Gender and entrepreneurship

Even if women represent about half of the working age population and the education gap is closing, they tend to be underrepresented in the workforce, especially in leadership roles. This opportunity cost will cap global GDP growth to $108 trillion³²² in the next six years. Achieving the full-potential scenario, where women have an equal role compared to men in all labour markets, would push global GDP to about $136 trillion by 2025.³²³ However, the full potential of women entrepreneurship has yet to be reached. A 2015 study by the Global Entrepreneurship Development Institute found that more than 61 per cent of the countries reviewed scored less than fifty points on the latest Female Entrepreneurship Index (FEI) worldwide.³²⁴ Only Australia was in the top 10 countries for female entrepreneurship for Asia-Pacific and there are only 3 Asia-Pacific countries listed in the top 30 of the index (in rank order: Australia; Singapore; Taiwan, China).

The Global Entrepreneurship Monitor (GEM) publishes a comprehensive report on the state of women entrepreneurship worldwide, based on a larger longitudinal data collection involving more than 100 countries annually. The 2018/2019 Women’s Entrepreneurship report, featuring 74 economies from six regions including the Asia-Pacific, highlights that over 163 million women started new businesses, and an additional 111 million are running established businesses.³²⁵ These numbers highlight the financial impact of women-owned businesses, but they also move a step further by differentiating the types of entrepreneurial activities that women are involved in, and the stage of growth of their venture. 

When measuring the Total Entrepreneurial Activity (TEA), which represents the percentage of working age adults who are new or nascent entrepreneurs, GEM uncovers that a gender gap remains, especially across types of ventures.³²⁶ Rates of female entrepreneurship in transition economies and innovation-driven economies continue to experience increasing gaps, but in the LDCs, the ratios of male/ female startups are closer.

Necessity-driven entrepreneurship signals involvement in the start- up cycle because of lack of alternatives. For a woman, the loss of a husband or being a single mother who needs to provide for the family is a poignant driver of necessity entrepreneurship.³²⁷ On the opposite side of the spectrum, opportunity- driven entrepreneurship is based on the recognition of an open niche to exploit. Necessity-driven entrepreneurship can limit the growth potential and sustainability of women entrepreneurship, eventually leading to discontinuance. Women-owned businesses close at a higher-rate than male-owned businesses. The reasons for such business mortality vary from unprofitability, lack of access to financial resources, or other personal factors. However, in innovation economies, women exit opportunity-driven ventures at a much lower rate than men, specifically at only two-thirds of the rate of their male counterpart.³²⁸ This differential rate underlines the importance of policy level interventions to support innovation-driven entrepreneurship levels beyond their current marginal levels.³²⁹

Further, other factors that are brought forward when explaining the slower growth of women entrepreneurship center on cultural differences, such as segregated gender roles. Gender stereotypes are an important source of these differences between women’s and men’s entrepreneurship. Gender stereotypes refer to beliefs generally shared by society about typical traits of women and men, and they have an effect on the professional evaluation of people.³³⁰ The typical characteristics of women (feminine) are often connected with their traditional role as homemakers, while those of men (masculine) are related to their traditional roles as providers.³³¹ Entrepreneurs’ activities have also been traditionally associated with masculine traits.³³²