Women in Innovation and Entrepreneurship: 3rd in Blog Series

Blog Post
Title	Women in Innovation and Entrepreneurship: 3rd in Blog Series
Author	Julia Wang
Series	Women in Innovation and Entrepreneurship
Content status	Tabled
Publication date
Notes	Focus on international social entrepreneurship
Image
	© edegan.com, 2016

Abstract

This blog post aims to examine women's role in social entrepreneurship, as well as the United States' support for social entrepreneurship.

Blog Post

Women in Entrepreneurship: Social Enterprises

According to the World Bank, women and girls are one of the most marginalized groups in the world. Only two percent of international aid funding supports programs for girls.[1] The last decade has seen a rise in social entrepreneurship, especially among women, to help address this gap in funding and support. Social entrepreneurship focuses on social value and sustainability through the use of economic activity. Social enterprises have the potential to do what other companies can or will not, which is why so many women, particularly in developing countries, have been stepping up to fill this space. Women know what women need and can find sustainable solutions to the problems that women in underserved communities face. Studies like Urbano et al., 2014[2] and Fernández-Serrano and Liñán, 2014[3] suggest that women tend to be more driven by social rather than economic motivations when creating their own companies. Because of this, women around the world find a more level playing field in the form of greater representation, but many still see gender inequality in the field of social entrepreneurship. Women need the same support that men have in the field of social entrepreneurship to most effectively improve the lives of people in their country and around the world.

In Southeast Asian countries, like the Philippines, Malaysia, and Indonesia, women fare better in social entrepreneurship when taking into account leadership roles and the gender pay gap, and they compose 46 percent of the leadership of operational social entrepreneurship ventures.[4] Many also note more state support in the form of grants from government-linked agencies and less discrimination in social entrepreneurship compared to other more traditional business fields. In the United Kingdom, women lead 40 percent of social enterprises, and 84 percent of social ventures have at least one women on its board[5]; however, women in social entrepreneurship also earn 29 percent less than their male counterparts[6]. In case studies of the Czech Republic, Italy, and Sweden, the European Parliament’s Directorate General for Internal Policies found that female-dominated sectors of entrepreneurship are less attractive to investors. Social enterprises are also more unfamiliar to traditional sources of finance and subject to angel investors’ greater focus on monetary returns. Thus, many female social entrepreneurs are at a disadvantage when trying to access capital to start and operate their own enterprises.[7]

Recently, the Thomas Reuters Foundation, in conjunction with StarMine, UnLtd, and Deutsche Bank, found that out of the 45 biggest economies in the world, the United States is the best country to be a social entrepreneur.[8] However, despite its favorable conditions for social entrepreneurship, the United States ranks 43rd for the best place to be a female social entrepreneur. In the United States, women and men are relatively equally represented in the leadership of social entrepreneurship ventures, but the United States’ low female entrepreneurship ranking stems from concerns over the pay gap between male and female social entrepreneurs. Women social entrepreneurs also face inequalities in access to financial and human capital. 40 percent of women say that funding for their social enterprise is available, compared to 52 percent of men. Additionally, 65 percent of women agree that mentors are available in their ecosystem, while 72 percent of men say the same.[9]

The United States government has been gradually realizing the importance of social entrepreneurship, with the Obama administration’s establishment of the Office of Social Innovation and Civic Participation[10] and the Social Innovation Fund in 2009 to increase the impact of ventures that seek to improve the lives of people in low-income communities in the United States. A report by Mathematica Policy Research found that society as a whole benefits from a $2.23 return in investment for every dollar spent by a social enterprise.[11] Social enterprises are catalysts for inclusive, transparent, and sustainable growth.[12]

Social entrepreneurship can help stem income inequality and improve the lives of people of communities and groups that are often ignored, but it seems that the gender gaps found in social entrepreneurship first need to be improved in order to more effectively impact these underserved communities and marginalized groups. Although the gender gaps found in social entrepreneurship can be thought of as smaller than those found in commercial entrepreneurship, these gaps are still substantial. Closing these gaps in the United States would not only create a society of gender-equal innovation, but also improve the way marginalized communities and groups are treated and serve the people who need help the most.