INTRODUCTION
In Asian developing countries, entrepreneurship development is currently an important issue related to economic development in the countries. It is publicly believed that the lack of entrepreneurship together with limited capital, skilled workers and technology have been the main important causes of relatively economic backwardness in most of these countries. Realizing this, training in entrepreneurship has been included as an important part of government programs to support the development of small and medium enterprises (SMEs) in the Asian developing countries. Women entrepreneurship development in Asian developing countries is currently very important since it is part of ongoing national efforts to alleviate poverty in developing countries in relation to the Millennium Development Goals (MDGs). Greater opportunities for women to participate in economic activities either as well-paid employyees or as successful entrepreneurs certainly will help much in poverty reduction. Since entrepreneurship development is usually associated with SME development, this paper focuses on women entrepreneurs in SMEs.
METHODOLOGY
This paper is based on a review of key literature and a descriptive analysis of secondary data, from government sources as well as from International Labour Organization (ILO), or from individual case studies, on women entrepreneurs in Asian developing countries. Since not all countries in the region have enough data and literature, this study only covers all member countries of the Association of Southeast Asian Nations (ASEAN), China and some countries in the South Asia including India and Pakistan
Definitions and main characteristics of SMES
The definition and concept of SMEs vary between countries in the region. There is no common agreement on what distinguishes a microenterprise (MIE) from a small enterprise (SE), or a SE from a medium enterprise (ME), and a ME from a large enterprise (LE). In general, however, a MIE employs less than five (5) full time equivalent employees, although many enterprises of this category do not hire workers, often called self-employment enterprises; sometimes they use family members as helpers or unpaid workers. A SME can range from less than 100 workers in, for instance, Indonesia, to as much as 3000 laborers in China. In Indonesia, Les are those with 100 workers or more, while in Vietnam, they are units with 300 or more full time employees. Comparison between countries becomes more difficult since in some countries, definition of SME based on number of employees, value of fixed or productive assets (excluding land and building) varies, or annual revenues also vary between sectors, e.g. Thailand, India and China, or even among departments or agencies, e.g. Indonesia and Pakistan.
Definitions of SME in some Asian developing countries.
Name of the Country
Employees
Fixed/Productive Assets
MIE
SE
ME
MIE
SE
ME
Indonesia
≤ 4
5-19
20-99
≤Rp>50 m
>Rp50m-≤Rp500m
>Rp500m-≤Rp10b
Malaysia
≤5
5-50
51-150
–
–
–
Philippines
9
19-99
100-199
≤P 3m
>P3m- P15m
>P15m-P100m
Thailand
≤ 4
5-<50
50-200
<THB 50 m
<THB 50 m
THB 50m-THB 200 m
Vietnam
<10
10-49
50-299
–
–
–
Cambodia
<11
11-50
51-100
50,000 US$
50,000 US$-
250,000US$
250,000US$-500,000US$
Lao PDR
1-4
5-19
20-99
<70 m. kip
<250 m. kip
<1200 m. kip
China
0-5
<300
300-3000
< 40 m. RMB
40 m – 400 m. RMB
India
–
–
–
≤2,5 m. INR
2.5 m – 50m. INR
50m – 100m INR
Pakistan
≤9
10-35
36-99
< 2 m PR
2-20 m PR
21-40 PR
Bangladesh
≤ 50
≤ 50
51-200
≤15 m Tk
≤15 m Tk
15 m – 100 m Tk
Sri Lanka
–
–
–
< m.SR
1m – < 20m SR
20 – < 50 m SR
Nepal
–
–
–
≤200.000 NR
> 200.000 – 30 m. NR
> 30 m – 100 m NR
Besides using number of employees, annual revenues, or value of invested capital as criterion to define MIEs, SEs and MEs, in fact, MIEs can be obviously distinguished from SEs or MEs by looking at their different characteristics in many business aspects, such as market orientation, social-economic profiles of owners, nature of employment, organization and management system, degree of mechanization (nature of production process), sources of raw materials and capital, location, external relationships, and degree of involvement of women as entrepreneurs.
