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American entrepreneur, television host and media executive Oprah Winfrey receiving the Presidential Medal of Freedom from US President Barack Obama in 2013.
Finnish entrepreneur Armi Ratia (1912–1979), founder of the Marimekko textile and home decorating company.

Female entrepreneurs are said to encompass approximately 1/3 of all entrepreneurs worldwide.[1]

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Definition

Main article: Entrepreneurship

Entrepreneurship has traditionally been defined as the process of designing, launching and running a new business, which typically begins as a small business, such as a startup company, offering a product, process or service for sale or hire.[2] It has been defined as the "...capacity and willingness to develop, organize, and manage a business venture along with any of its risks in order to make a profit."[3] While definitions of entrepreneurship typically focus on the launching and running of businesses, due to the high risks involved in launching a start-up, a significant proportion of businesses have to close, due to a "...lack of funding, bad business decisions, an economic crisis -- or a combination of all of these"[4] or due to lack of market demand. In the 2000s, the definition of "entrepreneurship" has been expanded to explain how and why some individuals (or teams) identify opportunities, evaluate them as viable, and then decide to exploit them, whereas others do not,[5] and, in turn, how entrepreneurs use these opportunities to develop new products or services, launch new firms or even new industries and create wealth.[6]

Traditionally, an entrepreneur has been defined as "a person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk".[7] Rather than working as an employee, an entrepreneur runs a small business and assumes all the risk and reward of a given business venture, idea, or good or service offered for sale. The entrepreneur is commonly seen as a business leader and innovator of new ideas and business processes."[8] Entrepreneurs tend to be good at perceiving new business opportunities and they often exhibit positive biases in their perception (i.e., a bias towards finding new possibilities and seeing unmet market needs) and a pro-risk-taking attitude that makes them more likely to exploit the opportunity.[9][10]"Entrepreneurial spirit is characterized by innovation and risk-taking."[3] While entrepreneurship is often associated with new, small, for-profit start-ups, entrepreneurial behavior can be seen in small-, medium- and large-sized firms, new and established firms and in for-profit and not-for-profit organizations, including voluntary sector groups, charitable organizations and government.[11] For example, in the 2000s, the field of social entrepreneurship has been identified, in which entrepreneurs combine business activities with humanitarian, environmental or community goals.

An entrepreneur is typically in control of a commercial undertaking, directing the factors of production–the human, financial and material resources–that are required to exploit a business opportunity. They act as the manager and oversee the launch and growth of an enterprise. Entrepreneurship is the process by which an individual (or team) identifies a business opportunity and acquires and deploys the necessary resources required for its exploitation. The exploitation of entrepreneurial opportunities may include actions such as developing a business plan, hiring the human resources, acquiring financial and material resources, providing leadership, and being responsible for the venture's success or failure.[12] Economist Joseph Schumpeter (1883–1950) stated that the role of the entrepreneur in the economy is "creative destruction"–launching innovations that simultaneously destroy old industries while ushering in new industries and approaches. For Schumpeter, the changes and "dynamic disequilibrium brought on by the innovating entrepreneur ... [are] the ‘norm’ of a healthy economy."[13]

Entrepreneurship typically operates within an entrepreneurship ecosystem which often includes government programs and services that promote entrepreneurship and support entrepreneurs and start-ups; non-governmental organizations such as small business associations and organizations that offer advice and mentoring to entrepreneurs (e.g., through entrepreneurship centers or websites); small business advocacy organizations that lobby the government for increased support for entrepreneurship programs and more small business-friendly laws and regulations; entrepreneurship resources and facilities (e.g., business incubators and seed accelerators); entrepreneurship education and training programs offered by schools, colleges and universities; and financing (e.g., bank loans, venture capital financing, angel investing, and government and private foundation grants). The strongest entrepreneurship ecosystems are those found in top entrepreneurship hubs such as Silicon Valley, New York City, Boston, Singapore and other such locations where there are clusters of leading high-tech firms, top research universities, and venture capitalists.[14] In the 2010s, entrepreneurship can be studied in college or university as part of the disciplines of management or business administration.

