Female Entrepreneurship in East and South-East Asia: Opportunities and Challenges

Association

Preface

To date, studies of gender and economic development in Asia have considered women mostly as economic agents in labor markets. But Asian women are not only laborers in the fields and factory workers. They are also producers, entrepreneurs and investors. Entrepreneurship, and more specifically female entrepreneurship as both concept and activity, has been growing in importance in Asia since the mid-1990s, with an acceleration at the beginning of this decade.¹ But the image and idea people have of female entrepreneurs in Asia are generally, first, that there are very few of them; and second, that they are mainly in the informal or formal micro-sector, producing relatively low-added-value goods and unsophisticated traditional services. Women’s entrepreneurial ventures have an image of limited projects complementing male entrepreneurs’ activities and having small economic significance. This overall image reflects the perception that people have of Asian women at work. Institutional and socio-cultural obstacles are perceived as impeding the development of female entrepreneurship, just as they limit the economic activities of women in general terms.

This perception is both right and wrong. The numbers of businesses created and managed by women in the four countries selected in this book, Japan, South Korea (Korea hereinafter), Malaysia and Vietnam, are steadily growing. Mead and Liedholm² wondered why women-owned companies are disproportionately concentrated in low-return activities. In fact, women entrepreneurs were never a cohesive group of self-identified or readily identifiable actors anywhere. Evidence shows that women entrepreneurs (admittedly still a small number of them) enter into traditionally male-dominated fields, increasingly blurring the gender-based definition of specific sectors and products deemed appropriate to female entrepreneurial activities. Be it in developed Japan or developing Vietnam, women’s entrepreneurship strategies are not inevitably ‘low growth’.³ Not all women entrepreneurs are risk averse or invest primarily in social networks. There are businesswomen creating large corporations, or willing to do so, all over the place. They use venture capital, have a high-growth strategy and manage companies already listed or aiming to stock exchange listing. Some Japanese women entrepreneurs, pioneers of internet-related communication, have become significant employers, investors and important opinion leaders; in Malaysia and Vietnam, through women’s organizations some entrepreneurs are politically influential in their communities and national polities. Moreover, in those two countries women’s organizations play an important grassroots role to reinforce female entrepreneurship; likewise, in Korea women’s organizations are closely involved in the ambitious projects of their government to promote women’s interests and create business opportunities.

But it is true that most women-owned businesses, be it by design or by necessity, are still small and operate in traditional sectors. It is also true that obstacles of different natures hinder their development. All categories of women entrepreneurs exist in the four countries despite the differences in stages of economic development. From Japan to Vietnam, it goes from high fliers to people willing to manage comfortably small businesses of modest size and little development, down to necessity entrepreneurs struggling at the bottom of the pyramid. But businesses created with modest ambitions may eventually grow fast, and struggling ‘necessity’-type businesses sometimes turn out to be dynamic and innovative concerns. Innovation does not come necessarily from high-technology-related businesses. In view of demographic changes and lifestyle diversification, traditional fields are transforming themselves and some become attractive, high-growth, innovative markets. The widely varying nature, scope and objectives of activities, as well as the motivations and obstacles women entrepreneurs face, reflect the constantly changing institutional and socio-cultural context in which they operate, and also the evolution of the entrepreneurs themselves in their economic and familial environments.

It could be argued that women’s involvement in today’s Asian societies and economies as entrepreneurs is a kind of revival of the past. There are differences arising from changes in the institutional setting, new actors in the field, new rules of competition and new forms of organization of production and communication means. But entrepreneurial endeavors by women in these four countries are not something completely new. They have always existed in one form or another. What is occurring now is a new avatar emerging in our globalized world. It develops in a new environment with the same mixture of dynamism and enthusiasm, but also ambiguities, misunderstandings and contradictions coming from the differences between perceptions, reality and ideals present in societies and markets that women entrepreneurs have always had to confront in the past.

The four countries are very different in those respects. Large variances are also observed in economic structure, business and innovation systems, demography, natural resources endowment and socio-cultural environment. But although they are unique in many ways, historical events and current socio-economic evolution justify aggregate analysis. The countries share many historical, cultural and social features that affected the development of women as unpaid labor, employees, self-employed or entrepreneurs. The interplay of (often common) history, culture and policy and their dynamic effects on female entrepreneurship in each country still impact it and contribute to transcend the differences. It is precisely because they exhibit a large array of different characteristics and are at different stages of economic development while also sharing a large common experience in many respects that they have been selected.

