Entrepreneurship Mgt. (2006) 2: 429–439 DOI 10.1007/s11365-006-0007-y
Guest editorial: Female and ethnic minority entrepreneurship Nerys Fuller-Love & Lynn Lim & Gary Akehurst
Published online: 20 October 2006 # Springer Science + Business Media, LLC 2006
Abstract There has been an increasing level of interest in diversity in small business enterprises. This diversity has been largely focused on female and ethnic minority entrepreneurs. Although there is evidence that female entrepreneurship can have a positive impact on economic prosperity, levels of earnings remain low. The articles in this special issue further our understanding of female and minority entrepreneurs. They examine important topics such as the differences between male and female entrepreneurs in terms of confidence, growth expectations, entrepreneurial orientation and social capital, developing management skills in female entrepreneurs, their management competencies and refugee entrepreneurship. Keywords Women . Entrepreneurship . Social capital . Business skills . Refugees
Introduction Entrepreneurs are a diverse group whether they are men or women, those from different ethnic backgrounds, social groups, types of business, or geographical areas. They range from the self-employed sole trader with no employees to those employing a relatively large and well-organised workforce. They start a business for a variety of reasons, some may spot an opportunity, some are motivated by wanting to make money or flexible working hours, others may want to employ family members or feel they have no other option. It can be difficult to start a business in any circumstance yet there is evidence that some groups may find it more N. Fuller-Love (*) : L. Lim : G. Akehurst School of Management and Business, University of Wales, Aberystwyth, UK e-mail:
[email protected] L. Lim e-mail:
[email protected] G. Akehurst e-mail:
[email protected]
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difficult. Women, some ethnic minority groups, the disabled and those in rural areas may all face some degree of additional problems in trying to start a business. Access to resources, including finance, labour and markets, may be more difficult for some groups. What factors can explain the gap in the numbers of men and women starting a business? One of the major hurdles for women is acquiring resources, particularly finance for their new venture. Women, traditionally, have found it difficult to raise finance and today, only a small percentage of women success in raising venture capital (Brush, Carter, Gatewood, Greene & Hart, 2004). Interest in female entrepreneurship in particular has been increasing all around the world and women play an increasingly important role in entrepreneurial activity. One of the more fascinating elements of research into female entrepreneurs is to discover how women differ from their male counterparts. Another aspect of current research is to discover the characteristics of female entrepreneurs and to provide policy insights to support and encourage them. The Global Entrepreneurship Monitor (GEM) report on Women and Entrepreneurship (Minniti, Arenius & Langowitz, 2006) found that men are twice as likely as women to be engaged in entrepreneurial activity. For example, the rates of male business owners in the UK were 14.24% and female 5.82%. There are also sectoral differences as women are more likely to be engaged in the consumer-oriented sector than men. Of those with established businesses, the highest female participation rates were Thailand with 13.2% and China at 10.3%. According to this report (Minniti et al., 2006) fewer women than men know other entrepreneurs and believe they have sufficient skills to run a business. This suggests that men are more confident in their abilities than women and also have better business networks. Therefore, the availability of networks and enhancing skills for female entrepreneurs may be very important. Developing confidence in female entrepreneurs and addressing their fear of failure may also be important. The increase in female and ethnic minority entrepreneurship is likely to have a positive effect on economic development. All over the world, women and people from different ethnic backgrounds are successfully starting new business ventures. Entrepreneurial activity various across countries and there are different motivations for starting a business. Women’s business ventures are more likely to be in the service industries, for example retail and health and beauty. Education and training may be an important factor in providing female entrepreneurs with more resources and confidence so that they can venture into more high-growth, high-technology businesses. The perspectives presented in this special issue illustrate some important points. First, the problems faced by under-represented groups such as women and ethnic minorities in trying to run their own businesses. They investigate the reasons why women are less likely to grow their businesses and start businesses using high-technology, whether entrepreneurial orientation and social capital affect the growth prospects of women-led businesses, whether female entrepreneurs gain a positive benefit from participation in entrepreneurial and business skills programmes, and what type of refugees are more likely to consider starting a business.
