Entrepreneurs are an essential part of every nation, be it developed or developing, and are a harbinger of change and economic development in a society. Now imagine if entrepreneurs are extremely important for the community; how essential is the contribution of women in the economic development, especially when they make up to almost 50% of the total population? Sadly, the statistics share a different story. In the financial year of 2021, nearly 20% of women in India own micro, small, and medium businesses as compared to 80% of men in this field. India has been ranked 52nd out of the 57 countries that were surveyed in the Index of Women Entrepreneurs, reflecting the extremely poor rank in the field of woman entrepreneurship.
In this article, we will focus on the reasons for the lower participation of women in the business sector, and we will also look into the importance of having more women entrepreneurs in the nation.
WHY DO WE HAVE FEWER WOMEN ENTREPRENEURS IN INDIA?
Well, the phenomenon is true not only for India— women are generally fewer in number in the field of business. One of the factors contributing to this can be the unconscious bias that investors and the public in general hold that women are more agreeable and do not possess adequate skills and traits— or at least are not as good and dependable as male entrepreneurs. Empirically, women are considered to have lower pride or self-confidence and high levels of humility, which makes it a little more difficult for women to sustain themselves in a high-risk environment. Although these shreds of evidence are always debatable, and we can argue that not all women are like that, the current statistics give rise to such pre-conceived notions that are enough to discourage women from venturing into this field.
Women are also not exposed to the same opportunities as men. Most of it has to do with our society’s structure, where women are expected to be the primary caretakers of the home and family. 43% of women in the US quit jobs after marriage. India has one of the worst labor force participation rates (LFPR) by women (it is a measure to tell the total percentage of women who work— that includes both those who are presently employed and those who are unemployed but actively seeking work). India also has the lowest female participation rates in the world at as low as 21%, which means that 79% of women (aged 15 years and above) do not even seek work.
According to a report by MasterCard, the business environment in India is not favorable for female entrepreneurs. Some firms are registered under a woman’s name due to the ease of getting finances or for other administrative purposes, but men remain the primary decision-makers. Furthermore, most of the women-led businesses in India are small-scale ones and generate less revenue.
When it comes to gaining financial support, most women depend on their savings rather than taking out a loan to start a business. According to the World Bank’s Global Findex database, Indian men are more susceptible to taking out loans or credit than women. This is usually because women hardly have access to any collateral to borrow money from formal financial markets since most of the household resources and property are generally under the control of men. Also, investors show much less faith in women. They are usually considered to be high-risk by potential investors.
Safety can be considered a really big issue, especially in India. Be it commuting alone for work or the workplace itself; women do find it really difficult to seek a safe environment.
Indian corporate culture is heavily dominated by males— often identified as “bro culture” and often tend to celebrate apathy while being emotional is considered a weakness. The environment is cutthroat, and women tend to feel alienated and uncomfortable. Thus, it becomes a little more challenging for women to blend in, make more networks or connect with the market.
WHY IS IT IMPORTANT TO PROMOTE WOMEN ENTREPRENEURS?
If a society is not competent enough for women to realize their full potential, it misses a chance to create more employment and develop economically at a much faster rate than it presently is. A recent study showed that measures taken to close the gender gap in India could lead to a 6.8% gain in GDP. Another study estimated that advancing women’s equality in India could boost its GDP by $0.7 trillion in 2025 or 16% as compared to the ‘business as usual’ scenario.
Improving the sector and creating a more amicable environment for women can create over 30 million women-owned enterprises. This can generate potentially transformative employment in India of 150–170 million jobs, which is more than 25% of the new jobs required for the entire working-age population, from now until 2030.
Interestingly, the very virtues of empathy and emotion that are sometimes looked down upon are what make women entrepreneurs different and more likely to succeed. Recent studies show that startups founded by women take substantially less time to exit than the overall market. Hence, from a business perspective, investing in women entrepreneurs is an undervalued opportunity. Some experts also believe that women think more about their customers and their product and can be very good leaders and managers as they have better communication and organizational skills. They can keep the functioning of the company in order and are also more competent in managing fights and ego clashes. Studies also show that when women lead the company, they have a better company culture and high transparency. Also, other employees, especially women, generally feel more safe and comfortable as women-led companies tend to be more sensitive towards women-safety issues.
“Women know the problems faced by other women. They are able to approach innovation from a place of empathy and experience in a way that is poised to capture the attention of millions of other women who make up the majority of household buying decisions. That is a huge market opportunity,” says Jesse Draper, Founding Partner, Halogen Ventures.
They can employ other women and can even inspire other women to start businesses. This can ultimately help in reducing the gender gap in workforces and make women more independent. A recent McKinsey Global Institute report found that minimizing the gender gap in labor force participation holds the potential to add $12 trillion to the global GDP by 2025.
Women entrepreneurship can lead to tremendous social change. The presence of women in business not only helps society grow economically but also helps in improving the status of women in society.
As a society, we need to understand the importance of women entrepreneurs as their promotion can bring innovation, job creation, and economic growth with them. Women entrepreneurs do go through some difficult structural and institutional barriers that stop them from realizing their full potential.
Government intervention and easier access to finance and education have increased women-owned enterprises from 14% to 20% in the past 20 years. NITI Aayog’s Women Entrepreneurship Platform (WEP) is a digital platform that aims to bridge the information asymmetry for female entrepreneurs. They can register at their portal to get all the information about government schemes and connect with other people that can provide essential services like accountancy, raw materials, etc.
Although there is a huge gap in gender in startups, we also need to acknowledge that with the advent of globalization and development in technology, we have seen an exponential rise in the percentage of women entrepreneurs in India. India is currently going through a revolution when it comes to women entrepreneurs. There is a decent rise in women’s participation, and they not only come from well-established business families but represent every section of society. While yes, society is changing and is now much more supportive of women entrepreneurs, the change has been fairly recent, and there is still a long way to go.
We need more women in the workforce, and that is not just limited to women starting their own business but women who want to work so that they can gain the much-needed experience and confidence to start their own business if they want to. With that, we need a better and more equal education system, more safety measures for women in public spaces, especially at the workplace, and more schemes like NITI Aayog’s WEP that help women network better. Women should be given equal opportunities, and a non-discriminatory environment is necessary for them to flourish. But what truly makes all the difference is that men alone do not need to change; women also need to be more direct, assertive, and confident. Even though the journey might be more difficult, they need to have faith in themselves and need to take more risks to survive in this field.
Written by: Aashna