Women entrepreneurship in developing countries

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The aim of this paper is to focus on contribution of women as entrepreneurs and their role in economic development and is based on the secondry data.

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International Journal of Management (IJM) Volume 8, Issue 4, July– August 2017, pp.1–7, Article ID: IJM_08_04_001 Available online at http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=8&IType=4 Journal Impact Factor (2016): 8.1920 (Calculated by GISI) www.jifactor.com ISSN Print: 0976-6502 and ISSN Online: 0976-6510 © IAEME Publication WOMEN ENTREPRENEURSHIP IN DEVELOPING COUNTRIES Dr. Ruchi Tripathi Assistant Professor, Institute of Management Studies, Noida, India Vinay Pratap Singh Associate Professor, Bharat Institute of Technology, Meerut, India ABSTRACT India is a developing economy, enjoying the youngest youth population of the world Woman constitutes the family, which leads to society and Nation. Social and economic development of women is necessary for overall economic development of any society or a country. Entrepreneurship is the state of mind which every woman has in her but has not been capitalized in India in way in which it should be. Due to change in environment, now people are more comfortable to accept leading role of women in our society, though there are some exceptions. But if we analyze the country’s contribution in area of entrepreneurship, it is very little. Entrepreneurship leads in generating employment and utility products and services for the society and economy. This entrepreneurship deficiency in the country is also the major cause of unemployment. In the era of industrialization, liberalization and globalization, most of the world’s developed countries are enjoying the benefits of Innovation through contribution of women as Entrepreneurs. Our increasing dependency on service sector has created many entrepreneurial opportunities especially for women where they can excel their skills with maintaining balance in their life. The aim of this paper is to focus on contribution of women as entrepreneurs and their role in economic development and is based on the secondry data. Key words: Entrepreneurship, Economic Development, Women Entrepreneurs Cite this Article: Dr. Ruchi Tripathi and Vinay Pratap Singh, Women Entrepreneurship In Developing Countries. International Journal of Management, 8 (4), 2017, pp. 1–7. http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=8&IType=4 http://www.iaeme.com/IJM/index.as 1 editor@iaeme.com
Women Entrepreneurship In Developing Countries 1. INTRODUCTION In recent years, the rate of new business formation by women has significantly outpaced the rate of new business formation by men across all ethnic groups in the USA. Similar trends are found across the developing world. However, women still own and manage significantly fewer businesses than men. The explanation for this phenomenon, the behavior of female entrepreneurs in terms of traits, motivations, and success rates, and their gender-related distinctiveness are complex and multifaceted. Despite a growing literature we still need more research on female entrepreneurship—particularly in developing countries where we are seeing a growing number of initiatives aimed at promoting entrepreneurship and empowering women in the process. The latter tendency reflects a generally growing interest in female entrepreneurship in developing countries, which, in turn, is due to greater interest in the role played by entrepreneurship in the economic development process. Women have been assigned a special role not only because they stand to benefit from entrepreneurship being the poorer and more discriminated against gender, but also because they are seen as a critical driver of entrepreneurship in light of their unique role in the household and the rise in female-headed households across the developing world. Entrepreneurship refers to the act of setting up a new business or reviving an existing business so as to take advantages from new opportunities. Thus, entrepreneurs shape the economy by creating new wealth and new jobs and by inventing new products and services. However, an insight study reveals that it is not about making money, having the greatest ideas, knowing the best sales pitch, applying the best marketing strategy. It is in reality an attitude to create something new and an activity which creates value in the entire social eco-system. It is the psyche makeup of a person. It is a state of mind, which develops naturally, based on his/ her surrounding and experiences, which makes him/ her think about life and career in a given way. The women have achieved immense development in their state of mind. With increase in dependency on service sector, many entrepreneurial opportunities especially for women have been created where they can excel their skills with maintaining balance in their life. Accordingly, during the last two decades, increasing numbers of Indian women have entered the field of entrepreneurship and also they are gradually changing the face of business of today, both literally and figuratively. But still they have not capitalized their potential in India the way it should be. The role of women entrepreneurs in the process of economic development has been recognized form nineties in various parts of the world. Today, in the world of business, women entrepreneurship has become an essential movement in many countries and has been accepted in all areas of working. The United Nations report has also concluded that economic development is closely related to the advancement of women. In nations where women have advanced, economic growth has usually been steady. By contrast, in countries where women have been restricted, the economy has been stagnant. 