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Key questions they address include: 1. Are growth expectations higher for male nascent entrepreneurs than for female nascent entrepreneurs? 2. What is the contribution of non-economic resources (entrepreneurial orientation and social capital) to the success of small firms and are there any differences between male and female owners? 3. Do female entrepreneurs gain entrepreneurial and business skills and knowledge after completion of an enterprise training programme? 4. Are there any differences in managerial competencies of male and female entrepreneurs? 5. Is there a potential of refugee entrepreneurship? What type of refugees are likely to consider starting a business and would they be able to earn a reasonable income?
Background to this special issue The impetus for this special issue came from a research project which aims to develop entrepreneurial skills in female entrepreneurs in Ireland and Wales. Initial results from a survey of female entrepreneurs in Ireland and Wales confirm the findings from all over the world. Firstly, the level of female entrepreneurship is relatively low compared to men, they engage in low growth retail and service sectors and they have lower confidence than their male counterparts. The results of an initial survey of female entrepreneurs show that the respondents are concentrated in the retail sector in Ireland and the tourism and hospitality sector in Wales. Only a very small proportion of the respondents were involved in manufacturing. However, a large proportion wanted to grow their businesses although almost half were sole proprietorships which indicate that the businesses are relatively small. The majority of the respondents had a positive attitude towards risk and agreed or strongly agreed that men found it easier to raise finance. Some of the motivations for running their own business included flexibility and a better lifestyle. In view of running a business for profit and growth, the majority agreed that a female entrepreneur runs a business for profit and disagreed with the statement that women are less likely to grow a business than men. The primary objective of this research is to develop management skills in business and support and encourage female entrepreneurs to develop high-growth, high-technology and high value-added businesses. The joint development between two countries, Ireland and Wales, will give an opportunity to study the differences and the similarities faced by female entrepreneurs. The call for papers for this special issue was designed to inform this process and to give other researchers in this area of study the opportunity to publish their work. The articles included in this special issue were subjected to a review by anonymous referees and the editors want to thank those who contributed to the review process, in particular Bill O’Gorman, the co-ordinator of the Irish female
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entrepreneurship project, who reviewed several papers. We believe that the articles in this issue significantly advance the field of female and ethnic minority entrepreneurship.
Topics and articles in this issue The articles in this issue address various issues regarding female and minority entrepreneurship and increase our understanding of the following issues (1) the difference in growth expectations between female and male nascent entrepreneurs (2) the difference in entrepreneurial orientation and social capital between female and male entrepreneurs (3) an investigation into whether participants of a female entrepreneurship programme gained entrepreneurial and business skills and knowledge (4) the managerial competencies in male and female entrepreneurs (5) the potential for entrepreneurship amongst refugees.
Gestational activities One of the fundamental research questions about female entrepreneurship is the extent to which they differ from their male counterparts. Two areas where differences have been noted are growth and technology. Although women have similar growth expectations to men, in reality they grow more slowly than male-led new businesses and employ fewer employees (Minniti et al., 2006). Matthews and Human (2000) found no differences as regards to growth expectations and Kollinger and Minniti (2005) found little support for the theory that women were more prone to ‘fear of failure’ (Wagner, 2004). Previous research in North America (Carter & Brush, 2004; Menzies, Diochon & Gasse, 2004) found that women tended to major in health related subjects whereas men were more likely to study science, computers and technology. There is evidence to suggest that women are more likely to use existing technology and use less start up capital (Minniti et al., 2006). This article, (Menzies, Diochon, Gasse & Elgie, 2006) is a study of nascent entrepreneurs in Canada, investigating the gender differences regarding personal characteristics and gestational activities, as well as characteristics of the business and the start-up activities. Logistic regression was used to predict the creation of an operating business according to gender and other variable. The methodology is robust in that it is a longitudinal study over five years based on a randomly selected sample. During this time the respondents were asked if the business had been operating at a profit for six months, including paying a salary to the entrepreneur. The results found significant differences in university education with men choosing applied science and computers and women focusing on health related subjects. Men estimated a higher probability that their business would be operating in five years and men had more start-up experience, were more likely to own their own homes and had more friends and neighbours with businesses. Women, unsurprisingly, spent more time on household tasks.
