There Is Not a Commonly Accepted Definition of Entrepreneurship Or Entrepreneur and There

Draft of October 17, 2007

4.3 Entrepreneurship

What it is

There is not a commonly accepted definition of entrepreneurship or entrepreneur and there are different understandings of the phenomenon. One definition is that “entrepreneurship is a phenomenon in the economy by which individuals or companies assume risks to create something new in order to reap the benefits from the new venture”[1]. This very broad definition would also allow the inclusion of aspects such as intrapreneurship (entrepreneurship possibilities within a given company).

Definitions used by countries to collect and or disseminate data on women’s and men’s entrepreneurship include concepts such as owners, managers, self-employed, and employers but different approaches are often used when these concepts are defined and put into the context of entrepreneurship.

An entrepreneur may be defined as the owner or manager of an enterprise, its executive director, or a member of its managing board. Self-employed people are also commonly considered to be entrepreneurs, but not all data sources include self-employment in their definition of entrepreneurship. Self-employment itself can be defined in multiple ways according to the different goals of various sources. For example, not all countries in the UNECE region use the standard guidelines of the International Labour Organization (ILO) for defining self-employment.

The lack of a common framework for defining entrepreneurs and entrepreneurship makes it difficult to have one internationally recognised definition. Different countries pursue different objectives through entrepreneurship so no single definition would satisfy all. The links between entrepreneurship and the objectives that countries pursue through entrepreneurship should be clear.

Why it is important

Entrepreneurship is an important part of the national economy. It is an important factor in creating and increasing employment opportunities and fuelling economic growth. For many years, policymakers have identified entrepreneurs as important drivers for employment, innovation and economic growth[2].

Entrepreneurship is viewed as a critical activity to regenerate and sustain economic growth in strong economies and also as a means of boosting employment and productivity in deprived regions or in developing countries, as it is an important source of job creation, career opportunities and poverty reduction for both men and women.

According to the Global Entrepreneurship Monitor Report on Women and Entrepreneurship regardless of country, men are more likely to be involved in entrepreneurial activity than women.[3] Examination of entrepreneurial behavior across the globe yields a clear picture of a gender gap in venture creation and ownership activity. The entrepreneurial gender gap exhibits varying dimension and characteristics, a significant gender gap exists for both early stage entrepreneurial participation and established business ownership, and this gender gap is greatest in the high-income country group, regardless of type of activity.

In the Beijing Platform for Action one of the means of improving women’s employability, in the context of increasing flexibilities in labour markets, is fostering women’s access to self-employment and entrepreneurship. However, policies aimed at supporting entrepreneurship development tend to be gender neutral.

The OECD notes that the reduction of women’s barriers to market access, the improvement of their position within the value chain and the enhancement of their productivity is likely to benefit local, national and regional economies as well as households[4]. Overall, the data shows that women entrepreneurs across all types of countries and economies have an important impact on the economy through creating jobs for themselves and for others. This is of social and economic importance to their economies.