History

Before the 20th century, female operated small businesses as a way of supplementing their income. In many cases, they were trying to avoid poverty or were replacing the income from the loss of a spouse. At that time, the ventures that these women undertook were not thought of as entrepreneurial. Many of them had to focus on their domestic responsibilities. The term entrepreneur is used to describe individuals who have ideas for products and/or services that they turn into a working business. In earlier times, this term was reserved for men.[15]

Women became more involved in the business world only when the idea of women in business became palatable to the general public; however, this does not mean that there were no female entrepreneurs until that time. In the 17th century, Dutch colonists who came to what is now known as New York City, operated under a matriarchal society. In this society, many women inherited money and lands, and through this inheritance, became business owners. One of the most successful women from this time was Margaret Hardenbrook Philipse, who was a merchant, a ship owner, and was involved in the trading of goods.[16]

During the mid 18th century, it was popular for women to own certain businesses like brothels, alehouses, taverns, and retail shops. Most of these businesses were not perceived with good reputations; because, it was considered shameful for women to be in these positions. Society frowned upon women involved in such businesses; because, they detracted from the women's supposed gentle and frail nature. During the 18th and 19th centuries, more women came out from under the oppression of society's limits, and began to emerge into the public eye. Despite the disapproval of society, women such as Rebecca Lukens flourished. In 1825, Lukens took her family business of Iron works, and turned it into a profit-generating steel business.

In the 1900s, due to a more progressive way of thinking, and the rise of feminism, female entrepreneurs began to be a widely accepted term. Although these female entrepreneurs serviced mostly female consumers, they were making great strides. Women gained the right to vote in 1920, and two years later, Clara and Lillian Westropp started the institution of Women's Savings & Loan as a way of teaching women how to be smart with their money. As society progressed, female entrepreneurs became more influential. With the boom of the textile industry and the development of the railroad and telegraph system, women such as Madame C. J. Walker took advantage of the changing times. Walker was able to market her hair care products in a successful way, becoming the first African American female millionaire. Carrie Crawford Smith was the owner of an employment agency opened in 1918, and like Madame C. J. Walker, sought to provide help to many women by giving them opportunities to work.

During the Great Depression, some of the opportunities afforded to women took a backseat and society seemed to reverse its views, reverting to more traditional roles. This affected women working in business; however, it also served as a push to those involved in the entrepreneurial world. More women began to start their own businesses, looking to survive during this time of hardship. In 1938, Hattie Moseley Austin, who had begun to sell chicken and biscuits after her husband died, opened Hattie's Chicken Shack in Saratoga Springs, NY.

During WWII, many women entered the workforce, filling jobs that men had left behind to serve in the military. Some women, of their own accord, took these jobs as a patriotic duty while others started businesses of their own. One of these women was Pauline Trigere, who came to New York from Paris in 1937, started a tailoring business that later turned into a high-end fashion house. Another woman was Estée Lauder, who was working on the idea for her beauty products which officially launched in 1946, a year after the war ended. When the war ended, many women still had to maintain their place in the business world; because, many of the men who returned were injured.

The Federation of Business and Professional Women's Clubs were sources of encouragement to female entrepreneurs. They often would hold workshops with already established entrepreneurs, such as Elizabeth Arden, who would give advice. During the 1950s, women found themselves surrounded by messages everywhere, stating what their role should be. Domesticity was the overall public concern and a theme that was highly stressed during this time, and women had to juggle combined home responsibilities and their career.

Home-based businesses helped to solve a good part of the problem for those women who worried about being mothers. Lillian Vernon, while pregnant with her first child, started her own business dealing with catalogs by investing money from wedding gifts and started filling orders right at her kitchen table. Mary Crowley founded Home Decorating and Interiors as a way of helping women to work from home by throwing parties to sell the products right in the comfort of their own home. In an effort to avoid criticism and lost business from those who did not support women in business, Bette Nesmith, who developed the product "Mistake Out," a liquid that painted over mistakes in typing, would sign her orders B. Smith so no one would know she was a female.

