Female entrepreneurship in Bangladesh

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Offline Arif Hossain

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Female entrepreneurship in Bangladesh
« on: March 14, 2020, 10:09:20 AM »

Bangladesh, as a rapidly developing nation, stands to gain the most from the inclusion of women in the business world. Women's economic participation and their ownership and control of productive assets speed up development, help overcome poverty, reduce inequalities, and improve children's nutrition, health, and school attendance. Women are more likely to devote more of their earnings back into their families and communities than their male counterparts, feeding money back into their local communities.

In recent years, the rate of new business formation by women has significantly risen in Bangladesh. However, women still own and manage significantly fewer businesses than men. According to the Economic Census 2013, the number of female headed establishments is 0.56 million (7.21 per cent) while it was 0.10 million (2.80 per cent) in 2001 and 2003. The explanation for this rising rate and the behaviour of female entrepreneurs in terms of traits, motivations, success rates, and their gender-related distinctiveness are, however, complex and multifaceted.

Historically, the fewer numbers of women entrepreneurs than men are due to the fact that fewer women than men start businesses to begin with. Evidence suggests that a variety of reasons contribute to explaining the observed differences in entrepreneurial behaviour across gender, and that such differences have significant implications at the macroeconomic level. In addition, the propensity of women to start a business differs from that of men for cultural reasons such as discrimination.

Recent evidence shows that the prevalence rates of female entrepreneurship tend to rise in developing countries like Bangladesh due to the fact that women face higher barriers to entry in the formal labour market and have to resort to entrepreneurship as a way out of unemployment and, often, out of poverty. Research on female entrepreneurship shows that, in many cases, opportunities and incentives are unfavourable for women to begin businesses, even when they have the abilities and knowledge.

Larger gender gaps in start-up activities are found in relatively better-off regions, whereas they tend to be narrower in poorer regions probably because many women are forced to start businesses out of necessity in poor areas. Moreover, women in poorer regions tend to be more self-confident about their abilities (skills and knowledge) to become entrepreneurs and less afraid of failure compared with women in better-off regions-notwithstanding subjective and possibly biased perceptions about self-confidence, fear of failure, and existence of opportunities or significant and systematically associated determinants of the gender gap.

The entry of women into entrepreneurship is the outcome of a complex mix of constraints and opportunities, as well as external impulses and aspirations. The main sector preferred and attractive to women entrepreneurs is the services for a number of reasons, such as women have better knowledge of and experience in the services sector; lack of specific technical skills tends to keep many women away from starting businesses in the manufacturing and high tech sectors; and women choose low capital activities, like those in the services sector, because of difficulties in obtaining financial resources.

Women rely more than men on extended families which, in many rural areas, are often their only or major social network. This is often constraining since women's marriage status, and the assets and incomes brought to their marriages, emerge as important determinants of their entrepreneurial decisions. Married women with young children are more likely to enter entrepreneurship than waged labour, and are more likely to be entrepreneurs than non-married women-although they are also more likely to quit a business voluntarily.

As far as female entrepreneurs' firm performance is concerned, women tend to have lower growth expectations and their firms tend to grow slower in both sales and employment than those of men. Some evidence suggests that women's primary concern is not with growth but rather with survival. This may be a reason for the finding that habitual female entrepreneurs tend to be portfolio rather than serial entrepreneurs, as they attempt to diversify income sources and survival chances.

Female entrepreneurs do not come from one homogeneous group but they come from different background, have different ideas about growth, and have all sizes of enterprises. Women use their knowledge and the resources available to them to start a new business. In order to start up a new enterprise, an entrepreneur must have access to key resources like capital and assets. Women are more likely to use their own money and borrowing from friends and family members. They value networking and feel that it is one of their key success factors.

Female entrepreneurs often have different management styles. They tend to manage by what is called the relational theory. They become successful by adapting to a style of management that is more suited to their needs rather than follow traditional male role models. The women have different types of relationships with their employees and clients. Women tend to combine the public and private areas of their lives. Their self-worth is gained by their ability to develop and build relationships. In their decision making process, they use influence to get people motivated. Communication becomes an essential part of their organisational success. This change in the way business is conducted helps women to be more competitive.

