Almost half of the nascent and new ventures arise from women (46.5%) in Ecuador.
The Global Entrepreneurship Monitor (GEM) Ecuador, whose second edition was published in October 2020 by the Espol Business School (Espae), is the latest look at entrepreneurship in the country.
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The study indicates that Ecuador is one of the countries with the highest gender parity in the rate of early entrepreneurial activity (TEA), which includes adults (18 to 64 years old) who are about to start a business (nascent) or started one that has not surpassed the threshold of 42 months (new).
“But despite the fact that a similar number of men and women start businesses, a higher proportion of men would be able to sustain their businesses for more than 42 months”, indicates the study.
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The proportion of women with new businesses was 47.7%, a consistent trend over the years. And 38% of established businesses are led by women. These are relevant figures today on the International Day of the Entrepreneurial Woman.
The results show that there are gender differences and gaps, since women undertake in a greater proportion to earn a living due to the scarcity of employment or family tradition. And to a lesser extent to make a difference or accumulate wealth compared to men.
The report points out that gender disparities come from before the decision to undertake. “Both the results of this report, as well as those of previous years, show that men show a greater self-perception of entrepreneurial skills, and less fear of failure as a barrier to starting a business”.
In the period 2008-2019, more men (52.93%) than women (49.99%) perceived opportunities to undertake; Likewise, more men (76.56%) consider that they have the skills to start a business than women (69.68%).
Finally, women (38.54%) showed that fear of failure constitutes a barrier to starting a business in a greater proportion than men (30.91%).
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“These results are in line with gender gaps observed in other areas, such as issues of quality employment and self-perception of entrepreneurial skills,” the report states.
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In general, women's businesses have little innovation
Virginia Lasio, director of GEM Ecuador, says that the country has stood out for years for almost gender parity in terms of early entrepreneurial activity . "What has been consistently observed is the higher proportion of enterprises due to the need of women, there is also greater self-employment."
Is it more difficult for a woman to run a business than a man?
A look at the entrepreneurial process from the intention of starting a business to achieving a well-established business shows the reduction of female entrepreneurs at each stage, this is a reflection of various kinds of difficulties, from the nature of the venture, through capacities, access to resources, power of their networks, etc. It is not easy to answer the question; through the GEM we have observed that the closure rate of women in the region is lower than that of men, in Ecuador it has been higher in some years. However, in Ecuador and also at the regional level, the proportion of women who state that the fear of failure could become a barrier to undertaking is higher. As for financing, even though it is not the main reason for business closures, there are more male investors than women, and due to diversity of preferences, there could be some bias that reduces the number of female ventures favored, even on crowdfunding platforms such as Kickstarter (which funds creative projects), some studies show. Here in Ecuador, crowdfunding is incipient and we still do not have data on its performance.
Do start-ups led by women have a longer average duration?
In established businesses, those whose existence exceeds 42 months, a gap is observed regionally; lower proportion of female owners. In the 2020-2021 period, overall, women entrepreneurs in Latin America showed the highest proportion of business closures caused by the pandemic.
How can the State support female entrepreneurship?
I wouldn't know if the State directly; This must improve the environment, entrepreneurship and innovation ecosystem, via comprehensive public policy, etc. It is a complex issue, to which we have always given partial solutions or Band-Aid-type solutions. In general, education and capacity building are a way of support. According to the GEM, women, in general, show the same or very close perception of opportunities to undertake as men, the same intention to do so, however, they feel less competent.
What are the main contributions of female entrepreneurship to the national economy?
It is interesting to note that the number of women entrepreneurs is higher in low-income countries and declines as the number increases. Sometimes we do not measure the impact of women's businesses due to the tendency to compare them with those of men. If we look at the global panorama, we will measure the importance of the contributions of women entrepreneurs in any phase of the entrepreneurial process. The latest study carried out by the Global Entrepreneurship Monitor (GEM) shows that women entrepreneurs represent almost 50% of all entrepreneurs around the world. Women represent around 40% of informal financing for entrepreneurs. They represent around a third of high-growth entrepreneurs globally. What is lost if women cannot or face barriers to undertake. Locally, I would believe that the direct impact on the economy is not visualized, due to the nature of the ventures; there is evidence of its impact on the well-being of families. As I mentioned before, not only in Ecuador but in the region, women's businesses out of necessity predominate. The latest GEM 2018-2019 report on women's entrepreneurship shows that in Latin America they are 40% more likely than male entrepreneurs to start out of necessity. Therefore, its impact is low in terms of job creation, internationalization and innovation. The large proportion of businesses is in retail trade both in the region and in Ecuador. In the area of information and communication technologies, men's businesses also predominate. The Tech Start Up Radar, published by Buen Trip, although it is not exhaustive of the businesses in the country, shows that these technology-based businesses have grown in the last two years; the latest edition shows 38 female founders out of a total of 280 start ups.
What do women's businesses need to make them more permanent and sustainable?
As long as they remain subsistence businesses they will always be vulnerable. However, the pandemic has also brought opportunities for entrepreneurs around ICTs (Information and Communication Technologies), and consumers have also changed their habits. It is possible that these circumstances provide better opportunities for women as well. In fact, globally and in Latin America and the Caribbean, the 2020-2021 report shows parity between men and women in terms of opportunities arising from the pandemic.
How innovative are female start-ups?
Not very innovative. The GEM report on women 2018-2019 mentions that globally eight countries show particularly low levels of innovation in women's ventures, with a gap of 50% compared to those of men, among these countries is Ecuador, the others are Bosnia and Herzegovina, Bulgaria , Indonesia and Iran. The 2020-2021 report reports that in middle-income countries, among which Ecuador is located, one in four women offers innovative products; There are also limitations, with the exception of Brazil, for example, in the export business. (YO)