2. SOME FACTS OF RESEARCH ON FEMALE ENTREPRENEURSHIP IN ADVANCED ECONOMIES What are the facts we have learned from the last 30 years of research on female self- employment and new business creation? We now know that significantly fewer women than men own and manage businesses worldwide. This could be because women fail more often than men or because fewer women than men start businesses to begin with, or both. Thus, at least a portion of the difference between genders must be due to the fact that fewer women than men start businesses. Evidence to date suggests that a variety of reasons contribute to explaining observed differences in entrepreneurial behavior across genders, and that such differences have http://www.iaeme.com/IJM/index.as 2 editor@iaeme.com
Dr. Ruchi Tripathi and Vinay Pratap Singh significant implications at the macroeconomic level. Perhaps women and men have different socioeconomic characteristics and, if we were to correct for factors such as education, wealth, family and work status, those differences would disappear. Indeed, quite a bit of empirical evidence shows that such differences exist. Also, women tend to possess fewer years of experience then men and tend to concentrate in different sectors. In addition, the propensity of women to start a business may differ from that of men for cultural reasons such as discrimination. The businesses owned and managed by men and women are also different. We now know that women's businesses tend to be smaller and to grow less than those owned by men. Also, women's businesses tend to be less profitable than those of men and to generate lower sales turnover than men, even in same industry comparisons. Minniti (2009, see further reading) provides a comprehensive and up-to-date review of the literature on women entrepreneurs and their businesses. 3. FEMALE ENTREPRENEURS IN DEVELOPING COUNTRIES Recent evidence shows that prevalence rates of female entrepreneurship tend to be relatively higher in developing then in developed countries. This has traditionally been explained by the fact that in developing economies women face higher barriers to entry in the formal labor market and have to resort to entrepreneurship as a way out of unemployment and, often, out of poverty. Research on female entrepreneurship in Latin America and the Caribbean, for example, found very high rates of female entrepreneurship in the poorest countries of the region—up to 35 per cent in Peru—and notes that only 13 per cent of women entrepreneurs in the region indicated that they expected their firm to grow over the following five years. In many cases opportunities and incentives are unfavorable for women to begin businesses, even when they have the abilities and knowledge. It is found that variables associated with entrepreneurial decisions tend to be the same for men and women and across countries, regardless of level of development, and that gender differences in entrepreneurial behavior tend to be remarkably stable across countries. However, the intensity with which each of these variables influences individuals does vary significantly across gender and across countries depending on their level of development. As a result, on average, participation rates for men tend to be 50 per cent higher than those of women creating a 'gender gap' in entrepreneurship. Larger gender gaps in start-up activity are found in middle-income countries, whereas they tend to be narrower in lower-income countries probably because many women start businesses out of necessity. Surprisingly, women in poorer countries tend to be more self-confident about their abilities (skills and knowledge) to become entrepreneurs and less afraid of failure compared to women in middle- and high-income countries—notwithstanding subjective and possibly biased perceptions about self-confidence, fear of failure, and existence of opportunities or significant and systematically associated determinants of the gender gap across all countries. Women in developing countries, like their counterparts in more developed ones, rely more than men on extended families which, in many rural settings are often their only or major social network. This is often constraining since women's marriage status, and the assets and incomes brought to their marriages, emerge as important determinants of their entrepreneurial decisions. Married women with young children are more likely to enter entrepreneurship than waged labor, and are more likely to be entrepreneurs than non-married women—although they are also more likely to quit a business voluntarily. http://www.iaeme.com/IJM/index.as 3 editor@iaeme.com