From the 1960s to the late 1970s, another change came about when divorce rates rose and many women were forced back into the role of being the sole provider. This pushed them back into the working world, where they were not well received. When the recession hit, many of these women were the first to be without work. Once again, the entrepreneurial endeavors of women came to the rescue as an effort of asserting themselves, and aiding other women in being a part of the workforce. Mary Kay Ash and Ruth Fertel of Ruth's Chris Steak House were part of that movement.

The 1980s and 1990s were a time of reaping the benefits from the hard work of women who worked tirelessly for their rightful place in the workforce as employees and entrepreneurs. Martha Stewart and Vera Bradley were among the twenty-first percent women who owned businesses. The public was also becoming more receptive and encouraging to these female entrepreneurs, acknowledging the valuable contribution they were making to the economy. The National Association of Women Business Owners helped to push Congress to pass the Women's Business Ownership Act in 1988, which would end discrimination in lending and also strike down laws that required married women to acquire their husband's signature for all loans. In addition, the Act also gave women-owned businesses a chance to compete for government contracts.

Another monumental moment for women in business was the appointment of Susan Engeleiter as head of the US government's Small Business Administration in 1989. In the late 1980s and throughout the 1990s, there was more of a focus on networking opportunities in the world of female entrepreneurs. There were many opportunities that came about to help those who were interested in starting up their own businesses. Support groups, organizations for educating the female entrepreneur, and other opportunities like seminars and help with financing came from many different sources, such as the Women's Business Development Center and Count Me In. Despite all these advances, the female entrepreneurs still fell behind when compared to their male counterparts.

As the 1990s came in, the availability of computers and the increasing popularity of the internet gave a much needed boost to women in business. This technology allowed them to be more prevalent in the business world and showcase their skills to their competitors. Even with the increased popularity of women in business, the availability of technology and the support from different organizations, female entrepreneurs today are still struggling. The economic downturn of 2008 did not serve to help them in their quest. However, with the continual attention given to female entrepreneurs and the educational programs afforded to women who seek to start out with their own business ventures, there is much information and help available. Since 2000, there has been an increase in small and big ventures by women, including one of their biggest obstacles—financing. [17]

Demographics

Studies have shown that successful female entrepreneurs start their businesses as a second or third profession.[18][citation needed] Because of their previous careers, female entrepreneurs enter the business world later on in life, around 40–60 years old.[citation needed] According to the Global Entrepreneurship Monitor report, “women are nearly one-third more likely to start businesses out of necessity than men.”[19] Because women are overtaking their male peers in the level of education obtained,[20] having higher education degrees is one of the significant characteristics that many successful female entrepreneurs have in common. The average self-employment rate for women under 25 years old in OECD countries is 7.2%.[21]

The number of self-employed women has steadily increased over the past three decades, putting them at an approximate thirty-three percent increase. Many female-owned businesses continue to be home-based operations. These types of businesses usually have limited revenue with about eighty percent of them making less than $50,000 in 2002. This group made up for about six percent of total women-owned businesses. Children of these female entrepreneurs are expected to boost that number as they contribute to the growing amount of female entrepreneurs. Most women-owned businesses are in wholesale, retail trade, and manufacturing. Female entrepreneurs have also made a name for themselves in professional, scientific, and technical services, as well as in healthcare and social assistance. In the majority of OECD countries, female entrepreneurs are more likely to work in the services industry than their male counterparts.[22]

In 1972, women-owned businesses accounted for 4.6 percent of all U.S. businesses—that was about 1.5 million self-employed women. That number increased to 2.1 million in 1979 and 3.5 million in 1984. In 1997, there were about 5.4 million women-owned businesses and in 2007, that number increased to 7.8 million. The participation of females in entrepreneurial activities does of course vary in different levels around the world. For example, in Pakistan, female entrepreneurs account for only 1% of this gender's population, while in Zambia 40% of women are engaged in this activity. The highest number of females involved in entrepreneurial activities can be seen in Sub-Saharan Africa, with 27% of the female population. Latin America/Caribbean economies show comparatively high percentages as well (15%). The lower numbers are seen in the MENA/Mid-Asia region with entrepreneurial activities registering at 4%. Developed Europe and Asia, as well as Israel, also show low rates of 5%.

