There has been gradual progress in closing the gender gap in entrepreneurship during the last 20 years. However, the COVID-19 pandemic is having a catastrophic impact on entrepreneurs and small businesses. The gender-regressive impacts are evident in women’s entrepreneurial activities. Sectors where women entrepreneurs are concentrated have been hit hardest and many women entrepreneurs struggle to access emergency support measures. Reinforced policy action is required to support women entrepreneurs. This chapter summarises the internationally-comparable indicators presented in the report on the state of women’s entrepreneurship across the globe, and the main policy messages contained in the policy insight notes.
Entrepreneurship Policies through a Gender Lens
OECD Studies on SMEs and Entrepreneurship
1. Key findings and recommendations
Abstract
In Brief
Women’s entrepreneurship policy needs to be better contextualised
The gender gap in entrepreneurship has been closing slowly. Between 2000 and 2019, the gender gap in entrepreneurship, as measured by self-employment, shrank in 25 out of 31 OECD countries where data were available. This is an important achievement. It must also be acknowledged that this is due partly to a decline in the share of men who were self-employed.
Progress has been slower in closing other gender gaps associated with entrepreneurship. For example, the gap between the share of men and women entrepreneurs who employ others has grown slightly since 2000. In addition, gaps remain in entrepreneurship skills and access to finance.
The COVID-19 pandemic has hit women entrepreneurs harder than men entrepreneurs. Women entrepreneurs are more likely to be operating businesses in sectors that have been disproportionally impacted by containment and social-distancing measures, including personal services, retail and tourism. In addition, women entrepreneurs have faced greater challenges accessing emergency relief due to thresholds and other qualification criteria. The pandemic presents a risk of undoing progress in closing gender gaps and advancing women’s entrepreneurship.
The policy insight notes in this report illustrate a wide range of policy approaches, challenges and contexts. When read together, a number of lessons for policy makers can be drawn:
To close gender gaps in entrepreneurship, greater efforts are needed by governments to address underpinning biases in society and the labour market. Gender roles can have a strong and often negative influence on women’s entrepreneurship.
Strong framework conditions for entrepreneurship are a prerequisite for women’s entrepreneurship policy.
Women’s entrepreneurship policies need a strong commitment and investment. Even when there is a solid policy framework for women’s entrepreneurship, a strong delivery system is needed.
Policy makers must invest more in contextualised policies and programmes that acknowledge the diversity of women entrepreneurs. It is clear that “one size does not fit all.”
Entrepreneurship education can be used more effectively to support women entrepreneurs. Gender-neutral and women-focused education must be offered early to instil confidence, skills and abilities in young girls to identify entrepreneurial opportunities. Such education is important across all post-secondary disciplines, but particularly in disciplines dominated by women, such as the Humanities.
A growing and diverse array of funding sources are being made available to women entrepreneurs. However, many of these gender-neutral initiatives do not adequately account for gender differences in founder motivations, circumstances or contexts.
More needs to be done to ensure that entrepreneurship ecosystems reflect the needs of diverse women entrepreneurs. This includes increasing funding for organisations and initiatives that foster inclusive entrepreneurship cultures, address gender barriers within mainstream interventions and offer women entrepreneurs direct support.
Strong regulatory institutions are needed to promote and support women’s entrepreneurship, particularly in areas such as parental leave and care responsibilities, where employees of large employers often have more access to supports than employees of small businesses.
The gender gap in entrepreneurship has reduced over the past 20 years
Women have traditionally been less active in entrepreneurship than men. Between 2015 and 2019, fewer than 6% of women in OECD countries were actively involved in creating a business relative to more than 8% of men. While gender gaps vary across countries, they are nevertheless present in all OECD countries. The gap is explained by a range of factors, including differences in individual motivations and intentions for entrepreneurship, levels of entrepreneurship skills, access to finance, networks and social attitudes towards women and men entrepreneurs. Many of these barriers are inter-dependent. For example, low levels of entrepreneurship skills and financial knowledge hinder an entrepreneur from exploring all possible options for accessing financing.
Moreover, women entrepreneurs tend to operate different types of businesses than men. On average, women entrepreneurs are more likely to operate businesses in service sectors and on a part-time basis, are less likely to have employees and to export, have growth intentions and to introduce new products and services (OECD/EU, 2019). Many of these characteristics are inter-related.
