Female Entrepreneurship and its Factors of Influence

Table of Contents

1. Introduction
1.1 Problem Definition and Aims
1.2 Methodology and structure

2. Correlation of entrepreneurship in general and economic development

3. Factors of influence for female entrepreneurs
3.1 Motives and intentions
3.1.1 Push factors
3.1.2 Pull factors
3.2 Challenges and constraints

4. Macro-environmental effects on female entrepreneurship

5. Conclusion

References

1. Introduction

1.1 Problem Definition and Aims

Female entrepreneurs nowadays contribute substantially to economic growth and poverty reduction, as women-owned companies in the United States are growing at more than double the rate of all other firms, contributing almost $3 trillion to the U.S. economy and being responsible for 23 million jobs. Likewise does female entrepreneurship increase in developing countries – with 8 to 10 million formal small and medium-sized enterprises existing which are owned by at least one woman (The World Bank, 2013, p. 3). However, to date, there are still more men than women – measured on a global scale with some rather insignificant exceptions in single countries – who are engaged in entrepreneurial activity (Kelley, Singer, and Herrington, 2012, p. 15). Although the number of male entrepreneurs still exceeds that of female entrepreneurs, yet, women decide to enter a mainly male-dominated field of operation. Together with other factors of influence, apparently, the women who decide to start their own businesses seem to have a significant positive influence on other females since the amount of companies managed by women is rising on a global scale as demonstrated in the World Bank’s publication Female Entrepreneurship: Program Guidelines and Case Studies (The World Bank, 2013, p. 3).

What are, hence, the specific reasons and motives that influence the women’s decision to engage in entrepreneurial activity and what are the challenges and constraints that might prevent potential female entrepreneurs from starting their own businesses?

The target of this seminar paper is to examine the various personal or micro-environmental motives, challenges, and constraints that influence women in their decision whether or not to establish their own ventures. Likewise it will investigate the effects of macro-environmental factors on the emergence of female entrepreneurship.

This paper does not discuss the differences between various countries, though it will mainly concentrate on female entrepreneurship and its aspects in industrialized countries. Neither does this seminar paper differentiate between large-scale enterprises nor small and medium-sized enterprises.

1.2 Methodology and structure

This paper starts with a definition of the term entrepreneurship and its relation to economic development in the second section. The third section is concerned with the elaboration of women’s motives and intentions as well as the challenges and constraints affecting their decision to engage in entrepreneurial activity. The penultimate section deals with the influence of macro-environmental factors on the emergence of women-owned enterprises. Finally, the last section discusses and summarizes the results.

2. Correlation of entrepreneurship in general and economic development

Due to the fact that entrepreneurship includes a huge variety of activities and undergoes constant change, many definitions are existent. Thus, entrepreneurship is nowadays seen as a dynamic process requiring energy and passion towards new ideas and creative solutions. Entrepreneurs are supposed to take risks, while simultaneously identifying opportunities (Kuratko, 2009, p. 5). However, not every entrepreneur has the possibility to recognize opportunities, as his or her entry into entrepreneurship is strongly dependent on the surrounding environment. Some entrepreneurs are indeed able to “respond to a perceived market opportunity. Others are forced into starting a business due to unfavorable circumstances” (Robichaud, LeBrasseur, & Nagarajan, 2010, p. 2). Unfavorable circumstances are, for example, the unavailability of “appropriate paid employment in recessionary economic conditions” (Dawson & Henley, 2012, p. 698). The reasons for being able to recognize opportunities are often called the pull factors, whereas the external factors forcing people to start their own businesses are referred to as push factors, equally designated as necessity-driven or opportunity-driven entrepreneurship (Robichaud et al., 2010, p. 2). According to previous Global Entrepreneurship Monitor (GEM) reports, “necessity-driven self-employment activity tends to be higher in less developed economies” (Bosma & Levie, 2009, p. 8). Thus, it can be inferred that most entrepreneurs in countries with higher gross domestic product (GDP) per capita are opportunity-driven entrepreneurs. As Minniti, Bygrave, and Autio (2005) stated, several studies show that a correlation between the rate of entrepreneurship and the per capita GDP is existent (p. 23). Countries with a low level of per capita income obtain many entrepreneurs as the scope for the creation of new markets is given. With an increase in per capita income the establishment of new firms decreases due to the fact that more people find employment in already established companies. However, with further rise of per capita GDP the number of entrepreneurs increases likewise as they obtain a higher amount of resources allowing them to go into business as well as to benefit from newly created opportunities (Minniti et al., 2006, p. 14).

3. Factors of influence for female entrepreneurs

3.1 Motives and intentions

3.1.1 Push factors

On the one hand female entrepreneurs are influenced by the so-called push factors. Duchéneaut stated that push factors are primarily determined as factors “of necessity such as insufficient family income, dissatisfaction with a salaried job, difficulty in finding work and a need for a flexible work schedule because of family responsibilities” (Duchéneaut, 1997; as cited in Orhan & Scott, 2001, p. 233). Thus, push factors “often have negative connotations” (Kirkwood, 2009, p. 346).

As currently only 4.6% of the Fortune 1000 CEO positions are held by women (Catalyst, 2014, p.1), one reason for women, in particular, might be a dearth of sufficient progress within their workplaces, the so-called glass ceiling barrier that prevents women from reaching executive positions within a company (Winn, 2004, p.143) and therefore fosters their decisions to start their own ventures. This might also lead to general job dissatisfaction, “ranging from hatred of their bosses to dissatisfaction with bureaucracy or salary”(Cromie, 1987, p. 256). However, harassment and subordination to male employees are important reasons for women to refrain from employment (Cromie, 1987, p. 257). Likewise, many women feel uncomfortable in a male-dominated workplace which is “characterised by the hierarchy, the ‘old-boys’ networks’ and the use of directive power” (Orhan & Scott, 2001, p. 233).

Considering the current economic crisis one significant argument to engage in entrepreneurial activity is imminent unemployment and failure of finding adequate employment, respectively (Dawson & Henley, 2012, p 698). As Faria, Cuestas, and Gil-Alana (2009) illustrate, there is a correlation between high rates of unemployment and an increasing amount of business-owners (p. 318). This is caused by the fact that “the opportunity cost of starting a new firm is lower for the unemployed” (Faria et al., 2009, p. 318) and therefore the unemployed are more likely to set up their own enterprises. Although this investigation concentrates on both genders, Dawson and Henley (2012) indicate that redundancy is one push factor that can be applied to women, equally (p. 701).

Though, the most important push factor when it comes to the motives of women to commence their own enterprise, is the necessity of combining “family commitments” (Dawson & Henley, 2012, p. 701) with their work life. As Hughes (2003) investigated, about 50% of self-employed women in an industrialized country named work-family balance as a very important factor for commencing their own businesses (p. 447). Another survey conducted by Kirkwood (2009) to examine the motivations of entrepreneurship reveals that 75% of the female respondents who had children named those as being the main reason along with reasons of flexibility for going into business for themselves (p. 352).

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