Women Entrepreneurs Have Come a Long Way—But There’s Still Room for Improvement
Starting and running more businesses than ever, women business owners worldwide are on the rise, according to the Global Entrepreneurship Monitor (GEM) 2016/17 Women’s Report. The report surveyed women entrepreneurs in 74 global economies to create a snapshot of women’s progress. Here’s some of what the new report found:
- In the past year, 163 million women worldwide started businesses.
- 111 million women currently operate established businesses.
- Since the last report in 2014 …
- Total Entrepreneurial Activity (TEA) among women grew by 10%.
- Women’s ownership of established businesses grew by 8%.
- The gender gap (that is, the ratio of women to men participating in entrepreneurship) shrank by 5%.
This continues the positive trend revealed in the previous report, which showed an average 7 percent increase in women’s TEA rates and average 6 percent reduction of the gender gap.
Why women start businesses
Entrepreneurial intentions—that is, the intention to start a business—among women increased by 16% from 2014 to 2016. The highest participation in entrepreneurship among women is in the 25-34 and 35-44 year old age groups. (This is also true for men.)
What prompts women to start businesses? On average, women in the survey are 20% more likely to start a new business out of necessity than are men. However, spotting entrepreneurial opportunity still accounts for the majority of women’s business startups. In innovation-driven (developed) economies, women are over 3.5 times more likely to start businesses of opportunity rather than necessity.
Women in factor-driven (undeveloped) economies are more likely to see opportunities for starting a business than women in innovation-driven economies. Fifty-seven percent of women in factor-driven economies say there are plenty of good opportunities to start a business, compared to 39% of women in innovation-driven economies.
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Innovation and women entrepreneurs
Overall, women entrepreneurs are 5% more likely to start innovative businesses than are men, the study reports. The highest level of innovation occurs in North America, where 38% of women say their businesses involve innovative products and services. North America also has the highest education rates among women entrepreneurs; 84% have a post-secondary or higher education.
What kinds of businesses do women start?
Overall, just 10% of women entrepreneurs are sole proprietors with no plans to add any employees in the next five years.
Over half of women entrepreneurs in innovation-driven economies are in government, health, education, and social services. In fact, at all economic development levels, women dominate this business category relative to men: On average, they are 2.25 times more likely than men to start businesses in this sector.
Women still remain less prominent in information and communications technology, however. Overall, fewer than 2% of women are starting business in this sector—slightly more than one-fourth the percentage of men starting IT/communications businesses.
Room for improvement
Despite all the positive news the GEM survey reports, there is still room for improvement in one key area: confidence. Surprisingly, women’s confidence seems to be lower the more developed their economy. In factor-driven economies, for example, more than two-thirds (67%) of women believe they have the capabilities to start businesses based on the opportunities they see. However, fewer than 35% of women in innovation-driven economies believe the same thing.
This is partly because businesses in innovation-driven economies are more complex, of course. But is it also due to a lack of confidence about our abilities? The gender gap in capabilities perceptions is widest in the innovation-driven economies, at just over two-thirds the level reported in men.
Perhaps part of the problem is that despite the attention paid to entrepreneurs in American culture, just 27% of women in the U.S. say they know an entrepreneur personally.
How can you change things?
- If you want to start a business: Get a role model—male or female—or more than one. Find someone you admire and learn as much as you can about how they did it. Get a real-life mentor, too.
- If you own a business: Be a role model to girls, young women, and any woman interested in starting a business. Look into local organizations in your area or industry that help women learn the ropes of entrepreneurship, and get involved!
