In the US, 30% of small and medium-sized enterprises (SMEs) are owned by women while in Canada, only 16% of SMEs are owned by women. Yet in countries such as Ghana, Thailand and Uganda there are more female startups than male startups. A headcount of startups or women-owned SMEs, however, does not provide the full story. All female entrepreneurs are important but they are not the same.
The ‘Melting Middle’ approach was developed in order to identify the differences that exist between distinct types of women entrepreneurs. This novel approach highlights the fact that though women entrepreneurs operate in all countries under all economic conditions, the types of female entrepreneurs that emerge are affected by a combination of personal characteristics and specific gendered conditions. For example, If gender impediments are great, women who are promising and potential entrepreneurs will choose to either not start or not scale their businesses. This is unfortunate, since this group of skilled and educated women are also the most receptive to policy initiatives that address the reduction or elimination of gendered barriers. Some countries are already tapping into these high impact female entrepreneurs, but more needs to be done to unleash their full impact.
Imagine an ice cream cone. Now imagine taking the ice cream cone into a sauna. Within minutes, there is little resemblance of any ice cream left. Similarly, potential and promising entrepreneurs who are the most sensitive to gendered impediments can literally severely limit or cease to engage in entrepreneurship under harsh conditions. The waffle cone however, remains unaffected by the heat of the sauna. The cone exemplifies the three other types of women entrepreneurs (privileged, die hard and reluctant) who engage in entrepreneurial pursuits regardless of prevailing conditions.
Privileged entrepreneurs experience less gendered impediments due to their unique status (elite or celebrity). An example of an elite entrepreneur is Isabel de Santos, a successful businesswoman and Africa’s richest women who is also daughter of Angola’s president. Jessica Alba, a popular and wealthy US actress, is an example of a celebrity entrepreneur. Recently she used her stardom to launch her business Honest Company. Die hard entrepreneurs are also less affected by gendered conditions and tend to be women who start businesses no matter what. Hassina Syed is an example of a die hard entrepreneur. Against the odds, including threats by warlords, government officials and rival male interests, Hassina ranks as one of the most successful entrepreneurs in Afghanistan.
Reluctant female entrepreneurs are women who start businesses due to lack of other viable economic opportunities to make an income. These women also tend to be less affected by policy initiatives. Often micro entrepreneurs, most are not interested in growing their businesses and if given the opportunity for a steady income from employment, the vast majority would cease their business operations. Only a small minority are ever able to scale their businesses.
In contrast, promising and potential female entrepreneurs are the two types of entrepreneurs most affected by policy. The limited pool of potential and promising female entrepreneurs has significant economic consequences as measured by the Gendered Business Growth Gap. If women started growth oriented businesses at the same rate as men, there would be 15 million more jobs created in the US, 5.8 million more jobs created in Brazil and 74.4 million more jobs created in China in the next two years. New diagnostic tools exist to assist countries unleash the ‘melting middle’. In 2015, the Global Women Entrepreneur Leaders Scorecard, sponsored by Dell Inc was created to identify the key impediments and provides actionable steps for expanding the pool of high impact female entrepreneurs.