Wars and other conflicts have profoundly affected the political and socio-economic landscapes in Asia, influencing women’s position in society. The Second World War in Japan and colonial era and Cold War-related conflicts in Korea, Malaysia and Vietnam affected many institutions, including socio-cultural norms and business systems. Japan became a democratic country with women given equal political and economic rights. Korea and Vietnam had to fight civil and proxy wars that left them in comparable circumstances, with analogous challenges to rebuild economies and societies that impacted on women’s social and economic position. After its independence in 1957, Malaysia had to fight against a communist insurgency until the 1970s. Internal ethnic conflicts that led to bloody riots between Malay people and members of the Chinese minority at the end of the 1960s induced a reconsideration of industrial and business policy that until now has a direct influence on male and female entrepreneurship development in Malaysia. In Vietnam and Malaysia the wars and their aftermath enhanced the status of women in society. This brought some of them into influential jobs and also injected new ideas, for instance the importance of voluntary organizations and the role group activities could play in their professional lives.

At the level of society and economy, the importance of female entrepreneurship is recognized and women themselves share similar needs and aspirations in respect of their careers and roles in society. In all four countries there are interrogations on the respective roles of the market and the state, the impact that information and communication technologies (ICT) could have on women entrepreneurs, and the linkage between economic development, empowerment and equality. As in other parts of the world, the development of female entrepreneurship induces a complex debate on the place of women in society, as economic agents but also as key members of their families, their communities and their countries. To some extent it could be said that female social and economic activities are now placed at the center (or much closer to the center than before) of societal and economic transformation. Their still-hesitant progress means they are at the nexus of the fears, interrogations and hopes of the whole society in which they operate. In the future female entrepreneurship could well develop economically and find its place in society. It would contribute to the offer on the market through innovative products, services and management practices, and create jobs while remaining inconsequential in the evolution of gender relationships. But through their actions, even if modest for the time being, women entrepreneurs in the four countries could maybe eventually have deeper societal effects. They could put in question traditional societal values regarding gender relationships, in being perhaps the vectors of emerging new types of business and social relationships.

¹.Dana, L.P. (2007) Asian Models of Entrepreneurship: From the Indian Union and the Kingdom of Nepal to the Japanese Archipelago. Hackensack, NJ: World Scientific.

²Mead, D.C. and Liedholm, C. (1998) ‘The dynamics of micro and small enterprises in developing countries’, World Development, 26(1): 61–74.

³.Downing, J. (1990) Gender and the Growth and Dynamics of Microenterprises, Gemini Publications Series. Washington, DC: Development Alternatives.

1

Introduction

This book’s objective is to advance understanding in the field of female entrepreneurship. Kuratko and Hodgetts’s¹ ‘encapsulating’ definition of entrepreneurship states that:

entrepreneurship represents a dynamic process of vision, change, and creation, requiring an application of energy and passion towards the creation and implementation of new ideas and creative solutions. Therefore, it includes the willingness to take calculated risks, the ability to formulate an effective team, the creative skill to manage needed resources, and fundamental skills of building a solid business plan, and finally, the vision to recognize opportunity where others see chaos, contradiction, and confusion.

Buttner and Moore defined a female entrepreneur as ‘a woman who has initiated a business, is actively involved in managing it, owns at least 50 per cent of the company, and has been in operation one year or longer’.² ‘Encapsulating’ and accurate in its description of the very essence of entrepreneurship as it is, applying stricto sensu the definition of Kuratko and Hodgetts in this study would nevertheless eliminate many people who should be included among entrepreneurs. People may start new ventures to pursue a perceived opportunity (real or imagined). They may be described as opportunity entrepreneurs. Others could be considered as ‘reluctant’ or ‘necessity’ entrepreneurs because they entered the field only by default, i.e. forced by life circumstances to start a business although they would have preferred another solution. Scase introduced a distinction between ‘entrepreneurship’ and ‘proprietorship’ in business activities taking place in the post-socialist countries of Central Europe and Russia.³ The main differences between these two categories are the contrasting psychologies of the founders, their attitudes towards trading and their orientation to capital accumulation.

