Women In Enterprise A Different Perspective

Description
Detailed description interpret women in enterprise a different perspective.

Womenin
Enterprise:
ADifferent
Perspective
Susan Marlow
Professor of Entrepreneurship:
University of Nottingham
Mark Hart
Professor of Entrepreneurship:
Aston University
Jonathan Levie
Professor of Entrepreneurship:
University of Strathclyde
Mohammad Karim Shamsul
PhD Candidate: Aston University
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RBS Group WomeninEnterprise: ADifferent Perspective
We’recommittedtopromoting
economicgrowthandto
fosteringtheright conditions
for peopletoturntheir ideas
intobusiness success.
RBSInspiring Enterprise
is howweencouragemore
peopleinmorecommunities to
exploreenterprise, buildtheir
skills andstart upinbusiness.
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RBS Group WomeninEnterprise: ADifferent Perspective
Foreword
RBS has been helping people to start up and succeed in business for
nearly 300 years. Supporting enterprise is a fundamental part of what we
do through our products, services, partnerships and sponsorships.
In 2011, we opened over 100,000 start-up accounts across the UK and
provided over 40p in every £1 lent to small and mediumsized enterprises.
We’re also proud to say that, last year, RBS opened more bank accounts
for women starting their own business than any other bank. Since 2007
we have provided tailored specialist support and advice for women-led
business through our dedicated Women in Business Specialists, who are in the course of being trained
and accredited by Chartered Banker and everywoman.
So, when statistics showthat women make up 51%of the UK population but only 17%of business
owners are female – and that men are twice as likely to start a business as women – we think it’s
worth finding out why and what we can do about it.
RBS commissioned this report fromAston University to try to understand why women appear to be
so under-represented in ranks of UK entrepreneurs. We wanted a detailed picture of gender and
entrepreneurship in the UK so we could understand the challenges that women are facing and get a
sense of what more can be done.
This report takes a fresh look at the evidence around the influence of gender on entrepreneurial
intentions, self-employment and business ownership. It makes a number of recommendations which
seek to remove barriers and increase opportunities for women to be successful entrepreneurs.
It also recognises that a great deal of good work is already underway to inspire and enable more
women entrepreneurs. But many of the underlying factors are complex and cultural, and it is
clear that more needs to be done if we are to make a long-termsignificant change in the arena
of women’s enterprise.
We hope that you find this report useful.
Chris Sullivan
Chief Executive Officer
Corporate Banking Division
RBS Group
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RBS Group WomeninEnterprise: ADifferent Perspective
Executive summary
Women in business
Anotable trend within developed economies since the 1950s has been women’s increasing labour force
participation such that they now, on average, formaround 48%of employees in developed economies and
about 66%of women, compared to 80%of men, are economically active. However, this level of
participation has not been re?ected in levels of either women’s self-employment or business ownership
where there are signi?cant gaps between men and women.
Eventually, we should aimto stop referring to‘women’ entrepreneurs but simply note there are segments
of people within the population who are entrepreneurial but whose gender is no longer of interest or note.
Global Entrepreneurship Monitor (GEM)
We set out the evidence on women entrepreneur in the UKeconomy. We rely on the Global Entrepreneurship
Monitor (GEM)
1
UKand international datasets to provide detailed information on women and their
entrepreneurial aspirations and activity. This is the only source of consistent annual data that identi?es those
active in business creation, what those businesses are, and their growth aspirations.
Women entrepreneurs in the UK economy
Women in the UK are about half as likely as their male counterparts to begin new?rms. This is a
common ?nding throughout most developed and developing economies. Once in business however,
fewgender-related performance diferences are evident amongst the self-employed or small ?rmowners.
So, women are neither better nor worse entrepreneurs than men once we control for a number of other
contextual factors such as education. However, amongst those ?rms which do grow, women are
under-represented. Thus, the key gender-related diferences within enterprise and entrepreneurship are
start-up rates and growth rates. In summary, this report suggests that:
Women and entrepreneurship
I
Women appear to "use" business ownership diferently to men. They appear to be more willing to
trade-of between their work and other areas of their lives. They are also more likely to use self-
employment as a temporary solution within a wider career path.
I
Women do not have any individual or collective 'entrepreneurial de?cit' but their socio-economic
position in society is highly in?uential in shaping their attitudes towards running successful
small businesses.
I
Women attribute their business exits less to failure and more to personal reasons, especially amongst
the 25-34 age group.
1 See www.gemconsortium.org for more details about the origins and methodology of the GEMGlobal project. The Global Entrepreneurship Monitor (GEM)
programme was developed in the UK in 1998, and produced a standardized procedure for using randomsamples of adults to identify individuals active at
diferent stages of the ?rmcreation process, fromstart-up ventures to established ?rms. Since inception this research protocol has been implemented in
almost 80 countries representing over three quarters of the world population. Most European countries, including the UK, have completed annual
assessments since 1999. The GEMprogramme is not just another source of data; it can be seen as a newparadigmof research and operationalization of
aspects of entrepreneurship. The GEMdata is nowwell accepted within the academic and policy community. The GEMUK dataset for the period 2002-2011
contains information on ~200,000 respondents and is the largest in the GEMGlobal project. For example, the GEMUK sample size for 2011 was ~10,000.
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RBS Group WomeninEnterprise: ADifferent Perspective
Business characteristics
I
Women are more likely to own ?rms which operate fromhome, are part-time and are in lower-order
services. This makes themmore likely to have limited growth trajectories.
I
Because of high rates of entry and exit in these preferred sectors, womens’ share of business
ownership has barely changed since 1992, even though increasing numbers of women are now
entering self-employment, or stating that they are self-employed.
I
Although women-owned ?rms are less likely to exhibit growth there is no evidence to suggest that
those women entrepreneurs who strategically target growth will be any less successful than their
male counterparts.
I
Women-owned ?rms outperformthose owned by their male counterparts, when ?rmcharacteristics
are controlled for (i.e., business age, sector and size) as well as the attributes of the individual
(i.e. education, age and income).
Business funding
I
There are fewgender-related diferences in terms of sources of funding of start-ups.
I
Once the business characteristics (e.g. size, age, sector, risk rating) are taken into account, women-led
businesses do not pay higher borrowing costs than men-led businesses.
I
Women-led businesses are signi?cantly less likely to be using external ?nance than men-led business.
This is true even after business characteristics are taken into account.
I
Amongst growth ?rms seeking equity ?nance, there are much fewer women-owned businesses (than
men-owned). This evidence suggests that, combined with the very small number of women who are
venture capitalists, women-owned business owners are constrained in their experience, consideration
and use of such ?nance.
Redressing the image imbalance
I
Prevailing entrepreneurial role models re?ect masculine bias and this is reinforced in popular media,
education and government policy. Whilst this is beginning to change – we are seeing an increasing
number of female role models emerging – there is still a long way to go.
I
Promoting and including more diverse role models is essential to encourage more girls and young
women to consider self-employment as acceptable and achievable.
I
Encouraging younger women with higher educational capital into enterprise will begin to dispel the
myths that women are not suitable or talented entrepreneurs. It will also ensure that women-owned
?rms are distributed more widely across the general business population.
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RBS Group WomeninEnterprise: ADifferent Perspective
Summary and recommendations
This report describes and reviews the in?uence of gender upon entrepreneurial intentions, self-employment
and business ownership. Speci?cally, we explored women’s entrepreneurship. Fromthe evidence presented
we found that there are three main gender diferences in entrepreneurship: in start-up rates, the nature of the
businesses they run and growth intentions. In addition, there is a rather complex picture of business ?nancing
and some concerns regarding popular depictions of entrepreneurial role models.
Fromthese ?ndings, we suggest a range of interventions designed to address these gaps which are sensitive to
the context of women’s’ entrepreneurship and which could be addressed by a range of public, private and third
sector institutions, including the media, resource providers, education and training bodies and state and semi-
stage agencies. ‘Closing the gap’ type approaches (i.e., those predicated on a‘if only there were the same
number of...’ type arguments) are often too simplistic. While they are a useful starting point they fail to
recognise the context in which women seek to develop an expression of their entrepreneurial aspirations and
intentions.
