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Global Rise of Women Entrepreneurs

 Women’s entrepreneurship has hit a media tipping point. The question is: Is it just a passing media fad that will soon be a blip on the radar screen, or is it actually a real, fundamental economic force that’s reshaping the world? I think it’s safe to say that it’s the latter. Women-owned entities in the formal sector represent approximately 37% of enterprises globally — a market worthy of attention by businesses and policy makers alike.

While aggregated data is often challenging to find, the recent Global Entrepreneurship Monitor (GEM) found 126 million women starting or running businesses, and 98 million operating established (over three and a half years) businesses. That’s 224 million women impacting the global economy — and this survey counts only 67 of the 188 countries recognized by the World Bank.

womenentrepreneurs2.gifThese entrepreneurs cross the spectrum of micro to high growth — from supporting life to creating wealth. They include hair salon owners, high tech visionaries and everything in between, all making critical economic contributions. Consider three aspects:

Reinvestment: In emerging markets, women reinvest a staggering 90 cents of every additional dollar of income in “human resources” — their families’ education, health, nutrition (compared, by the way, to 30-40% for men. Think of women’s increased income and assets as a gender dividend driving family, community and country wellbeing.

Job creation: Beyond their own incomes, 112 million of the GEM surveyed entrepreneurs employ one or more people. 12 million expect to employ up to six people in the next five years. That’s 72 million jobs just from this small sample. In countries like Kenya, so called “SMEs” (Small and Medium Enterprises) like this are responsible for 80% of all employment. And in the U.S., more than half of the 9.72 million new jobs to be created in the SME sector by 2018 will be created by woman-owned SMEs.

Innovation: When defining innovation as “offering products that are new to some or all customers” in some regions — including the U.S. and developed Europe — women entrepreneurs have higher levels of innovation than their male counterparts.

womenentrepreneurs3.gifCollectively, women entrepreneurs look different than their male counterparts. Their lower employment numbers and growth aspirations have historically led to questions of how to “fix” them. But different doesn’t mean deficient — or underperforming. For instance, recent Dow Jones research on venture-backed companies in the U.S. found those that were successful had twice the number of women on the founding team. On the other end of the growth spectrum, analysis of a dataset from 350 micro finance institutions across 70 countries indicated lending to more women was associated with lower write-offs and lower portfolio-at-risk. Similarly, I recently met with Sanergy and Copia Global, Kenyan social enterprises using franchise models. They both found that women entrepreneurs tend to be more successful because of their trusted status in the community. Controlling for firm characteristics, research suggests that women-owned firms outperform those owned by male counterparts.

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