This chapter presents gender-disaggregated indicators on entrepreneurship and self-employment for OECD countries and beyond. These include recent data on entrepreneurship activity rates and the characteristics of these activities, as well as data on barriers to business creation by gender. The section considers how the COVID-19 pandemic may impact gender gaps in entrepreneurship.
Entrepreneurship Policies through a Gender Lens
OECD Studies on SMEs and Entrepreneurship
2. The state of women’s entrepreneurship
Abstract
The gender gap has been closing among solo entrepreneurs…
Promoting women’s entrepreneurship is increasingly viewed as contributing to economic growth, job creation, income equality and social inclusion (OECD/EU, 2019; OECD, 2017). One estimate has suggested that if the gender gap in entrepreneurship was closed, global GDP could rise by as much as 2%, or USD 1.5 trillion (Blomquist et al., 2014). While it is important for individuals to have a range of choices in the labour market, and recognising that many will not choose entrepreneurship, women tend to have latent entrepreneurial potential that is not yet realised in most countries. Policy makers can help to unlock such potential, while recognising that women are heterogeneous with differences in motivations, intentions, experiences, opportunities and projects.
One of the most commonly used measures of entrepreneurship is self-employment, as shown in Figure 2.1. The numbers are dominated by the solo self-employed, i.e. self-employed individuals without employees. In 2019, the self-employment rate for women ranged from less than 5% in Japan, Norway and Denmark to nearly 25% in Greece, Chile and Mexico. Even given such differences, the proportion of women who were self-employed was lower than the proportion of men in all countries. Men were more than twice as likely as women to be self-employed in Denmark, Estonia, Ireland, Japan, Sweden and Turkey.
Figure 2.1. The gender gap in self-employment is closing in most countries
Note: Data for Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Luxembourg, Netherlands, Norway, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey and the United Kingdom refer to 2018. Data for Australia, Chile, Korea, Japan, Mexico and South Africa refer to 2017. Data for Israel refer to 2016. Data for Brazil refer to 2015.
Source: OECD (2020), Self-employed without employees (indicator), doi: 10.1787/5d5d0d63-en (accessed on 01 December 2020); OECD (2020), Self-employed with employees (indicator), doi: 10.1787/b7bf59b6-en (accessed on 01 December 2020).
Among the 31 OECD countries where data are available, the gender gap in self-employment reduced in 25 countries between 2000 and 2019 (Figure 2.1). Many factors could explain this reduction – policy interventions to support women entrepreneurs, the economic cycle and the ageing of the population of entrepreneurs (gender gaps tend to be slightly smaller among younger cohorts). However, one of the most important factors has been a decline in the share of men who are self-employed over the past decade (OECD/EU, 2019).
…but the gender gap was growing among self-employed with employees
Self-employed women tend to operate smaller businesses with fewer employees. Overall, women were approximately two and a half times less likely than men to be self-employed and have employees in OECD countries in 2019. There was essentially no gender gap in Ireland in 2019, but this was an exception. Self-employed men were more likely than self-employed women to have employees in every other OECD country, and were more than twice as likely to be employers in Israel, Mexico, South Africa and Turkey (Figure 2.2).
Furthermore, the gender gap among the self-employed with employees increased between 2000 and 2019. This is concerning because compared with the solo self-employed, this group of entrepreneurs has stronger economic and social impacts. The increase in the gap between the proportion of self-employed women and men with employees grew in about two-thirds of OECD countries (Figure 2.2). The gap increased the most in the Slovak Republic and Switzerland. By contrast, the gap narrowed in some countries, notably Portugal and Korea.
This difference in the size of women-owned businesses is related to the fact that self-employed women, on average, operate different types of businesses than self-employed men. In most OECD countries, 70% or more of self-employed women work in the services sector, compared to about 50% of men (OECD/EU, 2019). Some of the traditional sectors in which many women’s businesses operate are characterised by low barriers to entry, high competition, low productivity and low profit margins – where enterprises tend to stay small and be low value-added enterprises. Self-employed women also tend to work fewer hours than self-employed men, but work more hours than women who work as salaried employees (OECD/EU, 2019).
Figure 2.2. Women entrepreneurs are less likely to be employers and the gender gap is growing
Note: Data for Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Luxembourg, Netherlands, Norway, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey and the United Kingdom refer to 2018. Data for Australia, Chile, Korea, Japan, Mexico and South Africa refer to 2017. Data for Israel refer to 2016. Data for Brazil refer to 2015.
Source: OECD (2020), Self-employed without employees (indicator), doi: 10.1787/5d5d0d63-en (accessed on 01 December 2020); OECD (2020), Self-employed with employees (indicator), doi: 10.1787/b7bf59b6-en (accessed on 01 December 2020).
