The Global Entrepreneurship Monitor (GEM) 2005 Report On Women and Entrepreneurship

Wellesley, MA, and London, UK:  Women entrepreneurs use the same strategies as their male counterparts -- seeking opportunities, taking risks, mingling with other entrepreneurs, and sharpening their business skills -- according to the Global Entrepreneurship Monitor (GEM) 2005 on Women and Entrepreneurship released today.

Based upon survey data from more than 107,400 respondents in 35 countries, today’s GEM Women report, prepared by scholars at the Center for Women’s Leadership at Babson College, gives a clear indication that while women entrepreneurs often exhibit patterns of behavior similar to those of men, a gender gap nonetheless exists for entrepreneurial activity across the globe. 

Women most likely to be entrepreneurs are those who hold jobs, have higher levels of household income and education, and have confidence in their level of skill and in the possibility of their success.

For the first time, GEM divided countries into middle- and high-income clusters, on the basis of per capita gross domestic product (GDP), and identified entrepreneurs by stage of business process. The report found that women’s businesses in high-income countries are just as likely to survive and thrive as men’s.  It’s a different story in the middle-income cluster where the survival rate is significantly lower than that of a man’s business.  Also, young women (25 to 34) are more active in ‘early-stage’ enterprises in middle-income countries while women 35-44 are the most likely to lead ‘established’ businesses.

Despite these encouraging signs, a gender gap nonetheless persists.  On average, men remain nearly twice as likely as women to start a new business.  In high-income countries, the gender gap is greatest, while in middle-income countries it narrows somewhat. 

In trying to understand the gender gap data across country groups, Maria Minniti, Associate Professor of Economics and Associate Professor of Entrepreneurship, Babson College, and lead researcher for GEM Women, said, “What we see in middle-income countries is that the gender gap in entrepreneurial activity actually narrows.  When you connect this to the higher level of necessity entrepreneurship by all entrepreneurs in middle-income countries, it’s not hard to believe that the gap narrows because there is less opportunity for men, rather than because women have achieved greater parity.”

In addition to Minniti, Nan Langowitz, Director of the Center for Women’s Leadership at Babson College and Associate Professor of Management, and Elaine Allen, Associate Professor of Statistics and Entrepreneurship at Babson College co-authored the study.  Asked why entrepreneurial activity rises when women are already working and have higher levels of household income and education, Professor Langowitz said: “There’s a clear message that being in the workplace not only helps women achieve greater personal income but also gives them access to the resources, ideas, and social capital that enable entrepreneurial activity.”

Commenting on the data, Professor Allen added: “GEM data are exceptionally well suited for the study of female entrepreneurial activity. For the first time, we are able to compare women who are in the process of starting a business or have just started one with women who lead successful established businesses worldwide. The learning opportunity for anyone who is interested in women entrepreneurs and their challenges and potential is enormous.”   

The Global Entrepreneurship Monitor (GEM) 2005 on Women and Entrepreneurship report will be available at www.babson.edu/cwl. All GEM reports and new developments can be found at www.gemconsortium.org.

KEY FINDINGS FROM THE GEM 2005 REPORT

ON WOMEN AND ENTREPRENEURSHIP

Entrepreneurial Activity

Gender Gap Persists-- between men and women in overall entrepreneurial activity and in ownership of established businesses.  The gender gap is widest in high-income countries, regardless of activity. Men are twice as likely there to engage in both early-stage and established ventures. But in middle-income countries, the gap narrows to 25.6% in early-stage and broadens to 59.1 % for established business owners.

Motivations And Business Survival

Do women entrepreneurs start new ventures out of ‘necessity’—having no better job options—or because they perceive a real business ‘opportunity’?  And how does the gender factor play into business survival?

Males Exceed Women In Opportunity Entrepreneurship.  The rate of male opportunity entrepreneurship is higher than that of women in both high and middle-income countries.

‘Necessity’ Motivates More Women Than Men In Middle-Income Countries.  Necessity is a proportionately greater motivator for women’s business start-up than for men’s in middle-income countries (34.6% to 31.4%). This gap is non-existent in the high-income countries.

Greater Survival In High-Income Countries. For both men and women, business survival for more than 42 months is higher in high-income countries and no gender gap appears to exist. This is not the case in middle-income countries, where a woman’s business is significantly less likely to stand the test of time than a man’s.