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This study appears to confirm stereotypical views of men and women entrepreneurs i.e., that men are more interested in science and technology, particularly when choosing university degrees. Women were also more likely to focus on local customers than men, who were more optimistic about having international clients. Other factors such as the completion of a business plan, hiring employees or duration of gestational activities were the same for both male and female entrepreneurs. However, one of the critical factors appeared to be the higher degree of confidence amongst the male entrepreneurs. This confidence may be because the male entrepreneurs were more likely to own a home, be less burdened by domestic responsibilities, have expectations that the business would succeed in the long term, using technology, greater networking opportunities etc. On the other hand women were more likely to achieve an operating business and were better prepared, especially if they were members of a team. This article has investigated an important area for the understanding of female entrepreneurs and highlights the need for more empirical research into the process of creating a new venture, especially by female entrepreneurs.
Entrepreneurial orientation and social capital The concept of entrepreneurial orientation includes three dimensions—innovativeness, risk taking and proactiveness (Covin & Slevin, 1989; Miller, 1983). Women have been found to be similar to men in terms of entrepreneurial traits (Fagenson, 1993; Masters & Meier, 1988). In terms of social capital, Daniel (2004) found that women had better communication and people skills. Social capital can help to create competitive advantage for the firm (Nahapiet & Ghoshal, 1998). Menzies et al., (2004) found no differences between male and female entrepreneurs in their social contacts. However, this social capital does not appear to have a positive effect on women’s ability to raise venture capital (Brush et al., 2002) and their businesses generally have fewer employees and low revenues (Fischer, Reuber & Dyke, 1993). This article (Runyan, Huddleston & Swinney, 2006) looks at whether there are any significant differences in entrepreneurial orientation between male and female small business owners and whether this has an effect on the firm’s performance. For small business owners, the ability to exploit intangible resources such as social capital may increase the chances of success for women. The methodology for this study included four focus group interviews with small business owners to develop the questionnaire for the survey. Nine entrepreneurial orientation scores were used, focusing on innovation, proactiveness and risk-taking. Social capital constructors including reciprocity were measured in order to measure the extent to which small business owners felt that local customers patronised their businesses due to built up social capital. Shared vision was also measured as well as the density of network ties. Homophily i.e., the degree to which respondents felt that other network members shared their values, was also measured. Small business performance was measured using three indicators adapted from Frazier (2000) and Niehm (2002), the performance of their firm compared to last year, compared to major competitors and compared to other firms in the industry. The survey results showed that there were
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significant differences in the levels of entrepreneurial orientation between men and women in that females reported higher levels of both innovativeness and risk taking. Females also reported higher levels of social capital. Both entrepreneurial orientation and social capital were significant and positive indicators of firm performance but there was no difference between male and female small business owners in their utilisation of these to improve the performance of their business. This study focused on retail small businesses which are more likely to be owned by women. The female entrepreneurs reported significantly higher levels of shared vision and reciprocity confirming earlier research (Daniel, 2004) that women have better networking skills than men, especially in building relationships with others. However, no difference was found in the density of networks, the number of ties and the degree to which network members interact with each other and homophily, the degree to which business networks members share their outlook on life, values and business philosophy. Although women reported higher levels of entrepreneurial capital and social capital, the lower levels reported by the male respondents did not appear to affect their firm’s performance. This raises the question of whether women achieve the same levels of success than men due to greater entrepreneurial behaviour. This article makes a significant contribution in terms of understanding whether female entrepreneurs can gain the necessary resources to participate in highgrowth sectors by using entrepreneurial orientation and social capital.