Economic impact of women entrepreneurs*

Canada, 2000 (The Prime Minister’s Task Force on Women Entrepreneurs Report and Recommendations). There are more than 821,000 women entrepreneurs and they contribute to an excess of CAD 18,109 billion to the economy annually. Between 1981 and 2001, the number of women entrepreneurs increased 208%, compared with a 38% increase for men. Average annual sales for women-owned firms are significantly lower. In 2000, women-owned SMEs averaged CAD 311,289 in sales, compared with 654,294 in sales for firms owned by men.
Germany, 2000 (Kay, R., 2003. Female Entrepreneurs in Germany. Bonn, Germany: Institut für Mittelstandsforschung.). There are a total of 1.03 million women-owned businesses in Germany. Women-owned and managed businesses having annual turnover of at least €16,620 number 522,000. This represents 18% of the total in this group, and provides jobs for 2 million employees. Their turnover is in total €232 billion, approximately 6% of the overall turnover or 11% of the turnover gained by owner managed firms.
Sweden, 2001 (ITPS, 2002). Women start 28% of genuinely new firms and employ on average 0.6 full time employees compared 1.7 for men.
United State, 2002 (US Census). Women owned and managed firms represent 28% of the 23 million firms (6.4 million) and they provide employment for 9.2 million people. That represents 9% of all employed in the private sector.
Source: Promoting entrepreneurship and innovative SMEs in a global economy, OECD, 2004.
* These studies define women’s entrepreneurship as firms owned and managed by women.
Women entrepreneurs in some transition countries
Women entrepreneurs are less numerous than men in all transition countries. In countries for which there are data, men start their own businesses twice as often as women. In 2000 only 9% of employed women were entrepreneurs in the Czech Republic as compared to 18.8% of men. The situation was similar in Hungary (women 9.6% and men 18.7%) as well as in Romania, though the proportion of self-employed women is higher due to the larger share of self-employed in agriculture (women 17.4% and men 32.6%). The gender gap in entrepreneurship was even higher in Slovakia and Slovenia, where women’s share was respectively 4.1% (men 10.9%) and 6.5% (men 15.3%). These proportions were slightly better in Bulgaria, Croatia, Estonia, Latvia and Lithuania. In most countries, however, the gap between men and women in entrepreneurial activities had widened in many of these countries during the 1990s.
These trends reflect a loss of potential for job creation and growth as shown by many developed countries, where women-run enterprises are the most dynamic segment of the SMEs sector. In 2002, women-owned firms in the US employed nearly 9.2 million workers, up 30% from 1997, which reflects a growth rate that is between one-and one-half times the national average.
Source: Women entrepreneurship in Eastern Europe and CIS countries,2004

Overall, women still represent only a minority of all entrepreneurial and SME owners. Women’s business is mainly concentrated in the areas of small-scale entrepreneurship, which primarily includes retail and service. They are still represented as a minority of those who started business, are self-employed, or manage an SME type of a business.

Immigration is often an important parameter of entrepreneurship. In many instances, immigrants cannot easily find employment in the country of their destination and therefore establish themselves in new ventures. These can be family enterprises such as pizzerias. Like all ventures, some grow and move on from a small, family-operated business without any paid employees to a large employer.

In order to realise the objectives of further implementing the United Nations global mandate on gender equality by promoting the economics of gender as a factor of sustained growth, it is important to incorporate the gender entrepreneurial dimension in considering all SME and growth polices[5]. In order to develop these polices and respond to them there is a need for a clear understanding of the nature of women’s and men’s entrepreneurship and for accurate, comparable, timely and sex disaggregated data on financing, training, regulatory and legal environment of entrepreneurship.

The value-added of gender statistics

In order to develop polices that take into consideration their different impact on women and men entrepreneurs, policy makers need accurate, comparable and reliable data. For this purpose, it is necessary to identify the policy relevant issues of women and men entrepreneurs in order to clarify the objectives of any data collection. Gender statistics on entrepreneurship can be used effectively to:

• Make a significant and sustained impact on policy-makers of the value of female and male entrepreneurs to the national economy.
• Provide a better understanding of the factors that influence entrepreneurs.
• Provide a better understanding of female and male participation rates in entrepreneurship and its sectoral specifications.
• Incorporate a gender entrepreneurial dimension in considering all SMEs and growth policies (e.g. the administrative burden in the form of taxes and accounting etc.; addressing women’s and men's financing needs for all stages of business; policy coordination and leadership;promotion; training and mentoring; business support and information; associations and networks; regulatory and legal environment; technology access and utilisation: R&D and innovation).
• Make mainstream polices, research and programmes gender sensitive and take into account the specific needs of women and men entrepreneurs at their start-up and growth oriented stages.
• To profile women and men entrepreneurs, demographic information would help to promote awareness of their role in the economy.
• Monitoring the effectiveness and impact of government policies, programmes and initiatives on SMEs and entrepreneurship development.

