The Role and Contribution of Women’s Entrepreneurship

Professor Sara CarterUniversity of Strathclyde

RSA / DTI London 27th June 2005

The Role and Contribution of Women’s Entrepreneurship

• Numbers and trends

– Quantitative assessment of numbers and trends in UK

– Comparative analysis of EU, US and GEM 34 nations

– Focus on US experience

• Women’s experience of self-employment and business ownership

– Characteristics of women-owned businesses in the UK

– Constraints and their causes

• Academic discourses and policy implications

– How women entrepreneurs are viewed in academic research

– Recent policy and advocacy initiatives

UK Women’s Enterprise:Numbers and Trends

• Women’s business ownership trends in the UK are unknown– Definitional ambiguities:

• entrepreneurship, business ownership & self-employment• degree of women’s ownership (wholly, majority, co-owned etc)

– Statistical anomalies: • no gender disaggregation of business ownership datasets• only self-employment data available by gender• reliance on survey data and anecdotal evidence

• SME survey estimates suggest• 15% women-owned• 35% jointly owned by men and women• 50% men-owned

• Treasury goal to increase women-owned businesses from 15% to 20%

Source: FSB 2004 / SBS 2004

Female Self-employment in UK

• Women are under-represented in self-employment and business ownership, despite policies designed to increase rates of participation and despite expansion in business and personal services

Q1 1992: 899,000 self-employed women 7% of economically active women26% of self-employed population)

Q1 2004: 963,000 self-employed women 7% of economically active women26% of self-employed population

• Modest fluctuations, but no overall expansion in female share of self-employment in past 20 years

• Evidence of relatively low in-flows into and relatively high (and unexplored) out-flows from self-employment

Source: Labour Force Survey, ONS UK

Female Self-employment by UK Region

North East 4.4%North West 5.5%Yorkshire & Humber 6.1%East Midlands 7.1%West Midlands 5.9%East England 7.4%London 10.6%South East 8.3%South West 9.1%England 7.5%Wales 7.9%Scotland 5.2%Northern Ireland 5.4%

United Kingdom 7.2%Source: Labour force Survey, April 2005

Note: Female s/e as % total female employment

Women’s Enterprise in EU (15)

• Fewer self-employed women than in all age groups and in all sectors

• Self-employed as % of total employed– EU15 average: 15.5% m, 8% f (industry & services)– UK slightly below average (14% m, 6% f)– Highest: Greece (31%m, 16%f), Italy (26%m, 15%f), Portugal (20%m, 13%f)– Lowest: Luxemburg (8%m, 5%f), Denmark (10%m, 4%f), Austria (10%m,5%f)

• EU self-employed profile – 30% female vs 23% male operate in retail and distribution– 30% male vs 13% female operate in industry and construction– EU 15 (except EL) much larger proportion of females operate in distribution,

community and personal services, and hotels and restaurants– Similar education levels of male and female self-employed– Female self-employed operate in smaller enterprises / units

Source: Eurostat

Women’s Enterprise in USA

• 10.6 million firms are at least 50% owned by a woman or women– 48% of all privately-held firms are at least 50% owned by a woman– employ 19.1 million people– generate $2.5 trillion in annual sales

• Growth between 1997-2004 – estimated growth in number of women-owned firms nearly twice all firms

(17% vs 9%)– employment expanded at twice rate of all firms (24% vs 12%)– number of women-owned firms with employees grew by 28%, three

times growth rate of all firms with employees• Annual contribution

– $492 billion on salaries, $54 billion on employee benefits– $38 billion IT spend, $25 billion on telecommunications spend– $23 billion human resource services spend, $17 billion shipping spend

Source: Centre for Women’s Business Research, Washington DC

Women’s Enterprise in USA

• In USA, ‘women-owned businesses’ includes– businesses solely owned by a woman / women– businesses majority-owned (>51%) by women– businesses owned equally (50/50) by women and men

• Businesses that are majority-owned (>51%) by women comprise – 63% of ‘women-owned’ businesses– 6.7 million businesses

• Businesses that are majority-owned by women – employ 9.8 million people– generate $1.2 trillion in sales