Obviously, access to adequate capital is a big obstacle for the female entrepreneurs. Many women start their businesses with limited capital and working capital is one of the biggest issues for start-up businesses which may also affect their growth and survival rates. Further, female entrepreneurs have to bear more responsibility for their families than their male counterparts. Often, the greater need of women to balance work and family commitments makes entrepreneurship more appealing than salary generating work to some women. Even though self-employment often requires long workdays, it can also offer the possibility for greater flexibility in structuring the day.

The traditional view of what women's roles in society are, is an obstacle to them for becoming successful entrepreneurs. Women in business also have to struggle with well-established male networks including customers, suppliers and creditors. They also face discrimination that can hinder their ability to succeed. These and many other social perceptions regarding women make it difficult for women to manage their businesses.

The right motivation is important in making a decision to start up a new enterprise by a female entrepreneur. There are both 'push' and 'pull' factors that influence the women entrepreneurs' decision to start a new business. Push factors are negative forces and may include losing a job, unemployment, and not being able to fulfill aspirations in the working world. Women may also want to have flexibility in their work schedule and the ability to spend time with their families. Pull factors are positive forces and may include the desire for independence and flexibility, being the boss, achieving personal dreams, using creative skills, being more fulfilled, and the desire for wealth and power. Many women also want to make a contribution to society and make a difference in society.

Research indicates that women start their own businesses for three personal reasons: to have autonomy and freedom in the workplace; for more security; and more satisfaction with work. Women who are looking to find more freedom may do so because they have been discriminated in the workplace and have not been paid equally as men. Owning a business can provide a woman a sense of security after having experienced redundancy, divorce or other mishaps. They also like the economic security that owning a business can provide. Those women looking for satisfaction from business ownership want to take the challenge of improving their lots and become more productive.

So how does one assist the growth of female entrepreneurship? No differently than one does entrepreneurship as a whole. While one may want to focus on gender-related issues that prohibit women in business, without solving the overarching financial inclusion problems, the policy may basically be putting the cart before the horse. The primary need is to address the main issues plaguing the financially excluded women along with moving on to the more specific gender challenges.

The fact remains that women in Bangladesh have less access than men to finance, productive resources, services and opportunities, putting them at a disadvantage in participating in and contributing to socioeconomic development. While Bangladeshi women are choosing to become entrepreneurs in larger numbers, they find it harder to set up and expand their enterprises because they operate largely in the informal sector. Further, women-owned micro, small and medium-sized enterprises (MSMEs) face difficulties in getting access to finance and land, have poor managerial skills, and limited opportunities for business development training and networking.

The restricted movement of women due to the assignment of the reproductive role to women alone, high workload and unpaid labour, lack of decision-making in the household and subordination has kept most women trapped in disadvantaged situations. Economic empowerment of women plays a pivotal role in ensuring their right to equality and to an adequate standard of living, and it should be the prime agenda in every development discourse. Creating micro and small enterprise agencies to support and enhance entrepreneurship and production capacity of these enterprises will benefit women who often start their businesses on a small scale.

Discrimination is a possible source of gender gap in entrepreneurship and this is significant in Bangladesh. Discrimination against women is often the result of gender beliefs inherent in the country's culture and society.  This probably has  the  effect  of  not  only  reducing  women's  likelihood of becoming  entrepreneurs  and  their  earnings  as  entrepreneurs,  but  may  also  have reduced the non-pecuniary benefits that women could receive from entrepreneurship. Women in Bangladesh are tremendous forces of change in households and communities. Women entrepreneurs make a difference -- whenever they are given opportunities. For realising amore significant contribution of female entrepreneurship in development, women will have to win the race for equality and fairness.

Mustafa K. Mujeri is Executive Director, Institute for Inclusive Finance and Development (InM)


Source: https://journal-jger.springeropen.com/articles/10.1186/s40497-016-0055-x