COVID-19 is exacerbating gender gaps in entrepreneurship
The COVID-19 pandemic is having a profound shock on economies and labour markets around the world (OECD, 2020) and the impacts have been devastating for many entrepreneurs. Women entrepreneurs are being hit much harder than men.
Business closure rates increased during the COVID-19 pandemic and women-led businesses have closed to a greater extent than their men-led counterparts (Figure 2.3). Globally, the closure rate for women-led businesses (27%) was 7 percentage points higher than for men-led SMBs (20%) during May 2020. While the gender gap has closed over time, the closure rate for women-led businesses remained 2 percentage points higher than for men-led businesses. In October 2020, 16% of women-led SMBs were closed, in aggregate, relative to 14% of men-led businesses. However, with rising infection rates and the possibility of new lockdowns, there is a risk that these declines could be reversed. The gender gap in closure rates narrowed across all regions between May and October, except for sampled countries in the Middle East and North Africa region where the gender gap increased slightly.
One of the key reasons for this is that women are over-represented – both as self-employed and employees – among the hardest hit sectors (Figure 2.4). Overall, women account for one-third of the self-employed across most OECD countries and nearly half of employees, but they have greater shares among sectors that have been affected the most by containment and confinement measures – personal services, accommodation and food services, arts and entertainment, and retail trade.
Figure 2.3. Female-operated businesses have been more likely to close during the COVID-19 pandemic
Source: Facebook/OECD/World Bank (2020), “The Future of Business Survey”, https://dataforgood.fb.com/wp-content/uploads/2020/10/State-of-Small-Business-Report-Wave-IV.pdf.
Figure 2.4. Women are over-represented in the sectors hardest hit by COVID-19
Source: Eurostat (2020), Labour Force Survey, https://ec.europa.eu/eurostat/web/lfs/data/database.
Another reason for higher closure rates among women-led businesses is that COVID-19 has also exacerbated the gender divide at home since the burden of additional domestic responsibilities has disproportionately fallen upon women business leaders. About one-quarter of all women business leaders stated that they spent six hours or more per day on domestic responsibilities between May and October 2020, whereas only 11% of all male business leaders reported undertaking this amount of household work (Facebook/OECD/World Bank, 2020). More specifically, 25% of women business leaders reported that home-schooling impacted their ability to focus on work compared to 19% of men business leaders (Figure 2.5). Similarly, women business leaders were more likely than their men counterparts to take on household chores and childcare responsibilities. This increased work at home has decreased the time available for women entrepreneurs to dedicate to their business.
Figure 2.5. Female business leaders have been more likely to assume household responsibilities during the COVID-19 pandemic
Source: Facebook/OECD/World Bank (2020), “The Future of Business Survey”, https://dataforgood.fb.com/wp-content/uploads/2020/10/State-of-Small-Business-Report-Wave-IV.pdf.
The disproportionate impact of the COVID-19 pandemic on women entrepreneurs exacerbating gender gaps in entrepreneurship. Even before the COVID-19 pandemic, women were less active in early-stage entrepreneurship overall, i.e. creating start-ups or managing new businesses that are less than 42 months old. In 2019, women in OECD countries were two-thirds as likely as men to be involved in early-stage entrepreneurship. The gender gap was greatest in Japan and smallest in Spain, where women were about 95% as likely as men to be involved in early-stage entrepreneurship (Figure 2.6). These gaps can be explained by several factors, including differences in motivations for entrepreneurship, differences in how social attitudes affect education pathways and labour market activities, gaps in entrepreneurship skills, smaller entrepreneurship networks and greater difficulties accessing start-up financing. Many of these barriers will be discussed in greater detail later in this chapter.
Figure 2.6. There is a larger gender gap in early-stage entrepreneurship
Note: Early-stage entrepreneurship measures the share of the population that self-reports working towards launching a new business start-up or managing a business that is less than 42 months old.
Source: Global Entrepreneurship Monitor (GEM) (2020), “Global Entrepreneurship Monitor 2019/2020 Global Report”, https://www.gemconsortium.org/report/gem-2019-2020-global-report.
Governments introduced large-scale liquidity support measures (e.g. loans and wage subsidies and tax deferrals) at the outset of the COVID-19 confinement measures to help businesses survive the crisis. The rapid response was essential. However, little attention was paid to ensuring that these measures were gender-sensitive. As a result, many women-owned enterprises were not supported by “one size fits all” measures, in part because they are less likely to use bank loans (many programmes rely on existing bank products) or are smaller on average (some supports have size thresholds) than men-owned enterprises. Differences in financial knowledge may also play a role.