International implications

A recent international study found that women from low to middle income countries (such as Russia and the Philippines) are more likely to enter early stage entrepreneurship when compared to those of higher income countries (such as Belgium, Sweden, and Australia). A significant factor that may play a role in this disparity can be attributed to the fact that women from low income countries often seek an additional means of income to support themselves and their families. Overall, 40 to 50 percent of all small businesses are owned by women in developing countries.[23] Alternatively, this may also be due to the fact that, in western business practices, it is not seen as beneficial to exhibit perceived feminine traits. While eastern businesses tend to follow methods based around mutual respect and understanding, western business' expectations are for business leaders to be more ruthless, headstrong, and less sensitive or respectful.

"In the grab for power, women use whatever means available to them, whereas a man would take a club to his opponents head, a woman is more likely use other less forceful and more subversive measures. Let's just own it, we have different weapons in our arsenal." [24] Female entrepreneurs make up for approximately 1/3 of all entrepreneurs globally. According to one study, in 2012 there was an approximate 126 million women that were either starting or already running new businesses in various economies all over the world. As far as those who were already established, there was an approximate 98 million. Not only are these women running or starting their own businesses but they are also employing others, so that they are participating in the growth of their respective economies.

A study in India entitled "Barriers of Women Entrepreneurs: A Study in Bangalore Urban District", has concluded that despite all these constraints, successful female entrepreneurs do exist. Female entrepreneurs have evidently more to ‘acquire’ than their male counterparts. But, the socio-cultural environment in which women are born and raised hinders them. Social customs, caste restrictions, culture restraints, and norms leave women lagging behind men.[25]

Present challenges

Even though female entrepreneurship and the formation of female-owned business networks is steadily rising, there are a number of challenges and obstacles that female entrepreneurs face. One major challenge that many female entrepreneurs face is the effect that the traditional gender-roles society may still have on women. Entrepreneurship is still considered as a male-dominated field, and it may be difficult to surpass these conventional views. Other than dealing with the dominant stereotype, female entrepreneurs are facing several obstacles related to their businesses.

Obstacles specific to starting new firms

External finance and sex discrimination.

In general, women have lower personal financial assets than men. This means that for a given opportunity and equally capable individual, women must secure additional resources compared to men in order to exploit the opportunity; because, they control less capital. The question of whether women have a harder time getting finance than men for the same business opportunity has developed into its own sub-field.[26][27][28] One possible issue in raising outside capital is that 96% of senior venture capitalists are men and may not be as understanding of female-centric businesses.[29] However, the situation seems to be improving. A study by Babson College showed that in 1999, fewer than 5% of venture capital investments went to companies with a woman on the executive team. In 2011, it was 9% and in 2013 it had jumped to 18%.[30]

A specific solution for solving women's difficulties for obtaining financing has been micro-financing. Microfinance is a financial institution that has become exceptionally popular, especially in developing economies. Female entrepreneurs have also been especially successful in getting funded through crowdfunding platforms like Kickstarter.[30]

Due to lack of funding for women in new businesses many women founders have had to hire or create fake male profiles to act as co-founders, executives, or the face of their businesses to make progress. [31]

Obstacles to managing a small firm

Studies on female entrepreneurs show that women have to cope with stereotypical attitudes towards them on a daily basis. Business relations—from customers to suppliers and banks—constantly remind the entrepreneur that she is different, sometimes in a positive way such as by praising her for being a successful entrepreneur even though she is a woman. Employees tend to mix the perceptions of the manager with their images of female role models, leading to mixed expectations on a female manager to be a manager as well as a "mother". The workload associated with being a small business manager is also not easily combined with taking care of children and a family. However, even if the revenues are somewhat smaller, female entrepreneurs feel more in control and happier with their situation than if they worked as an employee.[32] Female entrepreneurship has been recognized as an important source of economic growth. Female entrepreneurs create new jobs for themselves and others and also provide society with different solutions to management, organisation, and business problems. However, they still represent a minority of all entrepreneurs. Female entrepreneurs often face gender-based barriers to starting and growing their businesses, like discriminatory property; matrimonial and inheritance laws, and/or cultural practices; lack of access to formal finance mechanisms; limited mobility and access to information and networks, etc.

