Smart people who want to encourage entrepreneurship in fast-growing markets abroad emphasize how important it is for an economy to have a legal infrastructure that creates incentives to invest and provides the freedom to grow.
For instance, "if it's hard to enter into contracts or to enforce the contracts, investors are more reluctant," says Josh Lerner, investment banking professor at Harvard Business School and the author of Boulevard of Broken Dreams. His book points out how badly governments fail at creating entrepreneurial hubs when they merely pour money into a market without reforming the legal system
Steve Case, the founder of
There are powerful -- and probably more complicated -- connections between women's entrepreneurship and the law. Women entrepreneurs worldwide face an extraordinarily unlevel playing field. Fewer than a quarter of economies worldwide, 20 out of 128, treat women equally under the law, researchers looking at the World Bank's database, Women, Business and the Law concluded in 2010.
But despite the fact that legal systems and cultural traditions stand in their paths in myriad ways that we are only beginning to understand, women entrepreneurs are moving ahead. In 2012, the Global Entrepreneurship Monitor (GEM), in a survey of 67 countries, found that there were 126 million women starting or running businesses, and 98 million operating established business, those that had been around for more than 3.5 years.
And women's entrepreneurship is widely coming to be seen as the one of the best resources for spurring global economic growth, especially in countries that are behind. For instance, Goldman Sachs concluded in its report on investing in women:
“Closing the credit gap for women-owned (small and medium businesses) in the BRICs and N-11 countries over the next few years could boost real income per capita growth rates in those countries by around 85bp on average. If the credit gap is closed by 2020, incomes per capita could be on average around 12% higher by 2030 across the BRICs and N-11, relative to our baseline scenario."
As the report suggests, access to capital would make a big difference. The International Finance Corp.'s program, Banking on Women, is funneling $813 million to banking institutions globally to help anchor loans to women, so that banks will feel secure enough to lend their own cash. "Most financial institutions want to see hard collateral," said Jessical Schnabel, product head of the program. "Many women business owners have other kinds of collateral."
The IFC's program is one of many by nonprofits, governments and big corporations, including Goldman Sachs' 10,000 Women program and Coca-Cola's efforts to empower women-owned businesses in its supply chain and the communities where its bottlers work. It reported last week that it aims to "enable the economic empowerment" of 5 million women entrepreneurs by connecting them with funding, networking and training by 2020. "As of Dec. 31, 2014, our 5by20 programs had helped enable nearly 865,000 women in 52 countries since the program launched in 2010," it said in its sustainability report.
There are also angel and venture funds investing in women -- both for the cause of equality and because they are good investments.
The flow of money will help. Reforming the legal systems is much harder and longer work, but it is going to be necessary, too. And the question is, how will it come about? The mechanisms by which property rights and marital laws keep women from becoming full economic participants isn't always clear, but the correlations are. For instance, according to the World Bank:
• In economies where there is gender parity in using property, 36% of firms have women participation in ownership. In economies where there is not, only 28% of firms do.
• In economies where property in a marriage is jointly titled and managed, women have higher rates of borrowing -- the joint title to assets such as homes can give them access to credit.
• Some economies in South American and Africa give men authority to manage all marital property. In economies where that's true, only 69% of women have credit cards, versus 91% in economies where marital property is jointly managed.
• Even in countries where there appears to be legal parity, the way the culture interacts with the legal system sometimes subverts the parity. For instance, in the United States, retirement accounts are considered communal property if they are established during a marriage. But the investment decision-making resides with the account holder, who, more often than not, is the man, who is earning a higher salary. Bad luck for the woman staying at home to care for the kids, who happens to have a husband who likes to gamble with stocks, and worse luck for the woman who might want to tap into retirement savings to start a business.
I'm not trying to stay that women business owners in the United States have it easier or harder than elsewhere: Only to make the point that
What is striking about this is the number of women who go ahead as entrepreneurs, anyway. Technology and new global networks make entrepreneurship more available to women. You can start a company on Instagram combined with a shopping app. Two years ago, I wrote about Saudi women who were getting companies off the ground doing just that.
"I'll let you in on a secret," Deem Al Bassam, a 28-year-old entrepreneur, told me. "You use Instagram to share photos, right? We are here (at home), using it as an e-commerce platform. You cannot imagine the number of businesses that are growing on Instagram."
Even the cultral norms are beginning to fade as women tap into wider global norms, which include empowered women and women as entrepreneurs. (The negative norms are still present in the United States and Europe, by the way, where women are 18% less likely to perceive they have the capability to start a business.)
Yet the biggest factor driving women entrepreneurs right up and over the un-level playing fields are the women themselves. They do it in sometimes surprising ways and changing ways, sometimes by calling out the inequities they encounter in funding and legal systems, sometimes by just ignoring them, and sometimes by passively resisting them.
Al Bassam said this most powerfully in our interview: Sexism is "not really there unless you believe it," she told me.
There's a lesson for all women (and everybody) in how Iranian women in the 1990s responded to restrictions put in place after the Iranian Revolution. I learned about this recently when blogger Amal Ghandour pointed me in the direction of the work of Asaf Bayat, whom she calls a scholar with ears very much to the ground. To a certain extent, the women just ignored the restrictions. They went to work, started companies, wrote books and became filmmakers and attended soccer games.
The biggest symbol of this: The bad-hijabi, the head covering women were required to wear. "With the jail penalty (between 10 days and two months) for improper hijab, showing inches of hair sparked daily street battles between defiant women and the agents of multiple official and semi-official morals-enforcing organizations." During a four-month period of 1990 in Tehran, 607 women were arrested, 6,589 were forced to submit written affidavits and 46,000 received warnings. By the late 1990s, Bayat writes, the bad-hijabi became an established practice.
The laws that hold women back economically and as entrepreneurs aren't as obvious as a law requiring women to cover their heads in Iran. And women in other parts of the world have more freedom to advocate for change through the political system, and by organized resistance and social movements.
But some of the tactics to create change are the same. My guess is that many women who start companies online don't pay much attention to the laws that make their endeavors riskier, harder and less rewarding. Eventually, as more and more succeed, the laws will have to catch up as the companies grow. More leaders will emerge, like Lerner and Case, to advocate for change in the laws that specifically hold women entrepreneurs back.
In the meantime, the women starting companies will just keep going. Entrepreneurs in general need to be incredibly and stubbornly optimistic, and to some extent willfully blind to the obstacles in front of them. Women entrepreneurs, especially those in emerging markets, facing higher, older and more hidden obstacles, need to be all of the above, and more so.
