Wind Beneath My Wings: Factors Affecting the Transformation of WomenFounded Businesses into Gazelles1 Susan Clark Muntean, Ph.D.

Abstract Productive entrepreneurial activity translates the ideas, creativity and skill sets of women who exploit market opportunities into high potential, high growth ventures. This in turn generates job creation and wealth, stimulating a positive cycle of well-being and opportunity creation for the country. While numerous comparative studies have measured women’s participation in starting or owning a business, the factors stimulating their engagement in highly productive entrepreneurial activity have been understudied. In this paper, I argue that three institutional and cultural factors influence the decision calculus of women to found and grow their businesses: legal and social status, institutional presence and domestic support. Preliminary findings suggest that countries that provide the requisite institutional and cultural support enjoy higher levels of opportunity-based entrepreneurial activity overall relative to countries lacking this support.

Author Bio Susan Clark Muntean is an Assistant Professor of Management and Entrepreneurship at Ball State University in Muncie, Indiana, U.S.A. Prior to joining Ball State and after completing her Ph.D. in Political Science at the University of California, San Diego in 2009, she was a Fellow in the Management Department at the London School of Economics. Comments and suggestions are appreciated and should be sent to [email protected].

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Paper presented at the 56th Annual International Council for Small Business World Conference in Stockholm, Sweden, 15-18 June, 2011. The term ―gazelles‖ describes small firms that grow quickly and create jobs, and is attributed to David Birch. 1

Introduction This research was motivated by the following observations of the author: countries that rank lowest on measures of economic prosperity and entrepreneurial opportunity are also those in which women tend to be marginalized and poorly treated. Conversely, countries that rank at the top of the list in prosperity and opportunity-driven entrepreneurial activity lead the world in measures of gender equality. The following question emerges from these observations: might opportunity-seeking women entrepreneurs help explain variation in innovation and opportunitydriven economic prosperity across countries?

If women are empowered to exploit market

opportunities, many will choose to do so and collectively this half of the population will significantly enhance overall prosperity in any given country. On the other hand, in countries where women are discouraged from or denied the opportunity to found prosperous businesses, the economy will stagnate and/or falter. This paper‘s focus is primarily on macro-level factors that promote the establishment of gazelles—high growth, high-impact firms—among women. Women may start a business or become self-employed for myriad reasons, including out necessity and lack of better employment alternatives, a desire for flexibility, to break the glass ceiling, or to pursue a hobby or ―lifestyle‖ business. Women who found and grow firms in order to exploit observed market opportunities are more likely to engage in high-growth, high impact entrepreneurial activity. These women are the most likely to seek outside financing, innovate, hire employees and expand into new product and service lines. In addition, they are the most likely to become serial entrepreneurs. These outcomes are all desiderata from an economic perspective. Successful women entrepreneurs attain wealth and the freedom such wealth brings, enabling them to attain high status, which in turn increases their influence over outcomes in the economic, political and social sectors. These outcomes are desirable from normative and feminist perspectives. 2

Three important factors that influence the engagement of women in productive entrepreneurial activity warrant further study: legal and social status, institutional presence and domestic support. Public policies, institutions and practices affecting these three factors either promote or inhibit the propensity of women to start businesses, as well as their productivity and likelihood of success once they found a business. Social and cultural factors affect the level of political and institutional presence and domestic support women are able to attain in the first place, but these variables are more difficult to quantify and are slow to change. Individual level variables, such as personal motivations, personality characteristics and demographic information, which have dominated the bulk of research on women entrepreneurs thus far, are the least responsive to public policy interventions (Ahl 2006). The granting and protecting of property rights, the appointment of women to high level positions of authority in both the public and private sectors, and family policies enabling higher levels of entrepreneurial participation, on the other hand, are all more amenable to public policy interventions and are critical to increasing the level of productive entrepreneurial activity among women across the globe. In this paper, I provide preliminary comparative cross-sectional data analysis to support these arguments. In the next sections, I explore the current knowledge about this important topic, describe preliminary research results from available data sources, discuss the limits of these sources and suggest a future research agenda.