Specific analyses of gender effects in entrepreneurship are still at the early stage. It is important that sex, as a fundamental variable, immigration, and the age of the entrepreneur are identified. While statistics generally serve to gauge the effects of past policy decisions, they also assist investigation of future policy options. If, for example, entrepreneurship statistics yield diverging results by gender, then future policy measures could accordingly be more appropriately directed towards women or men.

To offer the best possible support there is also a strong need for better knowledge about women and men entrepreneurs and statistical information on them.There is need for information on: who they are, what kinds of businesses they run, and how women are faring compared to men. The extant data often suffers from a lack of standard definitions and a lack of consistency among available data sources.

The OECD, in its research on women's entrepreneurship[6], has shown that a key determinant relates to women’s overall position in society. They note that being female creates the problem. Specific responsibilities (e.g., family-related) need to be overcome for them to have similar access to entrepreneurial opportunities as men. Furthermore, women may experience problems in regard to ownership of property and contract-related activities. More women need to participate in the labour force in order to improvethe relative position of women in society and of self-employed women.

The Global Entrepreneurship Monitor (GEM)[7] is an annual assessment of the national level of entrepreneurial activity across 42 countries. It is based on a harmonised assessment of the level of national entrepreneurial activity. GEM Global produces three reports on a number of special topics: High Growth / High Expectation Entrepreneurship; Financing; and Women and Entrepreneurship. In 2007, a report on Women Entrepreneurship using sex disaggregated data showed that there is a difference between men and women in starting up business and its ownership across selected European countries. The data show that women are a minority among business owners and they are less likely to start their own business.

A number of countries (Canada, Finland, etc) have placed considerable emphasis on the development of entrepreneurship indicators within its national policy framework[8]. Available data sources are limited in their ability to differentiate adequately among different types of self-employment. The lack of detailed information on the self-employed and their businesses makes it difficult to target policies to those most in need of support. Specifically, informal micro-entrepreneurs, many of whom are women, are most likely to be excluded from existing policy measures designed to support self-employment and entrepreneurship.

Implications for data collection

The gender dimension has traditionally been completely absent from business statistics. Lack of sex disaggregated data makes it difficult to have a comprehensive understanding of how policies impact on women’s and men’s entrepreneurial behavior. One of the main reasons is that for larger and particularly corporate businesses, it can be difficult to identify the entrepreneur.

The analysis of the role of gender in entrepreneurship requires the availability of data both at national and international levels. The most significant issue relates to the definition of entrepreneurs. There is currently a lack of common frameworks to define entrepreneurs. Statistics have been produced largely in a fragmented manner, and suffer from a lack of comparability within and between countries.

A joint OECD-Eurostat[9] project is currently investigating indicators and parameters of entrepreneurship and aims to produce a harmonised definition and a manual on how to measure entrepreneurship in such a way that it can be compared between regions, countries and sub-populations.

Sex disaggregated data on ‘Factors of Business Success’ (FOBS)*

Sex-disaggregated data can help to determine the factors that determine the success and growth of new enterprises, and it can show the differences between women and men in the motivations for starting up one’s own business, the barriers and risks encountered during the first years of existence, the current situation of the enterprise, and business plans for future development. Looking at some of the motivations, for women, the motivations ‘to avoid unemployment’, ‘to combine work and private life’ and ‘the age of the children’ would seem to be more important than for men. By contrast, for men, ‘to get away from an unsatisfactory work situation’ is more important than ‘to combine work and private life’. Whereas the ‘age of children’ comes 10th place out of 13, this motivation ranks last-but-one for men.
Figure 1: Motivation for start-up by gender, average of available countries, in %

Figure 2: Start-up difficulties by gender, in %

Differences between both groups are rather small but men cite more often ‘outstanding invoices’, finding ‘suitable personnel’ and ‘information technology’ as start-up difficulties. ‘Alone as entrepreneur’, ‘pricing goods’, ‘finding premises’, ‘finding suppliers and ‘backing from family’ were mentioned slightly more frequently by women.
*The target population of the survey is defined – based on the concepts of the Business Demography data collection – as an enterprise born in 2002, which had survived to 2005 and which was still managed by the original entrepreneur or founder.
The survey was carried out from June 2005 to January 2006 by the National Statistical Institutes of 13 EU Member States (CZ, DK, EE, FR, IT, LV, LT, LU, AT, PT, SI, SK and SE) and two Acceding Countries (BG and RO).
Source: Statistic in focus,, 29/2006, European Communities