Entrepreneurial and business skills There is some evidence to suggest that women are disadvantaged in both entrepreneurial option and entrepreneurial choices e.g. sources of capital and training, and that minority women are more disadvantaged than white women (Smith-Hunter & Boyd, 2004). Blenker, Dreisler and Nielson (2003) found that a lack of information and education is a problem for most female entrepreneurs and Stanger (2004) found that the use of government services as a source of training and assistance for women was low, whereas professional sources of training and assistance were more frequently used by women. O’Neill and Viljoen (2001) suggested that there should be specially developed female entrepreneurship programmes and training should be skills and sector based, linked to mentoring and after-care, and that training for the less educated should also be considered. This article (Botha, Nieman & van Vuuren, 2006) investigates whether the entrepreneurial group had gained entrepreneurial as well as business skills and knowledge after the completion of an entrepreneurship training programme and also, whether there are significant differences between those who took part in the programme and those who did not. Six different groups from different provinces and ethnic groups in South Africa took part in this survey. There were two groups, the experimental group and the control group which were both as similar as possible in terms of age, experience skill levels etc. The sample included already established, start-up or potential entrepreneurs, female entrepreneurs with high-growth potential and women whose training needs matched the training content of the programme. The methodology consisted of three different questionnaires, one administered
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before the training took place to measure the level of knowledge and skills as well as training expectations and needs, one after the completed programme to measure their behaviour and attitudes and one six months later to measure their business’ performance. The majority of the experimental group were more educated than the control groups. This may have been because of the selection criteria for the programme. A large proportion of both groups were black or coloured and the majority were also married. The experimental group were more likely to start their own business or another business and also their business were more likely to survive. The majority of the experimental group had businesses in the service or retail related industry, the construction industry and the food or catering sector, whereas the majority of the control group had businesses in the construction and manufacturing industry, followed by the service or retail and the food or catering industries. The results of the survey showed that the experimental group obtained entrepreneurial and business skills after taking part in the programme. The business knowledge obtained included drawing up financial statements, human resource management, business failure signs and causes, financial and cash flow management, break-even analysis, risk orientation, general management, marketing, growth, opportunity identification, competitive advantage, business planning, creativity and innovation, problem solving, legal issues, role models, networking etc. The experimental group improved more than the control group after attending the programme in terms of business systems and strategies, financial indicators and change orientation. This study showed that the experimental group gained entrepreneurial as well as business skills and knowledge after participation in the programme. The results also showed that the experimental group had gained more knowledge and skills six months after the programme compared to the control group. This study is interesting in that it has used a control group to measure the effectiveness of the entrepreneurial programme so that those who participated can be compared to those who did not. This article makes an important contribution to our understanding of the benefit that female entrepreneurs can gain from improving their business skills.
Management competencies All entrepreneurs, whether male or female, need a set of skills so that their business can survive and prosper. Encouraging business skills has been a cornerstone of government initiatives to help encourage and sustain the small business sector. There is also a need to update some skills, for example, technological skills so as to remain competitive (Gibb, 1997; Smallbone, 1990). In a very small firm, the ownermanager is the person doing most of the tasks and for many entrepreneurs they are seen as ‘the business’ (Stockdale, Rowe & Walker, 2004). McGregor and Tweed (2001) found that owner-managers in business believed they had good managerial competencies. However, small business owners may be reluctant to participate in training for a variety of reasons including time, cost and content. For most small business owners, the training needs to be practical and relevant to the business.
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The article by Walker and Webster (2006) aims to identify the current participation level of managerial competencies of participants at two points in time, when they started their business and their perception of their current managerial competencies. The survey was randomly distributed to small business owners in Western Australia. The women had generally been in business for less time than the men and had a higher level of education. Women generally rated themselves significantly higher on customer service, managing people, and computer and internet skills. This may reflect previous administrative experience (Winn, 2005). Despite rating themselves highly on most skills, the business owners had relatively little formal training in those areas. Respondents felt most competent in the areas of customer service and people management skills and least competent in electronic commerce skills. There were few gender differences, except for females reporting higher levels of customer service skills. Once they were running a business, the requirement for accounting and book-keeping skills increased, especially for women. Although most of the respondents rated themselves competent or very competent on all items of current competencies, they also stated they required further training in all items. In terms of training required, there was no difference between male and female respondents. The surprising result from this study is that most of the small business owners considered themselves to be managerially competent. This is despite the fact that the majority of the businesses were very small. Women generally owned smaller and younger businesses than the male respondents. They were also focused on the retail and service industries. Women rated themselves more competent on the softer management skills such as people management and information technology. Once in business, women are more likely to acknowledge that they need further training in most managerial competencies. However, both female and male business owners, acquiring those skills is low on their list of priorities. The problem is encouraging the small business owner, whether male or female, to make the investment in improving their managerial competencies. This article makes an important contribution to the literature on management competencies, especially for female entrepreneurs.
