A third of high-growth companies globally are now led by women, according to the Global Entrepreneurship Monitor (GEM) 2021/2022 report on women’s entrepreneurship.
“That’s an important statistic,” says Aileen Ionescu-Somers, executive director of GEM. “To me, this indicates that women can certainly succeed on the more demanding side of entrepreneurship.”
The report defines high-growth companies as job creators with more than 20 employees and expecting more than 20 hires over the next five years.
The GEM reports, produced by a consortium of universities, constitute one of the most comprehensive bodies of current data on entrepreneurship in the world. The Women Entrepreneurs Report examines data from 47 countries. It includes high-income countries (such as Canada, Chile, Japan, Saudi Arabia, South Korea, Uruguay, and the United States), upper-middle-income countries (including Belarus, Brazil, Colombia, Jamaica, Romania, Russian Federation, South Africa and Turkey); lower-middle-income countries (such as Egypt, India, Iran, and Morocco) and one low-income country, Sudan.
The Women’s Entrepreneurship Report also revealed that one in three innovation-driven entrepreneurs are women. According to the authors of the report, women entrepreneurs from upper-middle-income countries are currently the most prevalent among the most innovative and high-growth entrepreneurs globally and have reached parity with men in terms of business orientation. International market.
At the same time, women are more likely than men to start businesses without employees, according to the report. It is the largest group of companies and often a springboard for future job creators.
Women succeed in these areas with little or no “enabling” environment, that is, policies supporting childcare and other services that help women entrepreneurs. The “enabling environment” for women entrepreneurs in most countries is “very weak,” according to national experts who collaborated with the researchers. Beyond that, in most countries around the world, women tend to be less wealthy than men, with less money to exploit, according to the report.
Although fewer women around the world said they wanted to start a business or acted on these intentions in recent years, the situation was different in upper-middle-income countries. There, start rates skyrocketed 11% from 2019 to 2021, and there was no dip in 2020.
The presence of women at the helm of so many high-growth businesses is particularly noteworthy given the additional demands many women have faced during the pandemic, with schools shifting to online learning and childcare facilities scarce or non-existent. .
“Yes, of course they have been affected, especially start-up entrepreneurs. There have been a lot of business failures,” says Ionescu-Somers. “Women who were already more established entrepreneurs were able to juggle this challenge of suddenly no longer having childcare.”
A huge challenge for women entrepreneurs exists around the world, the report notes: lack of finance. “Essentially, the conclusion is that diversification of access to capital is sorely lacking,” says Ionescu-Somers.
One of the reasons for the limited access to funding is that many women gravitate towards areas that investors are less likely to support, according to Ionescu-Somers. “Obviously we have women in high-growth sectors, but women tend to choose different types of entrepreneurship than men,” she says. “They tend to go into retail, hospitality and other areas.”
The report calls for the mobilization of financial support for women entrepreneurs; support for high-potential women entrepreneurs in all sectors and all countries; celebrating women entrepreneurs as role models and demystifying gender stereotypes related to entrepreneurship.
“We’ve been saying for years that there are cultural and social biases against women,” says Ionescu-Somers. “It is obvious that there are models. But somehow we do a poor job of showcasing these role models and breaking down perceptions that women won’t be as engaged or successful. Perception is reality.”
It is possible that as more and more women succeed in their exits, they will also invest in other women-owned businesses. The report found that the business exit rate of women increased from 2.9% to 3.6% during the pandemic, while that of men increased from 3.5% to 4.4%. There was a 74% increase in exits for women in upper-middle-income countries, compared to 34% for men.
The report also highlighted some interesting regional trends:
· Only 12.9% of women in high-income countries said they intended to start a business, compared to one-third of women in low-income countries. Early-stage start-up activity typically accounts for about half the rate of intentions to start a business, according to the report.
· The highest start rate among women was found in the Dominican Republic. Nearly 44% of women declared a start-up activity, against 40.1% of men.
· Poland (1.6%) and Norway (1.7%) have the lowest start-up rates for women.
· Entrepreneurship in the Middle East and Africa is becoming more accessible to women. “There is an openness of these companies not only to entrepreneurs, but to women entrepreneurs in particular,” says Ionescu-Somers.
· Central and East Asian women have the highest rate of established business owners in the world. Kazakhstan has some of the highest rates of entrepreneurial intentions and start-up activity by women.
· Europe has the lowest rates of entrepreneurial intention and female participation.
The female entrepreneurship report’s lead author is Amanda Elam, Ph.D., CEO/co-founder of Galaxy Diagnostics, an early-stage medical diagnostics company in Research Triangle Park, North Carolina, and researcher at the Diana International Research Institute. at Babson College. The other contributors are:
Benjamin S. Baumer, PhD, of Smith College
Thomas Schott, American University in Cairo, University of Agder and University of Southern Denmark
Mahsa Samsami at the University of Santiago de Compostela
· Amit Kumar Diwivedi, PhD; at the Entrepreneurship Institute of India
· Rico Baldegger, PhD, at the University of Applied Sciences and Arts of Western Switzerland
Maribel Guerrero, PhD, at Arizona State University and Universidad de Desarrollo
· Fatima Boutaleb, PhD at Hassann II University of Casablanca, Morocco
· Karen D. Hughes, PhD at the University of Alberta and Diana Research Fellow at Babson College.
As numerous studies have illustrated, women’s economic empowerment benefits society on multiple fronts. For policymakers looking for low-hanging fruit when it comes to increasing their GDP and the general well-being of their communities, creating a better funding ecosystem for women entrepreneurs seems like a obvious step.