It is difficult to translate the concept of entrepreneurship into statistical measures using existing data collections. It is necessary to change the focus of the data from the characteristics of the enterprises to the characteristics of the people managing/owning the enterprises including sex-disaggregated data. Elements of the entrepreneurial role may be split across shareholders, directors and other senior staff, making it difficult to determine the impact of gender on entrepreneurship. The first major international study to use this approach was the Demographics of Small and Medium-sized Enterprises project[10].

The most common sources for data collection on women and men entrepreneurs are household surveys (usually labour force surveys), enterprise surveys, and official registers of enterprises. But each of these data sources uses different categories when collecting information and each also focuses on a different aspect of entrepreneurship. The resulting data is therefore not always comparable. These data collection issues have several implications:

• When using or comparing statistics on entrepreneurship it is important to take into account the source of the data and what definition for entrepreneurship was used.
• Regional and national efforts to promote women’s entrepreneurship must include work to establish a standard framework for defining entrepreneurship and a common set of indicators to measure entrepreneurship.
• It would be valuable to have some agreement on the type of information sources to be used (household surveys, administrative records, enterprise survey) and a time frame (annually, three years, and one-off).

When collecting sex disaggregated data on entrepreneurs it would be beneficial to have information on the relevant areas of entrepreneurship at two different levels: start-up and growth-oriented entrepreneurs levels. Relevant areas[11] of entrepreneurship could be policy coordination and leadership, legal environment, promotion of women and men entrepreneurs, role models, access to loans and premises, enterprise support and information centres, mentoring, networks, and training.

Policy coordination and leadership level

• Have women and men been identified as specific groups in government’s SME policies?
• Is the strategic framework for developing SME gender sensitive?
• Are women business associations represented at government advisory level?

Creating better data for the future knowledge

In order to really understand what drives women’s entrepreneurship and what are the consequences for the economy, three levels (individual, firm, and business environmental level) should be addressed to gain a better understanding. In relation to the dynamics of entrepreneurship, these levels should be studied in order to understand the nature of women entrepreneurship.
The first level is concerned with women being or becoming self-employed and is related to self-employment as a career choice among other available options. This level of analysis is related to women participation in the labour force and what they choose to do. Questions related to women’s entry in and exit from self-employment are major questions here.
The second level of analysis is at the firm level. That is, once women have engaged in business activities, how well will they perform relative to men in terms of survival and growth of their respective firms.
The third level is analysis at the business environment level. This level of analyses is related to understanding how the business environment is supporting or obstructing women entrepreneurs.
All levels of analysis have to be taken into consideration in order to understand what is happening and why.
For example, a recent study conducted in Sweden on the science and technology labour force’s career history and its involvement in self-employment showed that of those engaging in self-employment 30% only stayed self-employed for one year and very few repeated the experience over the eleven year period studied (1990-2000)*. About 12% of the science and technology labour force was at any time engaged in self-employment compared to 10% for the total labour force. At least for this group (which is seen as a very important source of entrepreneurship), other career alternatives had a better return. This study indicated important differences between men and women in their willingness to engage in entrepreneurship even when education and the effect of base rates were controlled for**.
Source:Adapted from 'Promoting entrepreneurship and innovative SMEs in a global economy, OECD, 2004.
*Delmar, F., Sjöberg, K., & Wiklund, J. 2003. The Involvement in Self-employment among the Swedish Science and Technology Labor Force between 1990 and 2000. Stockholm: ITPS.
**Carroll, G. R., & Mosakowski, E. 1987. The career dynamics of self-employment. Administrative Science Quarterly, 32: 570-589.

Promotion of women and men entrepreneurs