Main characteristics of MIEs, SEs, and MEs in Asian developing countries
Aspect
MIEs
SEs
MEs
1.Formality
Operate in informal sector, unregistered & seldom pays taxes
Some operate in formal
Sector, some unregistered & some pay taxes
All operate in formal sector, all registered & all pay taxes
2.Organization
and
management
Run by the owner, no division of internal labor, no formal management & no formal accounting system (bookkeeping)
Run by the owner, no division of labor, no formal management, and no formal accounting system
(bookkeeping)
Many hire professional
managers, have division of labor, formal organizational structure & formal account-ting system (bookkeeping)
3.Nature of
employment
Majority use unpaid family
members
Some hire wage laborers
All hire wage laborers & some have formal recruitment system
4.Nature of
production
process
Degree of mechanization
very low/mostly manual & level of technology very low
Some use up-to-date
machines
Many have high degree of
mechanization/have access to modern technology
5.Market orientation
Majority sell to local market
and for low-income consumers
Many sell to domestic
market and export & many serve also middle to high-income group
All sell to domestic market and many also export, all serve middle and high income consumers
6.Social and
economic
profiles
of owners
Low or uneducated, from poor households & main motivation: survival
Some have good education and from non-poor households & many have business/profit motivation
Majority have good education
Many are from wealthy families & main motivation: profit
7.Sources of raw
materials and
capital
Majority use local raw materials and use own money
Some import raw materials
& some have access to formal credits
Many use imported raw
Materials & majority have access to formal credits
8.External
relationships
Majority have no access
to government programs
and not business linkages
with LEs
Many have good relations
with government and have
business linkages (e.g.
subcontracting) with LEs
(including MNCs/FDI).
Majority have good access to government programs & many have business linkages with LEs (including MNCs/FDI)
9.Women
entrepreneurs
Ratio of female to male as
entrepreneurs is high
Ratio of female to male as
entrepreneurs is high
Ratio of female to male as
entrepreneurs is low
Recent development of SMEs
Asian developing countries have touted SMEs as the engine of economic growth and development, the backbone of national economies, the highest employment-generators, and a potential tool of poverty alleviation by creating self-employment avenues. In Southeast Asian countries alone (that is Indonesia, Malaysia, Thailand, Singapore, the Philippines, Brunei Darussalam, Lao PDR, Cambodia, Vietnam, and Myanmar), notwithstanding various definitional issues and data problems, by combining all sources which are available (Tambunan, 2008; Wattanapruttipaisan, 2003; Lim, 2008) there is an estimated total of around 52 million SMEs, with Indonesia as the largest contributor According to a report from the Secretary of the Association of Southeast Asian Nations (ASEAN) (ASEAN Development Blueprint for SMEs 2004-2014), these enterprises employ about 75-90% of the domestic workforce, especially adult persons and women (Lim, 2008). These enterprises play strategic roles in private sector development, especially in the aftermath of the 1997 Asian Financial Crisis. In some member countries, as their economies modernize or industrialize, SME provide the much-needed inter-firm linkages required to support LEs to ensure that they remain competitive in the world markets. In this region as well as in East Asia (e.g. China and South Korea), the total number of SMEs account, on average, for more than 99%.
Number of SMEs in selected Asian developing countries
Name of the Country
Number (‘000)
% of total enterprises
Indonesia
48,936.80
99.9
Malaysia
519.00
99.2
Philippines
72.70
99.5
Thailand
2,274.53
99.8
Vietnam
98.23
96.8
Cambodia
28.75
99
Lao PDR
26
99.4
China
2,370.26
99.7
India
12.34
90.0-99.7
Pakistan
2,880.00
90.0
Bangladesh
6,000.00
99.0
Singapore
72.00
97.8
Nepal
3,485*
98
SMEs’ contribution to total value added or gross domestic product (GDP), on the other hand, are much smaller than their share in total employment. This is indeed a general characteristic of SMEs in developing countries as compared to those in developed countries. In developing countries, SMEs are not yet so important from output contribution perspective due to their low productivity because they lack advanced technologies, sophisticated methods of production and skilled workers. However, in some individual countries, SMEs have GDP shares on average above 50%, such as Cambodia at almost 77% in 2001, Indonesia which reached almost 57% in 2003, and Brunei at 66% in 1995. In China, the ratio is about 60%.
