's entrepreneurial success; and will explore an agenda for programs, practices, and polices to support women's ventures now and in the future.
About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 130,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve potential. For more information, please visit http://www.ey.com.
About Babson College
Babson College in Wellesley, Mass., is recognized internationally as a leader in entrepreneurial management education. Babson grants BS degrees through its innovative undergraduate program, and grants MBA and custom MS and MBA degrees through the F.W. Olin Graduate School of Business at Babson College. Babson Executive Education offers executive development programs to experienced managers worldwide. For information, visit http://www.babson.edu.
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