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4.0 Gender differences in constraints and opportunities: Gender Entrepreneurship and Competitiveness in Africa, 2007

Guest post by: World Economic Forum

Article Overview: Do women and men entrepreneurs face different constraints in managing their businesses?

4.0 Gender differences in constraints and opportunities: Gender Entrepreneurship and Competitiveness in Africa, 2007

Do women and men entrepreneurs face different constraints
in managing their businesses? Table 2 indicates
for selected constraints, separately for men and women,
the percentage of entrepreneurs who are more likely to
complain that a specific constraint represents a “major”
or “very severe” obstacle for the operation and growth
of their enterprise. Some constraints tend to be more
closely associated with women entrepreneurs. For example,
corruption is identified as a “major” or “very severe”
constraint by female-owned enterprises somewhat more
frequently than by male-owned enterprises, while the
reverse is the case for labor regulations.

However,
although there are differences in their perceptions about
the severity of an obstacle, there is no clearly discernible
gender-distinct pattern in either the nature of the
constraint (that is, there is no obstacle that women find
systematically more severe than men in all countries) or
the country (that is, there is no country where women
are systematically more likely than men to complain
about all obstacles) in which the entrepreneur operates.

Unfortunately, small sample sizes—especially for the
sample of women entrepreneurs—again limit in many
cases the possibility of testing whether the difference
between female and male entrepreneurs is significant,
and to draw firm conclusions.

A related but important question is whether the
differences between women and men entrepreneurs is
due to gender rather than to other factors, such as the
size of the enterprise or the sector within which the
enterprise operates.The answer is “Yes”—to some
extent.

After accounting for the fact that enterprises of
different size and age, and that are operating in different
sectors and geographical locations, can be affected differently
by the severity of business constraints, we still
observe some differences between men and women
entrepreneurs in their judgment about the severity of a given constraint. Figure 3 shows predicted probabilities
of complaining about an obstacle being “major” or
“very severe” for a man and a woman entrepreneur with
fixed characteristics—that is, similar in all respects
except for their sex.12

The results are shown for 6 of
the 18 constraints identified in the Enterprise Survey
questionnaire—these are the constraints that are usually
indicated as more binding and critical for women than
for men, such as corruption and access to finance.
Women and men entrepreneurs do differ in their perceptions
of business constraints, after controlling for the
most important observable characteristics. Again, however,
there is no consistent pattern across countries and
constraints.

In some countries, men are more likely than
women to report a constraint as “major” or “very
severe”; in other countries the opposite holds—even
when looking at the same type of constraint. In several
cases, men and women entrepreneurs agree on the
severity of a constraint. No constraint appears to be a
“female-type” of constraint, that is, one overwhelmingly
suffered by women. Corruption, for example, is, along
with access to finance, a constraint that one would
expect women to be more likely to complain about
than others.

As shown in Figure 3b, in Mozambique,
Senegal, and Zambia, women are more likely than men
to judge corruption a “major” or “very severe” obstacle,
but in Angola, Benin, Egypt, Malawi, and Mali, men are
much more likely to complain about corruption.

Access to finance appears to be as much a male
problem as it is a female one. If women are more likely
to indicate this constraint as “major” or “very severe” in
Burundi, Eritrea, Kenya, Lesotho, and Madagascar, men
identify this more as a constraint in Angola, Mauritania,
and Tanzania. Figure 3 reveals a very clear positive
correlation—in countries where the probability of a
woman considering an obstacle “major” or “very severe”
is higher, the probability of men complaining about the
same obstacle to the same degree is also higher. So, for
example, corruption is clearly a problem for both men
and women in Egypt and Kenya, access to finance in
Guinea-Bissau and Cameroon, and tax administration in
Cameroon and Kenya.

Some issues appear to be more severe than others—access to finance is in general
clearly felt as a more problematic constraint than labor
regulations.

International research in other regions indicates that
a lower level of confidence, a greater fear of failure, and
the lack of role models may be preventing some women
from entering into business ownership in the first place.

In interviews conducted as part of the 2006 Global
Entrepreneurship Monitor surveys in 40 countries,
fewer adult women than men interviewed feel that
they “have the required skills and knowledge to start a
business”: 41 percent of women in low- or middleincome
countries compared with 50 percent of men,
and 33 percent of women in high-income countries
compared with 46 percent of men.These gender differences
disappear among the women and men interviewed
who actually own enterprises, with over three-quarters
of male and female respondents saying they have the
required knowledge and skills.

Likewise, women who
are not business owners are more likely than men to
agree that “fear of failure would prevent me from starting
a business” (40 percent compared with 33 percent in
low- or middle-income countries and 44 percent compared
with 39 percent in high-income countries) and,
again, gender differences disappear among the active
business owners interviewed.13

The lack of role models is another constraint to
women’s entrepreneurship, but one that appears to be
diminishing with time. Among the adult women interviewed
for the 2006 Global Entrepreneurship Monitor
study, just 35 percent in low- or middle-income countries
and 27 percent in high-income countries personally
know someone who has started a business.That share
increases to 53 percent and 47 percent, respectively,
among established business owners (those who have
been in business for more than 42 months), and it is
even higher for newly established businesses—61 percent
of women in low- or middle-income countries and
56 percent of women in high-income countries.14

Consequently, familiarity with someone involved in
entrepreneurship is positively correlated with becoming
an entrepreneur, and it appears that there are now more
such role models for women getting into business today
than even in the recent past.These factors all affect
selection into entrepreneurship at the outset, and help to
explain why, once already engaged in entrepreneurial
activity, differences based on gender seem to become
less immediately relevant.

The results derived from the Enterprise Survey data
presented here need to be interpreted with caution.
First, sample sizes are small. Second, there are missing
observations that are likely not to be random and therefore
are likely to affect the results. For example, entrepreneurs
who have a strong feeling about a constraint
being severe may be more likely to answer the question
(or vice versa).This selection effect on the missing values
may be different for men and women.Third, these
results reflect perceptions, not objective measures of the
constraints identified.

Finally, the severity of the constraints
is assessed by entrepreneurs already in business—
therefore these constraints are perceived in relation to
how they affect the firm’s operations, not its startup. It
may be that women are affected more than men by specific
constraints at the startup stage, so that they are not
able to enter into business, but this is not amenable to
analysis through the Enterprise Survey data.

Related Articles
  1.0 Overview: Gender Entrepreneurship and Competitiveness in Africa, 2007
  7.0 Conclusions: Gender Entrepreneurship and Competitiveness in Africa 2007
  2.0 Gender in African economies: Gender Entrepreneurship and Competitiveness in Africa, 2007
  6.2 Legal and regulatory constraints: Gender Entrepreneurship and Competitiveness in Africa 2007
  4.1.1 Constraints faced by women in the MSE sector: Support for Growth-oriented Women Entrepreneurs in Tanzania, 2005

Article Tags: business constraints, corruption, differences between men and women, enterprise, men and women, men and women, obstacle, percentage of entrepreneurs, women and men, women entrepreneurs



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