Newswise — There are millions of entrepreneurs in developing countries. In fact, in emerging markets, more than half of all workers — both men and women — are small-firm owners.
Many of them, unfortunately, are unable to earn a decent livelihood. And for the women, a persistent gender gap makes success even trickier.
In an effort to help improve business outcomes, governments and nonprofits each year invest billions of dollars in training programs, many of which provide mentors for the entrepreneurs. Unfortunately, female entrepreneurs frequently benefit less — or don’t benefit at all — from these programs.
A new study from the University of Notre Dame, Texas A&M, University of Chicago and London School of Economics recommends a simple adjustment to the current training system to give women a better shot at success. It looked into whether the gender of the mentors plays a role and found that for the men it does not, but pairing female mentors with female entrepreneurs, or gender matching, did make a significant difference.
“Breaking the Glass Ceiling: Empowering Female Entrepreneurs through Female Mentors” is forthcoming in Marketing Science from lead author Frank Germann, the department chair and Viola D. Hank Associate Professor of Marketing at Notre Dame’s Mendoza College of Business. Co-authors of the study are Stephen Anderson from Texas A&M, Pradeep Chintagunta from the University of Chicago and Naufel Vilcassim from the London School of Economics. The team collaborated with Grow Movement, a nonprofit based in London.
The study’s findings are based on a field experiment the team conducted in Kampala, Uganda, with 930 entrepreneurs, 40 percent of whom were women. The entrepreneurs were randomly matched with a female mentor, a male mentor or no mentor. Recruited by Grow Movement and based all over the world, the mentors worked for several months remotely with the entrepreneurs through videoconferencing, phone calls, texts and shared documents.
Almost all female entrepreneurs in the study worked full-time operating their businesses 6.5 days a week. Most sold directly to Ugandan consumers through retail and services and had one paid employee, on average. The businesses were about four years old, and the majority of the women were young, married mothers in their 20s with at least a high school education.
Two years later, the researchers did a follow-up survey. They learned that businesswomen in emerging markets benefit significantly more from having a female as opposed to a male mentor.
Why? The female mentors proved to be more positive and social in their interactions with the female entrepreneurs — suggesting they were more engaged. The study revealed a clear advantage for the women with female mentors who learned to build better customer relationships. For example, the businesswomen began to follow up post-purchase to ask about their customers’ experience and what could be improved.
“This really helped improve their firms’ performance,” Germann said. “Our findings show that firm sales and profits of female entrepreneurs guided by female mentors increased by, on average, 32 percent and 31 percent compared with the control group. And these estimates are even greater for high-aspiring female entrepreneurs.”
In contrast, compared with the control group, female entrepreneurs who were mentored by men did not significantly improve their sales and profits over the course of the study.
The study results point to a fairly simple, yet powerful, new policy tool.
“We have already shared our findings with several organizations, including some of our contacts at the World Bank who frequently design business support interventions delivered in emerging markets, many of which involve some kind of mentor,” Germann said. “We hope that female emerging market entrepreneurs will get paired with female mentors in the future, which, based on our findings, should help to break the glass ceiling and improve business outcomes.”
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