These recommendations seek to provide a framework for strengthening the role of women in driving
entrepreneurship in the UK. We do so in the knowledge that many overlap with previous recommendations
and initiatives. But it is clear that more needs to be done if we are to make a long-termsigni?cant change in
the arena of women’s enterprise.
I
Role models: Entrepreneurial role models play a critical role. There have been many examples of how
this can be done successfully: current examples include everywoman and the Female Entrepreneur
Association (FEA). Some speci?c recommendations for role models include:
– female ambassadors in key business sectors are needed to showcase achievements and encourage
more girls/young women to engage in business ownership as a preferred career;
– Innovations in the portrayal of enterprise and entrepreneurial role models in the media are long
overdue. It needs to move away froma preoccupation with pure entertainment and move towards
the reality of starting and running a successful business;
– Challenging associations between gender and entrepreneurship is imperative. It should not be
special or extraordinary for girls and women to be active in entrepreneurial activities.
I
Mentoring: Role models can only go so far. They raise awareness and inspire but they are unable to
deliver the required outcomes on their own. Mentoring is seen as an important way of sustaining start-
ups and building growth ambitions and current provision needs to be strengthened. Finding appropriate
and challenging mentors for women business owners can be difcult. This means encouraging more
women mentors but also raising awareness of gender bias among staf of existing business support
organisations. More schemes such as those within the Inspirational Journey initiative developed by
RBS/NatWest would add value in this area.
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RBS Group WomeninEnterprise: ADifferent Perspective
I
Non-gender business networks: In addition to women business networks such as everywoman, women
business owners need to be connected to business networks which are not de?ned by gender but by a
shared experience and trust as well as a shared ambition. Business Schools can provide an
environment to enable that to happen but too often they are caught up in the male-dominated
corporate world and are less connected to the host of successful women business owners on their
doorstep. Building networks of growth-oriented small business owners (both women and men) through
seminars, workshops, and short courses (delivered in novel ways embracing social media) should be
high on the agenda of all UK Business Schools and colleges. The Gazelle Group of Further Education
colleges is a relatively newand exciting development in this space.
I
Entrepreneurial aspiration: Schools, colleges and universities represent a unique opportunity to foster
entrepreneurial aspiration among girls and young women. There are many enterprise initiatives in the
education sector across the UK, and these need to be supported more intensively and connected to
tangible rewards for young people. The current generation of "born digital" or millennials provides new
opportunities for virtual/online initiatives and "game-i?cation" to encourage engagement. Starting a
business while in full-time education should not be seen as a side-line or extra-curricular activity by
young people but integrated into the core curriculumwith the appropriate rewards. The developing
national network of ‘enterprise academies’ provide an opportunity for those with a speci?c interest in
entrepreneurship to develop their skill sets in very diferent ways.
I
Business ?nance: Funding remains an issue for business owners and there would appear to be a
particular need to ensure that the ?nancial institutions are responding to the needs of women business
owners. However, the picture is complex and it is sometimes unhelpful to analyse simply by a gender
split. Astronger emphasis upon evidence which challenges assumptions of gender discrimination is
vital including developing a more robust analysis of data regarding the use of ?nancial products,
including termlending which looks at gender in the context of business age, sector and size.
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RBS Group WomeninEnterprise: ADifferent Perspective
Women do not have any
individual or collective
entrepreneurial de?cit;
but their position in society is
highly in?uential in shaping
their attitudes towards
running successful small
businesses.
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RBS Group WomeninEnterprise: ADifferent Perspective
Contents
Executive Summary
1. Introduction: women and entrepreneurship
1.1 Why focus on women and entrepreneurship? 10
1.2 Ashort overviewof existing evidence 13
2. Women entrepreneurs in the economy
2.1 Attitudes and barriers 15
2.2 Performance implications 17
2.3 Summary 20
3. Business funding
3.1 Introduction 21
3.2 Small firmfinance: supply and demand 21
3.3 Debt funding 23
3.4 Equity funding 23
3.5 Risk aversion 23
3.6 Gender and finance 24
3.7 Summary 24
4. Entrepreneurial role models
4.1 Entrepreneurial role model influence 25
4.2 Role model implications 25
4.3 Summary 26
5. Summary and recommendations
5.1 Summary 27
5.2 Recommendations 28
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RBS Group WomeninEnterprise: ADifferent Perspective
1. Introduction: women and
entrepreneurship
1.1 Why focus on women and entrepreneurship?
Anotable trend within developed economies since the 1950s has been women’s increasing labour force
participation such that they now, on average, formaround 48%of employees in developed economies and
about 66%of women, compared to 80%of men, are economically active
2
. However, this level of
participation has not been re?ected in levels of either women’s self-employment or business ownership.
Figure 1 shows that since the early 1970’s rates of women’s self-employment have continued to be lower
than that of men. Global Entrepreneurship Monitor (GEM) data
3
(see Figure 2, on the following page)
suggests that in the UK, like in most developed economies, men are twice as likely to expect that they will
start a business in the next three years or to be starting or running their own newbusiness as women
4
.
2. Weichselbaumer, D. and Winter-Ebmer, R. (2005), AMeta-Analysis of the International Gender Wage Gap’, Journal of Economic Surveys, 19 (3) 479 – 511.
3. We rely on the Global Entrepreneurship Monitor (GEM) international datasets to provide detailed information on women’s entrepreneurial behaviour. This is the
only source of consistent annual data that identi?es those active in business creation, what those businesses are, and their growth aspirations.
4. Levie, J and Hart, M(2012) Global Entrepreneurship Monitor (GEM) UKReport, 2011, Aston Business School and Hunter Centre for Entrepreneurship,
Strathclyde Business School.http://www1.aston.ac.uk/aston-business-school/research/impact/gem/reports/
GEM provides data on the entrepreneurial profile of young people – their attitudes, aspirations and actual engagement in
setting up their own business. The GEM national surveys covering ~ 60 countries each year consistently report that the
highest number of entrepreneurs can be found in the 25-34 age group. The headline measure in the GEM dataset is the
number of people in the early stage of setting up their own business (the GEM Total early-stage Entrepreneurial Activity
index – the TEA index). GEM creates an index of early stage entrepreneurial activity (known as TEA) using the following
approach: the TEA index is the sum of those respondents classified as nascent entrepreneurs and new firm entrepreneurs.
The TEA index does not measure all entrepreneurial activity and is not based on a survey of business entities. It measures
the characteristics of entrepreneurial individuals and the types of entities they establish. As such it is a unique and
internationally comparative measure of the cultural propensity of a nation, or region, to be entrepreneurial.
Nascents: the active planning phase in which the entrepreneur has done something during the past 12 months to help start
a new business, a new business that he/she will at least part own, and which has not paid wages or other income to the
owners in the past 3 months.
New Firm Entrepreneurs: the second phase is defined as from 4 to 42 months after the new venture begins to provide
income to the owners. Entrepreneurs who at least part own and manage a new business that has been paying some form of
income to the owners for at least 4 and not more than 42 months are referred to as new firm entrepreneurs.
GEMTEA Index
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RBS Group WomeninEnterprise: ADifferent Perspective
Figure 1: Percentage of workforce self-employed in the UK by gender
Source: UKLabour Force Surveys
Figure 2: Entrepreneurial intention and activity in the UK by gender, 2002-2011
Source: GEMUK Adult Population Survey 2002-2011
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RBS Group WomeninEnterprise: ADifferent Perspective
The UK Labour Force Survey
5
data for 2008 indicates that women constitute 26%of the self-employed
(people in employment who are not employees) and 17%of business owners
(owner/managers/employers). This level of under participation re?ects speci?c social and economic
challenges which prevent women fromfully developing their entrepreneurial potential. In addition, we know
that whilst there are relatively fewperformance diferences between male and female-owned ?rms, women
are under-represented in higher value added sectors
6
. Related to this, they are less likely to own growth-
oriented or exporting ?rms. Finally, the population of female-owned ?rms demonstrates higher degrees of
churn (start-up and closure) so, for example, the UK evidence suggests that since 1980, women were
increasing rates of start-up but their share of self-employment has changed little between 1992 and 2008
7
.
