Let’s level the ground for women-led SMEs
*This piece builds on the study carried out at the Laboratory of Entrepreneurship (LET) in 2020 “Digital disparities: Insights from entrepreneurs for SMSB growth with a gender perspective in Mexico”
Small and Medium-sized Enterprises (SMEs) are of particular social interest, as they provide a large number of jobs, around 70% of them in most of the countries(OECD, 2021). It’s also a relevant case of study as they usually face important barriers and often lag behind larger companies, having less access to innovation, resources and an equal ground to compete. However, women that lead SMEs face even more challenges, as several studies have uncovered. Women not only face lower wages, higher levels of informality and discrimination, but have to overcome structural social barriers that prevent them to fully integrate to the economy. This has been particularly tougher during the last couple of years, the pandemic disrupting the whole economy but hitting women even harsher. In order to build forward better it is crucial to understand the barriers that prevail in women-led companies including start-ups, in order to promote resilience, equality and prosperity.
There are 4.05 million enterprises with less than ten employees in Mexico. They gather 22.4 of the 46.4 million people occupied in non-agricultural economic units, where 41.6% are women. Women’s hierarchy and remuneration in SMEs are far from fair. For instance, in SMEs 39% of the managers are women, but only in 15.7% of those firms, they are responsible for decision making(ENOE, INEGI, 2020). A higher relative number of women earn less than two minimum wages than men (see the graph below). In the upper strata of salaries, women with these earnings are half of the men’s proportion. To summarize, a deep gender wage gap remains in the Mexican labor market, especially in SMSBs.
To better understand the gender disparities in SMEs in Mexico, it is necessary to consider the role of gender and the quality of labor. In addition to being the primary source of income for families, access to social security, health care, and credit availability also depends on the quality of labor. In Mexico, we observe significant differences in wages, social security access, health, education, and general welfare between male and female workers and their families. The most recent data shows that 10.4 million households (28% of the total) have a female head of the family. Their total incomes are 14% lower on average compared to homes with male heads of families (NSOE, NISG, 2019). Out of those female-headed households, 17% are working under conditions of informality, 33% do not have access to health care, and 71% have between one and three relatives depending on them (NSOE, NISG, 2019). Therefore, a crucial aspect of fostering business growth in Mexico is gender inclusion. According to OECD, Mexico still has one of the lowest female participation rates in the labor market. Only 43.5 % of working-age Mexican women were part of the labor force in 2018, compared with an OECD average of 52% and levels of around 60% in Colombia, Israel, the US, and Canada (OECD, 2019). Structural labor barriers, like the lack of public childcare, render mothers less likely to find or look for a job (Hoyos, Rogers, and Székely, 2016).
Considering the above, LET carried out a qualitative study to further understand the challenges faced by women in SME’s. Over 60 women entrepreneurs participated in focused groups and 22 in in-depth interviews, sharing the various challenges that they face. Some of the insights of the study are discussed below, being contrasted with existing literature and data on the matter:
Social norms are one of the main barriers in women-led SMEs
Women in Mexico hold many times the ultimate responsibility for family economic support. However, they often have to choose between having children or creating a business. It appears that Mexican culture might judge harsher women who take business risks, fail, or spend too much time in their professional life, especially during the early childhood years.
Although access to capital and the mobilization of other resources are considered the main barriers to starting or growing a business for both genders, women entrepreneurs often have additional barriers. These are related to the search for a balance between work and family. According to the most recent data from the National Household Survey provided by the National Institute of Statistics and Geography, 18% of the country’s 34.1 million households have a mono-parental structure. Of those, 83% have a female head of the family (NHS, NISG, 2018). Furthermore, the differences in time usage between male and female members are also significant. While males devote, on average, 38.1 hours per week to the domestic task to domestic duties and taking care of other family members — such as children and elders, females dedicate 57.7 hours to those tasks in the same period (DHRNS, NISG 2017). With this information, it is possible to better understand the dimension of the time trade-off for females. Mexican women have less time than men between providing for their families, growing their businesses, and taking care of household duties.
In the context of the time trade-off between taking care of their families and contributing economically, numerous women have faced social and cultural stigmas that reduce their self-confidence: a key factor for incentivizing entrepreneurial activity (Briseño, Briseño and Lira, 2016). For instance, their own families and domestic duties could require a significant time investment for female heads of the family. According to the National Survey of Household Relationship Dynamics (NSHRD), in 2016, 47.6% of the 46.5 million Mexican women above 15 years old agree that “working women neglect their children.” Traditional gender roles can increase social pressure to devote their time only, or primarily, to household tasks.