Entrepreneurial Scope

Women Are As Varied In Business Activities As Men.  Women entrepreneurs are involved in many different entrepreneurship paths, working in the extraction, transformation, business services, and consumer-oriented sectors of the economy. Still, more women engage in consumer-oriented ventures whereas men dominate the manufacturing transformation sectors across country clusters.

Women Are More Optimistic About Expansion.  Only a small portion of entrepreneurs, both women and men, predict significant growth for their businesses. Yet, women envision a higher profound growth potential in both their early-stage and established businesses (6.4% to 2.7%, respectively) than men do (4.8% and 1.1%, respectively).

Characteristics Of Women Entrepreneurs

 A Youth Movement. Young women (25 to 34) are more active in ‘early-stage’ enterprises in middle-income countries while more mature or ‘established’ businesses attract older women (35-44).  These peak age ranges expand in high-income countries. In both country clusters, wage-earning women are more likely to be involved in entrepreneurial activity.

Higher-Education In Higher-Income Countries.  Almost half of both early-stage and established women entrepreneurs have less than a secondary degree in middle-income countries. In high-income countries, at least two-thirds of women hold secondary degrees-- double the level of middle-income women-- and more than one-fourth earned graduate degrees.

Women Have Entrepreneurial Know-How. Women entrepreneurs are just as savvy as their male counterparts in seeking opportunities, taking risks, mingling with other entrepreneurs, and sharpening their business skills.  Both male and female entrepreneurs everywhere are more optimistic and show a reduced fear of failure compared to people not involved in entrepreneurship.

 

FOUNDING AND SPONSORING INSTITUTIONS: 
GEM 2005 Report on Women and Entrepreneurship

The Center for Women's Leadership at Babson College is the first center dedicated to women in business and entrepreneurship at a leading school of management. Through educational programs, research, and executive education, the Center for Women’s Leadership promotes the advancement of women at all stages of their professional development and the achievement of competitive advantage by companies focused on the talent and market power of women. The Center for Women’s Leadership collaborates with companies and business-related organizations to understand the issues that contribute to women's leadership success in business and entrepreneurship.  For information, visit www.babson.edu/cwl.

Babson College, Wellesley, Mass., USA, is recognized internationally as a leader in entrepreneurial management education.  Babson grants BS degrees through its innovative undergraduate program and grants MBA and custom MS and MBA degrees through the F.W. Olin Graduate School of Business at Babson College.  Babson Executive Education offers executive development programs to experienced managers worldwide.  For information, visit www.babson.edu.

London Business School’s Vision is to be the pre-eminent global business school, nurturing talent and advancing knowledge in a multi-national, multicultural environment. Founded in 1965, the School graduated over 800 MBAs, Executive MBAs, Masters in Finance, Sloan Fellows and PhDs from over 70 countries last year. The School’s executive education department serves 6,000 executives and 60 corporate clients on its programmes every year. London Business School is based in the most accessible and international city in the world and is one of only two UK business schools to have twice been awarded the highest research rating of five-star (5*), by the Higher Education Funding Council for England (HEFCE), confirming the School as a centre of world-class research in business and management. www.london.edu

The GEM report:  This is the seventh annual Global Entrepreneurship Monitor (GEM) cross-national assessment of entrepreneurship.  Started in 1999 with 10 participating countries, the project has expanded to include 35 countries in 2005 and is conducted through the Global Entrepreneurship Research Association (GERA).  GERA has developed into one of the world’s leading research consortia concerned with improving our understanding of the relationships between entrepreneurial activity and national economic growth.  No other research exists that can provide consistent cross-country information and measures of entrepreneurial activity in a global context.

GEM focuses on three main objectives:

• To measure differences in the level of entrepreneurial activity among countries
• To uncover factors determining the levels of entrepreneurial activity
• To identify policies that may enhance the level of entrepreneurial activity.

New developments, and all global, national and special topic reports, can be found at www.gemconsortium.org.  The program is sponsored by Babson College and London Business School.

For more information contact:

Barbara Spies Blair

blairb@babson.edu

781-239-4621

Kerry Taylor

kerrytaylor@london.edu

+44 (0) 20 7706 6972