How to define high impact female entrepreneurs: The Case of Latin America

istockphoto_2439867-business-woman-on-white-jumping_PAID_FORAccording to the latest Global Entrepreneurship Monitor’s (GEM) 2012 survey[1], the Latin American region boasts quite a high degree of female entrepreneurship: 15 percent of working age females are engaged in Total Entrepreneurship Activity (TEA)[2] compared to 19 percent of working age males. The highest female TEA rates are found in Ecuador (27 percent) and Chile (19 percent).  However, these numbers are often inflated due to high percentages of female entrepreneurs who are necessity driven, i.e. starting businesses for economic survival (as is the case for 41 percent of the female TEA rate in Ecuador).  Other Latin American countries such as Colombia have both a high percentage of  male and female TEA (26 percent and 19 percent respectively) and also a high proportion of high growth TEA (as measured by expected increase in 20 or more employees in the next five years).

High impact firms have generally been associated with high growth firms. However  high growth firms represent a very small fraction of all entrepreneurs. According to an Ernst and Young 2011 study[3] based on GEM data, in which 80,000 people in 60 countries were surveyed  (aged 26 – 45), only 3 out of every 1,000 survey respondents achieved high growth[4] – that’s only 6 entrepreneurs in each country!

 When analyzing female entrepreneurship however, it may be more useful to apply a broader definition of high impact entrepreneurs such as is suggested by the Global Entrepreneurship and Development Index (GEDI) which denotes high impact entrepreneurship as ‘market expanding, export oriented, innovative’[5]. In order to be able to further promote high-impact female entrepreneurship in Latin America, it is important to understand the opportunities and constraints for female entrepreneurship development.

Notes

[1] Xavier, S.R., Kelly, D. and J. Kew (2013) Global Entrepreneurship Monitor 2012 Global Report, www.gemconsortium.org

[2] TEA measures the percentage of the population 18 – 64 yrs. that are either nascent or owner managers of a new business.[3] Morris, R. (2011) 2011 High Impact Entrepreneurship Global Report, sponsored by Ernst & Young.

[4] High growth is defined as entrepreneurs that were increasing their employee rate by 20 percent annually.

[5] Acs, Z. and L. Szerb (2012), Global Entrepreneurship and Development Index, Northampton, MA: Edward Elgar.

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