However, since June 2008 the share of women in self-employment in the UK has increased from29.4%to
31.5%in June 2012. This means that there are nowalmost 1.5 million women self-employed which
represents an increase of around 300,000 since before the economic downturn.
Clearly, higher rates of start-up are balanced by high rates of closure. However, we need to be careful about
assuming that business start-up rates and self-employment rates are measuring the same thing, or that
higher rates of closure imply higher rates of failure For example, in the 2011 GEMsurvey, only 52%of
women who classi?ed themselves as self-employed also reported being women business owner-managers,
compared with 74%of men self-employed. Thus, almost half of women self-employed do not see
themselves as running a business. To these women, self-employment is another formof employment,
rather than running a business. It therefore is perhaps unfair to include these in any assessment of
women’s enterprise, where“enterprise” is equated with“business”.
In relation to business closure, women may have a more realistic viewof howwell their business is doing
and they may have a greater range of competing interests for their time. In fact, GEMUK data suggests the
opposite of the assumption that greater churn means greater failure: exited women business owners are
more likely to report personal reasons for exit than men and less likely to report business failure-related
reasons. The frequency of responses mentioning personal reasons peaks at age 25-34 among women, and
there is no such peak among men. But personal reasons are mentioned by women of all age groups at a
higher frequency than men. More research is needed on precisely what these reasons are, although we can
be fairly sure that caring for young or old family members is probably one of them.
5. UKLabour Force Survey:http://www.esds.ac.uk/government/lfs/
6. Marlow, S., Shaw, E. and Carter, S. (2008) ‘Constructing Female Entrepreneurship Policy in the UK: Is the USAa Relevant Role Model?’ Environmental
Planning C26 (1) 335 – 351.
7. See footnote 6.
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RBS Group WomeninEnterprise: ADifferent Perspective
Table 1: Principal reason for closing a business in the last 12 months,
by age group and gender
Source: GEMUK Adult Population Survey 2007-2011 (based on a total sample size of 92,676 18-64 year olds)
G
e
n
d
e
r
Age
in yrs
The
business
was not
pro?table
Problems
getting
?nance
An
opportunity
to sell the
business
Another job
or business
opportunity
The exit
was
planned in
advance
Retirement
Personal
reasons
An
incident
Other Total
M
a
l
e
18-24 31.2% 3.8% 2.3% 31.4% 12.5% 0.0% 6.4% 6.9% 5.6% 100.0%
25-34 30.5% 4.3% 5.6% 29.4% 6.2% 0.0% 17.2% 1.1% 5.6% 100.0%
35-44 31.1% 7.8% 5.0% 18.0% 7.6% 1.6% 15.2% 4.4% 9.3% 100.0%
45-54 37.2% 5.0% 7.7% 14.8% 2.9% 6.1% 14.8% 3.4% 8.1% 100.0%
55-64 26.1% 4.3% 8.7% 6.5% 4.8% 22.7% 13.1% 3.4% 10.4% 100.0%
Total 31.1% 5.4% 6.1% 18.4% 6.4% 6.8% 13.9% 3.7% 8.2% 100.0%
F
e
m
a
l
e
18-24 42.2% 0.0% 0.0% 15.0% 15.6% 0.0% 25.4% 0.0% 1.8% 100.0%
25-34 21.3% 4.6% 2.1% 17.3% 7.6% 2.7% 34.2% 0.3% 9.8% 100.0%
35-44 29.2% 2.3% 2.9% 22.7% 6.1% 0.4% 25.1% 1.0% 10.2% 100.0%
45-54 25.0% 4.9% 3.4% 14.1% 6.4% 8.3% 22.9% 1.8% 13.2% 100.0%
55-64 20.7% 5.0% 4.2% 4.0% 3.1% 30.4% 19.9% 3.2% 9.4% 100.0%
Total 25.0% 4.0% 3.0% 14.5% 6.3% 10.0% 25.3% 1.5% 10.3% 100.0%
Women’s unequal participation in business ownership is problematic for several reasons in relation to
fairness and equality and also, broader economic prosperity. Evidently, women should not be prevented
fromstarting and growing newbusinesses merely because of their gender. In addition, if women face
additional barriers in creating newventures which have the potential to innovate, generate wealth and
create employment this can afect economic prosperity. So, it is imperative to investigate the particular
gender-related challenges women might experience when considering or undertaking newventure creation
and when sustaining and/or growing existing businesses.
1.2. A short overview of the existing evidence
Both self-employment and business ownership have traditionally been a“man’s world”. Even today the
popularised general termfor the entrepreneur is a“small business man”. As such, it was presumed that
there were a fewareas in self-employment, such as personal services (for example, hairdressing) where
women dominated but this was an outcome of a female dominated sector and so, ‘women’s work’ rather
than any re?ection of the desire to be enterprising. Thus, historically policy, practice and research assumed
the natural entrepreneur was a man and women were, on the whole, not interested in or not suited to self-
employment. Such presumptions have been challenged in recent years with an emerging body of literature
questioning the notion that women are uninterested in, or lack the ability to be, self-employed
8
. In addition,
governments across the globe have expressed the desire to encourage more women to begin new
businesses in order to contribute to economic well-being through the generation of wealth and creation of
newemployment. The recent ‘Global Gender Gap’ report fromthe World Economic Forumunderlines yet
again the important of equality in driving efciency and competitiveness in the economy
9
.
8. See overviewby Neergaard, H. and Marlow, S. (2011), ‘The Emperor’s NewClothes: Rendering a feminist theory of entrepreneurship visible’, Paper to the 56th
ICSBConference, Stockholm, Sweden.
9. Hausmann, R; Tyson, L and Zahidi, S (2011) The Global Gender Gap Report 2011, World Economic Forum, Geneva, Switzerland.
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RBS Group WomeninEnterprise: ADifferent Perspective
There is a distinct strand of research, policy and practice focused upon women’s business ownership
activities that stretches back to the late 1970s. It is notable that approaches to studying female
entrepreneurship have demonstrated distinct patterns in terms of focus and approach. These, in turn, have
shaped policy support and related initiatives to encourage more women to set up their own business or
enter self-employment. Such themes can broadly be categorised as:
1. Gender as a variable. Early examinations of women’s business ownership explored their experiences
of self-employment in comparison to those of their male counterparts – as such, the population of
business owners were divided according to gender (male and female) with these two categories
compared and contrasted. The difculty with this approach being that men were taken as the default
group so what they did and howthey managed their ?rms was taken as normal and natural. This led to
many negative comparisons as it was presumed that female-owned ?rms would be diferent and
indeed, inferior to those of their male counterparts in both performance and growth potential. In other
words, the problemlay at the level of the individual such that women needed‘?xing’ with special policies
and advice so they could learn to be more like men. Indeed, this body of research was in?uential in
shaping government policy in the USAand Europe suggesting that focused initiatives to encourage
more women to consider newbusiness start-ups and to ofer themspecialist support once in business
should address their entrepreneurial shortcomings. Despite its limitations, the‘gender as a variable’
approach is absolutely critical to provide descriptive overviews of the small ?rmpopulation as long as
the sample is sufciently representative (as in the case of the GEMdata).
2. Feminist critiques. Fromthe early 2000s an increasingly critical approach was taken to existing
assumptions that women entrepreneurs were somehowinferior to their male colleagues
10
. This
argument was based upon a number of key critiques related to entrepreneurial propensity (that is, the
likelihood to start a new?rm), to ?rmperformance (diferences between the performance pro?les of
male and female-owned ?rms) and to ?rmgrowth. First, the culture surrounding entrepreneurship is
very masculine such that women as a group feel they are outsiders and reinforces the notion that
business ownership is not an appropriate career choice for women. This argument is supported by
popular entrepreneurial role models which are inevitably white males – these span fromthe‘dodgy
dealer Del Boy’ image to that of the professional wealth creator (Richard Branson) to the technological
innovator (James Dyson). Women are much less likely to feature in any list of role models. For example,
in a recent study of 16-21 year olds in the UK 48%of the images of enterprise mentioned by young
people were of Lord Alan Sugar (29%) or Steve Jobs, Richard Branson, Bill Gates or Donald Trump
(19%). No women were speci?cally mentioned
11
.