Gender gaps in self-employment reduced between 2000 and 2019 in 25 of 31 OECD countries, where data are available. The gender gap in rate of self-employment reduced by as much as 5 percentage points in five countries (Iceland, Ireland, New Zealand, Hungary and Greece), and reduced by smaller amounts in 20 countries. However, the gaps between women and men increased in six countries (Estonia, Slovak Republic, Portugal, Poland, the Netherlands and Austria). Furthermore, the gap between the proportion of self-employed women and men with employees grew between 2000 and 2019 in approximately two-thirds of the OECD countries.
COVID-19 risks reversing gains in women’s entrepreneurship
The COVID-19 pandemic may exacerbate gender gaps in entrepreneurship. Women entrepreneurs have been disproportionately impacted by the COVID-19 pandemic. Women entrepreneurs are more likely to operate businesses in hard-hit sectors (e.g. personal services, tourism, retail, arts and entertainment), be less financially resilient and have less finance knowledge and confidence. Moreover, women bear a disproportionate share of caregiving responsibilities in households, which restricts the time available for their businesses, and renders them less equipped to pivot business activities in response to the crisis (e.g. less access to external advice, less likely to be online). This has resulted in higher closure rates among businesses operated by women relative to those operated by men.
The large-scale COVID-19 liquidity support measures that governments have introduced have been implemented quickly but may not be gender-sensitive. Governments had to act quickly to support small businesses and the self-employed with liquidity support tools (e.g. loans and wage subsidies). However, these have generally been simple undifferentiated tools that follow a “one size fits all approach.” Such support may not filter equally to all small businesses. Women-owned enterprises might not benefit as much as men-owned businesses because, on average, they are less likely to use bank loans (many programmes rely on existing bank products) or are smaller (some supports have revenue or employment thresholds). Differences in financial knowledge also play a role.
Traditional gender roles exert negative influences on women’s entrepreneurship
Gender roles in society can have negative influences on the scale and nature of women’s entrepreneurship. In many OECD countries, tax and family policies continue to reinforce traditional gender roles. Income tax models that favour single income earners in households can dissuade women from participating in entrepreneurship. In addition, while family policy is evolving to provide greater support for women’s participation in the labour market, a bias towards employment over entrepreneurship remains. This can be illustrated by parental leave and childcare policies, which can negatively influence the feasibility of entrepreneurship for many women.
Greater efforts are needed to legitimise, celebrate and normalise women’s entrepreneurship. The policy insight notes in this report confirm that women entrepreneurs often retain lower status then men entrepreneurs, even within OECD countries with high perceived levels of gender equality. This is demonstrated by women’s entrepreneurship supports that are underpinned by volunteerism, making supports vulnerable to fatigue and high levels of turnover among time-stretched unpaid workers. Governments need to do more to promote women’s entrepreneurship, such as promoting diverse role models, recognizing leaders through award programmes and funding women-focused support services.
Women’s entrepreneurship policies are well-established in many countries
Women’s entrepreneurship policies have been in place in some countries for decades. This report shows that, to varying degrees, women’s entrepreneurship policies and programmes are in place in all of the 27 countries and regions covered. The rationale behind targeted policies and programmes to promote and support women’s entrepreneurship is typically built on three arguments:
Women are under-represented in entrepreneurship compared with men. Closing the gender gap yields welfare gains for individual women and society as a whole.
There is evidence that women are held back in entrepreneurship by institutional and market barriers, such as social attitudes that discourage them from creating businesses, and market failures that make it more difficult to access resources like skills training, finance and networks.
Evaluations suggest that women are less aware of public enterprise support programmes, and that mechanisms used to select programme participants can favour men (OECD/EC, 2017).
Women’s entrepreneurship policy frameworks are needed to underpin individual policy actions
Women’s entrepreneurship policy is a “work in progress” rather than a finished product. In some instances, the policy insight notes provide evidence of policy and practice working together to achieve the desired goals. In other instances, the notes show a lack of effective policy or presence of policies and practices that are not consistent. The good news is that all countries highlighted are engaged in women’s entrepreneurship practice, with an impressive array of programmes and initiatives. A caveat, however, is that projects and funding are often vulnerable to economic and political changes without underpinning policy frameworks. This threat lends support to the importance of women’s entrepreneurship policy as a means for informing, grounding and sustaining different types of women’s entrepreneurship programmes and practices. Conversely, practices that are not linked to policy may represent areas of opportunity and serve as a signpost for under-valued areas of policy.