Literature Review The amount of research on women-owned businesses and women entrepreneurship itself is sparse (approximately 6-7 percent of all publications in the top entrepreneurship journals) and scholarly research on legislation, public policies and governmental programs that impact the

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quantity and quality of women‘s entrepreneurial activity is almost non-existent (De Bruin, CG Brush, and Welter 2006). In a recent study of 435 academic articles published in entrepreneurship journals and conference proceedings, only 28 focused on women-owned businesses, and of these 28, only two of these examined the governmental and public policy factors influencing women‘s entrepreneurship (CG Brush and Edelman 2000, 453). This is surprising, given women own or are joint owners in approximately 40 percent of all privatelyheld businesses in the United States, and greater than 30 percent of businesses in numerous other countries (Sources: Center for Women‘s Business Research, 2008; (De Bruin, CG Brush, and Welter 2006)). The research on women-owned businesses focuses primarily on individual women—their motivations, personal characteristics, management styles, and supposed shortcomings and difficulties, including managing family issues and attaining financing; unlike the greater body of entrepreneurship literature, ―contextual and historical variables affecting the business such as legislation, culture, or politics are seldom discussed‖ in the work on women entrepreneurs (Ahl 2006, 605). This paper is an attempt to illuminate a path to further explore this gap. Several studies have been conducted that analyze comparative differences in rates of entrepreneurial activity across countries, but these do not contribute to our understanding of why there are differences in rates of entrepreneurship by gender from country to country, nor are there theories explaining a relationship between the treatment and status of women and the level of productive entrepreneurial activity overall (Hofstede et al. 2002; Baumol 1990; Lee and Peterson 2000; Acs, Audretsch, and Strom 2009). Another body of literature assesses motivations for, experiences with and differences in rates of business start-up, including productive entrepreneurial activity by gender, although most of these studies are limited to a single country

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or a small region within a country and a narrow range of variables (Gundry and Welsch 2001; Tan 2008; Morris et al. 2006; Alsos and Ljunggren 1998; Zapalska 1997; Welter et al. 2003). Since few studies are comparative, there is limited capacity to compare differences in national policies, institutional and cultural factors that either promote or inhibit productive entrepreneurial activity among women. Comparing relative rates of women‘s productive entrepreneurial activity—in order to understand why some countries provide rich soil and others rocky terrain— represents a gap in the entrepreneurship literature. A global research agenda on women-founded businesses is emerging, although clearly greater theorizing and empirical research is needed (CG Brush 2006; Ahl 2006). Contributors to the literature on women-founded and managed gazelles typically select only from the most successful women entrepreneurs and provide personal accounts of the reasons for their success; these accounts do not tell us, however, why similarly resourceful women do not choose to or are not able to start a business, and of those who do found a business, choose to limit its growth or attempt to grow the business but fail to transform it into a gazelle (Silver 1994; Koplovitz 2002). Gender-based studies of entrepreneurship look at the internal factors behind the proclivity towards entrepreneurial activity by gender, such as motivations and personal characteristics, and internalized cultural norms (Manolova, CG Brush, and Edelman 2008). One body of thought claims women differ from men in their social capital and networks, both of which are critical to entrepreneurial success (Elam, CG Brush, and Welter 2010; Weiler and Bernasek 2001; Katz and Williams 1997). Another body of thought claims that women founded businesses differ (for example, are smaller) primarily because gender is problematic for women in accessing venture capital or bank loans (PG Greene et al. 2001; Read 1998; BJ Orser, AL Riding, and Manley 2006; Alsos, Isaksen, and Ljunggren 2006; Prasad 2009; Fabowale, B

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Orser, and A Riding 1995; EJ Gatewood et al. 2009). Yet myriad institutional and cultural factors affect the proclivity of women to start and grow their own business; the ability to obtain capital and access to networks, I posit, are in part consequences of these underlying factors, which vary by country. As stated by the researchers at the Economist Intelligence Unit, ―cultural norms and attitudes play a role in determining a woman‘s economic opportunities…attitudes towards women often supersede laws designed to protect them‖ (The Economist Intelligence Unit 2010, 34). Further evaluation of existing laws and public polices is needed, as well as cultural attitudes and norms that inform and shape the legislative and policy process and outcomes. Few studies look at the internalization and institutionalization of cultural norms concerning the roles of women, which affect both their entrepreneurial motivations and economic choices, as well as the availability of resources to support their productivity. If women state that they are primarily motivated to start a business in order to better balance work with family life, or that they seek to keep their businesses small and manageable in order to dedicate their time to domestic responsibilities, this response itself is not questioned. Another question begs to be asked: if these women had expectations of equity with men in cultural, domestic and institutional support, would they be differently motivated and would their decision calculus change?

