Gender gaps in entrepreneurship are costing economies dearly

There are long-standing gender gaps in entrepreneurship. These gaps can be measured in various ways but a good place to start is the number of women who are active in entrepreneurship. Women in OECD countries are about two-thirds as likely as men to be working on a start-up or new business. This gap varies across countries, ranging from essentially no difference between women and men in Spain, to women being less than half as likely as men to be involved in early-stage entrepreneurship in Japan, Norway and Turkey.

Women are two-thirds as likely to be starting or managing a new business

Share of the population involved in a starting or running a new business, 2016-20

Gender gaps through another lens

There are many differences, on average, in the characteristics of the businesses operated by men and women. This includes sector and size of business. Women entrepreneurs are more likely to be concentrated in sectors with limited growth potential, including for example personal service sectors. Women entrepreneurs are also less likely to be employers. On average, about one-quarter of self-employed women employ others relative to about one-third of self-employed men.

These differences in activity rates and business characteristics are explained by a wide range of factors. Surveys often point to differences in motivations and ambitions for entrepreneurship, as well as higher levels of risk aversion. For example, about 43% of women across the OECD report that a fear of failure stops them from pursuing entrepreneurship relative to 37% of men. But it is also important to recognise that women tend to face greater obstacles to business creation. This includes differences in how the institutional conditions impact the labour market decisions of women differently than men (e.g. parental benefits) as well as biases in entrepreneurship support programmes (e.g. support schemes favour growth-oriented businesses). Obstacles also include larger skills gaps, greater difficulties accessing start-up financing and less effective networks that might be able to overcome these resource constraints.

A narrowing gap that’s still too wide

Many of these gaps have been closing over time. This includes not only differences in entrepreneurship activities, but also differences in motivations and ambitions. Progress is still too slow though and more is needed because current support doesn’t adequately address systemic biases nor the barriers faced by women entrepreneurs.

The time for action is now and COVID-19 recovery packages offer a golden opportunity to take a leap forward. Governments need to go further in adapting offers to the needs of different women entrepreneurs and different local conditions. This includes differentiating support offers for different profiles of women entrepreneurs. For example, a young female graduate with a STEM degree will need different support in starting a business than a female refugee or an older women who is looking to transition to retirement through a part-time business. In addition, there is a need to strengthen overarching policy frameworks to ensure that women’s entrepreneurship support schemes and organisations have stable and sufficient resources. This will also help to ensure that schemes, such as training, coaching and microfinance, are delivered as part of a coherent system.

For more information on women’s entrepreneurship trends and policies, please see the new Missing Entrepreneurs 2021 report. This report was prepared by the OECD and EU as part of a wider collaboration on inclusive entrepreneurship that includes the Better Entrepreneurship Policy Tool, policy brief and more.

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