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GEM Report Uncovers a Possible Ambition Gap in Women Entrepreneurs

274M Women are Starting Businesses Worldwide, But Growth Remains Out of Reach for Many

by Skyler Rossi
November 16, 2021
in Women Entrepreneurs
Reading Time: 4 mins read
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Men more often identify wealth as a leading motivator

Women represent almost half of all entrepreneurs active around the world, but in many regions, they continue to raise less funding, be involved in fewer high-growth businesses and close more businesses than men, according to the Global Entrepreneurship Monitor 2020/21Women’s Entrepreneurship Report. 

Likely as a result, women tend to run smaller businesses than men. More than 36% of women work as soloprenuers in early stages — operating without co-founders or staff. That’s compared to 24.6% of men. Women are also half as likely as men to run businesses with 6-19 employees and ⅔ less likely than men to run a business with 20 or more employees. 

Only about 30% of the women surveyed worldwide expect to hire six or more employees in the next five years, compared to 48% of men, write the report’s authors, led by Amanda Elam, a researcher at Babson College’s Center for Women’s Entrepreneurial Leadership.

Recent attention has focused on the pernicious effect of less support for women entrepreneurs — which may become a self-fulfilling prophecy. People including Makisha Boothe, founder and CEO of Colorado-based Sistahbiz, a support organization for Black women entrepreneurs, argue that giving people a small amount of money to launch their companies forces them to think small. That kind of tentative support is more likely to happen to women entrepreneurs than men.

And it may show up in the way women entrepreneurs frame their goals.

About 57% of women and 62% of men globally reported they started a company to generate great wealth. However, there’s a 10-point gender gap between men and women in middle income and high-income countries with this motivation, while women in low-income countries are equally as likely as men to report that they started a company to generate great wealth. Meanwhile, women and men are about equally as likely to start a business to make a difference in the world (47-48%) or to continue a family tradition (32-33%).

Big Numbers, but Growth is Hard

Based on the countries in the GEM 2020 survey, about 274 million women around the world are involved in business startups, 139 million women are owners or managers of established businesses and 144 million women are involved in business investment globally. Meanwhile they only make up one in three established business owners, and represent about one in three growth-oriented entrepreneurs active in the world. 

Despite the growth, women remain less likely to become entrepreneurs worldwide, and those that are entrepreneurs plan less growth. The global average total early-stage entrepreneurship activity rate — which GEM defines as the percentage of adults between the ages of 18 and 64 who are either a nascent entrepreneur or an owner-manager of a new business– for women is 11%, which is over ¾ of that of men (0.8 female to male ratio).

GEM has collected data about entrepreneurship in more than 100 economies since 1999. Its global researchers also conduct about 150,000 interviews annually with experts and entrepreneurs.

“Much of the conversation over the years has centred on increasing the number of female entrepreneurs. We need to see this conversation evolve to focus on high-growth activities,” the report’s authors wrote. “So many women around the world are making a significant impact, despite barriers in the system that impact growth opportunities. It is imperative that more focus is placed on helping female entrepreneurs and business owners to build high-growth companies.”

In Low-income Countries, Women Entrepreneurs Abound

In some ways, women in low-income countries fare better than women in high-income countries, compared with their male counterparts. In low-income countries, women have a higher average entrepreneurship activity rate, and are less likely than men to close businesses.  Low and middle-income countries showed the highest levels of entrepreneurial intentions for women, according to the report.

Women in Europe have some of the lowest rates of entrepreneurship compared to women in other regions — they’re also less involved in high-growth entrepreneurship than most other parts of the world. The global average total early-stage entrepreneurship activity rate for women there is 5.7%, much lower than the world’s average of 11%. However, women in Europe are also more likely to be self-employed or have a few employees, according to the report. In North America, women are much less growth oriented than men, according to the report.

The Impact of the Pandemic

Also, 50% of women in the U.S. cited the pandemic for their business closure, which is higher than the global average and twice the rate reported by women in Canada.  

Across the globe, women were “more deeply” impacted by the pandemic than men, according to the report. Of the people who reported recently closing a business, Women were 20% more likely than men to report a business closure because of the pandemic, according to the survey. That gap was the largest in Europe and North America — there, women were 50% more likely than men to close a business because of the pandemic. 

Women were also more likely than men to say that starting a business during the pandemic was more difficult — a gap that was, again, more pronounced in Europe and North America. 

But that’s not to say that women haven’t adapted — many have successfully navigated small business vulnerabilities and sector impacts, despite insufficient public policy interventions — especially support for family care, school and small business. 

Women in East and Central Asia did this especially well. There the trend was reversed: more men reported business closures due to the pandemic there than women (38% vs 34%). Also, in low-income  countries, women were less likely than men to report a business closure because of the pandemic. 

Recommendations

The report, linked here, recommends the following for advancing women’s entrepreneurship globally:

Focus on support for women’s high-growth business activity

Encourage women investors: “Three recent trends suggest pathways to increased investment in women-owned firms: the organization of women’s business angel networks, where women are learning to invest in the kinds of product and business that they value; impact investing; and women-focused investing.”

Support women business owners in male-dominated sectors, such as through targeted entrepreneurship programs.

Develop policy that directly supports women business owners, including sufficient support for family care, schooling and small-business impacts, policies that many countries have fallen short on.



This story and others on Times of E are made possible by a sponsorship from the Ewing Marion Kauffman Foundation. The Ewing Marion Kauffman Foundation is a private, nonpartisan foundation that provides access to opportunities that help people achieve financial stability, upward mobility, and economic prosperity – regardless of race, gender, or geography. The Kansas City, Mo.-based foundation uses its grantmaking, research, programs, and initiatives to support the start and growth of new businesses, a more prepared workforce, and stronger communities. For more information, visit www.kauffman.org and connect with www.twitter.com/kauffmanfdn and www.facebook.com/kauffmanfdn.

Tags: Global Entrepreneurship Monitor
Skyler Rossi

Skyler Rossi

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