One-third high-growth businesses worldwide are now run by women, according to the sweeping Global Entrepreneurship Monitor (GEM) 2021/2022 Women’s Entrepreneurship Report.
“That’s an important statistic,” says Aileen Ionescu-Somers, executive director of GEM. “For me that indicates that women can definitely achieve on the most demanding side of entrepreneurship.”
The report defines high-growth businesses as job-creators with 20+ employees that are projecting 20+ hires in the next five years.
The GEM reports, produced by a consortium of universities, make up one of the most comprehensive bodies of current data on entrepreneurship around the globe. The report on women entrepreneurs looks at data from 47 countries. It includes high-income countries (such as Canada, Chile, Japan, Saudi Arabia, South Korea, Uruguay and the U.S.), upper-middle income countries (including Belarus, Brazil, Colombia, Jamaica, Romania, the Russian Federation, South Africa and Turkey); lower-middle income countries (such as Egypt, India, Iran and Morocco) and one low-income country, Sudan.
The Women’s Entrepreneurship Report also found that one in three innovation-driven entrepreneurs is female. Women entrepreneurs in upper-middle-income countries are currently the most prevalent among the most innovative, high-growth entrepreneurs globally and have reached parity with men when it comes to international market focus, according to the report’s authors.
At the same time, women are more likely than men to start businesses with no employees, the report found. This is the largest group of businesses and often a stepping stone for future job creators.
Women are achieving success in these areas with little to no “enabling” environment—meaning policies supporting childcare and other services that help women entrepreneurs. The “enabling environment,” for women entrepreneurs in most countries “very low,” according to national-level experts who collaborated with the researchers. Beyond this, in most countries around the globe, women tend to be less affluent than men, with less of their own money to tap, the report found.
Although fewer women globally said they wanted to start a business or acted on those intentions in the past few years, the situation was different in the upper-middle income countries. There, startup rates skyrocketed by 11% from 2019 to 2021, and there was no decline in 2020.
The presence of women at the helm of so many high-growth businesses is particularly noteworthy given the extra demands many women faced during the pandemic, with schools transitioning to online learning and childcare scarce or nonexistent.
“Yes, of course they were impacted, especially the early-stage entrepreneurs. There was a lot of business failure,” says Ionescu-Somers. “Women who were already more established entrepreneurs were able to juggle this challenge of suddenly having no childcare.”
One massive challenge for women entrepreneurs exists around the globe, the report notes: Lack of funding. “Mainly, the conclusion is that diversification of access to capital is cruelly missing,” says Ionescu-Somers.
One reason for limited access to financing is that many women gravitate to fields that investors are less likely to back, according to Ionescu-Somers. “Obviously, we have women in high-growth sectors, but women tend to choose different kinds of entrepreneurship from men,” she says. “They tend to go into retail, hospitality and other areas.”
The report calls for mobilization of financing support for women entrepreneurs; support for high-potential women entrepreneurs in all sectors and countries; celebration of women entrepreneurs as role models and a debunking of gender stereotypes related to entrepreneurship.
“We’ve been saying for years there are cultural and social biases against women,” says Ionescu-Somers. “It’s obvious there are role models. But somehow we do a bad job of showcasing these role models and actually breaking down the perceptions that somehow women will not be as committed or successful. Perception is reality.”
It is possible that as more women achieve successful exits, they will invest in other women-owned businesses, as well. The report found that women’s business exit rates increased from 2.9% to 3.6% during the pandemic, while men’s increased from 3.5% to 4.4%. There was a 74% increase in women’s exits in upper-middle-income countries, versus 34% for men.
The report also highlighted some interesting regional trends:
· Only 12.9% of women in high-income countries reported intentions to start a business, versus one-third of women in lower-income countries. Early-stage startup activity is usually about half the rate of intentions to start a business, the report found.
· The highest startup rate for women was found in the Dominican Republic. Nearly 44% of women reported startup activity, versus 40.1% of men.
· The lowest startup rates for women were in Poland (1.6%) and Norway (1.7%).
· Entrepreneurship in the Middle East and Africa is becoming more accessible to women. “There is an opening up of these societies to not only entrepreneurs but women entrepreneurs in particular,” says Ionescu-Somers.
· Women in Central and East Asia have the highest rate of established business ownership in the world. Kazakhstan demonstrates some of the highest rates of both entrepreneurial intentions and startup activity by women.
· Europe has the lowest rates of entrepreneurial intention and participation by women.
The lead author of the Women’s Entrepreneurship Report is Amanda Elam, Ph.D., CEO/co-founder of Galaxy Diagnostics, an early-stage medical diagnostics company in Research Triangle Park, N.C., and a research fellow at the Diana International Research Institute at Babson College. Other contributors are:
· Benjamin S. Baumer, PhD,, of Smith College
· Thomas Schott, from American University in Cairo, University of Agder and University of Southern Denmark
· Mahsa Samsami at University of Santiago de Compostela
· Amit Kumar Diwivedi, PhD; at Entrepreneurship Institute of India
· Rico Baldegger, PhD, at University of Applied Sciences and Arts Western Switzerland
· Maribel Guerrero, PhD, at Arizona State University and Universidad de Desarrollo
· Fatima Boutaleb, PhD at Hassann II University of Casablanca, Morocco
· Karen D. Hughes, PhD at University of Alberta and Diana Research Fellow at Babson College.
As many studies have illustrated, women’s economic empowerment benefits society on a variety of fronts. For policymakers looking for low-hanging fruit when it comes to boosting their GDP and the overall wellbeing of their communities, creating a better funding ecosystem for women entrepreneurs seems like an obvious step.