Women Entrepreneurship In Developing Countries 4. ECONOMIC DEVELOPMENT Economic development of a country is usually determined by the growth of per capita income. However, other than per capita income, in the essence of modern economic growth, we also know that, on average, it might be measured with other fundamental changes that occur. Such changes are, among other things, the way people live, as they are more likely to move to cities and work in factories, no longer in farms. That happens as the household industries tend to decline and replaced by larger enterprises. Other indicators that we might see are the tendency of the families to reduce the number of children, so the birth rate begins to fall. Development could be seen also from the point of view of employment progress, capital, business volume and consumption. In other words, economic development can be seen in the structural change of the society, and implies more than just economic growth. Gillis, Perkins, Roemer and Snodgrass (Economics of Development, 1996) stated that a key element in economic development is that the people of the country must be major participants in the process that brought about these changes in structure. Participation in the process of development implies participation of those benefits. If growth only benefits a tiny, wealthy minority, whether domestic or foreign, it is not development. 5. WOMEN’S ROLE IN ECONOMIC CONTRIBUTION In light of the explanation about economic development cited above, I would like to cite Naisbitt' and Aburdene’s statement that the progress of women’s role in several sectors, including business, could be seen in some phenomenon mentioned hereunder: 1. In line with the improvement of women’s education, women are no longer the minority in fields that were dominated by men in the past. 2. The field of information technology creates many opportunities for the development of women’s talents in this specific field. 3. The increase in the number of women who lead their own business, especially the ones in small and medium scale enterprises. 4. Women’s leadership is able to gain high loyalty due to the fact that they are the ones that are able to conduct clean, ethical, transparent and honest management. 6. REASONS FOR WOMEN OPTING FOR ENTREPRENEURSHIP Self determination, expectation for recognition, self esteem and career goal are the key drivers for taking up entrepreneurship by women (Moore & Buttner, 1997). Sometimes, women chose such career path for discovering their inner potential, caliber in order to achieve self satisfaction. It can also provide a mean to make best use of their leisure hours. However, dismal economic conditions of the women arising out of unemployment in the family and divorce can compel women into entrepreneurial activities 7. OBSTACLES FOR WOMEN ENTREPRENEURSHIP The entrepreneurial process is same for men and women. Successful men and women entrepreneurs undergo similar motivations and thus achieve success in largely same way under similar challenges. They are also found to have access to fund from the same sources. The same condition both men and women can be successful entrepreneurs. (Cohoon et.al. 2010). However, in practice most of the upcoming women entrepreneurs face problems that are of different dimensions and magnitudes than that faced by their male counterparts. These problems, generally, prevent these women entrepreneurs from realizing their potential as entrepreneurs. The major hurdles that the women face during starting and running a company http://www.iaeme.com/IJM/index.as 4 editor@iaeme.com
Dr. Ruchi Tripathi and Vinay Pratap Singh generally come from financing and balancing of life. The balancing of life is caused due to lack of family support for the women. The other hindering external factors include gender discrimination, inaccessibility to information, training opportunities, infrastructure etc. Some internal factors like risk aversion by women, lack of confidence, lack of vision of strategic leader etc. can also create obstacles for the women entrepreneurship development. 8. MEASURES TO REMOVE THE OBSTACLES The elimination of obstacles for women entrepreneurship requires a major change in traditional attitudes and mindsets of people in society rather than being limited to only creation of opportunities for women. Hence, it is imperative to design programmes that will address to attitudinal changes, training, supportive services. The basic requirement in development of women entrepreneurship is to make aware the women regarding her existence, her unique identity and her contribution towards the economic growth and development of country. The basic instinct of entrepreneurship should be tried to be reaped into the minds of the women from their childhood. This could be achieved by carefully designing the curriculum that will impart the basic knowledge along with its practical implication regarding management (financial, legal etc.) of an enterprise. Adopting a structured skill training package can pave the way for development of women entrepreneurship. Such programmes can train, motivate and assist the upcoming women entrepreneurship in achieving their ultimate goals. Various schemes like the World Bank sponsored programmes can be undertaken for such purposes. The course design should focus on imparting input on