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IS GENDER AN ISSUE TOWARDS THE PROMOTION OF ENTREPRENEURSHIP

DEVELOPMENT IN DEVELOPING COUNTRIES?


GROWTH-ORIENTED WOMEN ENTREPRENEURS (MOZAMBIQUES CASE)

By

Rotafina Jos Sande Donco (Ph.D.)


Doctorate in Business Administration (International Markets)
September 2016

Email: R.donco@yahoo.co.uk
Tel.: +258 825796070

ABSTRACT
Small Medium Enterprises (SMEs) are continuously playing a key role in economic development of both
developed and developing countries. The contribution of women in business can no longer be ignored
although culture and gender stereotypes continue to hinder womens development in the business sphere.
Gender related barriers include asymmetrical rights and obligations, labor mobility limitations, literacy
problems and unequal access to resources. Social feminists argue that no matter what business ventures
women engage, they are doomed to fail therefore it is paramount to ensure that facilities for technical
assistance and access to finance are created to help them succeed. Liberal feminists on the other hand
recognize the necessity of providing an equal playing field for both growth-oriented women and men-led
ventures for they have an equal chance of success or failure. This paper expounds on possible ideal
approach towards entrepreneurship development and its applicability in developing countries. The
research focuses on Mozambique a developing country located in the Southern Africa region.
Keywords: SMEs, women-led enterprises, gender

INTRODUCTION
SMEs potential to succeed and to contribute to the economic development of a given country is
determined by the characteristics of the individual entrepreneurs, the firm, the macroenvironment,
relational factors, their perceived role towards job creation and entrepreneurship facilitation (Wen-Hu,
2010; Kikooma, 2010; Nichter & Goldmark, 2009). As with any other project, SMEs undergo different
phases; starting up, growth, maturity and decline (Louis & Macamo, 2011). Understanding the SMEs
value chain and their characteristics could be an important channel to reinforcing the weaker links
through the enhancement of the available opportunities for the development of SMEs by tracing the flow
of competing products from input stage to the final consumers (Wennekers, Stel, Carree & Thunk, 2010;
Kongolo, 2010). Women-led SMEs however, have continued to remain small due to challenges associated
to access to capital, access to markets and access to networks (Hadary, 2010). Gender stereotype has
continuously attributed women as the weaker sex, which has contributed to women-led SMEs perceived
underperformance (Gupta, Turban, Wasti & Silkdar, 2009; Marlow & McAdam, 2010).
Estrin & Mickiewicz (2010) argue that gender approach to economic issues can be justified on
grounds such as equality, efficiency and need. Most women-led businesses are contained to accommodate
work family balance and not due to the fact that they cannot grow (Adkins et al., 2013). It is widely
acknowledged that gender plays a significant role on how individuals perceive lack of support more
importantly for women than men (Gupta et al., 2009). A majority of women-led businesses are less likely
to export compared to their male counterparts owing to gender differences in export propensity due to
systematic differences in firm and owner level attributes associated with exporting (Orser, Spence, Riding
& Carrington (2009).
In order to have a complete picture with regard to growth oriented women-led SMEs, U.S. was used
as benchmark being a developed country whose institutions are well developed as opposed to
Mozambique a developing country. The aim of the research is two-fold:

To contribute to the existing body of knowledge in the area of women-led enterprises and their
access to international markets.

To benchmark relevant best practices used in the United States particularly on the women-led
SMEs that could be leveraged in Mozambique.

Women-led businesses comprise a third of all SMEs in the U.S. because they allow work-family balance
and facilitate the control element that women entrepreneurs need (Adkins et al., 2013). The growth of
women-led businesses is fully supported by the federal recognition of the women-led businesses through
the Women Business Act of 1988 which established a long-term infrastructure and sustained commitment
on the development of women-led businesses for over thirty year period (Miltchelmore & Rowley, 2013).
Though the US banking industry is more fragmented and competitive, the debt market still penalizes
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female owned SMEs than male-owned because ambiguity in the gender assistance of business borrower
masks the gender effect due to the fact that loan approval process is at the discretion of the accounts
manager (Wu & Chua, 2012).
In Mozambique as in any other developing country, external barriers affecting SMEs growth and
access to international markets include competition for the market share, high expenses involved in
importing materials and complicated procedures particularly at the customs due to corruption, weak
institutions such as the judiciary system where contractual enforcement for instance still faces challenges
(Louis & Macamo, 2010).