Development of women entrepreneurship
As in other parts of the world, women’s entrepreneurship development in Asian developing countries has also a tremendous potential in empowering women and transforming society in the region. Yet in many countries, especially where the level of economic development, reflected by the level of income per capita and the degree of industrialization, is still low, this potential remains largely untapped. Sinhal (2005), for instance, observed that less than 10% of the entrepreneurs in South Asia, comprising Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka.
Categories of Women Entrepreneurs
There are three categories of women entrepreneurs, that is. “chance”, “forced” and “created” entrepreneurs.
Categories of women entrepreneurs (by reasons/motivations for starting the business) in Asian developing countries.
Category Main reason/motivation
-was hobby/special interest
-family/spouse had business
-control over time/flexibility
-challenge, try something on one’s own
-show others I could do it.
-example to children
-employment to others /do something worthwhile
These different categories are based on how their businesses got started, or the main reasons or motivetions behind starting their own businesses. Chance entrepreneurs are those who start a business without any clear goals or plans. Their businesses probably evolved from hobbies to economic enterprises over time. Forced entrepreneurs are those who were compelled by circumstances (e.g., death of a spouse, the family facing financial difficulties) to start a business, their primary motivation, hence, tend to be financial. Created entrepreneurs are those who are “located, motivated, encouraged and developed” through, for instance, entrepreneurship development programs. Although, within the developing countries, the degree varies by country, depending on many factors, including level of economic development, reflected by the level of income per capita, and social, cultural and political factors. Gender equity has many dimensions and it is not easy to measure, due to the lack of accurate, gender discriminated social indicators in many countries, especially in the developing world.
Two indices often used to measure gender equity are Gender Development Index (GDI) and Gender Empowerment Measure (GEM) constructed by UNDP. GDI is human development index (HDI) adjusted for gender inequality, and HDI measures the average achievements of the country in terms of the extent to which people lead a long and healthy life, are educated and knowledgeable, and enjoy a decent standard of living. GDI measures achievements in the same basic dimensions as HDI but in addition captures inequalities between women and men. Together GDI and GEM attempt to capture the level of development of women and the extent to which women are free from discrimination in building their capabilities and in gaining access to resources and opportunities.
In 2008, the GEI ranks the 2008 situation of 157 countries, based on the most recent statistics available, and is able to determine evolution trends in 133 by comparing their present index with that of five years ago. The following table presents the GEI for selected Asian developing countries.
Gender Equity Index 2008 for selected Asian developing countries
Country/Economy
GEI 2008
Dimensions
Education
Economic activity
Empowerment
Philippines
76
100.0
63.5
65.5
Hong Kong
72
98.5
66.0
51.8
Viet Nam
71
88.6
81.2
44.0
Thailand
70
98.7
71.7
39.7
China
69
95.1
73.3
38.2
Singapore
66
89.6
58.6
48.7
Brunei Darussalam
63
98.7
48.4
41.2
Cambodia
60
76.3
83.5
21.0
Malaysia
58
98.1
46.6
29.1
Korea, Rep.
54
84.2
53.9
23.5
Sri Lanka
53
83.7
42.9
32.1
Indonesia
52
91.7
52.8
12.4
Bangladesh
51
82.3
53.5
17.6
Nepal
44
61.1
57.0
15.3
Pakistan
42
73.2
34.2
17.5
India
40
77.5
36.6
6.3
World Economic Forum (WEF) also produces annual report on global gender gap ranking, based on gender gap index (GGI). The index is based on four critical areas of inequality between men and women:
The index scores are on a 0 to 1 scale (0.00 = inequality, 1.00 = equality) but can be roughly interpreted as the percentage of the gender gap that has been closed. The index scores can be interpreted as the percentage of the gap between women and men that has been closed.
Another important institution which produces annual report on global employment trends for women is the International Labour Office (ILO). Its 2008 report shows that most regions in the world are making progress in increasing the number of women in decent employment, but that full gender equality in terms of labour market access and conditions of employment has not yet been attained. According to the report, economic empowerment for women has a lot to do with their ability or inability to participate in labour markets and with the conditions of employment that the women who do manage to find work face. The report shows that labour force participation rates in South Asia have traditionally been low due to the low rates for women. Compared to 100 men active on labour markets only 42 women participate by either working or looking for work. The low participation is also reflected in the employment-to-population ratios: in 2007, only 3.4 out of 10 women of working-age actually worked (34.1%), and over the last ten years the female employment-to-population ratio slightly decreased. For the same period, the share of women as own-account workers, increased by 7.9% and as employer declined by 0.2% m.
