Women, Entrepreneurship, Developing Countries

Minniti, Maria

Naudé, Wim

English

Research Papers in Economics

 
  
 
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EVENTS 
PUBLICATIONS 
 
  
  
  
  
  
  
  
  
AUGUST 2010  
 
FEATURE ARTICLE AND HIGHLIGHTS 
Female Entrepreneurship in Developing Countries 
Maria Minniti and Wim Naudé. Full article. 
UPCOMING EVENTS 
Development under Climate Change (special session at PEGNET 2010 Annual 
Conference in Johannesburg, South Africa) 
2-3 September 2010 
Book Launch: Southern Engines of Global Growth (Oxford University Press). 
UN, New York, USA 
14 September 2010 
ANNOUNCEMENTS 
Professor Ernest Aryeetey, new Vice-Chancellor of the University of Ghana. 
The Director of UNU-WIDER and its entire staff wish to warmly congratulate 
Chair of UNU-WIDER Board, Professor Ernest Aryeetey on his appointment to 
the post of Vice-Chancellor of the University of Ghana. Full article. 
 
The Visiting scholars and PhD Research internship programmes are posted 
in Opportunities. 
All closing dates for applications are 30 September 2010. 
 
For more information on how to apply, see Opportunities. 
 
For more information on our current programme, see Research. 
PUBLICATIONS 
Books and Journals 
Southern Engines of Global Growth 
Edited by Amelia U. Santos-Paulino and Guanghua Wan 
Special Section: Female Entrepreneurship across Countries and in 
Development 
The European Journal of Development Research, Volume 22(3) 
Guest Editors Maria Minniti and Wim Naudé 
UNU-WIDER Special Issue on Fragility and Development in Small Island 
Developing States 
The Journal of Development Studies, Volume 46(5) 
Edited by Amelia U. Santos-Paulino, Mark McGillivray and Wim Naudé 
  
Information on all of WIDER's publications is available on our website: 
http://www.wider.unu.edu/publications/ 
 
WIDER Working Papers 
Page 1 of 3 WIDER Angle - August 2010
01/09/2010 http://www.wider.unu.edu/widerangle_newsletter/2010/en_GB/08-2010-wider-angle/  
  
