Female entrepreneurs are a leading part of socio-economic growth in New Zealand and worldwide and regulators should consider investing more in female entrepreneur education.

According to the Global Entrepreneurship Monitor Women’s Report, 163 million women across 74 countries worldwide were starting up or operating new enterprises, and an estimated 111 million were running established businesses in 2016.

Women entrepreneurs play significant roles in increasing family incomes, creating employment for their societies, and providing value-added products and services to the world.

In addition, female owners are more likely to hire female employees, which lessens the gap of gender equality and discrimination and pays a significantly larger level of tax-per-employee than their male counterparts.

New Zealand is among the leading countries when it comes to female-owned businesses, with about 32% of businesses owned by women.

The 2018 Mastercard Index of Women Entrepreneurs placed New Zealand as one of the top countries, with the strongest supporting conditions and opportunities for women to thrive as entrepreneurs. Other top countries include Sweden, Canada, the United States, and Singapore.

These developed markets with strong enabling conditions, however, are not immune to cultural bias against female entrepreneurship. On average, four in 10 female founders frequently encountered gender bias while running their startups and 42% believed the same gender discrimination would continue as they attempted to scale up their business, according to the 2018 report by The Unilever Foundry.

Barriers

Despite their significant contributions to job creation, income generation, and gender equality, the barriers preventing female entrepreneurs from doing business remain and even become wider in recent decades. Among the challenges, dealing with bureaucratic complexity and corruption is one of the most impactful business obstacles that women entrepreneurs encounter, especially in emerging economies where corruption and bureaucratic complexity are of serious concern.

Regulators should consider investing more in female entrepreneur education and establishing more business networks to help combat the extra burden they face in dealing with bureaucracy.

We did a study that employed comprehensive data covering 16,560 enterprises in 32 emerging economies in Eastern Europe and Central Asia and found female-led firms account for 19.2% of all enterprises, which is approximately four times lower than the share of male-led firms in the sample.

Female entrepreneurs spent about16.3% of their time working on addressing government regulations, which is 0.7% higher than their male counterparts, suggesting that time costs and bribery engagement are higher in female-run firms than that in male-run firms.

In addition, the impact of gender on firm bribery and the time cost of dealing with regulatory hassles is more pronounced among firms located in countries that are more corruption-prone and becomes weaker among countries with higher female educational levels.

Time costs

In searching for a mechanism underlying the positive association between female entrepreneurs and the time costs of dealing with bureaucratic complexity, this study found that, relative to their male counterparts, female-run firms have a lower likelihood to obtain a construction permit by 2.9%, to secure a government contract by 4.7%, or to hold an operating license by 1.6%.

Further, female-run firms tend to be visited more frequently by government officials. To the extent that the engagement in bribery might ease bureaucratic hassles, potentially alleviating business failures, the bribe-to-survive motive serves as a possible explanation for the higher level of bribery and time cost of addressing government regulations in female-led firms than in male-led firms in emerging economies.

As well, as the time cost is an important factor in the decision-making process by economic entities in transition economies, bribe engagement can serve as a hedging instrument against risks derived from bureaucratic burdens, particularly for female entrepreneurs in emerging markets, so that they can stay focused on their firms’ core business activities.

The global financial crisis (2007-8) and the current Coronavirus pandemic have had far-reaching impacts on startups and entrepreneurship around the world.

Businesses run by female entrepreneurs were especially vulnerable during the global crisis, according to a recent study by the OECD.

The policymakers can consider establishing more business networks that allow female entrepreneurs to improve their startup capital and business experience, as well as gaining better access to the new capital and policies so they can reduce the time cost of dealing with bureaucratic regulations and sustain their business resilience in times of crisis.

• Dr Harvey Nguyen is a senior lecturer at Massey Business School. He is the deputy director of Massey’s Sustainability & CSR Research Group and serves on the editorial board of several international refereed journals. 
• Dr Mia Pham is a senior lecturer in finance at Massey University. She is an associate editor of Corporate Governance: The International Journal of Business in Society. 
• Dr Lan Archer is a research fellow at Griffith Business School, Griffith University.

This content was supplied free to NBR.