Reduced entrepreneurial self-confidence
Linked to the above matter, there is an often shared feeling among women, that they lack the abilities or knowledge to lead a company. The self-confidence levels differentiate from those of their male peers, which is often influenced by societal and cultural stigmas, as mentioned above. In Mexico, being a woman reduces the perception of business opportunities more than the economic background. Regarding self-perception of capacity to start a business, being younger than 25 or older than 55 years old, having primary or secondary education, and being a woman are respectively the most critical variables to reduce entrepreneurial self-confidence (Naranjo et al. 2015).
Despite similar education conditions between genders (INEGI, 2020), women in the focus groups were more eager than men to learn and apply new knowledge to boost their current business and introduce innovative business ideas. They expressed their desire and necessity to possess a certificate from a formal institution to “feel more confident.” That was not the case with male interviewees. Presumably, women feel a greater need for academic achievement to compensate for gender discrimination, and systemic social invalidation. However, to gain new knowledge, they need more time, which is restrained from their day-to-day duties, as stated in the previous point.
Hostile environments
Up until 2016, 10.2% of the occupied women in Mexico declared to have been victims of some sort of violence within their labor environment, including discrimination (NSHRD, NISG, 2017). This reality often translates into resistance from their families to finance women’s entrepreneurship, reluctance by financial institutions to take risks in women’s projects, and general mistrust to accept women as responsible for decision-making, presenting themselves as risk-takers. Moreover, women have constantly reported harassment and different types of violence against them in the working place.
On the other hand, this harassment has expanded to digital environments. For SMEs where social media and other internet-related tools play an increasing role, this is of increasing importance. The 2017 Cyberbullying Survey Module reported that 17.7% of the female internet users had been victims of an intentional act of harassment using a digital platform at least once in the last year. (NISG, 2018). On top of that, 64.9% of the female aggressors were males. Furthermore, a staggering 41.9% of women reported having received unappropriated sexual proposals at least once in the last twelve months, while 41.5% have suffered from threatening or received offensive messages, and 35.4% had contacted fake profiles (NISG, 2018).
The hostile environment that women face has relevant consequences for women’s integrity and constitutes a significant disincentive for female entrepreneurs. According to The cyber violence against women and girls report, acts of gender violence committed or aggravated, partially or totally, in digital platforms causes psychological and emotional damage, reinforce prejudices, damage reputations, cause economic losses. These threats pose barriers to participation in public life and, eventually, can lead to forms of sexual violence and other forms of physical abuse. Those displeasing consequences of cyberbullying and digital harassment represent a significant limitation for female entrepreneurs.
lack of comprehensive policies that boost women-led SMEs
There are multiple government programs in place that foster entrepreneurship and business growth. However, they are often designed without a gender perspective. For instance, some programs that provide financial assistance require a collateral that covers the amount to be credited, but less than 30% of women possess a property. This results in the rejection of over 70% of women-led startups that require this type of support. While many programs are directed to women, many still lack various considerations to be inclusive, starting from the design (for instance the limiting requirements for providing support) to the call (reaching the entrepreneurs, as it is usually men who receive the information from entrepreneurial hubs) to the implementation (having considerations for women’s limitations). Specific actions must be taken to foster women-led companies, as they present particular characteristics and encounter specific challenges.
All of the points mentioned are interlinked and reinforce one another, making it challenging to design better policies that tackle them holistically. The following actions are outlined to deepen the discussions for leveling the ground to women entrepreneurs:
Incorporate systematic and robust policies directed to include women in the economy. Our economic system will benefit by incorporating more women into the labor force, but better conditions need to be put in place to favor this integration. There is a need to put in place targeted policies that acknowledge women’s needs and difficulties. For example, enhancing flexible environments for work, like working in flexible schedules or even working from home, dramatically benefits women, as this allows them to take care of their families. Simultaneously, spread information among the society about the disparities they face. The vast literature on the matter is emerging and policymakers need to take this evidence and considerations for formulating labor policies with a gender perspective. A well-known example is to advocate for affordable, public child-care to support female employees and entrepreneurs.
Support awareness and incentivize gender equality. Discriminatory social norms still condition women’s business growth in Mexico. Women are still perceived as the traditional caretakers and thus many times negatively judged when they dedicate time to their work instead of their families. Comprehensive egalitarian policies might push for a systemic change, like extending maternity and paternity leaves. Hereby, awareness-raising campaigns would help change the population’s perspective, encouraging men to share family and household responsibilities and support women who choose to take on entrepreneurial activities.