profitability, marketability and practical management lessons. Besides, there should be consideration in helping the women entrepreneurs in balancing their family life and work life. As a special concern, computer illiterate women can be trained on Information Technology to take the advantage of new technology and automation. The established and successful women entrepreneurs can act as advisors for the upcoming women entrepreneurs. The initiatives taken from these well established entrepreneurs for having interaction with such upcoming women entrepreneurs can be proved to be beneficial in terms of boosting their morale and confidence. It may result in more active involvement of women entrepreneurs in their enterprises. Infrastructure set up plays a vital role for any enterprise. Government can set some priorities for women entrepreneurs for allocation of industrial plots, sheds and other amenities. However, precautionary measures should be undertaken to avoid the misuse of such facility by the men in the name of the women. Even in today’s era of modernization the women entrepreneurs depend on males of their family for marketing activities. This is simply because they lack the skill and confidence for undertaking such activities. Women development corporations should come forward to help the women entrepreneurs in arranging frequent exhibitions and setting up marketing outlets to provide space for the display of products or advertisement about services made by women. http://www.iaeme.com/IJM/index.as 5 editor@iaeme.com
Women Entrepreneurship In Developing Countries 9. CONCLUSION In the recent research reported by an Australian NGO, Community Aid Abroad, which states: 'Women are the Third World's powerhouse. They produce a staggering 60 percent of all food, run 70 percent of small-scale businesses and make up a third of the official labor force - in addition to caring for families and homes. Yet, their status rarely reflects this enormous and vital contribution. By any measure - income, education, health, land ownership, legal rights or political power - women get a raw deal. The poorest of the poor are usually women because discrimination cuts off their escape routes from poverty - education, health services, equal pay employment, access to land and finance. It is becoming increasingly clear, however, that there will only be sustainable development in the Third World when women play an equal part in decision making. No developing country can afford to ignore women's existing and potential economic contribution, or their pivotal role in determining the health and welfare of a nation's children. All the evidence points to one conclusion: economic growth and improvement in the quality of life for everyone is faster in areas where women's status is higher. Therefore it can be concluded that we need more theory, as theoretical developments have not kept pace with the large amount of empirical studies. The significant and yet unresolved issue concerns what variables should enter the utility function of individuals when studying their allocation of time between household production, waged labour and self-employment—particularly in developing economies and when alternative views of the familial unit are considered. And when applied to serial entrepreneurship, the theoretical and empirical literature has very little to say on women in developing countries. Discrimination has been suggested as a possible explanation for the gender gap in entrepreneurship and this is likely to be more significant in poorer countries, although the evidence is mixed. Discrimination against women is often the result of gender beliefs inherent in a culture or society. This may have the effect of not only reducing women's likelihood of becoming entrepreneurs and their earnings as entrepreneurs, but may also reduce the non- pecuniary benefits women receive from entrepreneurship. All this can lead to future scope of study. Women in developing countries are tremendous forces for change in their families, villages, cities and countries. They CAN and DO make a difference - when they get a chance, which is reflected not only in the business practices, but also in the policy shaping process of governments domestically as well as regionally. The more significant role in economic development through women entrepreneurship is something that should be pursued, and it is not something that can be achieved freely and easily. There has to be a struggle to win that race. REFERENCES [1] Special Section: Female Entrepreneurship across Countries and in Development, European Journal of Development Research. [2] Minniti, M. (2009). Gender Issues in Entrepreneurship. Foundations and Trends in Entrepreneurship. 5(7–8): 497–621. [3] Naudé, W.A. (2010). Entrepreneurship, Developing Countries and Development Economics: New Approaches and Insights, Small Business Economics Journal, 34 (1): 1- 12. [4] Naudé, W.A. (2010). Promoting Entrepreneurship in Developing Countries: Policy Challenges. UNU Policy Brief 04/2010. [5] Acs, Z. and Szerb, L. (2007) Entrepreneurship, Economic Growth and Public Policy. Small Business Economics, 2007, Vol. 28 Issue 2/3, p. 109-122. http://www.iaeme.com/IJM/index.as 6 editor@iaeme.com
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