THEORY
The liberal and social feminist theories have attempted to explain why male and not female-led
SMEs are successful (Shinnar, Giacomin & Janssen, 2012). The liberal feminist theory advocates the
equality of both men and women therefore, male-led or female-led business ventures have an equal
chance for failure or success. On the other hand, the social feminists believe that women are the
oppressed group because they are divided by factors such as class, race, ethnicity and religion and
oppressed simply because of the fact that they are women.
Social feminists therefore would argue that women entrepreneurs need to be assisted, coached,
hand-held through special technical assistance programs in order to be at the same level with men which
would place them at a better position to compete against their male counterparts (Shinnar et al, 2012).
The role of gender in the international trade remains virtually unexplained however, Orser et al., (2009)
have highlighted the liberal and socialist feminist theorists interpretations of owner and firm attributes
associated with exporting.

Table 1
Liberal and Social Feminist Theories Interpretations of Owner and Firm Attributes Associated with
Exporting
Export attributes

Liberal feminist theory

Social feminist theory

Growth intention

Men and women who retain


similar growth intentions are
equally likely to export

Female business owners seek outcomes that differ from


male counterparts thus female entrepreneurs might seem
as if they are not growth oriented (Crant, 1997). Growth
intentions therefore are moderated by gender
consequently, male-led businesses are more likely to
export than female-led enterprises.

Management
experience

Men and women who retain similar


levels of management are equally
likely to export

Socialization results in different life experience and


women are likely to bring less related market
experience as compared to men thus male-operated
enterprises have a high propensity to export compared
to women-led businesses

Residency status

Men and women who are


immigrants are equally likely to
export

Additional barrier to being women and foreigners is a


prohibitive factor to women entrepreneurs to export as
opposed to the male counterparts because the
immigrants firm resources are structured differently in
female and male operated businesses (Mirchandani,
1999).

Firm size

Men and women who operate firms


of similar size are equally likely to
export

Firm size is linked to the available resources therefore


inherently gendered giving male operated firms an
upper hand with regard to exporting as compared to
women-led enterprises.

Sector

Men and women who operate firms


of similar sectors are equally likely
to export.

Women are more likely to be employed in social sectors


and men in decision-making or protection sectors with a
tendency therefore for women to be averse to export
sectors.

Firm age

Men and women who operate firms


of similar age are equally likely to
export

Women-led businesses on average are younger


compared to male-operated businesses and with this
experience come the export experience by the male
counterparts (Carrington, 2005)

Innovation (R&D)

Men and women who


Operate firms with similar
Investments in innovation are likely
to export

In most cases, women lack the knowhow, resources and


credentials and the networking opportunities as opposed
to men hence male operated ventures likely to export
because of an upper hand in these dimensions as
opposed to women-

Note. Adapted from Gender and export propensity by B. Orser, M. Spence, A. Riding, & C. Carrington,
2009, Entrepreneurship Theory and Practice, 34(5), 933-957. Copyright 2009 by Baylor University
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RESEARCH DESIGN
A qualitative research through an exploratory case study was employed to understand the
dynamics of growth oriented women-led businesses in Mozambique. Yin (2009) underlines that an
exploratory design can be used where there are few or non-existence of earlier peer reviewed studies to
refer to in the area. This is true in Mozambiques scenario where academic literature on women-led
businesses is limited and only a few interventions on women entrepreneurship development, which are
not peer reviewed such as the International Finance Corporations technical assistance program to
women-led SMEs (IFC, 2013).
The focus of an exploratory research design is always to gain insights and familiarity and for later
investigation and it is flexible for it addresses all types of research questions including why, what and
how (Yin, 2009). The unit of analysis for the research was women-led businesses and the sample frame
was limited to growth-oriented women and male-led SMEs in Maputo city and province, which is only a
segment of the country as there are 10 provinces in Mozambique. As an exploratory case study of factfinding, the sample size was limited to the participation of 20 women entrepreneurs and 10 male
entrepreneurs as participants who met the following criteria:

Have been in business for a minimum of 2 years.

A maximum of 50 employees and

Whose business is legally registered.

This was particularly so in order to ensure that the informal sector was not included as this study focused
on growth-oriented women entrepreneurs. The male participants as a control group in order to facilitate
drawing the right conclusions with regard to women-led businesses as the same questions were subjected
to all the participants. Triangulation to enhance the validity and reliability was employed and involved the
combination of three data collection methods the principle one being the focus group discussions,
structured questionnaire and observation.
FINDINGS
One hundred percent of the male participants were breadwinners as opposed to 67% of the
women participants. The youngest participant was 30 years old and the eldest 65 years old. Thirty-five
percent of the participants had university degrees, 5% Masters degree, 10% were studying for their
bachelors degree, 30% had completed secondary school (12th grade), 5% were had an education level of
up to 11th grade, 5% 10th grade level of education while 10% had a basic primary education of up to 5th
grade. Eighty eight percent of the respondents were more than five years as businesspersons whereas 75%
were legally registered and operating under the license issued through the Ministry of Trade and
Industries.
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5th"graders"(primary)"
10th"graders""
11th"graders"(secondary)"
12th"graders(secondary)"
University"studies"in"Progress""
Masters"level""
university"graduate"
0"

1"

2"

3"

4"

5"

6"

7"

Total&number&of&par/cipants&

Figure 4. Academic level of the research participants.


