Female Entrepreneurship in East and South-East Asia

Opportunities and Challenges

Philippe Debroux

• Publisher: Chandos Publishing
• Year: 2010
• Topic: Business
• eBook ISBN:
  9781780632421
• Subtopic: Imprenditoria
• Index: Business

This detailed study of female entrepreneurship in Asia examines the high economic growth that is increasingly driven by market-oriented economic reforms favouring entrepreneurship. There is a higher awareness by women of their political and socio-economic rights and recognition by society at large of social legitimacy of women pursuing business activities in their own right. This book assesses socio-cultural and economic factors influencing female entrepreneurship in Asia as well as the process and the tools and challenges that accompany it. - Opportunity to acquire knowledge on the socio-economic roles played by women as entrepreneurs in the region - Description and analysis of the issue in countries at different stages of economic development and with different socio-economic and cultural environment - A broad approach encompassing historical, political, sociological, economics and businesses-related aspects of female entrepreneurship

1

Introduction

This book’s objective is to advance understanding in the field of female entrepreneurship. Kuratko and Hodgetts’s¹ ‘encapsulating’ definition of entrepreneurship states that:

entrepreneurship represents a dynamic process of vision, change, and creation, requiring an application of energy and passion towards the creation and implementation of new ideas and creative solutions. Therefore, it includes the willingness to take calculated risks, the ability to formulate an effective team, the creative skill to manage needed resources, and fundamental skills of building a solid business plan, and finally, the vision to recognize opportunity where others see chaos, contradiction, and confusion.

Buttner and Moore defined a female entrepreneur as ‘a woman who has initiated a business, is actively involved in managing it, owns at least 50 per cent of the company, and has been in operation one year or longer’.² ‘Encapsulating’ and accurate in its description of the very essence of entrepreneurship as it is, applying stricto sensu the definition of Kuratko and Hodgetts in this study would nevertheless eliminate many people who should be included among entrepreneurs. People may start new ventures to pursue a perceived opportunity (real or imagined). They may be described as opportunity entrepreneurs. Others could be considered as ‘reluctant’ or ‘necessity’ entrepreneurs because they entered the field only by default, i.e. forced by life circumstances to start a business although they would have preferred another solution. Scase introduced a distinction between ‘entrepreneurship’ and ‘proprietorship’ in business activities taking place in the post-socialist countries of Central Europe and Russia.³ The main differences between these two categories are the contrasting psychologies of the founders, their attitudes towards trading and their orientation to capital accumulation.

Scase has articulated this way of thinking in writing that proprietors’ ownership of property and other assets is not necessarily used to realize profits nor for the purpose of longer-term processes of capital accumulation.⁴ In the Weberian sense, the entrepreneur is willing to forgo direct consumption in order to expand the scale of the entrepreneurial activities.⁵ On the other hand, proprietors are not likely to use their capital assets for the purpose of long-term capital accumulation. Their prime motive is much more likely to be to consume and utilize economic surplus in order to maintain a specific standard of living or lifestyle, rather than to reinvest these funds into their business. According to Scase, in the emerging markets of Russia and Central Europe the greater proportion of small business traders are proprietors rather than entrepreneurs.⁶

He concedes, however, that these categories are dynamic and not rigidly defined. It is therefore possible for proprietors to turn into entrepreneurs or vice versa. In this book we will come across opportunity entrepreneurs close in terms of attributes to those Kuratko and Hodgetts describe, but also other people who in some respects may lack some attributes of their entrepreneurs and seem closer to the Eastern European proprietors described by Scase. As stated by Schumpeter, to be an entrepreneur requires innovation in combining various resources that are available around and getting new things done or performed.⁷ It makes entrepreneurship a variable with a number of extreme values. In the case of the entrepreneurs we consider in this book, some may not have a clear vision of what their business ought to be because markets are too uncertain, there are so many factors they do not control that they cannot think in a long-term perspective, their skills level may not be that high and their business plan is very simple. For many of them, success may mean survival or a precarious decent life for their family. They may not have a ‘capitalistic’ vision of their business, at least at the beginning. Thus they may not accumulate much capital – sometimes none for a while – but their intention is to do so if possible. For some, entrepreneurship may not have been the first choice of career, but in many respects in their behavior and attitude they have a passion and devote energy to achieve success. They want to have a fulfilling, interesting job and make it on their own. They are creative at their (sometimes low) level and are always looking for new ways to stay and prosper in the market. Therefore, they should also be considered as entrepreneurs.

