Motivations and Challenges of Female Entrepreneurship in Developed and Developing Economies

Motivations and Challenges of Female Entrepreneurship in Developed and Developing Economies

Harish C. Chandan (Argosy University, USA)
DOI: 10.4018/978-1-4666-8798-1.ch012
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Globally, women entrepreneurs manage micro enterprises, social enterprises, small-to-medium enterprises (SMEs) and knowledge-based businesses. The entrepreneurship rates for women vary globally and, in general, are smaller than those for men. Both the Individual-centric approach and country-specific approach is necessary since women in different countries operate in a specific socioeconomic context (Singh, 2012; Pathak et al., 2013). For increasing the entrepreneurial rates of women businesses in a country, one has to consider the individual, psychological, socioeconomic and political context including education, mentoring, financial support, networking, and social, cultural and religious norms (GEM, 2014). An egalitarian social paradigm is proposed which removes social, cultural and religious constraints for women and counts on men to share equally in the household and family care activities. The motivations and challenges, of women entrepreneurs have to be understood in the context of the gender role and the duality of modernization vs. tradition (Belwal, 2014).
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According to the Global Entrepreneurship monitor (GEM) study in 67 countries, there are 126 million women entrepreneurs in the world. In most countries, entrepreneurship levels for women are lower than that for males except in in Panama, Thailand, Ghana, Ecuador, Nigeria and Uganda. The female entrepreneurship rates differ among developed and developing economies, and even for economies at the similar stages of economic development. For example, in Zambia, 40 percent of women are engaged in entrepreneurial activity whereas only 1% of women in Pakistan are entrepreneurs (GEM, 2014; Niethammer et al. 2007). The entrepreneurial rates in different countries are influenced by the social status of the women in the specific cultural and religious context. To explain the variation, one has to look at both the Individual-centric approach and country-specific approach since individuals operate in a specific context (Singh, 2012. Female entrepreneurship is a reflection of the societal context where the business is located (Pathak, Goltz and Buche, 2013).

Historically, women entrepreneurs have gravitated towards consumer, retail and service sectors, and avoided capital-intensive manufacturing sector (OECD, 2001; 2004; 2012). In developing economies in sub-Saharan Africa, 37 percent of women entrepreneurs start businesses out of necessity, as it's the only way they can earn a living (Kelley et al., 2011). However, women entrepreneurs are active in all the sectors including the necessity-driven, efficiency-driven and innovation-driven sectors of the economy globally but are under-represented in the science and knowledge-based businesses that deal more with intangible assets like information and knowledge (Wiklund et al., 2003). Women may be unsure of their ability to identify, assess and act on an opportunity in a high-technology sector. Knowledge-based female entrepreneurship is more prevalent in the developed or knowledge economies like U.S.A., Canada and Western Europe. Even in the developed countries, where women often are more highly educated than men, women are less likely than men to think that they can be successful in starting a new innovation-driven business. In addition, the female entrepreneurs appear to show reluctance to expand their businesses or to enter new and less tested markets. There are fewer women than men starting a new business and running mature businesses due to individual, social, cultural and institutional factors. The individual factors that limit entrepreneurial success includes lack of education and training, self-doubt, fear of failure and a desire to seek approval from others (Bruin et al., 2006). In developed economies, women may have more years of education but it may not relate to self-perceived confidence in their entrepreneurial capabilities. The social and cultural factors that inhibit female entrepreneurship include male-dominated social structure that leads to household and childcare responsibilities delegated mostly to women (Brush et al., 2012). The restrictions for women in some religions and implied deference to men in other religions are not conducive to entrepreneurial success. The institutional factors include access to financing, relative lack of role models and social networking for women entrepreneurs and patriarchal laws in many countries (GEM Women’s Report, 2012). There is a widespread assumption that women start businesses with a motivation to combine family responsibilities with work commitments. Another assumption is that women have only moderate aspirations for the growth of their business, and prefer stability and independence to growth (GEM, 2014).

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