Emerging Lessons on Women's Entrepreneurship in Asia and the Pacific

Case Studies from the Asian Development Bank and The Asia Foundation

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• Publisher: Asian Development Bank
• Year: 2018
• Print ISBN: 9789292613525
• eBook ISBN: 9789292613532
• Topic: Business
• Subtopic: Women in Business
• Index: Business

The Asian Development Bank (ADB) and The Asia Foundation prepared this report as a guide to support women's entrepreneurship in Asia and the Pacific. The three parts of the report cover the key barriers that women in Asia and the Pacific face when trying to establish or grow a business, case studies of projects supported by ADB and The Asia Foundation throughout the region, and proposed areas for further research. The recommendations are aimed at creating an enabling environment for women entrepreneurs and strategies for addressing gaps and leveraging opportunities.

1. INTRODUCTION

There is widespread recognition that unleashing women’s talent as entrepreneurs is an effective way to narrow the current gender gaps in the labor market, and thus contribute to inclusive growth. A number of governments, donors, development partners, investors, and nongovernment organizations (NGOs) have geared up to work toward this objective. This report is intended to guide effective decision-making by these stakeholders with regard to supporting women’s entrepreneurship in Asia and the Pacific.¹ It provides recommendations for programs and policy changes that will create an enabling environment for women entrepreneurs, as well as strategies for addressing gaps and leveraging opportunities for women entrepreneurs in the region.

The report has been jointly prepared by the Asian Development Bank (ADB) and The Asia Foundation, two organizations that have a history of supporting women entrepreneurs in Asia and the Pacific. While they promote women’s entrepreneurship in different ways, they share one clear goal: to enable women to reach their full economic potential. ADB is a multilateral financial institution that assists its developing member countries and partner organizations in this endeavor by providing loans and equity investments to women-owned micro, small, and medium-sized enterprises (MSMEs), as well as technical assistance to women entrepreneurs. The Asia Foundation is a nonprofit international development organization that works with local organizations, governments, and the private sector to advance women’s empowerment and gender equality across Asia, contributing to women’s economic rights and opportunities by supporting women’s entrepreneurship, worker rights, and climate resilience.

Both organizations seek to address the key legal and regulatory constraints that limit the prospects of women entrepreneurs.

Both institutions recognize that much more needs to be done to ensure that women reach their full economic potential. ADB’s and The Asia Foundation’s respective women’s empowerment and gender teams saw an opportunity to learn from the extensive work done by both organizations, in order to better identify the most effective strategies for supporting women entrepreneurs. They also wanted to learn from the activities that had been less successful. This study leverages the organizations’ complementary areas of expertise—most notably The Asia Foundation’s experience in program management and ADB’s experience in providing access to financing and to markets in Asia and the Pacific—to make policy and program recommendations for strengthening support for women entrepreneurs.

ADB and The Asia Foundation hope that this report will result in a renewed commitment by all stakeholders to supporting women entrepreneurs through gender-responsive, evidence-based investments and strategies.

2. WOMEN’S ENTREPRENEURSHIP IN ASIA AND THE PACIFIC

2.1 An Overview of Women’s Entrepreneurship

a. What Is Women’s Entrepreneurship?

Globally, women’s entrepreneurship is increasingly a driver of economic growth and job creation. Asia and the Pacific stand to gain 70% in per capita income within roughly two generations by eliminating gender disparities in employment, including in the area of entrepreneurship.²

According to the International Finance Corporation, women own 50% of microenterprises and 59% of small and medium-sized enterprises (SMEs) in East Asia and the Pacific, and women in South Asia own 10% of microenterprises and 8% of SMEs.³ There is no universally accepted definition of a “women-owned” or “women-led” business, or of a “woman entrepreneur.” In fact, few sources explicitly define these terms, and some use them interchangeably. But there are distinctions in meaning. For instance, “women-led” could imply partial or full ownership, and it could refer to management or operations. In this report, the analysis focuses on women entrepreneurs who are both majority owners of their own businesses and have financial and operational decision-making power over those businesses.

