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Australia, No 2 behind the US in support for women's entrepreneurship

05 July 2013

Traditional BEE assessments (such as The World Bank's Doing Business indicators or the Heritage Foundation's Index of Economic Freedom) are "gender-blind," thus ignoring both the legal and cultural impediments that exist for women in many countries when they attempt to start or grow businesses.

At the same time, gender equality indices (such as the World Economic Forum's Global Gender Gap reports, the Economist Intelligence Unit's Women's Economic Opportunity Index, or the UN's Gender Empowerment Measure) do not include entrepreneurial measures among the factors assessed.

Interestingly, the top-ranked countries in each of these two distinct types of environmental assessments share exactly 0 countries in common. (See the paper, "Assessing Business-Enabling Environments: How Gender Changes the Equation," presented by Womenable CEO Julie Weeks in 2011 at both an academic conference and a meeting of national policy institutions.)

Now, into the breach, comes an exciting new project: Gender-GEDI.

Spearheaded by a team at George Mason University that also developed the Global Entrepreneurship and Development Index (hence GEDI), this new index consists of 30 evaluation factors, aggregated into 15 pillars and three main environmental elements: entrepreneurial environment, entrepreneurial eco-system and entrepreneurial aspirations.

The pilot effort assessing the individual, institutional and legal environment for high-potential women's entrepreneurship includes 17 countries - picked to represent a range of regions and development contexts. Here's the list in descending order of performance.

1 United States

2 Australia

3 Germany

4 France

5 Mexico

6 United Kingdom

7 South Africa

8 China

9 Malaysia

10 Russia

11 Turkey

12 Japan

13 Morocco

14 Brazil

15 Egypt

16 India

17 Uganda

The new analysis underwritten by Dell, was released at its 4th annual Women's Entrepreneur Network gathering, held in Istanbul, Turkey. Womenable was pleased to have played a role as an advisor on this effort, and we look forward to expanding the analysis to additional countries in the future (pending funding, of course!)

Index Highlights

No single determinant of success

Top performing countries including the US (No. 1) and Mexico (No. 5) scored consistently well across a wide range of indices, compared to low-performing countries, which were much more inconsistent. For example, India (No. 16) scored relatively high for "opportunity recognition," suggesting that the female population recognizes good opportunities for businesses where they live, but received low scores relating to "institutional foundations," indicating that the women's ability to act on those perceived opportunities is limited.

Economic development is not enough

Being strong in key areas such as legal rights, education and access to finance do not automatically result in high-potential female entrepreneurship. In some countries, the business environment for success is right, but female entrepreneurship is still low. This is often due to social and cultural norms that make it less conducive for women to become entrepreneurs. Japan, the UK and the US are all high income countries but Japan has the lowest percentage of female managers (9 percent) compared to the U.S. (43 percent), leaving many women in Japan without the experience and skills to start their own businesses. This is the same for other low-performing countries: Turkey (10 percent), Egypt (11 percent) and Morocco (13 percent).

Lack of knowledge holds back business growth

There is a trend among less educated females in developing countries to take advantage of entrepreneurial opportunities, but without education they lack the skills to move their businesses beyond the micro level. With the exception of Japan (63 percent), only a relatively small percentage of female business owners in the low-performing countries are highly educated: Morocco (2 percent), Brazil (12 percent), Uganda (7 percent).

Access to finance is crucial

Few women have bank accounts in low-performing countries: Egypt (7 percent), Uganda (15 percent), India (26 percent) and Morocco (27 percent). This compares to almost 100 percent access in the top-performing countries, other than Mexico (22 percent). However, even in countries where access to a bank account is high, venture capital funding is still low. For example, in the U.S. only 3-5 percent of venture financing goes to women-owned businesses.

Effective networking can open doors

Networking with other entrepreneurs and having access to the Internet helps create opportunities for female entrepreneurs. In particular, the Internet provides new ways of networking that eliminate temporal and geographic, as well as gendered social constraints, that can limit women's access to information and resources. In the U.K., 78 percent of Internet users are women, compared with less than 7 percent in India and Uganda.

Technology enables business growth

Technology is an essential component for fostering high-potential female entrepreneurship. While research and development does not guarantee successful growth, without systematic research activity, new product development and future growth will be inhibited. Turkey and Egypt scored very low in this area while Japan and the U.S. scored highly. Technology has also made it cheaper than ever to start a business and removes many of the social and physical barriers women must overcome to start their own businesses and connect with the resources they need. Entrepreneurs need scalable technology solutions that enable them to accelerate the growth of their business to succeed.

Not all rosy at the top

Despite ranking high on the Index, even top-performing countries have room to improve before they can achieve parity across all areas and fully unlock the contribution female entrepreneurs can deliver. For example, France and the U.K. have much lower ratios of female to male startups (48:100 and 46:100 respectively) than the U.S. (71:100) and Australia (85:100) showing that a large gap of "underutilized entrepreneurship potential" remains, and the U.S. and U.K. need to improve the number of women graduating with science degrees (41 percent and 37 percent respectively) in order to prepare a larger pool of tech savvy high-potential female entrepreneurs.

Room for optimism

A lower relative GDP doesn't dictate the success of women entrepreneurs; some countries like Mexico (No. 5) ranked much higher than others with a similar economic and cultural profile, e.g. Brazil (No. 14), suggesting that improving access to resources and providing a favorable business environment can have a major impact.

For more

Click on the link to learn more about Gender-GEDI and to download and read the 22-page white paper.

Julie Weeks is a Ruby member and the CEO of Womenable. Her online business, based in the US, is a research, program and policy developmentconsultancy focussed on improving the environment for women-owned businesses worldwide.