Motivation differs among entrepreneurs, so it is expected that the variables influencing their decision-making may also diverge.⁸ Choosing to start a business in order to exploit an opportunity despite having access to alternative income-producing activities is different from a forced choice driven by economic survival. But in almost all cases the difference between necessity and opportunity entrepreneurs is not as clear-cut as it seems to be. Obviously, as explained by Brush, in most cases when a woman (or a man) decides to create a company, it is not for one reason but a mix of push and pull factors resulting from individual and contextual circumstances.⁹

Pull factors are concerned with the expectation of being better off as an entrepreneur. Thus individuals are often attracted to entrepreneurship in the expectation that it will provide greater material and/or nonmaterial benefits. Push factors take into account the conflict between one’s current and one’s desired state. They are often associated with some level of professional dissatisfaction, frustrations with salaried employment, unemployment and/or personal crises. The push and pull factors have been mostly identified in Western countries, but they have been found as well in studies undertaken in Asian countries.¹⁰

In Asia, too, there are women entrepreneurs who say they were motivated to create a business by pull factors such as the desire for self- achievement, autonomy, freedom and the flexibility that results from self-employment, rather than to supplement the family income.¹¹ Push factors include obstacles, such as glass ceilings, which prevent women from moving beyond a certain point in the managerial hierarchy, or glass walls preventing lateral moves, consequently keeping women in specialized operational, technical functions serving as back-up to managerial positions. Women employees and managers in all four countries say they have faced glass ceilings and glass walls; this is confirmed in studies in Malaysia, Vietnam, Korea and Japan.¹² Perceptions of facing gendered barriers in terms of promotion and recognition of professional merits by the organization are important for them in the decision to create a business. As argued by Goffee and Scase, women contemplating entrepreneurship are attracted by the fact that they do not need to meet organizational selection criteria based on age, gender, experience, etc.¹³ They may want to avoid the supervisory controls of formal employment and/or the inhibiting constraints of domestic roles or male-imposed identities that are allocated to them via established societal institutions.

For a number of entrepreneurs interviewed for this study, one of the biggest advantages of business proprietorship was indeed the absence of such organizational selectors. It was particularly so for those coming from cultures, like Japan and Korea, where the criteria of gender, age and seniority remain important and codification of male/female roles can still be a strong inhibiting factor at work. They had experienced frustration at being deprived of the opportunity to utilize their talents fully, by the subsequent lack of challenge in their salaried job and/or the difficulties of operating in rigid hierarchy-driven organizations where those factors are at play. Gender and age also have a role in being an entrepreneur. In the first stage of activity, respondents in all four countries said that credibility vis-a-vis stakeholders is often based on those criteria. But obstacles can be overcome through personal efforts – something that is perceived as more difficult in an organization. Women may also explicitly attempt to avoid a labor market that confines them to insecure and low-paid occupations. In Malaysia and Vietnam many women resort to entrepreneurship and become hawkers, petty retailers or wholesalers because they lack the education and skills to find employment in the formal sector. But this is not unknown in Japan and Korea either, despite their higher educational standards. Likewise, economic necessities such as making a living after a divorce or the need for two incomes in a household to achieve a desirable standard of living appear to be crucial reasons (actually increasingly important) for entering business for many women in all four countries.

As argued by Moore and Buttner: ‘In cases where women are earning less in self-employment than they were in wage employment, it may be that the non-pecuniary benefits of self-employment lead to a utility premium in running one’s own business in excess of the value placed on the loss of income, which is especially relevant in the case of women entrepreneurs.’¹⁴ This could mean, for example, creating an NPO working with handicapped children after 15 years as an investment banker, like one of our Japanese respondents. It may also result from conflicts between life priorities and one’s employment context. For highly paid Japanese and Korean female managers it may be more fulfilling to quit their job in order to rear a child rather than continue in a working environment where holding a managerial position is difficult to make compatible with childcare. In view of the difficulties in returning to a previous post after a temporary career break, and the opportunity cost of deciding to re-enter salaried life in a smaller concern, they may finally decide to start something on their own, generally earning much less than during their managerial career, at least at the beginning. Their intellectual capabilities, business experience and portfolio of contacts allow them to identify and pursue specific business opportunities, making them opportunity entrepreneurs. But the fact that they often say they would probably have pursued their managerial careers if their companies had given them the possibility of balancing private and professional life makes them a type of necessity entrepreneurs as well.

