Fostering growth oriented female entrepreneurship development in East Asia

asian-bizwoman2Can the conditions be improved to allow for more high potential female entrepreneurs in East Asia? Overwhelmingly the answer is yes! According to the 2014 Gender-Global Entrepreneurship and Development (GEDI) Index East Asian countries are concentrated in the ‘moderate ranking’ group: Out of the 30 countries included in the index, South Korea and China are tied in 11th place, Japan is in 14th place, Malaysia is in 21st place and Thailand is in 17th place. Below four areas where impediments exist are discussed:  (1) Startup activity and education; (2) Female leadership; (3) Legal rights; and,  (4) Access to capital.

(1) College education is important for growth oriented female entrepreneurs. In terms of startup activity and college educated female business owners, some country clusters emerged: China and Malaysia are both characterized by moderate female startup activity rates and low percentages of college educated female business owners. Japan and South Korea are both characterized by low female startup rates but higher percentages of college educated female business owners. Thailand high female startup rate (about 11.5 female startups for every 10 male startups according to data from the Global Entrepreneurship Monitor) and moderate levels of college educated female business owners are unique. All five countries would benefit by developing strategies to attract more  college educated women to start businesses.

(2) Access to leadership is another area which needs improvement. Even though South Korea elected its first female president, Park Geun-Hye in 2013, she is the exception rather than the rule for women’s access to decision-making positions in most of East Asia. Low numbers of female managers further indicate that large portions of working women are not only not gaining management experience but also more limited access to networks and knowledge useful for business startups. According to the Global Gender Gap Index, the percentages of female managers ranged from 28% in Thailand to only 9% in Japan.

(3) According to the World Bank’s Women Business and the Law database,  all five countries exhibited some legal restrictions for women in terms of access to property for married women (Thailand and Malaysia) or restricted access to employment (China Japan, South Korea and Malaysia). In addition, according to OECD’s GID database, in Malaysia discriminatory practices limit women’s access to public spaces. When legal rights are restricted, it can limit female business startups and business growth.

(4) Access to Capital for female entrepreneurs is critical.  According to the World Bank’s Findex Database, the majority of women in the East Asia sample have access to bank accounts.  But what about Venture Capital financing?  Though specific data for VC funding are lacking, available data[1] show that top managers of VC Investment firms are overwhelmingly male in China  (86.8%) and Japan (97.9%) as in other developed and developing countries. Increasing evidence indicates that the lack of female VCs is one of the reasons that female entrepreneurs receive less VC funding. Crowdfunding is a potential alternative funding source for female startups and growing firms. Forty-seven percent of all successful campaigns on Indiegogo, one of the main crowdfunding platforms in the United States, are run by women (Macleod 2014).  In our East Asia sample, crowdfunding platforms are still in their early stages and so they still do not provide a viable alternative at this stage for female entrepreneurs.

For additional information and additional country results see the 2014 Gender-GEDI Executive Report.

[1] Gaule, P. and M. Piacentini (2012), Gender, Social Networks and Access to Venture Capital, unpublished manuscript in OECD (2012) Closing the Gender Gap: Act Now, http://www.oecd.org

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