Women’s entrepreneurship interventions must be contextualised
Context in the form of institutions, culture and social norms has important effects on the existence or non-existence of women’s entrepreneurship policies, as well as on the priorities stressed in such policies. As an example, policies in some developed economies, such as the United States, the United Kingdom and Australia, tend to focus on expanding the entrepreneurial ecosystem in ways that will benefit women entrepreneurs. In contrast, developing or in-transition economies tend to focus on foundational challenges to gender equity, social justice, economic security and empowerment. Similarly, women-focused programmes reflect the institutional, cultural and normative characteristics of the respective countries. Such influences are reflected in what gets done to support women entrepreneurs, and who does the work. In some instances, for example, the role of government is to create the legal and regulatory framework that supports women’s entrepreneurship, while providing resources. In other country contexts, government plays a more directive role in creating infrastructure, funding and establishing small business support networks. Both approaches can work, but are different and reflect corresponding differences in the country-level entrepreneurial contexts.
More effective implementation of policies is needed to achieve policy objectives
Policy makers should develop a means for “closing the loop” to ensure that desired outcomes for women’s entrepreneurship policies are clearly articulated and measured on an ongoing basis. Few countries have established systematic methods for monitoring the impacts of women’s entrepreneurship policy against policy objectives, and for identifying progress relative to targets and the effectiveness of different measures. As an example, a common intervention to support women entrepreneurs is women-focused entrepreneurship training and skills development programmes. To date, there is limited objective evidence within or across countries demonstrating the impacts of such programmes in increasing women entrepreneurs’ access to resources and enhancing the viability of their firms. This reflects a lost opportunity to learn from high impact policy interventions and to demonstrate benefits. Lack of evidence may lead to the vulnerability of programme funding. Since many of the practices described in the report are partially funded by taxpayers, it is imperative to demonstrate the impacts against pre-determined objectives.
Greater efforts are needed to address gender gaps in entrepreneurship skills
There are benefits to offering dedicated entrepreneurship training for women. Benefits include increasing the involvement of women in business creation, augmenting the quality of start-ups founded by women, and enhancing the relevance and attractiveness of support for women entrepreneurs. While many countries are implementing dedicated entrepreneurship training programmes for women, approaches are often poorly designed and not well-connected to other small business supports. Moreover, there are many examples of duplication among offers, which can create confusion among the targeted entrepreneurs. Governments need to improve dedicated training, coaching and mentoring schemes by contextualising the offers (e.g. for local conditions, different profiles of women entrepreneurs, different sectors of start-up projects) and bundling supports into cohesive systems that provide a range of inter-connected and reinforcing schemes.
However, the development of dedicated training programmes is not sufficient to close the gender gap in entrepreneurship skills. Gender-neutral entrepreneurship education needs to be further developed and implemented early in the mainstream education system so that young girls understand that entrepreneurship is a viable career option. Such programming can instil confidence, skills and abilities to identify and exploit entrepreneurial opportunities. Entrepreneurship education is important across all academic disciplines, but particularly in disciplines dominated by women, such as the Humanities.
Greater use of dedicated measures is needed to address gender gaps in access to financing
There is a commitment by most governments to increase women entrepreneurs’ access to financing. While a range of mechanisms are in place, a broader use of instruments, such as loan guarantee schemes and microfinance, is needed. This includes increased access to capital for growth-oriented small businesses. Regardless of the type of instrument used, the policy insight notes in this report show that mainstream financing sources and government’s use of small business finance schemes are not always as effective for women as they are for men. A greater use of women-focused small business financing programmes is needed.
References
Coleman, S., C. Henry, B. Orser, L. Foss and F. Welter (2019), “Policy Support for Women Entrepreneurs’ Access to Financial Capital: Evidence from Canada, Germany, Ireland, Norway, and the United States”, Journal of Small Business Management, Vol. 57, No. 2, pp. 296-322.
Henry, C., B. Orser, S. Coleman and L. Foss (2017), “Women’s entrepreneurship policy: a 13 nation cross-country comparison”, International Journal of Gender and Entrepreneurship, Vol. 9, No. 3, pp. 206-228.
OECD/EU (2019), The Missing Entrepreneurs 2019: Policies for Inclusive Entrepreneurship, OECD Publishing, Paris, https://doi.org/10.1787/3ed84801-en.