Refugee entrepreneurship The number of refugees entering countries in Western Europe has increased over the last decade. These people usually find it difficult to get a job and setting up their own business can help with integration in the community (Kloosterman & van der Leun, 1999) and provide them with a source of income. There has been considerable research about ethnic minority entrepreneurship (Portes, 1995; Waldinger, Aldrich & Ward, 1990) but very little research has been carried out into refugee entrepreneurship. Refugees flee their country because they are persecuted whereas immigrants leave their country for better prospects elsewhere. The social networks are likely to be less extensive than for immigrants (Gold, 1992). They are unable to go back to their own country for more funds, or other resources and they may have experienced trauma which leaves them with psychological problems (Hauff & Vaglum, 1993). If
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they had to leave their own country suddenly, they might not have been able to bring some things with them such as money, assets or things they need to find employment, such as certificates. Wauters and Lambrecht (2006) look whether there is a potential for entrepreneurship amongst refugees, what types of refugees are likely to want to start a business and whether these business enable them to earn a reasonable income. Some immigrants settle in a country with the express intention of setting up a business, although this does not apply to refugees. Other ethnic minorities see an opportunity to supply the needs of the ethnic community. They may also be influenced by role models or have other reasons to set up a business. Refugees see that setting up a business gives them more opportunity to integrate in the community. The authors hypothesize that refugee entrepreneurs are likely to be older, male and start a business in sectors with low entry barriers, and earn less than other self-employed immigrants. A survey was carried out amongst refugees and asylum seekers in the Reception Area for Newcomers in Flanders where all the incomers are required to follow courses to facilitate their integration into society. The authors developed a formula for calculating the appetite for entrepreneurship. The main reason for becoming an entrepreneur was to integrate into the Belgian society. Other reasons for becoming entrepreneurs included the attractiveness of entrepreneurship i.e., being one’s own boss. Economic response reasons such as a market opportunity had lower scores, probably because refugees are not well integrated into the community. The main reasons for not considering becoming self-employed were that it was too difficult for a refugee or immigrant and that there was too much uncertainty about their future. Other reasons included that they did not have sufficient financial resources and there was too much red tape. Some thought the risks were too high and that they were not suited to be entrepreneurs. The authors reported that the majority of male refugees who have a history of self-employment and whose family members are self-employed probably or definitely want to start a business. However, only a small percentage of female refugees who have no history of self-employment and no self-employed family members definitely or probably want to start their own business. This study shows that self-employment in the past, family members who are self-employed and gender are the factors that influence their propensity to become entrepreneurs. This is not very different to the reasons that influence the rest of the population but it shows that there is a potential for entrepreneurship amongst refugees. This article highlights that refugees may have additional problems to overcome if they want to start a business and makes an important contribution to the literature on ethic minority entrepreneurship.
Conclusion Female and ethnic minority entrepreneurship has become an increasingly popular subject over the last few years. The contribution that previously under-represented groups can make to economic prosperity is now recognised and there is now a greater understanding of some of the hurdles that they may face in trying to set up
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their own business. Females are particularly under-represented as business owners, and even when they do start a business, their earnings and number of employees are lower than male entrepreneurs. Women are also less likely to enter into high-growth, high-technology businesses. There are now many initiatives, support and training programmes to help women getting into business. This volume represents recognition that there is a need for further research on female and ethnic minority entrepreneurship. The articles lead us to the conclusion that there are many other issues to consider when dealing with groups that are under-achieving with regard to setting up and growing a business. Some of the reasons for this include the fact that men are more confident and, although women are better at social contacts, men have better business networks. Although women appear to have similar entrepreneurial orientation, men appear to achieve the same or better performance. Managerial skills and competencies may help to improve the firm’s performance and taking part in an enterprise skills programme has a benefit in terms of increased knowledge for the participants. However, both male and female entrepreneurs may have a higher perception of their managerial competencies than the performance of their businesses would confirm. Finally, these articles show that for some groups, such as refugees, the hurdles to self-employment may be particularly difficult to overcome. While female entrepreneurs continue to make progress, it is clear that there are many avenues to explore in future research to further our knowledge and to help develop policy initiatives.
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