Entrepreneurship takes more than just hard work and late-night emails. It also requires confidence, grit, and resources to help you accomplish your goals.
One might expect that women entrepreneurs in higher-income countries would be more likely to start up a new business than those in lower-income countries, given relative measures of societal gender equality and how easily women in each group can access resources. But new research tells us a different story.
Based on findings from the latest Global Entrepreneurship Monitor (GEM) study (pdf), the world’s foremost study of entrepreneurship, a more nuanced picture is emerging: Women from lower-income countries tend to be more self-confident about their abilities and are less fearful of failing when starting up a new business than their higher-income country counterparts.
According to the latest GEM report for 2017–18, women from lower-income countries around the world, including Kazakhstan, Lebanon, and Colombia, tend to be more self-confident about their skills and knowledge when starting up a new business than their women counterparts from middle- and high-income countries.
Together, these traits—having the belief that one has the knowledge, skills, and experience to start a business—are described as an individual’s entrepreneurial self-efficacy. An individual’s degree of entrepreneurial self-efficacy is considered an important element driving “entrepreneurial spirit” and, according to researchers, positively influences the decision to start a business.
Previous research has shown that the decision to start a business is heavily influenced by personal perceptions in general and for women in particular, a fear of failure. In a 2009 study of nascent entrepreneurship across 28 countries and across gender, entrepreneurship scholar (and Center for Women’s Entrepreneurial Leadership (CWEL) Research Director) Amanda Elam found that both confidence and optimism—perceptions critical to entrepreneurial self-efficacy!—play an especially important role in women’s decisions to start a business. Higher degrees of both elements increased the odds of starting up a new venture by two to five times! With a woman’s self-confidence in her skills and knowledge playing such a significant role in predicting how likely it is she will engage in entrepreneurship, it’s no wonder that researchers are turning to these role models from lower-income countries to better understand how entrepreneurial self-efficacy helps women start and grow their own businesses.
Yet as we said earlier, this is a story with nuance. We must remember that starting up a business in a higher-income country is a fundamentally different endeavor from launching a business in a lower-income country: Evidence suggests that many women starting businesses in lower-income countries are driven not by business growth, but survival. For these women, deciding to start a business may be out of necessity rather than desire.
Higher levels of entrepreneurial self-efficacy may not tell the whole story. Entrepreneurship scholars, however, note that two other factors play a major role in whether someone will decide to launch his or her idea: whether an individual knows someone who’s started up a business in the past year (a sign of entrepreneurial awareness), and whether she thinks there are good opportunities for starting a business in the local area (a trait of opportunity perception). Together with a high level of entrepreneurial self-efficacy, these three factors are considered strong indicators of entrepreneurial spirit and help predict whether someone will start up a new business regardless of being “pushed” or “pulled.” In short: Entrepreneurial spirit does not rely on fixed traits, but rather abilities and resources that can be purposefully developed regardless of whether you find yourself in a high- or low-income country.
So if you have been considering starting a business but are hesitating, consider looking to these entrepreneurs in lower-income countries for inspiration. Take advantage of the resources around you that are available, or look for ways you can make them available.
Remember that neither optimism nor confidence in your abilities are fixed traits—both can be developed through training. Entrepreneurial spirit can be developed through programs focused on strengthening entrepreneurial self-efficacy, entrepreneurial awareness, and opportunity perception. There are many ways to positively influence the decision to start a business, and CWEL is one place that offers resources—like it’s Women Innovating Now (WIN) Lab® accelerator program—on entrepreneurial self-efficacy and entrepreneurial awareness.