Problem Formulation: Arguments and Hypotheses Legal and Social Status The legal and social status of women is critical in determining what potential economic opportunities are available to them. For example, the degree to which property rights are

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available to women and how well they are enforced in practice are important determinants of the incentives to engage in entrepreneurial activity. To maximize entrepreneurial activity in any country, property rights must be strongly and consistently protected such that women are provided the full capacity to reap the benefits of their labor. It is a necessary but not a sufficient condition to have legislation protecting their property rights. Without trust in the enforcement of property rights, an entrepreneur cannot effectively reap the gains from exploiting market opportunities, and the venture is not likely to expand beyond a subsistence business. These rights must be enforceable and widely respected and upheld in practice, such that individual women know a priori that they will be able to both control their firms and reap the full rewards from their business successes. Important elements of a woman‘s legal and social status include the rights to obtain, manage and invest collateral, which includes the full range of real and personal property (that is, land, buildings, machinery and fixtures) and intangible property (that is, stock, savings and checking accounts, patents). Unequal access to land ownership, inheritance and registration of property as well as unequal decision-making rights over assets and shared property in practice prevent women from using these as productive assets in the business as well as preventing these assets from being used as collateral for securing bank loans. The most compelling explanation for gender discrepancies in bank lending is the relatively lower availability of collateral held by women relative to that held by men (Ahl 2006, 603; Fabowale, B Orser, and A Riding 1995; PG Greene et al. 2001). According to Women‘s World Banking, once women in places such as Kenya and Ghana are able to obtain savings accounts in their children‘s names and to use these as collateral, the amount of entrepreneurial activity among these women increases (Campbell 2007). Control over savings accounts—a basic property right—enables these women to use this property as collateral for bank loans to fund

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their businesses. Women founders of high potential businesses may be even more resource dependent, as opportunity-driven women are believed to begin with a more lucrative bundle of resources (that is, collateral and property rights protecting this collateral) relative to women driven into business ownership out of necessity (De Bruin, CG Brush, and Welter 2006, 586; Minniti, Arenius, and Langowitz 2005). These arguments lead to the following testable hypothesis: Hypothesis 1:

Higher legal and social status of women will lead to higher levels of

productive entrepreneurial activity, ceteris paribus.

Institutional Presence The second factor of importance is the status of women in the culture, as measured by their presence (or absence) in the institutional hierarchy. A society that maximizes the equality of women will have a flatter and more fluid social hierarchy, where women rise to the top positions of power in influential institutions. If women are perceived as equal to men in their entrepreneurial and managerial ability, they will be have better access to the capital, debt financing, qualified business partners and employees, which are all necessary to launch and grow a productive business. In countries where women lack this status, women entrepreneurs will struggle to find the resources they need to launch a high growth, lucrative enterprise. Women can hold the same basic legal rights and property protection, and yet in practice experience significant barriers to establishing thriving businesses if there exists systemic cultural biases against their productive capacities in the business world. Countries where women are held in high regard will have few barriers to their achieving the highest levels of leadership in both the public and private sectors. Institutional and cultural factors affect the ability of women to gain

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leadership and business experience themselves and to receive support from other women in business, finance and government. The strong presence and powerful influence of women in finance, industry, academia and government—through representational, institutional and network effects—are likely to translate into stronger support for women entrepreneurs, and hence the flourishing of women-founded gazelles in that country. These arguments lead to the second testable hypothesis: Hypothesis 2: The greater the presence of women in formal positions of authority, the greater the level of productive entrepreneurial activity, ceteris paribus.

Domestic Support The third factor of interest is the degree to which domestic support—in the form of institutions, policies and practices—enable women to dedicate sufficient time and resources to productive entrepreneurial activity. Women often juggle entrepreneurial activity with other family care activities, and are both societally and personally driven to assume an unequal role with men in this domestic arena. Ideally this would not be the case, and men would hold equal motivations and be held equally accountable for childcare and other domestic duties, yet the research shows this is clearly not the case in the present time. These findings are consistent regarding women entrepreneurs across the globe, although the extent to which greater levels equality is achieved varies across countries (DeMartino and Barbato 2003; Ahl 2006; C Brush et al. 2004; Sekaran and Leong 1992; Moore and Buttner 1997; Coughlin and Thomas 2002; Mulholland 2003). The relationship between family policy at the country level and the amount and quality of women‘s entrepreneurship deserves greater investigation (Ahl 2006, 611).