European Transition at Twenty: Assessing Progress in Countries and Sectors 
Erik Berglöf, Lise Bruynooghe, Heike Harmgart, Peter Sanfey, Helena 
Schweiger, and Jeromin Zettelmeyer WP2010/91 
The Economic Legacy of Civil War: Firm Level Evidence from Sierra Leone 
Paul Collier and Marguerite Duponchel  WP2010/90 
Country Role Models: Synthesis of Ireland, Japan and Switzerland 
Ronald Findlay WP2010/89 
The Swedish Model 
Ari Kokko WP2010/88 
Foundations of Minority Communities: Resident Koreans in Japan 
David Rands WP2010/87 
The Impact of Multiple Imputation of Coarsened Data on Estimates on the 
Working Poor in South Africa 
Claire Vermaak WP2010/86 
Elites and Institutional Persistence 
James A. Robinson WP2010/85 
Why Are the Elite in China Motivated to Promote Growth? 
Xiaowei Zang WP2010/84 
The Long-Run Weight of Communism or the Weight of Long-Run History? 
Gérard Roland WP2010/83 
Elite Capture or Capture Elites? Lessons from the 'Counter-elite' 
and 'Co-opt-elite' Approaches in Bangladesh and Ghana 
Sam Wong WP2010/82 
Two for the Price of One? The Contribution to Development of the New 
Female Elites 
Alison Wolf WP2010/81 
ICT Sector, Globalization and Urban Economic Growth: Evidence from 
Bangalore (India) 
M. R. Narayana WP2010/80 
Globalizing Shanghai: International Migration and the Global City 
Wei Shen WP2010/79 
Energy Consumption and Carbon Emission-Based Productivity Change and 
Industrialization in Post-Reform China 
Shiyi Chen and Amelia U. Santos-Paulino WP2010/78 
When Unstable, Growth Is Less Pro-Poor 
Patrick Guillaumont and Catherine Korachais WP2010/77 
Subjective Poverty and Reference-Dependence: 
Income over Time, Aspirations and Reference Groups 
Carolina Castilla WP2010/76 
Misuse of Institutions: Lessons from Transition 
Leonid Polishchuk WP2010/75 
Poverty and Time 
Walter Bossert, Satya R. Chakravarty and Conchita d'Ambrosio WP2010/74 
Empirical Issues in Lifetime Poverty Measurement 
Michael Hoy, Brennan Scott Thompson and Buhong Zheng WP2010/73 
Measuring the Effect of Spell Recurrence on Poverty Dynamics 
José Maria Arranz and Olga Cantó WP2010/72 
On Some Problems of Variable Population Poverty Comparisons 
Nicole Hassoun and S. Subramanian WP2010/71 
Globalization and Exclusionary Urban Growth in Asian Countries 
Amitabh Kundu and Debolina Kundu WP2010/70 
How Production Firms Adapt to War: The Case of Liberia 
Topher L. McDougal WP2010/69 
Page 2 of 3 WIDER Angle - August 2010
01/09/2010 http://www.wider.unu.edu/widerangle_newsletter/2010/en_GB/08-2010-wider-angle/Entrepreneurship and Human Development: A Capability Approach 
Thomas Gries and Wim Naudé WP2010/68 
Globalizing Households and Multi-ethnic Community Building in Japan 
Chihiro Ishii WP2010/67 
Health and the Urban Transition: Effects of Household Perceptions, Illness, 
and Environmental Pollution on Clean Water Investment 
James H. Spencer WP2010/66 
Entrepreneurship, Structural Change and a Global Economic Crisis 
Thomas Gries and Wim  Naudé WP2010/57 
Information on all of WIDER's publications is available on our website: 
http://www.wider.unu.edu/publications/  
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Female Entrepreneurship in Developing Countries 
Maria Minniti and Wim Naudé 
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 behaviour 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. 
  Within this context, UNU-WIDER's project on 
  Promoting Entrepreneurial Capacity turned its 
  focus towards a fresh look at female entrepreneurs 
  in developing countries. The resulting research was 
  recently published as a special section of the 
  European Journal of Development Research (EJDR) 
  (see further reading). This article provides a short 
  overview of some of the key findings and 
  recommendations contained in the special section 
  of the journal
 