Source: Centre for Women’s Business Research, Washington DC

Female Self-employment in USA

• Self-employment in the USA (2002)– 8,490,000 total self-employment – 6.4% of total employment– 5,124,000 male self-employed (60.3%) – 7.3% total male employment– 3,366,000 female self-employed (39.6%) – 5.4% of total female employment

• Historical trends in self-employment– In 1976, women constitute 26.8% of total self-employed in US – In 2005, women constitute 26.7% of total self-employed in UK

– In US Increases in female share of self-employment every year since 1976– In UK, fluctuations, but few overall changes in female share of self-employment

since 1984 (1st year when female share jumped from 18% average to 24%)

Source: US Bureau of Labor Statistics and UK ONS

Women’s Experience of Entrepreneurship in UK

• Women owned businesses are younger and smaller

• Age and scale• Younger businesses (50% established in past 5 years), very few

old businesses owned by women• Fewer women-owned firms are VAT registered (58% registered,

5% exempt, 37% unregistered)• Lower average sales turnover (40% under £50,000)• More likely to operate from home

• Employment profile• Women owned mean employment 4.3• Men owned mean employment 5.9• Co-owned mean employment 8.8

• Source: FSB 2004

Women’s Experience of Entrepreneurship in UK

• Distinctive profile of women business owners

• Women more likely to start in business on their own• More likely to register as sole traders (71%)• Fewer limited companies (18%) or partnerships (9%) owned by

women

• Twice as likely to have additional part-time employment• Less likely to own more than one business

• Concentration in traditionally ‘female’ sectors• Retail (26%), business services (12%), other services (11%),

health and social work (7%), education (5%)• Manufacturing (4%), construction (1%), transport (1%),

agriculture (1%)

Source: FSB 2004

Constraints on Women’s Enterprise

Prior labour market experiences• The impact of prior occupation and sector on acquisition of economic,

social, human and cultural capital• Women starting in business often lack hard resources (capital, savings)

and soft resources (management experience, training)

Start-up and growth finance• Women use 1/3 the capital used by men, irrespective of sector• Dependence on personal savings and informal finance sources• Very little use of VC and business angel investment• Initial under-capitalisation has a long term negative effect on business

survival and growth prospects

Developing and using business networks • Networks traditionally developed by and for men • Women’s networks tend to consist of other women

Women Entrepreneurs in Innovation • Few women in technology and innovation sectors, less related to personal

characteristics and abilities and more related to structural and experiential factors

• The advantages of education and experience do not totally compensate for disadvantages of gender

• The single entrepreneur style favoured by women is the antithesis of the teams required by university and commercial science

• New UK research suggests women are not less attracted to spin-off ventures, neither do women have fewer entrepreneurial characteristics than men

• But, women lack opportunities to lead spin-outs, they lack sufficient networks (which need to be wide and weak-ties) and lack business credibility

Academic Discourses

• Academic discourse on entrepreneurship is narrow, gendered and focused on ‘high potential’ technology-influenced influenced

• Derived from Schumpeterian ‘heroic’ perspectives, reinforced by personality and trait research

• Dualism in the SME sector between the very few high growth ‘gazelles’ and the majority of ‘lifestyle’ trundlers

• Selectivity of support ‘picking winners’ hampered by inability to identify high growth businesses in advance

• ‘High potential’ entrepreneurs are identified by their stated growth aspirations, clustered around key demographic characteristics white, well-educated, males, aged 25-45

• No evidence that these entrepreneurs have higher growth rates than others

• No evidence that non-high potential entrepreneurs do not grow

Policy Implications

• Key policy support for women’s enterprise in past five years– Strategic Framework for Women’s Enterprise, SBS 2003– Treasury aim to increase the numbers of women entrepreneurs– Development of advocacy through Prowess and possibility of new

Women’s Business Council• Debates about separate business support

– Continued focus on low-level, remedial support– Evidence of gendered constraints in women’s access to high growth

programmes• Need to focus on:

– Defining what we mean by women’s enterprise– Disaggregating datasets by gender (VAT, IDBR)– Structural barriers in the labour market and in self-employment that lead

to the under-capitalization of women-owned businesses– The development of effective advocacy

The Role and Contribution of Women’s Entrepreneurship

Professor Sara CarterUniversity of Strathclyde

RSA / DTI London 27th June 2005