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Gendered power relations in the household significantly affect women‘s productivity as entrepreneurs relative to men. These power relations play out in the democratic process and are translated into public policy. Gendered divisions of labor, specifically domestic work as feminine and non-domestic work—especially the creation and growth of private businesses—as masculine, is hypothesized to play a central role in the amount of entrepreneurial activity conducted by both men and women in any country. If it is culturally acceptable for men to engage in substantial amounts of domestic work, including child care and housework, then more men are likely to engage in such activity and free up the relative time that women have available for non-domestic work, either directly (through actually doing the work in a particular household shared with a female entrepreneur) or indirectly: given it is culturally acceptable for men to engage in these activities, men are likely to respect these roles and responsibilities and vote for governmental support for these activities, such as paid parental leave and subsidized child care. Following this logic, countries that actively support domestic activities, such as providing paid parental leave and subsidized child care will have more successful, highly productive women entrepreneurs. Paid parental leave, extensive financial support for or direct provision of childcare and pro-family tax policies all work to support women in the workplace generally, and these include women entrepreneurs. In addition, cultures with greater equality in practice between men and women, and which have a culture in which men are engaged in and share roles providing traditional domestic support activities such as child care, elderly care, housework, and shopping will have more productive women entrepreneurs. Women who juggle both the primary responsibility for domestic work and entrepreneurial activity without institutional and domestic support will be less motivated to launch and especially to grow their businesses, and will be less

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productive relative to women entrepreneurs who have strong support from spouses and the government. In the U.S., self-employed women spend considerably more time on household activities and on caring for children relative to both wage and salaried women and self-employed men (Gurley-Calvez, Harper, and Biehl 2009). Specifically, self-employed women spend approximately 3.5 hours more per week on household activities than wage-and-salaried women and six more hours per week than men; they spend three more hours than men on primary child care activities and 6.4 more hours on secondary child care (when the parent is at the same location as the child but is primarily engaged in another activity) (Gurley-Calvez, Harper, and Biehl 2009). This leaves fewer hours available for women to dedicate to growing their businesses. The effect of being married and having children on the availability of time to dedicate to the business is reversed for married men; married men spend approximately four more hours on their businesses relative to unmarried self-employed men, while married selfemployed women spend approximately 4.5 fewer hours on their businesses relative to unmarried self-employed women (Gurley-Calvez, Harper, and Biehl 2009). These findings suggest that domestic responsibilities represent a significant barrier to the growth and prosperity of womenowned businesses and a significant advantage to the relative growth and prosperity of menowned businesses. This structural difference may be a more important factor limiting the size of women-owned businesses than access to capital and social networks. These arguments and preliminary findings lead to the third hypothesis: Hypothesis 3: Greater domestic support will lead to higher levels of productive entrepreneurial activity, ceteris paribus.

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Empirical Findings

Figure 1 Preliminary findings suggest that when women enjoy high legal and social status, entrepreneurial opportunities are more readily available to them, and they are more likely to be driven to pursue entrepreneurial activity given the quality and quantity of the opportunities available to them, instead of out of desperation. Figure 1 presents a box and whisker plot chart of groups of countries on the two dimensions of interest: legal and social status of women and entrepreneurial opportunity. This shows that groups of countries at the bottom of the hierarchy in terms of the legal and social status of women also have the lowest level of opportunity-driven entrepreneurial activity. The indicator for legal and social status in this paper is from the Economist Intelligent Unit 2010 and includes measures of property ownership rights. This factor includes both legislated (statutory) rights to both moveable and immovable (personal and real)

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property as well as customary practices. 2 Groups of countries with the highest levels of opportunity-driven entrepreneurial activity consistently rank at the top of the world in the legal and social status and institutional presence of women (see Table 1 and Figure 1).3

