Posted on 25 January 2012
A groundbreaking new study finds that female entrepreneurs are far more likely than their male counterparts to feel that difficulty in obtaining finance is a barrier to starting a business.
Co-authored by Professor Dylan Jones-Evans, Director of Innovation and Enterprise at the University of Wales, Dr Caleb Kwong and Dr Piers Thompson, the paper “Differences in perceptions of access to finance between potential male and female entrepreneurs” published in the latest edition of the journal International Journal of Entrepreneurial Behaviour & Research, examines whether being female increases the probability that an individual feels difficulty in obtaining finance is a barrier to starting a business.
Drawing on data from 49,107 individuals questioned as part of the Global Entrepreneurship Monitor (GEM) adult population survey, the results from the study show that women are more likely to perceive that they are financially constrained than their male counterparts. Additionally, the research found that gender plays an influential role in preventing potential female entrepreneurs from starting a new business when no other barriers exist. In fact, the models developed found that women are around 10 percent more likely than men to perceive finance to be the only barrier to entrepreneurship.
According to Professor Jones-Evans, there is a role for policymakers to develop specific support mechanisms to deal with this issue:
“The availability of start-up finance from various sources should be marketed by different support organisations to encourage women to attempt to obtain the necessary finance rather than being discouraged at the first hurdle. This includes the need to increase both financial awareness and financial literacy, so that potential female entrepreneurs are aware of all financial options open to them as well as increasing their ability to utilise those funding sources they have knowledge of. These should not only emerge from public bodies and women's stakeholders groups, but also from the private sector and community-based organisations, such as credit unions, which have greater outreach abilities”.
The study also found a stronger effect from education in reducing these perceptions of financial constraints for women. This implies that female graduates could provide a source of potential entrepreneurs who are less likely to perceive obtaining finance to be a problem and are more positively positioned to be capable of acquiring external funding. Given this, Professor Jones-Evans suggests that higher education institutions could play a vital role in supporting the development of female entrepreneurs.
“Universities could increase the level of female entrepreneurial activity by advertising the benefits and potential of entrepreneurship as a career. This could be undertaken through cross faculty entrepreneurship education programmes which address the needs of all the student population rather than just business students. More importantly, they could provide enterprise initiatives that are specifically targeted towards the specific needs of potential female entrepreneurs within the student population.”
Professor Dylan Jones-Evans is Director of Enterprise and Innovation at the University of Wales.
Dr Caleb Kwong is a lecturer in Innovation at the University of Essex, Southend-on-Sea.
Dr Piers Thompson is a Senior Lecturer in Economics at Cardiff Metropolitan University.
The paper, which is entitled ‘Differences in perceptions of access to finance between potential male and female entrepreneurs: Evidence from the UK’, can be accessed by clicking on the following link:
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