Thus, the self or society-imposed structural constraints of women’s lives combined with negative
stereotypes have limited themas a group as potential entrepreneurs. This is clearly and categorically
not an individual short-coming or something which might be easily addressed by policy initiatives.
Finally, a careful examination of prevailing ideas regarding the so called‘under-performance’ thesis –
that women-owned ?rms have poorer performance pro?les than those of men suggesting that women
were less competent entrepreneurs – has been questioned. In fact, research
12
suggests that when
?rmcharacteristics (size, sector, age, funding) are controlled for, women-owned ?rms outperform
those owned by their male counterparts.
10. See for example, Ahl, H.J. (2006). ‘Why research on women entrepreneurs needs newdirections’. Entrepreneurship Theory and Practice 30(5): 595-621.
11. Metcalfe, J (2012) Enterprising Minds: Enterprise, further education and the UKeconomy, Carnegie UKTrust, Dunfermline, Scotland.
12. See Fairlie, Rand Robb, A. (2009), ‘Gender diferences in business performance: evidence fromthe characteristics of business survey’, Small Business
Economics, 33: 375 – 395; Marlow, S. and McAdam, M. (2013), ‘Advancing debate and challenging myths – exploring the alleged case of the under-performing
female entrepreneur’, International Journal of Entrepreneurial Behaviour and Research for a critique of the underperformance thesis.
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RBS Group WomeninEnterprise: ADifferent Perspective
It is not disputed that, on the whole, women-owned ?rms are very small but in fact, as is noted
13
, this
descriptor is true of the majority of small ?rms. The realities of many women’s lives require ?exible
employment which, until recently, has not been considered as conducive for self-employment or
business ownership given its association with masculine work.
It is noted that there is nowan increasing tendency to use home-based self-employment as a viable
solution to the problems of ?exible income generation. Interestingly, this ?exible approach is
increasingly referred to as ‘mumpreneurship’ by the media, despite it being a popular option for both
genders (e.g. Will King, Founder and CEOof King of Shaves, advocates ?exible working, which he calls
“working fromroam”.)
3. Future pathways. We nowneed to combine these strands of research to gain a more comprehensive
picture of women’s experiences of business ownership and how, and if, they difer fromthose of men.
As such, large sophisticated datasets, such as GEM, are essential to describe the characteristics of the
self-employed and small ?rmowners. In addition, drawing fromprevious research we have a number of
broad themes which require further attention; ?rst, far fewer women choose to begin newventures –
this is an almost global phenomenon – so, we need to explore why this diference persists and what
solutions might be suggested. Second, why are women-owned ?rms more likely to be overly
concentrated in less knowledge-intensive services which constrain their performance and growth
potential? Third, why are women business owners more likely to exit businesses which are not failing?
Within this report we will look more carefully at the issues and evidence regarding these particular aspects
of female entrepreneurship. We begin with a mapping exercise, drawing upon the GEMdataset and
describe the characteristics of women-owned ?rms within the UK.
13. Storey, D.J. (2011) ‘Optimismand Chance: The Elephants in the Entrepreneurship Room’ International Small Business Journal, (29) 4 303 – 321.
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RBS Group WomeninEnterprise: ADifferent Perspective
14. Acs, Z., Bardasi, E., Estrin, S. and Svejnar, J., (2011), ‘Introduction to special issue: Female entrepreneurship in developed and developing economies’,
Small Business Economics, 37: 393 – 396; Hart, M; Martiarena, A; Levie, J and Anyadike-Danes, M(2011) Gender, Resource Acquisition and Expected
Future Size of Start-ups in the United Kingdom’ GEMUK WP No. 1, Aston Business School.
15. McAdam, M. (2013) Female Entrepreneurship, London, Routledge (forthcoming)
2. Women entrepreneurs in the economy
2.1 Attitudes and barriers
Drawing upon the comprehensive GEMdataset, we can describe where women-owned ?rms are situated
in the economy and their operating pro?les. In 2011 the GEMconsortiummeasured entrepreneurial activity
amongst individuals in 54 economies: 10,573 adults aged 16–80 participated in the UK survey. The GEM
UKTotal Entrepreneurial Activity (TEA) Index con?rms the general picture within the literature that women
are less likely to move into self-employment and ?rmownership as lead entrepreneurs. Drilling down a
little deeper, we can illustrate the entrepreneurial attitudes and reported barriers to growth amongst
men and women.
Figure 3: Entrepreneurial attitudes in the UK by gender, 2002-2011 (18-64 years)
We can see a substantial diference between beliefs of men and women regarding the possession of
‘entrepreneurial capital’ that is, the skills, knowledge and experience to begin a new?rm. Initial levels of
capitalisation are strong indicators of the future performance of a new?rm. Thus, where the owner has high
levels of human capital (education, managerial experience), social capital (extensive networks) and
?nancial capital (income, savings, collateral) the venture is more likely to succeed. Entrepreneurial capital
is largely accrued fromeither previous employment (before becoming self-employed) or prior business
ownership. Prevailing evidence
14
suggests that women begin their ?rms with lower levels of both human
and ?nancial capital and this relates to their experiences of employment and serial entrepreneurship. As is
well established, women have high levels of human capital in terms of educational attainment but this is still
not translated into an equitable share of senior management roles.
Source: GEMUK Adult Population Survey 2002-2011
17
RBS Group WomeninEnterprise: ADifferent Perspective
This afects their access to networks and, crucially, constrains the accrual of ?nancial capital and
associated collateral. Essentially, women enter business ownership with lower levels of entrepreneurial
capital overall which in turn, afects the sustainability of the enterprise
15
.
Such factors, combined with a lower level of engagement with business ownership and an absence of
relevant role models combine to suggest that women, as a population, have lower self-con?dence to move
into entrepreneurship. When analysed more closely, it is likely that this is not an individualised problemof
self-con?dence but more an informed assessment drawn froma range of market signals concerning
women’s suitability and ?t as entrepreneurs. This factor aside, it is not surprising that women are less likely
to personally knowsomeone who has recently started a new?rmgiven there are fewer women overall in
the business population. Similarly, when we assess the perceived barriers to starting a business among
those who are not entrepreneurs (see Figure 4 below), again there are relatively fewgender-related
diferences.
Figure 4: Perceived barriers to starting a business – % of non-entrepreneurial population
aged 18-64 years
This does, of course, suggest a conundrumthat if there are fewperceived diferences regarding barriers,
why do more women not move into self-employment or become business owners? As we will see later, the
evidence suggests this is due to sectoral in?uences, role models, entrepreneurial capital and domestic
responsibilities – issues not included in Figure 4, above.
Source: GEMUK Adult Population Survey 2004-2010 (except Fear of Debt and Loss of Security: 2008-2010)
16. Freel, M. Carter, S., Tagg, S and Mason, C. (2012), ‘The latent demand for bank debt: characterizing discouraged borrowers’, Small Business Economics,
38: 399 – 418.
17. Causer, P. and Park, N. (2009) Women in Business. Regional Trends: 41: 31-51.
18
RBS Group WomeninEnterprise: ADifferent Perspective
2.2. Performance implications
Relatively fewfemale entrepreneurs have grown their ?rms or intend to do so
16
. Figure 5 describes
expectations for growth in jobs over ?ve years – we can see that women business owners have lower
expectations of creating any newjobs and they are under-represented amongst entrepreneurs with the
fastest growing businesses. In part, this is because women are more likely to own businesses which they
run part-time, as Table 2 shows. In addition, the Labour Force Survey, which measures self-employment
(which excludes owner-managers who are employees of their own incorporated businesses), suggests that
in 2007, 30%of women self-employed and 8%of men self-employed were mainly home-based
17
. GEMdata
(Table 2, on the following page) suggests that when all business owner-managers are taken into account,
this gender-based diference in home-working falls away. The diference between these two measures may
be because many people who work for themselves may not see themselves as running a business. It is
important to bear this in mind when analysing self-employment data.
