Why aren’t there more female entrepreneurs?

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Why aren’t there more female entrepreneurs?

Entrepreneurship has been suggested to be at the core of innovation that leads to development, which in turns leads to growth.
On balance, existing firms lose more jobs than they create. But once Deaths are set aside, Survivors usually create more net jobs than startups do.

Tim Kane

Of course, not all business venture become great successes, but even those that at the end do not grow to become the next Google or Walmart, offer the means to earn some income to their business owners, and to their employees if they have any (Wennekers & Thurik, 1999; Acs et al., 2010, 2016). Furthermore, starting up a business can be the only way to earn any income in periods of economic downturns when many businesses layoff their staff to cut down their expenses. What is more, starting up a business might be a good way by which somebody who otherwise would not have the ability to work a full-time job can continue to work (e.g. housewife). Women particularly can benefit greatly from entrepreneurship, since it gives them the autonomy as well as flexibility to operate their business and balance more efficiently the work and family. Moreover, who is to say that a small business idea, regardless of whether it was put in action out of desperation or not, will not find its way to greatness?
The beginnings of all things are small.

Marcus Tullius Cicero

There is a recent trend among feminist-economist, which shows that the gentle push of women towards entrepreneurship is an excuse for insufficient support policies for women’s fair access and treatment in wage-employment, motherhood and childcare. The argument is that if the aforementioned provisions were warranted for women in wage-employment, there would be no need for women to turn to entrepreneurship to access employment, or to better balance their work and family responsibilities. They will often cite research results from Sweden, where women numbers in wage-employment are much higher than in other EU member-states, and women appear to be less enthusiastic about entering self-employment (Delmar & Davidsson, 2000; Rønsen, 2014).

It is realistic to say that women around the world, on average, suffer a gender penalty to their wage-employment salary, career prospects in most organisations, access to start-up finance, skills perception, and the list can go on (Parker, 1999; Delmar &Davidsson, 2000; Annink and den Dulk, 2012; Yu, 2017). It is also likely that state support to various motherhood or childcare provisions can be improved. On the other hand though, if the state uses its numerous governmental institutions to improve the support to women in wage-employment who choose to start a family and have children, beyond a certain level, of which I cannot know (or anyone else), while not providing greater support to their self-employed counterparts as well, then in the (very) long run, one would expect to come across a society with very unbalanced economic power between men and women. It is unrealistic to expect that increasing the maternity-related benefits for female wage-employees without doing the same for female self-employed will not hurt the numbers of female entrepreneurs.
He was a very inferior farmer when he first began... and he is now fast rising from affluence to poverty.

Mark Twain

To make this thesis more clear lets give an example. As Plato would say, come then, and let us pass a leisure hour in story-telling and let us use our imagination to envisage a society in which the state provides women in wage-employment with superb benefits, such that of paid maternity leave from 6 months to... say up to 48 months, with a monthly financial support equal to the full amount of her last salary earned, and a guarantee of return to her previous employment. Let us add to that an additional childcare support of the equivalent annual average expense for a combined nanny/sitters, child-minders, and day-care, say approximately £15K per annum. We would assume that such incentives would gently push women who wish to have children, towards wage-employment and consequently away from self-employment. One can assume that the only women who would choose to reject these generous wage-employment benefits, and instead choose to start their own business would be, among others, those who somehow were uninformed of such benefits, or those indifferent to them due to being born in a family with their own successful business, or those who managed to set up a successful business before they decided to have children and the trade-off is too big for giving up their business.
There is demand in these days for people who can make wrong conduct appear right.

Terence

I am not in favour of predictions, because future-telling is full of risk and uncertainties, but if I was forced to put my money on a prediction, then I would say that in our imaginary situation women would be attracted to wage-employment in far greater numbers than in self-employment. It would likely take two generations for the market to be heavily controlled be men, with women consisting the bulk of the wage-employed workforce. Capital would be controlled by men, with women existing in some surreal dystopia, where they are highly respected, have a great freedom of economic activity, and enjoy many privileges, apart of course from those that direct the market. If in this version of the world the “one dollar, one vote” maxim holds true, then women being unequally able to spend the dozens of millions in lobbying which the captains of industry can, they would end up having limited political power as well.
Why is it that several countries have, in only a few short decades, experienced a rapid accumulation of human capital – the Asian miracle economies– while other countries at about the same place in the poverty ranking have not? Surely the answer is the emergence of entrepreneurship, encouraged and sanctioned by the government.

Edmund S. Phelp

References

Acs, Z. J., Åstebro, T., Audretsch, D. and Robinson, D. T. (2016) ‘Public policy to promote entrepreneurship: a call to arms’, Small Business Economics, 47(1), pp. 35–51.

Annink, A. and den Dulk, L. (2012) ‘Autonomy: the panacea for self-employed women’s work-life balance?’, Community, Work & Family. Routledge, 15(4), pp. 383–402.

Delmar, F. and Davidsson, P. (2000) ‘Where do they come from? prevalence and characteristics of nascent entrepreneurs’, Entrepreneurship and Regional Development, 12(1), pp. 1–23.

Mankiw, N. G., (1995), ‘The Growth of Nations’, Brookings Papers on Economic Activity 1, 275–326.

Parker, S. (1999). ‘The Inequality of Self-employment and Employment Incomes: A Decomposition Analysis for the UK’, Review of Income and Wealth, Vol. 45, 263-274.

Rønsen, M. (2014) ‘Children and family: A barrier or an incentive to female self-employment in Norway?’, International Labour Review, 153(2), pp. 337–349.

Wennekers, S. and Thurik, R. (1999) ‘Linking Entrepreneurship and Economic Growth’, Small Business Economics, 13(1), pp. 27–56.

Yu, W. (2017) ‘Tradeoff or Winner Take All? Relationships between Job Security and Earnings in 32 Countries.’, Sociological Perspectives, 60(2), pp. 269–292.

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