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Does Gender Matter for Small Business Performance? Experimental Evidence from India

Delecourt, Solène, and Ng, Odyssa. “Does Gender Matter for Small Business Performance? Experimental Evidence from India.” Published by authors as a working paper( November 2019).

Abstract

Many well-known studies have shown that female-owned micro-enterprises are less profitable and have lower returns to capital than their male counterparts. This raises an important question: what drives the estimated gender gap in business performance? We examine this question in the context of vegetable sellers in Jaipur, India, a context where observationally women make less than men. We conduct two field experiments that keep every business aspect the same except for the gender of the owner, business aspects such as location, goods supplied, and hours of operation. In Experiment 1, we isolate demand-side constraints by training confederate sellers to sell packaged goods at fixed prices using a standardized script, thereby additionally controlling for seller behavior. In Experiment 2, we only control for supply-side characteristics. In both experiments, we find that women earn at least as much as men. Our results demonstrate that the estimated gender earnings gap in this context is not due to differential demand- side constraints or seller behavior, but instead is likely driven by differences in access to capital.

Micro-entrepreneurship in Developing Countries

Seema Jayachandran, 2020. “Micro-entrepreneurship in Developing Countries, ” CESifo Working Papers Series 8086, CESifo.

Abstract

This article reviews the recent literature in economics on small-scale entrepreneurship (“microentrepreneurship”) in low-income countries. Major themes in the literature include the determinants and consequences of joining the formal sector; the impacts of access to credit and other financial services; the impacts of business training; barriers to hiring; and the distinction between self-employment by necessity and self-employment as a calling. The article devotes special attention to unique issues that arise with female entrepreneurship.

Money or Ideas? A Field Experiment on Constraints to Entrepreneurship in Rural Pakistan

Gine, Xavier; Mansuri, Ghazala. 2014. Money or ideas? A field experiment on constraints to entrepreneurship in rural Pakistan (English). Policy Research working paper ; no. WPS 6959;Impact Evaluation series Washington, D.C. : World Bank Group. 

Abstract:

This paper identifies the relative importance of human and physical capital for entrepreneurship. A subset of rural microfinance clients were offered eight full time days of business training and the opportunity to participate in a loan lottery of up to Rs. 100,000 (USD 1,700), about seven times the average loan size. The study finds that business training increased business knowledge, reduced business failure, improved business practices and increased household expenditures by about $40 per year. It also improved financial and labor allocation decisions. These effects are concentrated among male clients, however. Women improve business knowledge but show no improvements in other outcomes. A cost-benefit analysis suggests that business training was not cost-effective for the microfinance institution, despite having a positive impact on clients. This may explain why so few microfinance institutions offer training. Access to the larger loan, in contrast, had little effect, indicating that existing loan size limits may already meet the demand for credit for these clients.

Supporting Growth-Oriented Women Entrepreneurs: A Review of the Evidence and Key Challenges

Cirera,Xavier; Qasim,Qursum. 2014. Supporting growth-oriented women entrepreneurs : a review of the evidence and key challenges (English). Innovation, technology and entrepreneurship policy note;no. 5 Washington, D.C. : World Bank Group. 

Abstract

In recent years, support programs for women entrepreneurs have gained traction and prominence as a means to create jobs and boost productivity at the national and regional levels. However, disparities in initial resource endowments of male—and female-led firms, sector sorting into low productivity activities, social norms, and institutional arrangements, constrain the growth of female-led enterprises. This note reviews the outcomes of programs supporting female growth entrepreneurs and draws lessons from available evidence to inform the design of more effective programs. The review shows that most programs are primarily geared
toward microenterprises, making it difficult to draw conclusions about program design for growth-oriented entrepreneurs, but some early findings point the way forward. Management practices appear to improve as a result of business education, but there is little robust evidence to prove that support programs lead to significant improvements in business performance outcomes. Furthermore, in programs with both male and female participants, firm performance improves in some cases for male-led firms only, not for female-led firms. The note concludes
by suggesting the need for more experimentation in the design and delivery of services and a new focus on strengthening the engendering of support programs to more specifically address gender-specific constraints such as social norms, entrepreneurial preferences, and institutional arrangements, changing public discourse, and paying more attention to factors that induce

female entrepreneurs to diversify into higher value-added activities. Offering mentoring, networking, and other consulting services,
in addition to education on basic business practices and strengthening critical areas such as gender-specific content, can potentially increase the effectiveness of these programs.

Exploring the “feminisation of poverty” in relation to women’s work and home-based enterprise in slums of the Global South

Chant, S. (2014). Exploring the “feminisation of poverty” in relation to women’s work and home-based enterprise in slums of the global south. International Journal of Gender and Entrepreneurship, 6(3), 296-316. 

Abstract

The purpose of this paper is to explore links between a revisionist view of the “feminisation of poverty” in developing countries and women’s work and home-based enterprise in urban slums. Design/methodology/approach – The paper’s discussion of the “feminisation of poverty” draws substantially from ethnographic field research conducted in The Gambia, The Philippines and Costa Rica. This research led the author to propose the notion of a “feminisation of responsibility and/or obligation”. The latter approach draws attention to issues such as gendered disparities of labour, time and resource inputs into household livelihoods, which are often most marked in male-headed units, and are not captured in conventional referents of the “feminisation of poverty”, which are rather narrowly confined to incomes and female household headship. Findings – An integral element of the author’s critique is that the main policy response to classic “feminisation of poverty” thinking, to date, has been to “feminise” anti-poverty initiatives such as Conditional Cash Transfer (CCT) and microfinance programmes. Originality/value – The paper argues that the “feminisation of poverty” compounds the tensions women already face in terms of managing unpaid reproductive and/or “volunteer” work with their economic contributions to household livelihoods, and it is in the context of urban slums, where housing, service and infrastructure deficiencies pose considerable challenges to women’s dual burdens of productive and reproductive labour. The paper emphasizes that to more effectively address gender inequality while also alleviating poverty, policy interventions sensitive to women’s multiple, time-consuming responsibilities and obligations are paramount.