Figure 5: Growth expectations (jobs) of nascent and new business entrepreneurs
Table 2: Proportion of women and women owner-managers of established businesses that
operate mainly from home or elsewhere, by hours worked by the owner in the business
Another reason for the diference in average growth rate of women and men-owned businesses may be the
tendency for women to begin newventures in more competitive, less knowledge-intensive services. As shown
in Figure 6, women owners dominate all aspects of services with the exception of business services –which
include professional service ?rms of accountants, lawyers, doctors etc.
Gender Male Female
Location Home Other Total Home Other Total
less than
10 hrs
1.6% 1.4% 3.0% 6.5% 4.0% 10.5%
10-39hrs 14.7% 7.3% 22.1% 28.2% 19.7% 47.8%
40hrs
or more
41.5% 33.4% 74.9% 20.2% 21.6% 41.7%
Total 57.8% 42.2% 100.0% 54.8% 45.2% 100.0%
Source: GEMUK Adult Population Survey 2007-2009
Source: GEMUK Adult Population Survey, 2002-2010
Figure 6: Sectoral concentration of start-ups (nascents and new business owners)
by gender
Finally, women-owned businesses tend to be less-well capitalised at start-up. This is a re?ection both of lower
incomes of women and of the nature of the industry sectors women entrepreneurs tend to enter.
Finally, there are gender-related diferences in levels of churn (i.e. closure and failure). Figure 7 shows that
survival rates tend to be lower and churn rates tend to be higher among women business owners from2002 to
2011, with the exception of 2010. As explained earlier, exits are not all failures and when non-failure-related
exits are factored in, GEMdata suggests that the failure rates of women-owned businesses are the same as
those of men.
Figure 7: Business survival and churn (closure and failure) by gender
19
RBS Group WomeninEnterprise: ADifferent Perspective
Source: GEMUK Adult Population Survey 2002-2010
Source: GEMUK Adult Population Survey 2002-2011
20
RBS Group WomeninEnterprise: ADifferent Perspective
Note: The proxy early-stage business survival rate is the established business owner-manager rate
divided by the early-stage entrepreneurial activity rate. The proxy business churn rate is the business
closure rate (de?ned as the percentage of working age individuals who closed a business they owned
in the last 12 months) divided by the sumof the newand established business owner-manager rate.
Drawinguponadditional quantitative
18
andqualitative evidence
19
, it wouldappear that some women‘use’
business ownershipandself-employment diferently frommen. Womenare muchmore likely toownpart-time
enterprises and, if self-employed, tobe self-employedat home. They are alsomore likely toaccept lower ?nancial
returns. This re?ects trends inemployment where women’s positionas secondary earners withadditional
responsibilities for domestic/caringlabour requires a trade-ofbetweenwork ?exibility andincome. This inturn,
results ina higher tolerationof marginal returns/performance andlower growthambitions whenbalancedagainst
?exibility andhome centredwork. Inaddition, more womenuse self-employment as a temporary solutionto
combiningchild-care andincome generationat speci?c points intheir life, seekingtoselect back intoemployment
whenthey feel it is appropriate
20
. Labour Force Survey results fromApril toJune 2007showedthat 20%of self-
employedwomengave“family commitments/wantedtowork at home”as a reasonwhy they became self-
employed, comparedwith4%of men. Fifteenper cent of mengave“make more money”as a reason, compared
withonly 9%of women
21
. As we showedearlier, the intersectionof domestic responsibility, gender and
entrepreneurial activity needs tobe factoredintoany discussionof business survival, growthandchurn, this is
particularly true of self-employment rather thanbusiness ownership(see Box 1).
2.3 Summary
Arather complex pictureemerges hereinterms of attitudes towards entrepreneurshipand?rmperformance. We
canseethat menaremorelikelytoknowentrepreneurial peoplebut gender-relateddiferences interms of barriers
tostart-uparenot substantial. Onceoperatinginbusiness, anumber of external in?uences will in?uence?rm
performance–thesearecapital, sectoral andoperationallyrelated- anddohavegenderedconnotations. Thus,
becauseof socio-economicreasons (prior employment, greater caringresponsibilities) womenmaypossess lower
levels of entrepreneurial capital which, inturn, constraintheir likelihoodof self-employment or business ownership.
Relatedly, traditional expectations of appropriate‘women’s work’ arere?ectedinsectoral entrepreneurshipentry
choices, withmost womenchannellingtheir business activitytowards less knowledge-intensiveservicesectors.
Suchchoices, againincombinationwithdomesticresponsibilities, fuel greater levels of volatilitybut this scenariois
cloudedbytolerationof lower returns fromthebusiness. Probablytheonlyclear outcomeof this assessment is
that womendonot haveanyindividual or collective‘entrepreneurial de?cit’ but for manytheir socio-economic
positioninsocietyis highlyin?uential inshapingtheir attitudes toandsuccess as small ?rmowners.
Karen is a qualified accountant who previously held a senior management position with one of the large corporate
accountancy firms. Due to child care costs and work pressures, Karen resigned her post and became self-employed. Her
firm, KS services offers gardening services whilst, in addition, Karen informally undertakes book-keeping work (tax returns,
VAT returns) for a few other small firm owners. In her own words:
“Even after the children went to school, I was paying a fortune in child care and was completely stressed trying to juggle
home and work. My husband works in London so he is gone at 6.30 and is not back until 7 at night so no help at all. In the
end, I decided to follow my passion for gardening and started doing friends gardens at weekends and decided to turn it into
a business. The pay is laughable but, I work locally, choose my hours, am not paying for child care, I see the kids, I am doing
something I like, and to be honest I top it up with a few tax returns and stuff, particularly in the winter. My husband has a
good job so money is not too pressing. Of course, when the children are in senior school, I will go back to a proper job. My
previous employer is constantly in touch and has even offered me part-time hours so this business is just handy for me.”
Box 1 Case study example: KS services
18. Causer, P. and Park, N. (2009) Women in Business. Regional Trends: 41: 31-51.
19. Duberley, J and Carrigan, M. (2012) The career identities of ‘mumpreneurs’: Women’s experiences of combining enterprise and motherhood,
DOI: 10.1177/0266242611435182
20. Jayawarna D, Rouse J and Kitching J (2011) Entrepreneur motivations and life course. International Small Business Journal 29(1): 1–23.
21. Causer, P. and Park, N. (2009) Women in Business. Regional Trends: 41: 31-51.
21
RBS Group WomeninEnterprise: ADifferent Perspective
3. Business funding
3.1 Introduction
It is probably fair to say that one of the most enduring beliefs pertaining to small business owners –
particularly women – is that they are persistently denied access to appropriate and afordable funding. It is
popularly suggested that the root of this problemarises frombank caution and reluctance to readily supply
?nance to the sector
22
. If this ‘problem’ could be addressed then, it is argued, many more people would
start new?rms and existing ventures would growso creating more wealth and newemployment. In
addition, if funding inequities for groups such as young people, ethnic minorities and women could be
eliminated, then these groups would be more inclined to act upon their entrepreneurial intentions and so
add much needed impetus to the economy
23
.
Existing research in this ?eld however, suggests this is both a simplistic and distorted analysis of small ?rm
funding which takes little account of the diferences between supply and demand for funding, levels of risk
and uncertainty, owner preferences and the complexity of lending decisions
24
. Rather, the nature and
position of women-owned ?rms in the market and their funding requirements are more in?uential upon the
type and amount of ?nance demanded
25
. To explore these issues in greater depth we present evidence on
supply and demand issues, owner funding preferences, evidence pertaining to women’s use of business
?nance and related implications of these issues.
3.2 Small ?rm ?nance: supply and demand
The popular image of the small ?rm?nance market is one of constraint and frustration whereby most
entrepreneurs are denied much needed ?nance by unsympathetic bankers. Acloser examination of the
funding situation, however, suggests a rather more complex situation which requires a discriminatory
analysis between demand, supply and discouragement. The broad balance of evidence suggests that most
small ?rms do actually have access to adequate and preferred forms of ?nance. As such, there is relatively
little unsatis?ed demand in the sector as a whole
26
. This largely re?ects the nature and pro?le of the
majority of smaller ?rms as marginal performers with fewgrowth ambitions.