There is also a wide variety of ways to define MSMEs. The definitions vary by country, but they generally rely on a combination of four criteria: number of employees, net or total assets, annual turnover, and the amount of capital invested.⁴ Most women’s businesses qualify as MSMEs, particularly as micro and small enterprises. In fact, only one out of 10 women-owned businesses in Southeast Asia employs more than five people (footnote 4). In Cambodia, 65% of MSMEs are classified as “women-led,” but women own only one-third of all registered businesses, and less than 1% of businesses with more than 10 employees.⁵ In South Asia, only 8%–9% of formal SMEs are owned by women.⁶ In total, MSMEs account for more than 96% of all enterprises in Asia and the Pacific, contributing an average of 42% of total exports and providing employment for 62% of the labor force.⁷

Entrepreneurial motivation—the driving force behind one’s work ethic and business decisions—is an important factor shaping the outcomes for women-owned businesses. But the sources of motivation are not always the same. In lower-income countries in Asia and the Pacific, as well as globally, a higher proportion of women-owned businesses are established out of necessity, due to a lack of employment opportunities; while in higher-income countries, a greater share of women’s entrepreneurship is driven by opportunities emerging in the market.⁸ This distinction is an important one, as entrepreneurs who start a business in response to a perceived opportunity—as opposed to a lack of other options for income generation—are more likely to be growth-oriented, which means that they are more likely to aim to expand their businesses, hire more workers, and achieve higher financial returns.⁹

At the regional level, women and men start businesses out of necessity at roughly the same rate, but there is a significant gender gap in some countries, though not always in the same direction. In the Philippines, for example, 43% of women entrepreneurs establish livelihood (necessity) businesses, compared with only 28% of male entrepreneurs. Yet in Indonesia and Malaysia, more than 80% of women entrepreneurs are opportunity-motivated, while their male counterparts are almost twice as likely to be driven by necessity (footnote 8). And in the People’s Republic of China (PRC), nearly two-thirds of women entrepreneurs are responding to opportunities in the market, though many of their businesses remain small due to limited access to business loans.¹⁰

b. Existing Literature on Women’s Entrepreneurship in Asia and the Pacific

Academics and practitioners have been studying women’s entrepreneurship since the 1980s.¹¹ Much of the early literature on the subject featured comparative studies of individual characteristics of male and female entrepreneurs, such as age, education, attitudes, and perceptions. But experts later noted that this methodology could lead to skewed findings due to the “individualistic fallacy,” which is the assumption that outcomes at the individual level are solely the result of individual characteristics, as opposed to situational factors embedded in a given environment.¹²

More recently, a growing body of research rooted in the recognition of “entrepreneurial ecosystems” has been providing a more holistic view of the myriad factors that influence how women’s entrepreneurship flourishes or struggles in various social and geographic contexts.¹³ Diverse factors such as women’s legal rights, access to education, and national family leave policies, coupled with the influence of cultural and religious norms, all influence the opportunities available to women entrepreneurs. Emerging research is increasingly drawing from multiple fields to produce more informed, relevant, and actionable strategies. Researchers are also working to develop more sophisticated indicators to define “women’s entrepreneurship,” with a view to helping policymakers and practitioners better target various forms of entrepreneurship—from cottage industries to high-growth “gazelles” (footnote 12).¹⁴

Several worldwide and regional trends are shaping research on women’s entrepreneurship. Large global data sets with gender-sensitive and sex-disaggregated indicators have been a hallmark of the recent literature on women and entrepreneurship. Examples of global resources emerging in recent years include the Global Findex (World Bank Group); Women, Business and the Law (World Bank Group); Global Entrepreneurship Monitor; Female Entrepreneurship Index; and the Global Women Entrepreneur Leaders Scorecard (Dell Inc.).

A survey of the available research on women’s entrepreneurship in Asia and the Pacific reveals an imbalance in terms of geographic focus, with significantly greater attention being given to Southeast Asia than to the rest of the region. Women’s presence in the member economies of the Association of Southeast Asian Nations (ASEAN) has been subject to extensive analysis, possibly due to the high rates of female entrepreneurship in many Southeast Asian countries, and to the high priority given to the sector by several governments in that subregion.