Opportunity versus Necessity: Understanding the Heterogeneity of Female Micro-Entrepreneurs

Gabriela Calderon, Leonardo Lacovone, Laura Juarez (2016) “Opportunity versus Necessity: Understanding the Heterogeneity of Female Micro-Entrepreneurs.” The World Bank Economic Review, Volume 30, Issue Supplement_1, Pages s86-s96.

Abstract

Entrepreneurs that voluntarily choose to start a business because they are able to identify a good business opportunity and act on it—opportunity entrepreneurs—might be different along various dimensions from those who are forced to become entrepreneurs because of lack of other alternatives—necessity entrepreneurs. To provide evidence on these differences, this article exploits a unique data set covering a wide array of characteristics, including cognitive skills, noncognitive skills, and managerial practices, for a large sample of female entrepreneurs in Mexico. Descriptive results show that on average opportunity entrepreneurs have better performance and higher skills than necessity entrepreneurs. A discriminant analysis reveals that discrimination is difficult to achieve based on these observables, which suggests the existence of unobservables driving both the decision to become an opportunity entrepreneur and performance. Thus, an instrumental variables estimation is conducted, using state economic growth in the year the business was set up as an instrument for opportunity, to confirm that opportunity entrepreneurs have higher performance and better management practices.

Returns to microcredit, cash grants and training for male and female micro entrepreneurs in Uganda

Nathan Fiala. Returns to microcredit, cash grants and training for male and female micro entrepreneurs in Uganda ,World Development, Volume 105, 2018,Pages 189-200.

Abstract

Experimental tests of microfinance programs have found little or no impacts on business and household income outcomes. I present experimental evidence that the gender of the individual receiving a loan matters for the impacts measured. Microenterprise owners were randomly offered either capital with repayment (discounted loans) or without (grants) and were randomly chosen to receive business skills training in conjunction with the capital. I find no short-run effects for female-owned enterprises from either form of capital or the training. However, I find large effects on profits and sales for male-owned enterprises that were offered loans. There is no effect for men from the grants, suggesting repayment requirements increased the likelihood of productive investment. The results indicate that cash-constrained men—a sample that is not traditionally targeted by microcredit organizations—can benefit from subsidized micro-finance.

Competing priorities: Women’s microenterprises and household relationships

Sophia Friedson-Ridenour, Rachael S. Pierotti. Competing priorities: Women’s microenterprises and household relationships, World Development Volume 121, 2019, Pages 53-62.

Abstract

Recent studies have suggested that women’s business decisions are influenced by members of their household, especially their spouse, and that these intrahousehold dynamics contribute to gender gaps in entrepreneurship outcomes. This in-depth qualitative study among micro-entrepreneurs in urban Ghana sought to understand the connections between women’s businesses and their households’ management of economic resources. The findings show that women’s business decisions are influenced by: 1) a desire to reinforce their partner’s responsibilities as a primary provider; 2) attempts to fulfil normative expectations of meeting the daily basic-needs of the family; and 3) a need to prepare for long-term security. To reinforce their husband’s responsibilities as a provider, women hid income and savings, and sometimes explicitly limited business growth. To ensure their ability to smooth household consumption and respond to emergencies, women prioritized savings over business investment. And, to plan for their long-term security, women opted for cautious business investment, instead maintaining pressure on their partner to meet current needs and investing in children and property for the future. Previous studies document gender differences in microenterprise business management. This research builds on those studies by examining how intrahousehold inequalities affect women’s business decisions. The findings demonstrate the contextual importance of social relations for understanding women’s business decisions. More broadly, the findings illustrate that interpersonal interactions concerning the management of economic resources are an integral part of how household members negotiate their rights and responsibilities in relation to each other.

Mind The (Profit) Gap: Why Are Female Enterprise Owners Earning Less Than Men?

Hardy M., Kagy G. (2018).Mind The (Profit) Gap: Why Are Female Enterprise Owners Earning Less Than Men?AEA Papers and Proceedings, vol. 108, pp. 252–55

Abstract

We explore potential causes for the well-documented profit gap between male- and female-owned microenterprises in low-income countries. We use rich data from an ongoing field project in Ghana’s garment making sector, and our study sample consists of all garment making firms in a midsize district capital. Even within the same industry, male-owned firms earn nearly twice as much profit as female-owned firms. Furthermore, we find the large and persistent gender difference in profits cannot be explained by our extensive firm- and owner-level characteristics. We conclude that factors outside of individual firm or firm-owner characteristics are likely to be at play.

It’s Getting Crowded in Here: Experimental Evidence of Demand Constraints in the Gender Profit Gap

Morgan Hardy, Gisella Kagy. It’s Getting Crowded in Here: Experimental Evidence of Demand Constraints in the Gender Profit GapThe Economic Journal, Volume 130, Issue 631, October 2020, Pages 2272–2290.

Abstract

This article considers market-level contributors to the well-documented gender profit gap among micro-entrepreneurs. We combine data from a garment-making firm census and market research survey in Ghana, uncovering a gender gap in the market-size-to-firm ratio and observing disproportionate self-reports of ‘not enough customers’ from female owners. We develop a simple model and discuss implications of potential gender differences in demand constraints. As experimental corroboration, we show that female-owned firms expand production and experience profit increases in response to random demand shocks, while male-owned firms do not. Nationally representative data echoes our experimental findings, showing more crowding in female-dominated industries.

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