In terms of start-up ?rms it has long been demonstrated that the main sources of funding are personal
savings, followed by the three‘Fs’ of funding
27
: ‘family, friends and fools’. Given the risks and uncertainties
surrounding newventures (and, for the most part, their small scale) sourcing formal funding is more
challenging – and perhaps, rightly so given the various ‘liabilities of newness’ attached to young ?rms.
Consequently, whilst using bootstrapping, seed corn and informal funding is associated with under
capitalisation and does appear to have implications for future growth and sustainability, it remains the fact
that this appears to be the preferred option for most newstart-ups. Figure 8 ofers an overviewof sources
of funding of start-ups and shows fewgender-related diferences.
22. The Guardian; March 16th 2012: ‘Businesses face £190bn funding gap in ?ve years, report warns’http://www.guardian.co.uk/business/2012/mar/16/businesses-190bn-funding-gap-report.
23. Cavalluzo, K and Cavalluzo, L (2002) ‘Competition, Small Business Financing, and Discrimination: Evidence froma NewSurvey’, The Journal of
Business, 75 [4] 303 – 319.
24. Storey, D.J. and Greene, F. (2010) Small Business and Entrepreneurship London, Prentice Hall.
25. Carter, S., Shaw, E., Lam, W. (2007) ‘Gender, entrepreneurship, and bank lending: the criteria and processes used by bank loan ofcers in assessing
applications’, Entrepreneurship, Theory and Practice 31 427 – 441.
26. See footnote 15
27. See footnote 16
22
RBS Group WomeninEnterprise: ADifferent Perspective
Regarding established ?rms, as is consistently con?rmed through research
28
, the majority of small ?rm
owners have fewambitions to growtheir businesses but wish to maintain themas sustainable and
pro?table. This is hardly surprising; it is evident that most employees have fewambitions to be CEOs.
Equally, most small ?rmowners have no career ambitions to growtheir ?rms into large, complex
organisations
29
. Thus, the preferred approach to ?nancing such ?rms is through retained pro?t or, despite
the costs, overdrafts and credit cards. This is because beyond the ?rst agreement (and unlike termloans
etc.) they do not require speci?c business plan applications, are ?exible, available and if maintained within
the limit – free fromclose surveillance. Formal loan applications are unlikely, unless very speci?c funding is
required for capital purchases, to support growth strategies or when the more ?exible alternatives (such as
overdrafts/credit cards/supplier credit etc.) become insufcient.
It is not disputed that the funding preferences and demands of many small ?rmowners are not the most
efcient or efective. Indeed, it is evident that general under-capitalisation and the high cost of these
options are detrimental to performance. Yet, this does not dissuade most owners fromsuch preferences or
encourage themto demand higher levels of formal funding.
In terms of supply, there is evidence that for those without recourse to the three‘Fs’ or who lack personal
savings, attaining formal debt or equity ?nance is difcult as they are coming to the market with little
collateral or a track record. For many of these newventures, government backed schemes guaranteeing
funding have been very useful. The other segment in the market which appears to experience challenges in
?nding appropriate ?nance are high growth ?rms or innovative ?rms which require high capital investment
prior to revenue generation. For these ?rms equity ?nance should be ?lling the funding gap but indications
are that for this cohort of ?rms, supply is challenging and a gap does exist
30
.
The last category mentioned is that of ‘discouraged borrowers’; these are ?rmowners across the sector
who require formal funding to begin, sustain or growbusinesses but do not actively seek it out as they
believe their applications will be denied. Evidence
31
indicates that this assessment is fairly accurate on the
part of the ?rmowner but nevertheless, there is a notable minority within the discouraged group who would
be good candidates for formal funding.
28. See footnote 15 &16
29. Hansen, B and Hamilton, R. (2011) ‘Factors distinguishing small ?rmgrowers and non-growers, International Small Business Journal, 29 [3] 278 – 294.
30. Coleman, S and Robb, A. (2012) Financing Strategies for women-owned ?rms, Stanford Publishing.
31. See footnote 16
Figure 8: Sources of start-up funding (excluding personal savings) reported by nascent
entrepreneurs
Source: GEMUK Adult Population Survey, 2002-2010
23
RBS Group WomeninEnterprise: ADifferent Perspective
Thus, fromthis very short scene setting overview, it is apparent that despite popularisedaccounts of recalcitrant
bankers and ?nance starved small ?rms, this is not an accurate assessment. The reality of the picture is far more
complex. One facet of this complexity we nowturn to is howgender in?uences this scenario and, in particular,
whether female entrepreneurs experience discrimination when starting or growing their enterprises.
3.3 Debt funding
Drawingfromtheevidence, it emergesthat –similar totheir malecolleagues–womenbusinessownersprefer toutilise
informal sourcesof ?nance(savings, familyloans) andthosewhichattract relativelylittleprovider scrutiny–credit
cards, overdrafts
32
. Assuch, women’spreferencesre?ect theestablished‘peckingorder’regardingfundingchoices.
There are two areas of gender-related diference which deserve further comment and explanation: the cost
and the amount of business funding demanded. On ?rst look, women-led businesses’ borrowing activity
suggests they (i) utilise lower amounts of formal funding and (ii) they pay higher borrowing costs
33
. On
closer inspection – and once business characteristics such as age, size, and sector are accounted for – we
see that the ?rst of these statements is true. Women-led businesses are indeed signi?cantly less likely to be
using external ?nance than men-led business
34
. They do not, however, pay higher borrowing costs. Any
apparent diference is related only to the pro?les of their businesses.
3.4 Equity funding
Interms of equity ?nance, we knowthere are very fewwomeninthis sector as either funders or entrepreneurs,
althoughthere are some highpro?le "role models" suchasJulie Meyer, of Ariadne Capital, andDale Murray, who
was namedBritishAngel Investor of theYear 2011. But there is very little researchwhichspeci?cally explores this
issue. Drawinguponthe pro?le of ?rms more likely toseek equity injections, as there are relatively fewwomen
entrepreneurs operatinginhighgrowthmanufacturing, services and/or science, engineering andtechnology
sectors there will be correspondingly fewseekingequity ?nance or higher level debt funding.
3.5 Risk aversion
On the whole, it has often been argued that women are more risk averse than men
35
. This in turn, afects
their business funding decisions regarding both the type and amount of ?nance sought. There is an
established body of evidence
36
which indicates that gendered socialisation in?uences do shape
entrepreneurial risk perception and risk propensity. As such, women demonstrate greater ?nancial caution
in their borrowing behaviours. Again, such diferences are not overly signi?cant if we bear in mind that most
small ?rmowners are conservative borrowers. The key area risk aversion impacts upon is the decision to
growthe ?rm. Here, we can see that women are more afected by social factors such as the desire to
maintain a home-based, part–time business to combine domestic and economic activities. This clearly
afects their growth ambitions. In addition, given that women are likely to begin their ?rms froma lower
capital base, expansion is both more difcult and presents greater risk given a more fragile operating base.
It would appear, then, that women tend to be more risk averse (or less over-optimistic) but to some degree,
this is justi?ed given social and capital constraints.
32. See footnote 14
33. Fraser, S (2004) Finance for Small and Medium-Sized Enterprises: A Report on the 2004 UK Survey of SME Finances, University of Warwick CSME
Working Paper.
34. Davies, S (2012) Women-led businesses; analysis fromthe SME Finance Monitor YEQ1 2012.
35. See, for example, Olsen and Cox (2001) ‘The In?uence of Gender on the Perception and Response to Investment Risk: The Case of Professional Investors’,
Journal of Psychology and Financial Markets, 2 (1), 29-36.
36. Kepler E and Shane S (2007), Are male and female entrepreneurs that diferent? SBA Research Summary No.309, September.