Distribution of female status in employment in South Asia, 2007 (% change from 1997 in parentheses)
Whereas, according to the report, East Asia, which has been the most successful region in terms of economic growth over the last decade, is also the region with the highest regional labour force participation rate for women, low unemployment rates for both women and men and relatively small gender gaps in sectoral as well as status distribution. In this region, the gender gap in economically active females per 100 males continues to be among the smallest in the world. For every 100 active men, there are 79 women participating in labour markets. Between 1997 and 2007, the shares of women as own-account workers (that is self-employed without employees) and as employer (that is self-employed with employees), respectively, increased by 11.1% and declined by 0.9%.
Distribution of female status in employment in East Asia, 2007 (% change from 1997 in parentheses).
Those changes in shares of women as own-account workers and employers can be seen as the development of women entrepreneurship.
Unfortunately, only few countries have national data and enough literature on women entrepreneurs, including Indonesia and Pakistan. In Indonesia, women entrepreneurs especially in SMEs have also been increasing since the 1980s during the new order era (1966-1998) when the country achieved rapid economic growth leading to rapid increase in per capita income. Data from the National state of the art of women entrepreneurship participation, then the table may suggest that becoming an entrepreneur, especially in larger, modern and more complex Labour Survey confirm this, looking at self-employed category by gender. Although, there are more males than females who are self-employed in businesses with or without employees, or the share of females engaged in businesses is lower than that of male entrepreneurs. According to a number of studies (Manning, 1998; Oey, 1998), the reason for the increasing number of womenowned enterprises are partly due to the increase of women’s educational level, and to the economic pressure the women faced in their households.
With respect to sectoral distribution within the manufacturing industry, most of the women entrepreneurs are in the food, beverages and tobacco industry, followed by textile, garment and leather, and non-metallic mineral products. In basic metal and fabricated metal products, the proportion of women entrepreneurs is always very small, not more than 1%. This indicates that women entrepreneurs in manufacturing industry tend to do businesses that do not require high skills and expertise. Indeed, in Indonesia, beyond the manufacturing industry, women entrepreneurs are more likely than male to be involved in these sectors, mostly as ownaccount traders having small shops or as owners of small restaurants or hotel (Tambuan, 2006, 2007).
In Pakistan, the rate of women as employers in the past 10 years does not change; while, that of those as selfemployed increased slightly. One important indication from this survey is that women working as entrepreneurs are still lower than that of their male counterparts. As in other countries in the region, women entrepreneurs in Pakistan are mainly found in MIEs (that is self-employed units) (Goheer, 2003; Sinhal 2005; Roomi and Parrot, 2008).
Main barriers faced by women entrepreneurs in the study area
In Asian developing countries, as in any other part of the world, though the entrepreneurial process is the same for men and women, there are however, in practice, many problems faced by women, which are of different dimensions and magnitudes, which prevent them from realizing their full potential as entrepreneurs. Entrepreneurship by definition implies being in control of one’s life and activeties. It is precisely this independence that societies in the region have denied women. According to Sinhal (2005), the situation is more critical in South Asian countries, as compared to other parts of Asia. The business environment for women, which reflects the complex interplay of different factors (e.g. psychological, social/cultural, religion, economic and educational factors) in the South Asian region ultimately results in the disadvantaged status of women in society.
In Bangladesh, a large number of women’s enterprises are operating on an informal basis and they are not identified in the country’s economy. These enterprises lack the basic forms and information, marketing opportunities, regulatory and social supports (ADB, 2001b).
In Nepal problems faced by women entrepreneurs in Nepal are mainly low access to credit and marketing networks, lack of access to land and property and reduced risk-taking capacity, lack of access to modern technology, lack of personal security and risk of sexual harassment, severe competition from organized units both in the domestic as well as the international markets, low level of self-confidence, and social and cultural barriers such as exclusive responsibility for household work, restrictions on mobility (ADB, 1999a).