Strengthening egalitarian conditions in law and education. A gender balance is essential to ensure that communities embrace inclusive and non-discriminatory conditions regardless of their geographic location. The significant inequality reveals the need for equal access and opportunities to education for men and women at all educational levels. In addition, reforms to current laws require eliminating biases, as in the case of retirement (pensions) and a review of the regulation that certifies companies in gender equality.
Fostering collective grass-root communities of practice to enhance an innovation culture. Encourage grassroots organizations — especially those led by women — to organize. These communities are more likely to consider the local culture, values, and collective knowledge to mobilize their communities to learn and innovate into the digital economy. The strengthening of an innovation and learning culture would push for further dissemination of innovation, out of which more entrepreneurs can benefit. This is especially relevant for women, who often feel threatened by men and are harassed also in various settings. These grassroots communities of practice can build their tailored-made sequential and flexible curriculum and increase confidence and motivation to learn new skills that might open new and better possibilities for their businesses.
Enhancing safe environments for women. Cyberbullying, harassment and other forms of violence are unfortunately constant situations that women face in the working and digital environment, evidence that was sustained within our interviews and focus groups. Policies that push for concrete actions that disincentivize this behavior are needed, from legal modifications to education programs. It is imperative to spread helpful information and awareness around potential threats, channels for reporting scams, and protection mechanisms to be used by women. Moreover, there is an imminent need to create spaces where women can feel safe, not only from harassment but also where they can fully develop their business potential.
Leveling the ground for women with lifelong-learning skills and environments. There is a latent eagerness form women entrepreneurs to be certified by an official institution to see themselves as “professional entrepreneurs,”; whereas men entrepreneurs felt more confident without any external validation. Still, most women have revealed that they often lack a long-term business expansion goal, a financial-fiscal strategy, or a digital learning plan. The importance of developing non-technical skills to increase their self-confidence, resilience, and leadership skills is latent. Therefore, female technical and soft-skills must be encouraged as part of the entrepreneurship training agenda. In addition, a grassroot, bottom-up approach might be better to create learning communities of practice. Learning communities of practices have the potential to improve entrepreneurs’ businesses and technological proficiency, achieve greater adaptability and social cohesion.
In an unpredictable, harsh environment, entrepreneurship represents an alternative source of income, especially relevant for groups like women, who face particular challenges in the labor market. This route became particularly relevant during the pandemic, in which the economic sectors that have been harshly hit are those with the highest concentration of the female workforce. Though promoting entrepreneurship is important for economic recovery, including a gender perspective is crucial for a sustainable and egalitarian recovery.
References:
Briseño, O., Briseño, A. & López, A. (2016) Female Entrepreneurship: A multi-case study of critical factors at the northeast of Mexico. Business’s Innovations. 13(25): 023–046 Mexico. (ISSN 2007–1191). Retrieved from: https://www.researchgate.net/publication/310233592_El_Emprendimiento_Femenino_Un_estudio_multicaso_de_factores_criticos_en_el_Noreste_de_Mexico
Hoyos, R. D., Rogers, H., & Székely, M. (2016). Ninis en América Latina: 20 millones de jóvenes en búsqueda de oportunidades.
Naranjo, E., Campos, M. & López, L. (2016) Global Entrepreneurship Monitor National Report Mexico 2015. Retrieved from: https://www.gemconsortium.org/report/gem-mexico-2015-national-report
National Institute of Statistics and Geography (2019) National Households Survey. Microdata. Retrieved from: https://www.inegi.org.mx/programas/enh/2019/default.html#Tabulados1
National Institute of Statistics and Geography (2017) Cyberbullying Survey Module. Microdata. Retrieved from: https://www.inegi.org.mx/investigacion/ciberacoso/2017/
National Institute of Statistics and Geography (2016) National Survey of Household Relationship Dynamics. Microdata. Retrieved from: https://www.inegi.org.mx/programas/endireh/2016/
National Institute of Statistics and Geography (2020) Occupation and Employment National Survey. Microdata. Retrieved from: https://www.inegi.org.mx/programas/enoe/15ymas/default.html#Tabulados
OECD (2021) Retrieved from https://www.oecd.org/cfe/smes/
OECD (2018) Labour force participation rate, by sex and age group, Statistics. Retrieved from: https://stats.oecd.org/index.aspx?queryid=54752