24
RBS Group WomeninEnterprise: ADifferent Perspective
Kate left her career as software logistics designer with a large corporate to begin a newfirmfocused on the design and
implementation of software to manage resourcing problems for manufacturing firms. The newfirmwas based in a business
incubator; funding was required to design, test and market the software packages thus, investment prior to revenue generation
was critical. In Kate’s words:
“My family encouraged me to go it alone and also, drewmy attention to business incubation which I didn’t even knowabout. In
terms of funding, I wasn’t sure - they have regular funding seminars here (events where potential investors make presentations
regarding financial products, meet entrepreneurs and build networks) but I feel I was steered away fromequity funding by the
[incubator] managers and guided towards debt funding – this has actually suited me and I also had quite a lot of personal
finance to help but of course, it has put some limits on what was available to keep us going in the early days.
What I did find slightly annoying was being singled out as different and even special just because I was a woman – I also felt the
[venture] fund managers – who are also men – don’t quite knowhowto deal with women like me. I think the finance package I
got was right for our company as I didn’t want to go too big, I want to keep it manageable, but if I had really wanted to get a big
chunk or equity funding I suspect I would have struggled.”
Box 2 Case study: Innovating resource solutions
3.7 Summary
The evidence suggests that the majority of small ?rmowners adopt a cautious approach to funding.
Therefore, it would appear that for most owners, there is a sufcient supply of funding within the market to
meet their demands. That is not to say that ?rmowners necessarily choose the most cost-efective or
efcient funding option as it would appear that availability and easy access are key in?uences upon the
funding decision. Such preferences are sustainable given that most small ?rms have no growth intentions
and as such, do not pursue more formal sources of either equity or debt funding. On the whole, women-
owned ?rms are no diferent fromthe general population of co-owned, male-owned or family-owned ?rms
in this respect. For example, once the business characteristics (e.g. size, age, sector, risk rating) are taken
into account, women-led businesses do not pay higher borrowing costs than men-led businesses. It is
notable that equity ?nance is a male-dominated bastion – there are relatively fewwomen venture
capitalists and equally, very fewwomen seek or are ofered equity funding. This re?ects their lowlevels of
involvement in the sectors preferred by equity funders. Women’s apparent lack of participation as
innovative entrepreneurial venturers is, of itself, a gendered issue.
3.6 Gender and ?nance
There is no evidence for overt gender discrimination in terms of bank lending, however, it would be
misleading and simplistic to suggest that gender does not matter. It does. The reason why women business
owners are more likely to be concentrated in lowknowledge-intensive services (and so demand lower levels
of ?nance) is a gender issue as it re?ects social expectations of appropriate work for women. As such,
women are more likely to end up in both employment and self-employment which is considered of lower
value and worth. Equally, women are more likely to own part-time and home-based businesses. This again
?ts a gendered pattern as it is more generally expected that women will combine economic activity with
domestic responsibilities. For such reasons, we see far fewer women in growth-oriented ?rms or in sectors
associated with higher added value and in turn, this in?uences their funding needs and choices (see Box 2).
25
RBS Group WomeninEnterprise: ADifferent Perspective
4. Role Models
4.1 Entrepreneurial role model in?uence
The social importance of role models is well established. Such ?gures are celebrated as those who best
capture all the stereotypical expectations we have of howa particular character should look, act and speak.
In turn, if we can identify with any of the various aspects of such role models (whether positive or negative)
it suggests that we too can be like themin terms of achievement, status and social regard. In respect to
entrepreneurial role models, there are very strong representations of ‘the entrepreneur’ which have
changed quite noticeably over recent years.
Looking back to the period after the Second World War, until the 1980s, the entrepreneur was most likely
represented as a so called‘spiv’ – a semi-criminal disreputable character operating on the margins of
society. Since the emergence of the enterprise society in the 1980s, this characterisation has changed
markedly such that the contemporary entrepreneur is portrayed as a positive role model being an
innovative wealth creator fuelling economic growth. Indeed, there are nowpopular television programmes
encouraging entrepreneurship whilst entrepreneurship education is nowdeemed a critical part of the
school and university curriculum.
However, one aspect which has not changed is the persistent masculinity of the ideal entrepreneur
37
. Men
dominate as entrepreneurial role models largely because the stereotypical traits linked to entrepreneurs –
competitive risk takers in pursuit of great wealth – are very strongly associated with masculinity. This is
despite the fact that the so called‘hero’ entrepreneurs – the Richard Bransons, Bill Gates and James
Dysons of this world are relatively rare and whilst certainly entrepreneurial innovators, are CEOs of multi-
national companies – not the sole proprietors and small ?rmowners such as those which dominate all
economies.
4.2 Role model implications
Whilst successful role models act as positive examples to encourage potential innovators to act upon their
ideas, the persistent masculinity within such representations is highly damaging to the aspirations of girls
and young women. Role models indicate howpeople might ‘?t’ into an expected and understood character
– as such, links are made between the role model and the individual. In the case of self-employment,
business ownership and entrepreneurship, it is quite evident that the stereotypical character in this
scenario is a man and as such, this acts to discourage young women who do not re?ect this stereotype –
they feel they do not ‘?t’
38
.
An investigation into the delivery of entrepreneurship education
39
illustrates this argument as within
contemporary universities, the ?gure of the entrepreneur described within research, teaching material,
popular media representations etc. is inevitably male – the small business ‘man’. When women are
discussed, they are singled out as ‘female’ entrepreneurs (thereby suggesting that the‘normal’
entrepreneur is a man). By uncritically incorporating such stereotypes into contemporary role models
within university teaching, not only is the normal entrepreneur con?rmed as a man, this in turn suggests
that only male students can legitimately aspire to these role models.
37. Ahl (2006), as above – see footnote 10.
38. Gupta, V.K., Turban, D. B., Wasti, S.A and Sikdar, A. (2009). ‘The Role of Gender Stereotypes in Perceptions of Entrepreneurs and Intentions to Become
an Entrepreneur’, Entrepreneurship Theory and Practice 33(2), 397-417.
39. Jones, S. (2011). A Bourdieuian Approach to Researching HE Entrepreneurship Education and Gender, Unpublished PhD Thesis: Leeds Metropolitan
University, Leeds, UK.
26
RBS Group WomeninEnterprise: ADifferent Perspective
Nowquite clearly, young women do go on to found newventures but, as was noted at the beginning of this
report, men are twice as likely as women to begin new?rms and this imbalance is evident upon a global
scale. Assessing the content and message of popular role model representations and howthey are used in
the media, education and other in?uential economic and social contexts to promote entrepreneurial
activity is essential to encourage more girls and young women to consider business creation as an
acceptable and accessible career choice. The experiences of Louise Allcroft, the founder and CEOof
Complement Genomics Ltd are a useful illustration of the importance of role models (see Box 3).
4.3 Summary
In summary, role model representations of entrepreneurs are enduring and difcult to challenge. Prevailing
role models re?ect a masculine bias and this is reinforced in popular media, education and government
policy. This needs to change.
“Throughout my time at school and at University I had no idea of what I wanted to do for a career and ended up ‘falling’ into
genetics (which ironically was a subject that I actually found horrendously boring at A-level!). I met my business partner, in 1998
and in 2000, our firm, Complement Genomics Ltd [a DNAtesting business] was founded – and we haven’t looked back since!
Between us we had a good skill set that together complemented each other and allowed us to work well together too.
The early days were very hard. Running a business - any business, whether it is one like ours or indeed, a hairdressers or a shop -
is a very steep learning curve and it can be quite a lonely experience too. Your work colleagues are nowyour employees and you
nowhave this massive obligation to make sure you can pay them(as well as all of the other bills) at the end of each month. Being
a relatively young female entrepreneur was quite difficult for me. (I was 28 when I started.) I often felt ‘inadequate’ in meetings
particularly as 99%of the time these meetings would be men only and men who were in/closer to my dad’s generation rather
than my own. Thankfully, most of the time, I had nothing to worry about – and in some ways my age and gender was an
advantage as it probably took themby surprise to do business with a girl young enough to be their daughter but who actually
owned and was a director of the company that they were about to do business with. They had to listen!
