Surge in female start-ups narrows ‘enterprise gap’

Businesswoman

The UK has witnessed a rapid rise in the number of start-ups in recent years. But the number of new female entrepreneurs in the UK has risen far faster than men in the past decade.

New research from the University of Strathclyde and Aston University using data from the Global Entrepreneurship Monitor (GEM) also reveals there are large disparities between different parts of the country when it comes to this ‘enterprise gap’.

The GEM data shows that between 2003-6 and 2013-16, the proportion of women that went into business rose by 45%, compared to just 27% among men. Overall, however, men are still nearly twice as likely to be entrepreneurs (10.4% of men versus 5.5% of women).

In Scotland, the proportion of women early-stage entrepreneurs grew from an average of 3.2% of working age women in 2003-6 to 5.4% in 2013-16, bringing the Scottish rate into line with the UK average of 5.5%.

Scotland now ranks as the third highest region in the UK in terms of gender parity for entrepreneurship, with 64 early-stage female entrepreneurs for every 100 males.

Regional differences

The region with the closest gender parity is the West Midlands, where there are 74 new female entrepreneurs for every 100 males, compared to just 33 in the North West.

Researchers have suggested these regional differences may be partly explained by the presence of higher numbers of graduates and mobile individuals including international migrants.

Across both sexes, the 2016 UK early-stage entrepreneurship rate was significantly higher than 2015, and again exceeded the previous long-run rate of around 6% which prevailed until 2010.

The UK rate of 8.8% compares favourably to France (5.3%) and Germany (4.6%) - confirming the UK as the start-up capital of Europe. But this is still significantly lower than that of the US (12.6%).

At the global level, the UK’s rates of female early-stage entrepreneurship remain well below many other advanced economies.

Canada has the highest absolute rate of female early-stage entrepreneurs at 11.6%, while Spain has the closest male/female ratio of any developed economy, with 74 Spanish women entrepreneurs for every 100 men, compared to 53 for the UK.

Many developing economies display even higher rates of female entrepreneurship. In Ecuador, 31.9% of women are entrepreneurs, while other Latin American and South East Asian nations dominate the top spots. Indonesia and Brazil are the only GEM-participant countries where there are more female entrepreneurs than male.

The findings have been revealed in the Global Entrepreneurship Monitor (GEM) UK Report, an annual publication from the GEM UK team which looks at a range of entrepreneurship indicators, coordinated by Professor Mark Hart of Aston Business School in Birmingham and Professor Jonathan Levie of the University of Strathclyde Business School. 

GEM is the largest and most comprehensive study on entrepreneurship globally, collecting data on entrepreneurial activity in more than 60 countries via centrally-coordinated questionnaires. It defines entrepreneurship as any attempt at new business or new venture creation, such as self-employment, a new business organisation, or the expansion of an existing business by an individual or team.

The Aston and Strathclyde researchers grouped UK regional entrepreneurship rates over several years to produce more robust, representative samples than individual years alone allow.

Professor Jonathan Levie of the Hunter Centre for Entrepreneurship at Strathclyde Business School, said: “This rise in female early-stage entrepreneurship in Scotland to a level that matches the average across the UK confirms what people in Scotland’s entrepreneurial ecosystem have been seeing in recent years – the emergence of a new generation of women entrepreneurs.”

Dr Karen Bonner, senior researcher at Aston Business School, said the reasons behind the continuing disparity between male and female entrepreneurship rates were complex: “On the one hand, we could point to different societal expectations, with women still taking on the bulk of unpaid caring roles and entrepreneurship still stereotyped as a ‘male’ career choice in our wider culture,” she said.

“When asked why they started their business women are significantly more likely to cite ‘greater flexibility for my personal and family life’ and the desire for ‘freedom to adapt my own approach to work’ than men. But despite these differences, and controlling for other factors like sector, age and start-up capital, both men and women display similar levels of ambition when it comes to growing their businesses.

“We also observe a tendency for women generally to be more risk-averse which may make them self-select out of entrepreneurship, particularly in places where there are ‘safer’ employment options that allow them to work more flexibly around caring responsibilities. This would help to explain why places like Northern Ireland and the North East of England, with relatively high proportions of public sector jobs, have low start-up rates for both men and women.”

Minister for Small Business, Consumers and Corporate Responsibility, Margot James said: “Supporting innovation and entrepreneurs is a central pillar of this Government’s Industrial Strategy, so it is great to see more women throughout the country engaging in entrepreneurship in Britain.

“The UK remains among the best places in Europe to start a business, but we must continue working to ensure that this positive trend continues. From reducing corporation tax rates to providing £3.4 billion in finance through the British Business Bank, we know small business support is key to building a strong and thriving economy.”