Women often have different motivations and intentions in entrepreneurship than men
Women often become entrepreneurs for different reasons than men and have different growth expectations and intentions (OECD/EU, 2019; OECD/EU, 2018). There is a body of research that suggests that many women go into self-employment to benefit from the flexibility it provides in order to manage work-family responsibilities, while others start a business to avoid the “glass ceiling” in employment. This point is supported by many studies based on small samples and self-reported answers (OECD/EC, 2017). There are also studies that find that women’s self-employment decisions are influenced by business considerations (e.g. state of the economy, access to finance) and social factors (e.g. care responsibilities) in much the same way that men’s decisions are (Saridakis et al., 2014).
With respect to expectations, for example, new women entrepreneurs are less likely them men to report that they expect to create at least 19 jobs over the next five years. This suggests that women entrepreneurs are, on average, less oriented towards seeking high employment growth compared to men. Over the period 2015 to 2019, new women entrepreneurs were 60% as likely as new men entrepreneurs to anticipate creating at least 19 jobs over the next five years in OECD countries. There were seven OECD countries where more than 10% of new women entrepreneurs expected this level of growth, whereas this proportion of men was reported in 24 countries (Figure 2.7).
The survival rates of women-owned businesses are comparable to men-owned businesses in many countries. There is evidence that women-owned businesses earn less revenue and demonstrate lower labour productivity (OECD/EU, 2019; OECD, 2012). These differences can be explained, in part, by gender differences in sector engagement, motivations and business strategies. As noted earlier in the chapter, women-owned businesses are over-represented in service sectors and under-represented in sectors with high value-added potential, such as, science, technology and engineering sectors (Marlow and McAdam, 2013).
Figure 2.7. High-growth expectations
Note: Early-stage entrepreneurs are those involved in creating a new business or managing a new business that is less than 42 months old.
Source: OECD (2020), special tabulations of the Global Entrepreneurship Monitor’s adult population survey.
Women entrepreneurs face a range of subtle barriers to start-up
All entrepreneurs face a variety of challenges in starting and sustaining their businesses. While many of these barriers are common to men and women, some obstacles are more likely to be faced by women or are more significant for women entrepreneurs (OECD/EU, 2019).
Unsupportive culture
While women’s social and economic participation has advanced substantially over the past few decades, negative gender stereotypes persist. Women face a range of subtle barriers associated with occupational gender roles that can exert negative influences on their labour market decisions, including in entrepreneurship and self-employment.
Entrepreneurship has a long history as a “masculine” phenomenon, which has been sustained by cultural, social and economic processes. Gender biases are reinforced by formal education systems. These have resulted in embedded attitudes and norms that give women’s entrepreneurship a lower level of social and cultural legitimacy (Ogbor, 2000). These affect the market position and image of women-owned firms, constrain the mobilisation of resources (Brush et al., 2004) and impede the realisation of entrepreneurial potential (Marlow and Patton, 2005).
Social and cultural attitudes reinforce traditional gender roles, which lead some women to self-restrict their business and entrepreneurship activities to “feminised” professions, sectors and business fields. Furthermore, norms about how genders “should behave” lead some women to self-restrict activities, including securing important resources such as human, financial and social capital.
The relatively small number of women entrepreneurs who are perceived to be “successful” and personified as role models is detrimental in encouraging others to consider entrepreneurship as a career option, especially in science, engineering and technology related fields. The masculine ideal of a successful entrepreneur is perpetuated by social media, education and through policies in most countries.
One way in which social attitudes are visible is through attitudes towards failure. Women in OECD countries are nearly 20% more likely than men to report that “fear of failure” is a barrier to business creation (OECD/EU, 2019). The proportion of women self-reporting this barrier ranges from about 30% in Norway and Korea to 66% in Greece (Figure 2.8).
Figure 2.8. Fear of failure as a barrier to business start-up
Source: OECD (2020), special tabulations of the Global Entrepreneurship Monitor’s adult population survey.
Lack of entrepreneurial skills
One of the greatest challenges cited by entrepreneurs is a lack of entrepreneurial skills. Women entrepreneurs typically have less experience in running businesses and therefore less management experience at start-up and smaller business networks (Shaw et al., 2009).
Across OECD countries, women were about three-quarters as likely as men to report having the skills and knowledge needed to start a business between 2015 and 2019 (Figure 2.9). The share of women self-reporting that they have entrepreneurship skills over this period ranged from about 6% in Japan to more than half in the United States (51%), Croatia (51%), Chile (60%) and Colombia (62%). Moreover, there also appears to be a gender gap in perceived access to entrepreneurship training (OECD, 2016).