Table 1: Top Ranking Countries

Rank

Country

Entrepreneurship Score

H1: Legal and Social Status

H2: Institutional Presence4

1

Denmark

3.700

99.6

24

2

Sweden

3.601

99.6

32

3

United States

3.448

75.9

43

4

Finland

3.411

99.3

39

5

United Kingdom

3.309

87.5

35

6

Norway

3.235

99.3

31

7

Ireland

3.203

88.4

32

8

Singapore

3.185

77.9

31

9

Iceland

3.181

98.7

33

10

Canada

3.157

98.7

36

11

Switzerland

3.144

89.8

30

12

Netherlands

3.078

99.8

27

13

Australia

3.051

88.6

37

14

New Zealand

2.920

82.7

40

15

Yemen

2.827

36.8

2

16

Germany

2.803

99.2

38

17

Austria

2.525

89

28

18

Hong Kong

2.375

78.1

29

19

South Korea

2.322

78.3

10

20

Japan

2.204

88

0

21

France

2.136

89.4

n/a

22

Belgium

2.055

99.2

33

23

Taiwan

2.014

n/a

n/a

24

Estonia

1.907

93.1

36

2

According to the Economist, customary practices ―are unwritten rules and norms established by long usage (based on customs and cultures) and ―often prevent women from exercising full control over any assets they have brought to a marriage or acquired independently‖ (The Economist Intelligence Unit 2010, 36). 3 Legal and social status of women data are from the Women‘s Economic Opportunity Index 2010, compiled by the Economist Intelligence Unit Inc., and the Entrepreneurship and Opportunity data are from the Legatum Institute. Entrepreneurship Opportunity is an index comprised of measures of a country‘s entrepreneurial environment, innovative activity, and access to opportunity. 4 Institutional presence proxy is the percentage of legislators, senior officials and managers who are women. Source: United Nations Statistics Division, Gender Info 2007. 13

25

UAE

1.866

52.8

10

26

Israel

1.814

83.6

32

27

Slovenia

1.671

99.7

35

28

Spain

1.487

99

32

29

Portugal

1.317

98.4

31

30

Czech Republic

1.242

99.1

28

Table 2: Lowest Ranking Countries

Rank

Country

Entrepreneurship Score

H1: Legal and Social Status

H2: Institutional Presence

80

Algeria

-1.317

58.1

5

81

El Salvador

-1.329

88.2

25

82

Honduras

-1.329

83.9

n/a

83

Indonesia

-1.432

53.2

22

84

Lebanon

-1.497

48.3

8

85

Egypt

-1.512

65.7

11

86

Uzbekistan

-1.563

n/a

n/a

87

Iran

-1.715

37.6

13

88

Bolivia

-1.784

74.3

29

89

Pakistan

-1.856

49.8

3

90

Ghana

-1.916

70.8

n/a

91

Kenya

-1.917

73.1

n/a

92

Sudan

-2.009

20.6

n/a

93

Syria

-2.079

54

10

94

India

-2.087

58.8

n/a

95

Nicaragua

-2.094

78.8

41

96

Bangladesh

-2.143

45.2

23

97

Nepal

-2.220

n/a

14

98

Rwanda

-2.291

n/a

0

99

Uganda

-2.301

46.9

n/a

100

Senegal

-2.357

78.1

n/a

101

Cambodia

-2.436

89.8

14

102

Mozambique

-2.463

n/a

n/a

103

Zambia

-2.499

n/a

n/a

104

Nigeria

-2.562

58.7

n/a

105

-2.729

64

n/a

106

Tanzania Central African Republic

-2.826

n/a

n/a

107

Cameroon

-2.854

42.1

n/a

108

Mali

-2.977

n/a

n/a

109

Ethiopia

-3.089

50.5

16

110

Zimbabwe

-3.810

n/a

n/a

14

Table 1 lists the top thirty countries on the Legatum Institute‘s 2010 entrepreneurship and opportunity index. These countries score better on indices measuring the legal and social status of women and their presence in parliaments/ legislatures and senior positions in management and government. Table 2 lists the thirty lowest scoring countries on entrepreneurship and opportunity and show that relative to the countries listed in Table 1, these countries score poorly on the indices measuring women‘s status and institutional presence.

Support for the first two

hypotheses increases at the extremes; the data in the middle ranking countries are mixed and ―noisier‖.

Notice that the countries in Table 1 are among the world‘s wealthiest and the

countries in Table 2 are among the world‘s poorest. This suggests compatibility with Michael Porter‘s economic development stages, with the top ranking countries in the innovation-driven stage at the top of the list on Table 1 and the lowest ranking countries in the factor-driven stage on the bottom of the list in Table 2.

