According to the comprehensive Global Entrepreneurship Monitor (GEM) 2021/2022 Women’s Entrepreneurship Report, a third of high-growth businesses globally are now run by women.
“This is an important statistic,” said GEM executive director Aileen Ionescu-Somers. “To me, it shows that women can absolutely achieve in the most demanding aspects of entrepreneurship.”
The report defines high-growth businesses as job-creating businesses that have 20 or more employees and plan to hire 20 or more employees within the next five years.
The GEM report produced by a consortium of universities constitutes one of the most comprehensive entrepreneurship data systems in the world. This report on women entrepreneurs looks at data from 47 countries. It includes high-income countries (such as Canada, Chile, Japan, Saudi Arabia, South Korea, Uruguay, and the United States), upper-middle-income countries (including Belarus, Brazil, Colombia, Jamaica, Romania, Russian Federation, South Africa, and Turkey); low- and middle-income countries countries (such as Egypt, India, Iran, and Morocco) and a low-income country, Sudan.
The Women in Entrepreneurship report also found that a third of innovation-driven entrepreneurs are women. Women entrepreneurs in upper-middle-income countries are now the most prevalent among the world’s most innovative, high-growth entrepreneurs, and are now on par with men in terms of international market attention, according to the report’s authors.
At the same time, women are more likely than men to start a business without an employee, the report found. This is the largest conglomerate and is often a stepping stone to future job creation.
There is little or no “enabling” environment for women to succeed in these fields—meaning policies that support childcare and other services that help women entrepreneurs. The “enabling environment” for women entrepreneurs is “very low” in most countries, according to national-level experts who worked with the researchers. On top of that, in most countries around the world, women tend to be less well-off than men and have less money to spend themselves, the report found.
While globally fewer women have said they want to start a business or do it over the past few years, the story is different in upper-middle-income countries. The entrepreneurship rate there soared 11% from 2019 to 2021 and has not declined in 2020.
With women at the helm of so many high-growth businesses, it’s especially notable given that many women are facing additional demands during the pandemic, with schools transitioning to online learning and childcare little or non-existent.
“Yeah, of course they’ve been affected, especially early-stage entrepreneurs. There’s been a lot of business failure,” Ionescu-Somers said. “Women who are already more established entrepreneurs are able to deal with the challenges of suddenly not having childcare.”
According to the report, one of the biggest challenges faced by women entrepreneurs around the world is lack of capital. “The main takeaway is that there is a serious lack of diversification of access to capital,” Ionescu-Somers said.
One reason for the limited access to financing is that many women tend to invest in areas that investors are less likely to support, Ionescu-Somers said. “Obviously, we have women in high-growth fields, but women tend to choose different ways of starting a business than men,” she said. “They tend to go into retail, hospitality and other areas.”
The report calls for mobilizing financial support for women entrepreneurs; supporting high-potential women entrepreneurs across all sectors and countries; celebrating women entrepreneurs as role models and debunking gender stereotypes related to entrepreneurship.
“We’ve been saying for years that there are cultural and social biases against women,” Ionescu-Somers said. “Obviously, there are role models. But somehow we don’t do a good job of showing those role models, and actually shatter the perception that women don’t commit or succeed in a certain way. Perception is reality.”
If more women successfully exit, they may also invest in other women-owned businesses. The report found that women’s business exit rates have increased from 2.9 percent to 3.6 percent during the pandemic, while men have increased from 3.5 percent to 4.4 percent. Female dropouts increased by 74% in upper-middle-income countries, compared with a 34% increase in males.
The report also highlights some interesting regional trends:
· Only 12.9 percent of women in high-income countries express entrepreneurial intentions, compared with one-third in low-income countries. The report found that early-stage entrepreneurial activity is typically about half the rate of entrepreneurial intentions.
· The Dominican Republic has the highest rate of female entrepreneurship. Nearly 44 percent of women reported entrepreneurial activity compared to 40.1 percent of men.
· The lowest rates of female entrepreneurship are found in Poland (1.6%) and Norway (1.7%).
· It is becoming easier for women to start a business in the Middle East and Africa. “These associations are not only open to entrepreneurs, especially women entrepreneurs,” Ionesco-Sommers said.
· Women in Central and East Asia have the highest business ownership in the world. Kazakhstan is one of the countries with the highest rates of female entrepreneurial intentions and entrepreneurial activity.
· Europe has the lowest rates of female entrepreneurial intent and participation.
The lead author of the Women’s Entrepreneurship report is Dr. Amanda Elam, CEO/co-founder of Galaxy Diagnostics, an early-stage medical diagnostics company based in Research Triangle Park, NC, and a Diana Institute Fellow at Babson College. Other contributors are:
· Benjamin S. Baumer, PhD, Smith College
· Thomas Schott from the American University of Cairo, the University of Agde and the University of Southern Denmark
· Mahsa Samsami, University of Santiago de Compostela
· Amit Kumar Diwivedi, PhD; at Indian Institute of Entrepreneurship
· Rico Baldegger, PhD, University of Applied Sciences and Arts Western Switzerland
· Maribel Guerrero, PhD, Arizona State University and Desarrollo University
· Fatima Boutaleb, Ph.D., Hassan II University, Casablanca, Morocco
· Karen D. Hughes, Ph.D., University of Alberta, Diana Fellow, Babson College.
As many studies have shown, women’s economic empowerment benefits society in every way. Creating a better financing ecosystem for women entrepreneurs seems like an obvious step for policymakers looking for low-hanging fruit in terms of improving GDP and overall community well-being.