Ever since Complement was formed we have always had fantastic support – not only fromfamily and friends but also fromthe
region. Business Link, ONE North East, Sunderland City Council, the BIC, Entrust, the Entrepreneurs Forumhave been fantastic
in championing CGL not only in the formof financial support e.g. grants and loans but also in being able to just have a discussion
about business ‘in general’ as many of the people in these organisations e.g. the Entrepreneurs Form, have often been there and
done it (or are still doing it!) themselves – and that advice and those anecdotes are worth their weight in gold.
No matter what your business does, no matter howmany £000’s you have at the end of your balance sheet, your problems are all
the same and shared by all businesses alike no matter howbig or small. I was lucky enough to win a place on an Institute of
Directors’ course (Diploma in Company Direction) through another very useful support network, WIN(Women into the
Network) and although the lectures were really interesting and informative what I really enjoyed and learned most fromwas in
fact the other students i.e. other company directors!
Box 3 Case study: Louise Allcroft – Complement genomics Ltd
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RBS Group WomeninEnterprise: ADifferent Perspective
5. Summary and recommendations
5.1 Summary
In this report, we described and reviewed the in?uence of gender upon entrepreneurial intentions, self-
employment and business ownership. Speci?cally, we explored women’s entrepreneurship. Fromthe
evidence presented we found that there are three main gender diferences – in start-up rates, the nature of
the businesses they run and growth intentions. In addition, we found a rather complex picture of business
?nancing and expressed concern regarding popular depictions of entrepreneurial role models. The
evidence is unequivocal regarding start-up rates. On a global scale women are less likely to start new
ventures. Within the UK, women are about half as likely to begin new?rms as men and this ?gure is broadly
in line with the European average but signi?cantly diferent fromthe US where the rates are much closer.
We conclude this re?ects women’s lower base rate of entrepreneurial capital which is constrained by
previous employment, greater domestic/caring responsibilities, plus a lower presence in areas traditionally
associated with self-employment (e.g. construction) and a smaller number of female entrepreneurial
role models.
Regarding growth pro?les, we note that very fewsmall ?rms will ever growand those that do are unlikely to
sustain growth trajectories over time
40
. Notwithstanding this evidence, women are under-represented
amongst such ?rms. We suggest this is, to some extent, sectoral as women are not well represented in
sub-sectors with high value added capacity (but we note that growth ?rms are spread across all sectors).
This in turn re?ects earlier segregation fromareas of education and careers which act as a platformfor
high-growth entrepreneurship. Additionally, the tendency for greater numbers of women to use
self-employment on a part-time or home-based footing to combine caring responsibilities and
income generation with the intention of eventually returning to waged employment mitigates against
growth ambitions.
Analyses of access to ?nance for start-up ofer a rather more complex picture; the evidence indicates that
women are more likely to depend on informal funding, request smaller amounts of debt funding, and rarely
apply for or receive equity funding. Yet, there is no evidence of direct discrimination against women. Sector,
operating pro?le, ?rmsize and business age are crucial in understanding the outcome for
women as they seek external ?nance. Combining all these factors it appears that higher rates of churn of
women-owned businesses ensure a younger and smaller population of women-owned businesses. These
newer smaller ?rms represent higher rates of risk and so are more likely to be denied formal loans; this may
have a further knock-on efect as owners become less likely to consider formal sources of ?nance in
anticipation of refusal.
Firms in sectors which require lowrates of start-up capital and operate part-time and/or are home-based
are less likely to seek formal funding and certainly not equity funding. Given the pro?le of women-owned
?rms, they will tend seek smaller loans which in turn, attract higher costs. Thus, whilst there is no doubt
that gender in?uences the market position of women-owned ?rms (i.e. the size, sector and type of
businesses that they run), women do not pay higher costs than men once these business characteristics
are taken into account.
40. See footnote 12
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RBS Group WomeninEnterprise: ADifferent Perspective
Finally, there is no doubt whatsoever that the very small number of credible and successful female
entrepreneur role models is highly detrimental in encouraging women to consider entrepreneurship as a
career where they will ‘?t’ and be considered credible and legitimate. The dominance of the male role model
is re?ected in popular media, education, research and policy formation. While this is beginning to change,
we still have a long way to go. Until this prejudicial bias is addressed, entrepreneurship will continue to be
presented as a‘man’s world’ where the small business man is the natural representation of the normal
entrepreneur. Institutional pressures position women in disadvantage in relation to entrepreneurship and
self-employment.
In summary, it is not individual women who need special help to change their attitudes towards business
start-up and growth nor indeed is it the prejudicial attitudes of banks which thwart their entrepreneurial
ambitions. Rather, there is a more complex combination of socio-economic factors related to education,
careers, domestic responsibilities and role models which efectively dissuade more women than we might
otherwise expect fromconsidering entrepreneurial activity and self-employment. When they do decide to
set up their own business the evidence indicates that by and large, despite stereotypical and popularised
opinion, there are fewoverall gender-related small ?rmperformance diferences when the context of these
businesses is taken into account.
5.2 Recommendations
These recommendations seek to provide a framework for strengthening the role of women in driving
entrepreneurship in the UK. We do so in the knowledge that many overlap with previous recommendations
and initiatives. But it is clear that more needs to be done if we are to make a long-termsigni?cant change in
the arena of women’s enterprise.
I
Role models: Entrepreneurial role models play a critical role. There have been many examples of how
this can be done successfully: current examples include everywoman and the Female Entrepreneurs
Association (FEA). Some speci?c recommendations for role models include:
– female ambassadors in key business sectors are needed to showcase achievements and encourage
more girls/young women to engage in business ownership as a preferred career;
– Innovations in the portrayal of enterprise and entrepreneurial role models in the media is long
overdue. It needs to move away froma preoccupation with pure entertainment and move towards
the reality of starting and running a successful business;
– Challenging associations between gender and entrepreneurship is imperative. It should not be
special or extraordinary for girls and women to be active in entrepreneurial activities.
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RBS Group WomeninEnterprise: ADifferent Perspective
I
Mentoring: Role models can only go so far. They raise awareness and inspire but they are unable to
deliver the required outcomes on their own. Mentoring is seen as an important way of sustaining
start-ups and building growth ambitions and current provision needs to be strengthened. Finding
appropriate and challenging mentors for women business owners can be difcult. This means
encouraging more women mentors but also raising awareness of gender bias among staf of existing
business support organisations. More schemes such as those within the Inspirational Journey
initiative developed by RBS/NatWest would add value in this area.
I
Non-gender business networks: In addition to women business networks such as everywoman, women
business owners need to be connected to business networks which are not de?ned by gender but by a
shared experience and trust as well as a shared ambition. Business Schools can provide an environment
to enable that to happen but too often they are caught up in the male-dominated corporate world and
are less connected to the host of successful women business owners on their doorstep. Building
networks of growth-oriented small business owners (both women and men) through seminars,
workshops, short courses (delivered in novel ways embracing social media) should be high on the
agenda of all UK Business Schools and colleges. The Gazelle Group of Further Education colleges are a
relatively newand exciting development in this space.
I
Entrepreneurial aspiration: Schools, colleges and universities represent a unique opportunity to foster
entrepreneurial aspiration among girls and young women. There are many enterprise initiatives in the
education sector across the UK, and these need to be supported more intensively and connected to
tangible rewards for young people. The current generation of "born digital" or millennials provides new
opportunities for virtual/online initiatives and "game-i?cation" to encourage engagement. Starting a
business while in full-time education should not be seen as a side-line or extra-curricular activity by
young people but integrated into the core curriculumwith the appropriate rewards. The developing
national network of ‘enterprise academies’ provide an opportunity for those with a speci?c interest in
entrepreneurship to develop their skill sets in very diferent ways.
I
Business ?nance: Funding remains an issue for business owners and there would appear to be a
particular need to ensure that the ?nancial institutions are responding to the needs of women business
owners. However, the picture is complex and it is sometimes unhelpful to analyse simply by a gender
split. Astronger emphasis upon evidence which challenges assumptions of gender discrimination is
vital including developing a more robust analysis of data regarding the use of ?nancial products,
including termlending which looks at gender in the context of business age, sector and size.
Contact us at:
[email protected]

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