Table 3: Legal and Social Status (1) Status 0.0556*** (0.000) -4.141*** (0.000) 93 0.286

Legal and Social Status Constant N R2 p-values in parentheses * p<.1, ** p<.05, *** p<.01

Table 4: Institutional Presence

Institutional Presence Women in Parliament Constant

(1) Institutional Presence 0.0364** (0.031) 0.0517*** (0.002) -1.545*** 15

(0.006) 81 0.191

N R2 p-values in parentheses * p<.1, ** p<.05, *** p<.01

Table 5: Domestic Support

Days of Maternity Leave Who Pays Maternity Contraceptive use Mandatory maternity leave Constant N R2

(1) Status 0.00837*** (0.001) 0.0193 (0.931) 0.0412*** (0.000) 0.00235 (0.441) -3.244*** (0.000) 93 0.411

p-values in parentheses * p<.1, ** p<.05, *** p<.01

In Table 3, legal and social status of women explains approximately 29 percent of the variation in quality of entrepreneurship across countries and is statistically significant at a 99 percent confidence level in a single regression. In Table 4, the presence of women in parliament, management and government explains approximately 19 percent of variation in opportunitydriven entrepreneurship and all measures are statistically significant.5 In Table 5, the length of paid maternity leave is highly significant and the combination of contraceptive use and three maternity leave variables explain 41 percent of the variation in entrepreneurship across countries. Another statistically significant control variable is contraceptive use (if women have smaller family sizes and can control their fertility, they will not need the same degree of domestic 5

Source of data on independent variables: United Nations Statistics Division, Gender Info 2007. 16

support in the first place, and this also translates into greater entrepreneurial activity). These findings suggest that domestic responsibilities interfere with entrepreneurial activity; countries with high levels of domestic support will have more productive entrepreneurial activity. A strong relationship between the domestic sphere and overall entrepreneurial activity suggests women represent an important link. It also suggests that the wind beneath women entrepreneurs‘ wings includes longer, mandatory, paid maternity leave, accessible and affordable contraceptives, and other forms of domestic support such as state-paid child care which free up their time for productive entrepreneurial activity.

Table 6: Restricted and Unrestricted Models (1) (2) Unrestricted Restricted Legal and Social Status 0.00319 (0.837) Women in Parliament 0.0132 (0.459) Institutional Presence 0.00316 (0.873) Days of Maternity 0.00328 Leave (0.110) Who Pays Maternity 0.0609 (0.760) Contraceptive use -0.00233 (0.818) Women in labor force -0.0941** 0.0210 (0.030) (0.159) Women tertiary -0.0576** education (0.032) Human Development 9.168*** 8.491*** Index (0.000) (0.000) Mandatory maternity 0.00120 leave (0.629) Self-reported women -0.00223 treated with respect 17

Self-reported social support Labor force participation rate Constant N R2

(0.911) 0.0690*** (0.004) 0.0290 (0.146) -7.743*** (0.000) 66 0.708

-6.730*** (0.000) 103 0.609

p-values in parentheses * p<.1, ** p<.05, *** p<.01

Table 6 provides a restricted and unrestricted model, with the unrestricted model incorporating various control variables. In the unrestricted model, which explains 71 percent of the variation on the entrepreneurship index among countries, the percentage of women in the labor force and in tertiary education are both statistically significant at a 95 percent confidence level. These findings are consistent with existing knowledge about entrepreneurs in general: those with previous experience in the work force and higher levels of education are more likely to start and grow successful businesses. Other factors that are statistically significant in the unrestricted model (Table 6) include self-reported measures of social support and if women feel they are treated with respect.6 This suggests support for the first hypothesis (greater social status and support translates into more opportunity-driven entrepreneurial activity among women). A human development index comprised of measures of life expectancy, mean years of schooling and gross national income per capita is statistically significant at a 99 percent confidence level in both the unrestricted and restricted model.7 The problem with this measure is the correlation with other variables of interest as well as with the direction of the causal arrow: highly

6

Data are from the Gallup World Poll database 2010 under elements of happiness. The human development index for 2010 was calculated based on data from UNDESA (2009d), Barro and Lee (2010), UNESCO Institute for Statistics (2010a), World Bank (2010g) and IMF(2010a). 7

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productive entrepreneurial activity translates into higher gross national income per capita, for example. The data suggest women (as well as men) need physiological and safety needs on the bottom of Maslow‘s hierarchy met before engaging in opportunity-driven entrepreneurial activity.