Figure 2.9. Entrepreneurial skills
Source: OECD (2020), special tabulations of the Global Entrepreneurship Monitor’s adult population survey.
Women entrepreneurs struggle to access finance
Access to finance is another commonly reported barrier to business creation. Women entrepreneurs generally have lower levels of capitalisation and are more reliant on owner equity and insider financing than men (OECD/EU, 2019; Coleman and Robb, 2016). They also grapple with greater challenges in accessing debt financing due to the sectors in which they operate, and unconscious investor bias (Carter et al., 2007). While evidence is inconclusive, in some countries these barriers result in gender-based differences in credit terms, such as higher collateral requirements and interest rates, despite controlling for structural characteristics like sector and size of business.
Women tend to have smaller and less effective entrepreneurial networks
There is long-standing evidence that women tend to retain smaller and less diverse entrepreneurship networks than men, which hinders access to ideas and resources. Entrepreneurship networks are groups of interconnected entrepreneurs, business service providers and other actors who can provide information in reciprocal relationships. Networks help entrepreneurs access financing, find business partners, suppliers, employees and customers, and generate ideas for new products, processes, organisational methods and business models. They can also influence an individual’s perception of the desirability and feasibility of entrepreneurship.
Research suggests that the networks of women entrepreneurs have (on average) a different composition than those of men (OECD/EU, 2015). Women are more likely to populate their entrepreneurship networks with friends, family and educators, whereas the networks of men are more reliant on business service providers and other entrepreneurs (OECD/EU, 2015). Therefore, women entrepreneurs are less likely to interact with individuals who control critical resources (Brush et al., 2004). In contrast, the entrepreneurship networks of men typically have more contacts with greater social and economic power, which can be advantageous in assisting in the gathering of information, resources and referrals (Uzzi, 1999).
Family and tax policies can discourage women’s labour market participation, including entrepreneurship
Regulatory institutions, such as social welfare systems, tax policies and family policies, impact the costs and feasibility of entrepreneurship for women. Tax policies that favour a dual-earner model are likely to foster women’s labour market participation and business activity. Women’s entrepreneurship is also affected by the extent to which they are able to reconcile family and professional obligations. This barrier is particularly challenging in those countries where traditional gender roles go hand in hand with a lack of public or private childcare and eldercare services. Furthermore, maternity and paternity leave provisions have a confirmed impact on the general rate of women’s entrepreneurship.
Policy can play an important role in supporting women’s entrepreneurship
Policy should address market, institutional and policy implementation failures that women face in entrepreneurship. In this respect, the central role of policy includes increasing the availability of resources to women entrepreneurs, including skills, finance and networks. Common approaches include offering entrepreneurship training, coaching and mentoring, developing women-focused entrepreneurship networks and facilitating access to a range of appropriate entrepreneurial finance opportunities.
A core policy question for many governments is whether support to women entrepreneurs should be delivered in dedicated programmes by specialist agencies, or whether women’s entrepreneurship support can be adequately integrated into mainstream programmes with accompanying gender-sensitivity training, gender targets and quotas, and programme re-designs. Both the dedicated and mainstream approaches are used in OECD countries. The approach selected is often determined by the size of the gender gap in entrepreneurship and social attitudes towards women in society and the labour market. Countries where women face fewer challenges in accessing education and opportunities in the labour market (e.g. Finland, Germany, Austria) tend to deliver women’s entrepreneurship support largely through mainstream programmes. However, addressing the specific needs of women’s entrepreneurship through access to general entrepreneurship support by women may be more challenging in other countries, where there may be a preference for dedicated women’s entrepreneurship support.
Regardless of the approach taken, the key to success is to ensure that entrepreneurship support is both accessible and relevant to women. If dedicated women’s entrepreneurship programmes are developed, it is important to build linkages with the broader business community and mainstream support institutions. This is to ensure that women-specific support does not reinforce barriers that women entrepreneurs face. Furthermore, it is important to better inform mainstream business support providers and investors about the needs and challenges of women entrepreneurs. This is to ensure that support is delivered effectively and that biases are removed in programming and investments.
It is also important for policy makers to go beyond measures that aim to address the challenges that individual women entrepreneurs face and to examine the broader institutional context affecting women’s entrepreneurship. More attention is needed to influence the environment and remove barriers to women’s entrepreneurship at source. For example, the role of education is key in encouraging women to go into STEM fields where there tends to be strong opportunities for high-potential entrepreneurship, and in offering gender-neutral entrepreneurship education across all areas of the curriculum. The design of welfare systems equally has critical impacts on women’s entrepreneurship.
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