In Pakistan, Roomi and Parrot (2008) found that women entrepreneurs do not enjoy the same opportunities as men due to a number of deep-rooted discriminatory socio-cultural values and traditions. These restrictions can be observed within the support mechanism that exist to assist such fledgling businesswomen. The economic potential of female entrepreneurs is not being realized as they suffer from a lack of access to capital, land, business premises, information technology, training and agency assistance. Inherent attitudes of a patriarchal society, that men are superior to women and that women are best suited to be homemakers, create formidable challenges. Women also receive little encouragement from some male family members, resulting in limited spatial mobility and a dearth of social capital. Their research suggests that in order to foster development, multiagency cooperation is required. The media, educational policy makers and government agencies could combine to provide women with improved access to business development services and facilitate local, regional and national networks. This would help integration of women entrepreneurs into the mainstream economy.
In Indonesia, the low representative of women entrepreneurs can be attributed to at least four main factors.
First, low level of education and lack of training opportunities. It is especially true for women living in rural areas or in relatively backward provinces. This fact is consistent with a report on gender mainstreaming in the education system in Indonesia cited in Suharyo (2005) which shows that, the illiteracy rate for women is still higher than men, and the gap between men and women in rural areas is much higher than that in urban areas.
Secondly, heavy household chores place a demand on women especially those in rural areas who have more children. They are required to perform their traditional role as housewives and therefore, they have fewer hours of free time than men, both during the weekend and on weekdays.
Thirdly, there may be legal, traditions, customs, cultural or religious constraints on the extent to which women can open their own businesses. Especially in rural areas rather isolated from big cities like Jakarta. Islamic-based norms have stronger influence on women daily life. This makes female behavior or attitude in rural areas less open than male (or than urban women) to “doing modern business” culture. In such society, women must fully comply with their primary duty as their husband’s partner and housewife, they are not allowed to start their own businesses or to do jobs that involve contact with or managing men, or simply they are not allowed to leave the home alone.
Fourthly, there is lack of access to formal credit and financial institutions. This is indeed a key concern of women business owners, in fact not only in Indonesia but also in other Asian developing countries. This is found to be more problematic for women in rural areas or outside of major metropolitan areas such as Jakarta and Surabaya.
In Malaysia, the problems faced by women entrepreneurs are the same as those in Indonesia. In addition to these problems, Ming-Yen et al. (2007) found that women entrepreneurs in Malaysia also faced a shortage of peer support networks compared with men even though various women entrepreneurs and industry associations have been formed which generally serve as a platform for women entrepreneurs to establish networks and exchange information and experiences as well as to conduct training programmes, seminars and workshops on motivation, leadership and entrepreneur development and to provide other means of support. According to their study, this is due to the fact that women may not join these associations as they might be overloaded with business and family responsibilities. This limits the women entrepreneurs’ ability to seek informal advice and peers financing as well as the information networks needed for survival and growth. This might pose a challenge to women entrepreneurs in establishing networks which are helpful to the survival of their businesses.
Conclusion
Based on limited data and literature, this paper has tried to examine the participation of women as entrepreneurs in SMEs in Asian developing countries. The main issue of women entrepreneurship development discussed in this paper is the main constraints facing women to become entrepreneurs or existing women entrepreneurs to sustain or grow. The paper shows a number of interesting facts. In Asian developing countries, as they accounted, on average, for more than 95% of all firms, thus the biggest source of employment, providing livelihood for over 90% of the country’s workforce, especially women and the young. Women entrepreneurs are mainly found in MIEs that is, traditional and low income generating activities. Majority of women entrepreneurs in the region were not drawn to entrepreneurship by “pull” factors, such as the need for a challenge, the urge to try something on their own and to be independent, to show others that they are capable of doing well in business, to be recognized by the society (self-esteem), hobby, or to use spare time, but by “push” factors such as poverty, unemployment, the need to have more cash income to support the family daily expenditures, and precaution motives (anticipation if husband is laid-off or unemployed, and other emergency needs). This may suggest that when women in the region are better educated and have greater well-paid employment opportunities, their participation in SMEs may decline.
References
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