  
Some stylized facts from three decades of research on female entrepreneurship in advanced 
economies 
What are the stylized 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 
A woman entrepreneur, supported by a Grameen Bank 
microloan, selling fabrics in Bogra, Bangladesh. Source: 
UN Photo; Mark Garten. 
Page 1 of 5 UNU-WIDER : Female Entrepreneurship in Developing Countries
01/09/2010 http://www.wider.unu.edu/publications/newsletter/articles-2010/en_GB/08-2010-Fem...worldwide. This could be because women fail more often than men or because fewer women than men start 
businesses to begin with, or both. However, some evidence exists that, after correcting for factors such as size of 
the business and sectoral distribution, women's failure rates are not that significantly different from those of men. 
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 behaviour across genders, and that such differences have 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. 
Female entrepreneurs in developing countries 
What do we know about female entrepreneurship in developing countries? Do 'stylized facts', as briefly noted 
above, also apply to developing contexts? The general question is whether the characteristics and role of female 
entrepreneurship vary across countries at different stages of development. 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 labour 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 
unfavourable for women to begin businesses, even when they have the abilities and knowledge. 
This issue was again taken up by asking, as documented in greater detail in the special section of EJDR, what 
variables are systematically associated with female entrepreneurship, and whether they vary when countries at 
various levels of economic development are considered. 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 behaviour 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 
Page 2 of 5 UNU-WIDER : Female Entrepreneurship in Developing Countries
01/09/2010 http://www.wider.unu.edu/publications/newsletter/articles-2010/en_GB/08-2010-Fem...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 labour, and are more likely to be entrepreneurs than non-married women—
although they are also more likely to quit a business voluntarily. 
As far as female entrepreneurs' firm performance is concerned, the evidence from developing and developed 
countries is somewhat similar. Women tend to have lower growth expectations and their firms tend to grow 
slower in both sales and employment than those of men even if one controls for sectors. Some evidence 
suggests that women's primary concern in many developing countries is not with growth but rather with survival. 
This may be a reason for the finding that habitual female entrepreneurs in developing countries tend to be 
portfolio rather than serial entrepreneurs, as they attempt to diversify income sources and survival chances. 
Further research 
We conclude our overview by noting a few avenues where further research is warranted. Six stand out. First, we 
need more theory, as theoretical developments have not kept pace with the large amount of empirical studies. 
Second, a 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. 
Third, questions related to cultural factors and migrations among the self-employed provide another very fertile 
area of inquiry for both theory and empirical work—with the possibility of making not only a significant contribution 
to science but also to policy and management practices. As migration becomes an important coping mechanism 
in the face of development shocks, further research would be very desirable especially at the under-researched 
intersection between gender, ethnicity, and migrant status. 
Fourth, 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. 
Fifth, very little is known about how the level of aggregate activity influences women's decisions about 
entrepreneurship and even less is known about how the latter contribute to growth. Although a significant amount 
of anecdotal evidence and some very good case studies exist on this topic, the lack of a systematic approach and 
data has prevented, so far, the formulation of a comprehensive and robust theory of female entrepreneurship and 
growth. Of course, no 'women only' theory is necessary. However, a solid understanding of how the distinctive 
characteristics of female entrepreneurship are accounted by existing models of growth would be very desirable 
for both science and policy. 
Finally, the study of institutions and how they promote or discourage female entrepreneurship is particularly 
needed for its policy implications, especially in developing countries where issues of institutional development 
has in recent years been emphasised. Within this context, a post-institutional approach based on insights from 
economics and organization theory seems promising as well as economic approaches that integrate tools and 
methods from anthropology and ethnography. 
About the Authors 
Page 3 of 5 UNU-WIDER : Female Entrepreneurship in Developing Countries
01/09/2010 http://www.wider.unu.edu/publications/newsletter/articles-2010/en_GB/08-2010-Fem... 
Maria Minniti is Professor and Bobby B. Lyle Chair in Entrepreneurship in the Cox School of Business, Southern 
Methodist University, Dallas, USA. She is participating in the UNU-WIDER research project on 'Promoting 
Entrepreneurial Capacity'. 
  
Wim Naudé is Senior Research Fellow at UNU-WIDER, Helsinki, Finland. He is director of the project 'Promoting 
Entrepreneurial Capacity'. 
Further Reading 
Special Section: Female Entrepreneurship across Countries and in Development, European Journal of 
Development Research. Guest Editors : Maria Minniti and Wim Naudé. 
 
Minniti, M. (2009). Gender Issues in Entrepreneurship. Foundations and Trends in Entrepreneurship.  5(7–8): 
Maria Minniti 
Wim Naudé 
Page 4 of 5 UNU-WIDER : Female Entrepreneurship in Developing Countries
01/09/2010 http://www.wider.unu.edu/publications/newsletter/articles-2010/en_GB/08-2010-Fem...497–621. 
Naudé, W.A. (2010). Entrepreneurship, Developing Countries and Development Economics: New Approaches 
and Insights, Small Business Economics Journal, 34 (1): 1-12. 
Naudé, W.A. (2010). Promoting Entrepreneurship in Developing Countries: Policy Challenges. UNU Policy Brief 
04/2010. 
  
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August 2010 
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Female Entrepreneurship in Developing Countries

http://www.wider.unu.edu/stc/repec/pdfs/wp2010/wa2010-08.pdf

Female Entrepreneurship in Developing Countries

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Research Papers in Economics