Policy Implications Without sufficient support, women may find themselves choosing self-employment or subsistence-level business ownership as the best of all available alternatives, but will both lack the incentive structures to ―think big‖ and efforts to expand beyond a microbusiness will be frustrated. Countries may rank high on the percentage of women engaged in start-up activity and small business ownership, but poorly on measures of entrepreneurial opportunity and prosperity. When wealth and labor are expropriated from women to their spouses or relatives, they will not be motivated to engage in wealth creation through business creation and expansion. Therefore, the first step in promoting new venture creation among women should be to maximize their property rights. Women will not be motivated to engage in anything further than subsistence level self-employment if they lack the incentives to invest their own capital and energies. It may be more effective to adopt policies and programs that promote increases in the amount and range of collateral available to women and to improve the protection of their full property rights in law and in practice rather than to search for and remedy discriminatory practices in bank lending. The second step for effecting policy changes to support women entrepreneurs is to generate the institutional support by having a larger and more equitable representation of women in the power structure. This includes women at high levels of the government and in business and finance. Countries with more equitable representation of women in the top power structures

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have greater levels of productive entrepreneurial activity overall, including productive entrepreneurial activity among women. Without the ability to fully exploit the returns from their business operations, or to attain support from high level networks in industry, finance and government, they will not be able to expand the business to its full potential. The third step is to provide domestic support in the form of paid parental leave and accessible, affordable and high-quality child care, which enable women entrepreneurs to focus their resources on developing a flourishing business.8 Lack of spousal and institutional support in domestic responsibilities (as evident in the U.S. case) represents a constraint on firm size. This suggests that a cultural shift to sharing domestic responsibilities along with ―the development of policies that enhance work-life balance‖ targeted to self-employed women might go a long way in closing the gender gap others have found in the size of women-owned businesses relative to men-owned businesses (CG Brush 2006; NM Carter and Allen 1997; Gurley-Calvez, Harper, and Biehl 2009, 1). Lifestyle intentions—or the desire to limit firm size in order to free up time for domestic responsibilities—may be a response to lack of domestic support rather than an a priori desire to spend less time on the business (NM Carter and Allen 1997). The assumption is that women choose to spend more time on domestic activities and relatively fewer hours on work. In self-reported surveys, women are much more likely than men to assert that their primary reason for becoming an entrepreneur is to balance domestic and work obligations (DeMartino and Barbato 2003). Research shows that women entrepreneurs spend more hours on both household and child care work, and less time is available for productive economic activity (Gurley-Calvez, Harper, and Biehl 2009). What is not known is how many additional hours women would choose 8

Some might argue that in many countries, extended family-members care for the children, and therefore state intervention is not necessary or desirable. My response is that the ―extended family members‖ as care givers are predominantly girls and women, who themselves are not free to engage in productive entrepreneurial activity nor to gain the education, training, capital and experience critical for starting their own successful businesses, as they are burdened by unpaid/underpaid work responsibilities in caring for siblings, grandchildren and other relatives. 20

to spend on growing their businesses if they had access to higher levels of domestic support, either from spouses or institutions, such as state-funded child care. It appears that in countries with state-funding of domestic support (that is, maternity leave and child care), women entrepreneurs engage in more opportunity-driven entrepreneurial activity. This finding suggests that if given the option, women would be less motivated by work-life balance concerns and more motivated by market opportunities in making the choice to start and expand a business. Child care support for wage and salaried women that primarily comes from the corporate sector rather than the state sector may perversely impact the incentives for women to exit the corporate work force and launch their own ventures. The lack of a domestic safety net alone may be the reason why women still found businesses at approximately half the rate of men in the United States, the only country in the world (out of 113 profiled in the Women‘s Economic Opportunity Index) as of 2011 lacking legislation mandating maternity leave benefits (The Economist Intelligence Unit 2010, 16). Countries with maternity policies that cover the selfemployed are especially significant for women entrepreneurs; paternity leave policies as well should free their time to engage in productive entrepreneurial activity as fathers are enabled to take on more infant care responsibilities (The Economist Intelligence Unit 2010, 17). The consequences for women in terms of the foregone opportunities to generate and build wealth from their ventures and for the country as a whole in terms of foregone productive entrepreneurial activity appear to be significant. Improving domestic support for all women in the form of state-paid maternity leave and child care appears to be an effective strategy to promote higher levels of productive entrepreneurial activity among women and thus to stimulate prosperity for the country as a whole.