The definition of Moore and Buttner could be also considered as too restrictive. It is difficult to evaluate exactly the economic weight of women-owned businesses or the number and position of female entrepreneurs. Gender-disaggregated figures are scarce, especially in Malaysia and Vietnam, and the existing data should be considered cautiously. First of all, the definition of the term is slightly different from country to country. There is no consensus on what constitutes a woman- owned business. In Korea, in the Women Business Ownership Supporting Law of 1999, it is defined as a company that is owned by a woman or women and is controlled by her (them).¹⁵ In the three other countries there is no official definition of the term.¹⁶ Then (as a direct consequence of the previous point), women’s entrepreneurial activities are not always acknowledged by the official statistics, and thus women’s business participation might be reflected as misleadingly low. In the ubiquitous household-based businesses in Vietnam and Malaysia, women do not always appear in the statistics if the activities are officially performed under the name of the husband. It is likely that more women than men entrepreneurs carry out informal activities, especially in Vietnam, some parts of Malaysia and Korea. In Vietnam, Malaysia and rural Japan, many businesses are co-owned and managed by a group of women, not an individual. Especially in the case of very small businesses (one to ten employees), similar to what is observed in Europe and the United States, many are family-based, with several members of the family having a stake in the activities. It was reported that in Malaysia about one-third of rural entrepreneurial projects are managed by both spouses.¹⁷ Figures for Vietnam are likely to be as high or even higher. Co- entrepreneurship is also common in the two developed countries, Japan and Korea. In 2004 women businesses managed by both spouses in Korea amounted to 32.9 per cent of the total.¹⁸ As a consequence, this study found companies where the female entrepreneur did not have a majority ownership, although it was clear that she was dominant in the decision-making process. Conversely, a notable number of companies are legally registered as owned by women although they are actually managed by men (generally the husband or family members). This is the case for instance in the construction industry in Japan and Korea, mostly for fiscal reasons, but cases are also reported in Malaysia of women playing only a symbolic role.¹⁹ The definition of a woman entrepreneur used in this book is a woman who is a de facto owner or co-owner of a business, is involved in its daily management and is the key decision-maker for devising the business strategy. Women whose names are registered as the owner but who are not actually responsible for running the business are not included, and nor are women business owners with no employee.

Structure of this book

The book aims to uncover the nature of female entrepreneurship in the region, its origin and characteristics, the opportunities that are offered to women entrepreneurs and the obstacles they face. It also envisions what could be the future of this phenomenon in the region, what concept of entrepreneurship could emerge, how it could lead to different types of business organizations and what could be its possible impact on society and gender relationships. As in other countries, the flow of women starting a business is determined by a variety of factors, including macro-economic conditions, entrepreneurial climate, legal and governance environment, competing labor market opportunities, educational level and orientation, the presence of skills that can be utilized in an entrepreneurial venture, demographic changes and public support policies. But it is also influenced by socio-cultura...

Table of contents

• Cover image
• Title page
• Table of Contents
• Copyright
• List of tables
• About the author
• Acknowledgements
• List of acronyms
• Preface
• Chapter 1: Introduction
• Chapter 2: The rising tide of entrepreneurship
• Chapter 3: Historical and current socio-political and economic context of female entrepreneurship
• Chapter 4: Evolution of the concept of female entrepreneurship and the reality of women-owned businesses
• Chapter 5: The institutional environment of female entrepreneurship
• Chapter 6: Women in the labor market
• Chapter 7: Public policy supporting female entrepreneurship
• Chapter 8: Results of the field survey
• Chapter 9: Conclusions
• Appendix: profile of the respondents
• Index