While some comparative data exist on the experiences of women entrepreneurs in rural and urban areas in Asia and the Pacific, there are few large data sets or targeted studies offering detailed analyses of this distinction. Similarly, while women have consistently participated in both the formal and informal sectors of the economy, there are only limited data on the participation of women in the informal sector, and on the conditions that make it easier for women entrepreneurs to transition from the informal to the formal sector.¹⁵

There is also a dearth of intersectional analyses targeting the status, opportunities, and challenges faced by different subgroups of women entrepreneurs, including women with disabilities; women who are HIV positive; gender-diverse and transgender women; and women of different castes, ethnicities, age groups, and religions. Any one of these social identities can have an outsized influence on a woman’s ability to start and grow her own business,¹⁶ and this fact underscores the importance of intersectional research tailored to local social structures.

2.2 Key Barriers to Women’s Entrepreneurship

Drawing from available data, this section describes the common challenges faced by women entrepreneurs across Asia and the Pacific. Where possible and relevant, subregional and national data points are used to illustrate larger regional trends and comparisons regarding the limited access to markets, finance, information, and relevant education and skills training, together with the impact of discriminatory laws and regulations, work environments that are unfriendly to women, and unpaid caring responsibilities.

It is important to underscore how the roadblocks preventing women from achieving their entrepreneurial potential are rooted in social norms and customary practices that prescribe how much capital, time, and autonomy a woman will be able to devote to entrepreneurial activities. Social norms that prioritize family and community interests over individual advancement can adversely impact women’s entrepreneurship. In South Asia, for example, it is common for women to stop undertaking paid work upon marriage, while in many Pacific island countries, the social obligation to take on the financial commitments of the extended family weighs heavily on women, sometimes forcing them to exit the workforce.¹⁷ Any effort to address the barriers, which are described in more detail below, must also address the underlying cultural norms of a community.

a. Limited Access to Markets

In countries where economic development is at a nascent stage, women are more likely to be employed in the agriculture sector, including agricultural production at an informal level to supplement subsistence livelihoods. Studies show that 37% of women globally are employed in agriculture and 47% in services. In developing countries, women are underrepresented in the manufacturing sector; and that is the case in Asia and the Pacific, where women in manufacturing constitute only 33% of the total workforce. However, as economies develop, women have more options with regard to entrepreneurship. For example, while women in Vanuatu are concentrated in agricultural production, Bangladeshi women are often employed in the garment industry. And in the Lao People’s Democratic Republic (Lao PDR) and Viet Nam, women have a strong presence across those countries’ dynamic manufacturing sectors.¹⁸

The particular market a woman entrepreneur seeks to access will depend on her education, family situation, and the state of the economy. Market access is the key to progress for female entrepreneurs because it allows women operating MSMEs to earn more income, and women with established businesses to grow. But women typically face multiple challenges: lower confidence; limited access to technology; limited mobility (compared with their male counterparts); insufficient knowledge of business, including product differentiation and labeling; and limited access to networks, including those of large-scale purchasers. This section focuses on those markets in which women entrepreneurs do sell goods and services.

Physically accessing markets to sell goods and services has been a challenge for women in many countries, especially in those countries where social norms constrain the places where women can be seen. Any attempts to develop rural infrastructure must therefore address the multiple barriers that women entrepreneurs frequently face. For instance, a rural infrastructure project in Bangladesh, supported by an infrastructure loan from ADB and coordinated by the Ministry of Local Government, Rural Development and Cooperatives, not only developed the rural road network, but also addressed social norms by supporting the construction of shops and sections of markets specifically for women traders.¹⁹

With the globalization of production since the 1980s, many countries in Asia and the Pacific have become centers for the production of textiles, electronics, automobiles, and food and beverages, as well as for outsourced services. While these developments should hold pro...

Table of contents

• Front Cover
• Title Page
• Copyright Page
• Contents
• Foreword
• Acknowledgments
• Abbreviations
• 1. Introduction
• 2. Women’s Entrepreneurship in Asia and the Pacific
• 3. Case Studies
• 4. Opportunities for Future Research and Programming on Women’s Entrepreneurship in Asia and the Pacific
• Footnotes
• Back Cover