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Limitations and Observations Most disappointing and problematic is the lack of quality data on the dependent variable of interest: high-impact, high-growth women-founded businesses. The lack of data is not a phenomenon mostly for developing and third-world countries:

the data are shallow and

incomplete in most of the worlds‘ largest economies as well. Rigorous cross country analysis of the independent variables is also not possible at this time given the dearth in the availability and lack of comparability of the data (CG Brush 2006). Globally comparable data on child care access, for example, are non-existent (The Economist Intelligence Unit 2010, 5). The lack of data makes drawing policy recommendations for domestic support difficult. Data solely on the presence of women at the top of the corporate and financial decision making hierarchy also were not widely available. In lieu of sufficient data, cross-country indices of both entrepreneurship and opportunity and indices on the treatment and status of women are used to make arguments and show relationships that warrant further investigation. It appears that countries with greater levels of equality between men and women along multiple measures are also the highest performers in opportunity-driven entrepreneurship, innovation, and prosperity. Countries in which women lack property rights, political and institutional presence, and domestic and social support are also stuck on the bottom of the charts on measures of entrepreneurial activity, innovation and economic prosperity. At the present time, we can only observe the correlations and that these factors appear to move in tandem (see Tables 1 and 2 as well as Figure 1). Triangulation with longitudinal and panel data, use of multiple methodologies, and implementation of robust research designs will further enhance our understanding of the relationship between the status of women and entrepreneurship-driven economic prosperity.

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Further testing is necessary and will ultimately determine the acceptance, challenge or rejection of the three hypotheses presented in this paper. In analyzing country-level data and hypothesizing possible reasons for different rates of productive entrepreneurial activity across countries, I have set aside the individual level motivations. Indeed, it may be criticized that there is an underlying assumption that women (as well as men) would, if given the opportunity and resources, growth their business to as large as possible (see Ahl 2006 for a critique of this assumption). Despite these limitations, this research effort was productive in revealing opportunities for further research. An observation is that the literature dichotomizes women-owned from men-owned businesses (or else assumes no differences while over-representing men-owned businesses). Yet many presumably men-founded businesses are jointly founded, and the women ―disappear‖ or are otherwise invisible actors in family businesses (Mulholland 2003). In one study of micro-lending, researchers found that approximately one-quarter of women who receive microloans transfer these resources to their spouse; another quarter of the recipients establish co-founded businesses with a spouse (Campbell 2007). In advanced economies as well as developing countries, women may be substantially undercounted as joint (or even sole) founders when the husband claims credit for the enterprise and represents the visible face of the business. More research is needed to investigate the reasons why women are invisibly absorbed into a family enterprise and scholars need to devise ways in which to better account for these women in future empirical work. Improving the overall treatment and status of women—including human development index factors such as health, education and wealth—will enhance the productivity of women entrepreneurs, particularly in less developed countries. In the most developed countries, however, women entrepreneurs still face significant barriers to founding thriving businesses that

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are institutional, cultural, and political in nature. One limitation on the measures of property rights used in this study, for example, is that the data do not capture the effective loss of property rights that occurs even in advanced economies, when women founders and heirs in family businesses effectively lose control over property rights at the wealth creation, wealth accumulation and wealth conservation stages (Mulholland 2003).

Conclusion and Recommendations Research on social, cultural, institutional and political level structural factors are likely to be more productive in addressing the status of women—including their productive capacity as entrepreneurs—and are normatively preferable to discursive practices focused on individuallevel gender explanations, which are also far less responsive to political or institutional solutions (Ahl 2006). Future investigations of inequalities in access to and use of financial capital and loan financing should control for amount of collateral and equal protection of that collateral. Further theory building and empirical research is needed in order to draw reliable, valid, and useful conclusions regarding the causal linkages between women‘s rights, treatment and status as operationalized as ―national equality policies‖ and increasing equality in the realm of women‘s entrepreneurship (De Bruin, CG Brush, and Welter 2006, 590; Alsos, Isaksen, and Ljunggren 2006). Further research is also needed to investigate ways in which women take advantage of institutional, cultural, and familial support in order to grow their business more rapidly. Another frontier is to conduct more comparative research in order to identify public policies that stimulate, support and reward productive entrepreneurial activity among women entrepreneurs. In this paper I have sought to contribute to the conversation by finding a gap in the literature,

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presenting testable hypotheses, and presenting preliminary empirical findings, which in turn I hope will stimulate further research and dialogue.

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