Making the most of it

A curse or a blessing for women entrepreneurs?

Reading Time: 4 minutes

Amartya Sen, the Indian economist and philosopher, wrote in a 2001 essay that in a world afflicted with “the deeply unequal sharing of the burden of adversities between women and men,” gender inequality must be understood as a “collection of disparate and interlinked problems.”

Gender inequality is reflected in laws, regulations, rights, norms, responsibilities, and opportunities. The World Economic Forum (WEF) has issued Global Gender Gap Reports (GGGR) since 2006, aiming to measure gender gaps in four key areas: health, education, economics, and politics. It found in its latest GGGR last year that “gaps between women and men on economic participation and political empowerment remain wide.” According to the WEF, recent years have even seen a partial reverse in what had been a slow but steady trend of closing gender gaps worldwide over the past decade.

In the economic sphere, gender gaps include painful inequalities in labor force participation, with a global average of 54 percent of women actively involved in the workforce, compared to 81 percent of men. Also, women earn on average 50 percent less than their male counterparts, despite the fact that they work longer hours, and do most of the unpaid labor, like household work and child care.

Gender inequality also impacts entrepreneurship. Research has shown that the number of female entrepreneurs is still lagging behind in most countries, but especially so in the Middle East and North Africa (MENA) region. According to the Global Entrepreneurship Monitor 2016 gender report, women in the MENA region run established businesses at one-third of the rate of men. Moreover, women start new businesses at less than 60 percent of the rate of their male counterparts. The report measures these discrepancies based on the so-called total entrepreneurial activities of individuals in the working age population (18–64 years). Moreover, the report finds that women-led businesses are 60 percent more likely to remain a single-person firm, and only one in 10 female entrepreneurs expect their business to grow in the coming years.

Looking only at these stark percentages gives a grim image of the immense detriment that gender inequality poses for women in entrepreneurship, but this is not the whole story. Research on entrepreneurship in the region indicates that the effects of gender inequality are more complex. A look at several important elements for entrepreneurs reveals a picture of women determined to overcome the disadvantages under existing gender gaps by venturing into self-determined entrepreneurial careers, and thus, becoming pioneers and role models for societal change. Limiting our view of female entrepreneurship in the MENA region to just the percentage of the gender gap might distract from very encouraging developments taking place in the region.

Self-confident women

The majority of women-led entrepreneurial projects in the region are opportunity-based innovative ventures with high market and growth potential. The region has a large reservoir of highly educated women: 38 percent of its researchers are female, a significantly higher percentage than the 30 percent ratio found in the rest of the world. Generally, researchers are an important source of innovation. The region also hosts a high number of female internet entrepreneurs: 35 percent, compared to 10 percent worldwide.

Women in this region have been able to derive business opportunities from this challenging environment, and many of the business models they have developed involve empowering others. For example, Ayah Bdeir, who is Lebanese, created  littleBits, easy-to-use, open source, modular electronic building blocks for prototyping and learning that enable users to develop their own innovations. Rana Chmaitelly, the founder of The Little Engineer, was concerned about her own kids’ addiction to smartphone technology, so she created workshops that engage kids with science, engineering, and technology. Many successful female entrepreneurs in the region develop business models that solve social and environmental issues while creating economic opportunities, such as using plastic trash to develop furniture in Hend Riad’s Reform Studio in Cairo.

Moreover, it appears that the unfavorable environment functions as a catalyst for many women as it increases their intention to become entrepreneurs. This is rooted in women’s widespread dissatisfaction with their current situations and the discriminatory working conditions that limit  their career paths in established organizations. Besides the glass ceilings that limit women’s opportunities, gender stereotypes against employed women as well as discriminating labor laws and limited job opportunities motivate some women to start their own business.

The gendered workplace context does not leave too many conventional opportunities for women, so, many create their own opportunities. This might stem from a strong sense of self-confidence among women entrepreneurs in the region. Worldwide, women have been found to have little self confidence in their entrepreneurial abilities and potential—regardless of their educational background—compared to their male counterparts. But while female self-confidence levels differ from country to country, research published in 2012 found that Lebanese women entrepreneurs were among the most self-confident globally, together with women in Saudi Arabia and Iran.

Contrary to women entrepreneurs, who take significant risks to launch themselves into freelance careers, gender inequality was shown to have the opposite effect on many men. In societies where men hold the position of decision-maker and breadwinner in a family, they are less likely to invest in the uncertain future of a new business. This is especially true in Gulf countries, where starting a small business does not afford social status. Instead, the most prized jobs, with higher salaries and benefits, can be found in public administration. Men in the Gulf region tend to start a business only when they are unable to secure a public appointment. In that sense, gender inequality takes its toll on male entrepreneurial potential in the region as well.

International findings have shown that the likelihood to start a venture increases with the presence of entrepreneurial role models and exposure to supportive social networks. However, in highly gendered societies, women entrepreneurs still depend primarily on non-professional networks, notably family and close friends, as research on Tunisia, Lebanon, Jordan, Bahrain, and the UAE shows.

Building networks

The lack of exposure to professional social networks and the reliance on private networks like families, is mostly tied to cultural and social restrictions on women’s mobility and interaction with males outside their families. Thus, there remains a great need for professional support systems that can introduce women to vital connections in the wider social space. Such support systems can open doors for women to meet potential collaborators, customers, and suppliers, in addition to providing mentoring and professional advice.

Therefore, women-centric networking and professional organizations like the Arab Women Organization, the Bahrain Businesswomen’s Society, or the Lebanese League for Women in Business (LLWB), are pivotal in enhancing leadership and entrepreneurial skills. LLWB, for example, offers networking events, mentoring, training, and lobbies the government for women’s rights and development.

In the economies of Middle Eastern countries, where economic progress is a predictor of female empowerment and higher rates of entrepreneurship, gender inequality has not deterred female entrepreneurs. Although gender equality still has a long way to go in the region, evidence suggests that women in the Middle East and North Africa remain determined to carve out a significant space for their inclusion in the economy and polity of their countries through entrepreneurial leadership.

Bettina Bastian is a professor of management in the Olayan School of Business at AUB.