A woman's entrepreneurship can make a particularly strong contribution to the economic well-being of the family and communities, poverty reduction and women's empowerment, thus contributing to the Millennium Development Goals (MDGs). Thus, governments across the world, as well as various developmental organizations, are actively undertaking the promotion of female entrepreneurs through various schemes, incentives and promotional measures. Female entrepreneurs in the four southern states and Maharashtra account for over 50% of all women-led small-scale industrial units in India[citation needed].

Obstacles to growing firms

A specific problem of female entrepreneurs seems to be their inability to achieve growth, especially sales growth.[33] Another issue is finance and, as stated previously, the entrepreneurial process is somewhat dependent on initial conditions. In other words, as women often have a difficult time assembling external resources, they start as less ambitious firms that can be financed to a greater degree by their own available resources. This also has consequences for the future growth of the firm. Basically, firms with more resources at start-up have a higher probability to grow than firms with fewer resources. Resources include the following: societal position, human resources, and financial resources. This initial endowment in the firm is of great importance for firm survival and especially for firm growth.[34][35][36][37]

A study by the Kauffman Foundation of 570 high-tech firms started in 2004 showed that women-owned firms were more likely to be organized as sole proprietorships, both during their startup year and in the years to follow. Female entrepreneurs were also much more likely to start their firms out of their homes and were less likely to have employees. This fact may serve as an indication that women either anticipated having smaller firms or were operating under resource constraints that did not allow them to launch firms requiring more assets, employees, or financial resources. This study also found that women only raised 70% of the amount that men raised to start their firms, which ultimately impacted their ability to introduce new products and services or expand their business in terms of employees or geographic locations.[29]

Despite the fact that many female entrepreneurs face growth barriers, they are still able to achieve substantial firm growth. There are examples of these both in a number of developing economies (Ethiopia, Tanzania, and Zambia) surveyed by the ILO, as well as in more developed economies such as the United States.

Encouragement

In 1993, "Take Our Daughters To Work Day" was popularized to support career exploration for girls, and later expanded to Take Our Daughters and Sons to Work Day. Hillary Clinton stated that "Investing in women is not only the right thing to do, but also the smart thing to do."[38] Research shows that there are many support groups for women in business, for female entrepreneurs, and for women looking for business advice. Women in different areas are willing to show the support that in some cases, they never had. They offer encouragement, advice, and support to moms who seek to provide for their families through their own visions for business. HerCorner, is a group located in Washington, D.C. This groups seeks to bring women business owners together to collaborate with each other for the betterment of their businesses. There are government backed programs available to female entrepreneurs and information can be found on their website at SBA Online and their Facebook group SBAgov. Female-only taxi companies in India, the UAE, and Brazil support working women.[39] One example of successful female entrepreneurship in rural villages of Bangladesh is the Infolady Social Entrepreneurship Programme (ISEP). Norway celebrates Female Entrepreneur of the Year.[40]

Reasons for launching firms

Many studies show that women start their own businesses for a variety of reasons. These reasons include the following: having an idea for a business plan, having passion for solving a specifically related career problem, wanting to be more in control of their careers, maintaining a more balanced life, having a flexible work schedule, and taking a personal vision and turning it into a lucrative business. Along with the intense desire to see their vision carried out, these women also have a great ability to multi-task and never feared the risks involved in being self-employed. Women are still facing many issues in the workforce, and being their own boss certainly is more appealing to some of the everyday issues they face outside of entrepreneurship. Gender roles are still very much a part of their lives, but for some female entrepreneurs, they feel more in control when working for themselves.

Feminism

A feminist entrepreneur is an individual who applies feminist values and approaches through entrepreneurship, with the goal of improving the quality of life and wellbeing of girls and women.[41] Many are doing so by creating ‘for women, by women’ enterprises.’ Feminist entrepreneurs are motivated to enter commercial markets by desire to create wealth and social change, based on the ethics of cooperation, equality, and mutual respect.[42][43]

See also

References

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