Most of the participants were motivated to start their businesses due to the following key factors:
satisfaction of basic needs, lack of formal employment, curiosity and inspiration drawn from other
successful business persons, control aspect, continuation of the family legacy, self-drive and the belief
that they could make it on their own. A majority of the respondents highlighted that being male or female
(sex) is not a determinant for their success and prefer working with male employees because they do not
mind working overtime neither do they miss work due to family-related problems.
The institutions supporting the SMEs including women-led businesses incorporate the
government, financial institutions in particular the commercial banks and the microfinance institutions,
the Multi National Corporations (MNCs) through business linkages, the family and community that
provide moral support and the business development services providers. Some participants are familiar of
the technical services offered by the government and other private sector entities while the majority of the
participants were not aware of what and where to access technical assistance for their businesses.
Fifty percent of the respondents admitted to have previously accessed loans from the commercial
banks. High interest rates, heavy application procedures, collateral preconditions, discriminations and
lack of matching products for instance working capital were some of the bottlenecks that were
highlighted. Only 2% of the respondents export their goods or services to other countries outside
Mozambique citing limited capacity to produce the required quantities, delay of settling of the bills by
debtors denying them the vital working capital needed to maintain the business operational and heavy
custom procedures as some of the major challenges linked to accessing international markets.

CONCLUSIONS
Growth-oriented SMEs whether women-led and male-led face the same challenges and sex does
not matter as to whether their business ventures will succeed or fail. All growth-oriented SMEs therefore
should receive the same consideration with regard to policies, strategies and technical interventions. One
of the issues that the study wanted to substantiate was whether promoting entrepreneurship from a gender
perspective is a good idea or rather resources should be used to propagate entrepreneurship regardless of
gender. Prior to the study, the researcher was an advocate of gender-based interventions leaning heavily
towards social feminist theory. The findings however contradict the expectations and the social feminist
approach that the promotion of entrepreneurship on a gender perspective is ideal rather, resources should
be directed to all SMEs on equal grounds regardless of sex as all growth-oriented SMEs face the same
challenges in Mozambique.
Most African American women entrepreneurs define success as a five-dimension achievement
including: (a) the ability to provide wealth to their families, (b) work-life balance by spending more time
in their family, (c) the ability to give back to the community through the provision of jobs, particularly to
those who are less privileged such as high school dropouts, former felons, and public assistance recipients
(d) the ability to satisfy their customers needs, and (e) the fulfillment of personal spiritual calling
(Robinson, Blockson, & Robinson, 2007).
The women-led SMEs in Mozambique consider their businesses successful when they are able to
honor their business obligations including paying the wages of their employees, rent, loan reimbursement.
Moreover, there is a paradigm shift that contradicts Wennekers et al.s (2010) findings that in most cases
SMEs in developing countries are implemented by less educated people, with no prior experience and that
women own most of SMEs. In Maputo Mozambique, a developing country, university graduates
implement most of the successful growth-oriented SMEs as per the findings. The owners do have prior
business or work experience while everyone is free to enter and to leave at will.
Another interesting finding is the optimism and pessimism by the respondents surrounding the
recent discovery of mineral resources including gas and oil amongst other minerals. At least 50% of the
respondents felt that they have no role to play within the mineral resources value chain. The other half of
the respondents saw a great potential of their participation in the short-term if proper and transparent
information is provided to all by the government or long-term through adapting the education curriculum
to ensure that their children get the proper training to help them benefit from the resources in the future.
This research however, dealt with growth-oriented women-led SMEs in Maputo city and province
and the male-led SMEs were used as a control. The study did not explore the informal sector, which
employs a majority of the population in the country. It would be significant to find out whether these
findings would hold true for the informal sector as well in Maputo, Mozambique. Further, if the variables
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would be changed particularly the sample frame to include some participants from the other provinces
would the findings be the same? Further research is therefore recommended using a quantitative approach
to allow the generalizability of the findings where growth-oriented male and female-led businesses
meeting the criteria would be allowed to participate from sampled provinces. Research on the high
interests on loans is also recommended which would shed some light as to whether the default rate is
higher amongst one gender or the situation is the same for both male and female enterprises.
IMPLICATIONS FOR PRACTICE
In most cases, interventions for reinforcing SMEs are thought of along gender roles. The findings
however point otherwise by highlighting that the key players should promote entrepreneurship
development on an inclusive basis particularly for growth-oriented SMEs. This is because as per the
studys findings, both women-led and male-led SMEs face the same challenges with regard to access to
finance, access to market, institutional barriers, growth management, access to information. Sex is
therefore not an issue that determines whether a growth-oriented business venture will succeed or fail.

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