Female entrepreneurship and the influence of national culture
Every European country has less female than male entrepreneurs. Even in well-developed countries like Germany, where the industry is thriving and innovation is peaking, only 15% of all start-up founders are women. Female founders also receive significantly less early-stage capital than male founders but end up performing better. As a result, they are often a better bet for investors.
But if women are more successful entrepreneurs than men, then why are there so few female founders? And taking it one step further, how can we motivate more women to become entrepreneurs?
When it comes to entrepreneurship, women have different preferences than men, but also face different external and internal factors than their male counterparts. The preferences relevant to entrepreneurship are marked by aspects such as risk inclinations, as well as values and personality traits. Women are more risk averse than men and define success to be the right combination of economic and non-economic outcomes, which also affects their sectoral choices when founding a company and leads to more business activity social sectors. Additionally, women rather look for a reward in the work itself than for monetary or societal recognition.
On top of that, society allocates them to different social roles and family backgrounds, which gender stereotypes jobs to be rather of masculine or feminine nature. These missing support systems (external factors) around women can also be marked by financial- and labor market discrimination, which prevents women from accessing loans, gaining relevant management experience and access to networks relevant to entrepreneurship. Women also tend to have fewer financial and human resources (internal factors) due to less experience in high-level management positions as well as in previous entrepreneurial roles, which leads to less access to relevant networks.
All in all, researchers identified these differences between men and women to be additional barriers that women must overcome, when wanting to become an entrepreneur. This partly explains, why less women choose to become entrepreneurs. Nevertheless, in the context of gender equality and societal welfare, increasing the number of female entrepreneurs became an important goal in many countries.
Consequently, policies to increase entrepreneurial activity among women were implemented both nationally in single countries and internationally by the EU. Still, these policies did not achieve the desired effect, which is why researchers started to associate cultural factors with entrepreneurship. With that taken into consideration, results show that especially the cultural dimensions masculinity and power distance, according to Hofstede, can have an impact on entrepreneurial activity.
Adding these findings to the topic of gender studies, past research also found that high levels of masculinity and power distance, increase gender specific roles, in which women typically hold lower positions with less influence. For my research, I took all these variables into account, trying to identify whether women in countries with high levels of masculinity and power distance have overcome even higher barriers to become entrepreneurs than women in countries with low levels of masculinity and power distance.
The results show that high levels of these two dimensions influence the barriers to entrepreneurship for women on average to a higher extent than, low levels of these dimensions. One example is that for a woman in Germany, where masculinity levels are high, relevant networks increase the likelihood to become an entrepreneur to a higher extant than for a woman in the Netherlands, where masculinity levels are low. This shows, that helping women in Germany to build business networks will have an even bigger effect on their entrepreneurial activity than implementing the same measures in the Netherlands. Findings like these indicate how cultural dimensions can influence women’s career choices significantly. They also indicate that differentiating policies on national and European levels can finally lead to the desired outcome of helping women overcome their barriers to become entrepreneurs.