Scase has articulated this way of thinking in writing that proprietors’ ownership of property and other assets is not necessarily used to realize profits nor for the purpose of longer-term processes of capital accumulation.⁴ In the Weberian sense, the entrepreneur is willing to forgo direct consumption in order to expand the scale of the entrepreneurial activities.⁵ On the other hand, proprietors are not likely to use their capital assets for the purpose of long-term capital accumulation. Their prime motive is much more likely to be to consume and utilize economic surplus in order to maintain a specific standard of living or lifestyle, rather than to reinvest these funds into their business. According to Scase, in the emerging markets of Russia and Central Europe the greater proportion of small business traders are proprietors rather than entrepreneurs.⁶

He concedes, however, that these categories are dynamic and not rigidly defined. It is therefore possible for proprietors to turn into entrepreneurs or vice versa. In this book we will come across opportunity entrepreneurs close in terms of attributes to those Kuratko and Hodgetts describe, but also other people who in some respects may lack some attributes of their entrepreneurs and seem closer to the Eastern European proprietors described by Scase. As stated by Schumpeter, to be an entrepreneur requires innovation in combining various resources that are available around and getting new things done or performed.⁷ It makes entrepreneurship a variable with a number of extreme values. In the case of the entrepreneurs we consider in this book, some may not have a clear vision of what their business ought to be because markets are too uncertain, there are so many factors they do not control that they cannot think in a long-term perspective, their skills level may not be that high and their business plan is very simple. For many of them, success may mean survival or a precarious decent life for their family. They may not have a ‘capitalistic’ vision of their business, at least at the beginning. Thus they may not accumulate much capital – sometimes none for a while – but their intention is to do so if possible. For some, entrepreneurship may not have been the first choice of career, but in many respects in their behavior and attitude they have a passion and devote energy to achieve success. They want to have a fulfilling, interesting job and make it on their own. They are creative at their (sometimes low) level and are always looking for new ways to stay and prosper in the market. Therefore, they should also be considered as entrepreneurs.

Motivation differs among entrepreneurs, so it is expected that the variables influencing their decision-making may also diverge.⁸ Choosing to start a business in order to exploit an opportunity despite having access to alternative income-producing activities is different from a forced choice driven by economic survival. But in almost all cases the difference between necessity and opportunity entrepreneurs is not as clear-cut as it seems to be. Obviously, as explained by Brush, in most cases when a woman (or a man) decides to create a company, it is not for one reason but a mix of push and pull factors resulting from individual and contextual circumstances.⁹

Pull factors are concerned with the expectation of being better off as an entrepreneur. Thus individuals are often attracted to entrepreneurship in the expectation that it will provide greater material and/or nonmaterial benefits. Push factors take into account the conflict between one’s current and one’s desired state. They are often associated with some level of professional dissatisfaction, frustrations with salaried employment, unemployment and/or personal crises. The push and pull factors have been mostly identified in Western countries, but they have been found as well in studies undertaken in Asian countries.¹⁰

In Asia, too, there are women entrepreneurs who say they were motivated to create a business by pull factors such as the desire for self- achievement, autonomy, freedom and the flexibility that results from self-employment, rather than to supplement the family income.¹¹ Push factors include obstacles, such as glass ceilings, which prevent women from moving beyond a certain point in the managerial hierarchy, or glass walls preventing lateral moves, consequently keeping women in specialized operational, technical functions serving as back-up to managerial positions. Women employees and managers in all four countries say they have faced glass ceilings and glass walls; this is confirmed in studies in Malaysia, Vietnam, Korea and Japan.¹² Perceptions of facing gendered barriers in terms of promotion and recognition of professional merits by the organization are important for them in the decision to create a business. As argued by Goffee and Scase, women contemplating entrepreneurship are attracted by the fact that they do not need to meet organizational selection criteria based on age, gender, experience, etc.¹³ They may want to avoid the supervisory controls of formal employment and/or the inhibiting constraints of domestic roles or male-imposed identities that are allocated to them via established societal institutions.

For a number of entrepreneurs interviewed for this study, one of the biggest advantages of business proprietorship was indeed the absence of such organizational selectors. It was particularly so for those coming from cultures, like Japan and Korea, where the criteria of gender, age and seniority remain important and codification of male/female roles can still be a strong inhibiting factor at work. They had experienced frustration at being deprived of the opportunity to utilize their talents fully, by the subsequent lack of challenge in their salaried job and/or the difficulties of operating in rigid hierarchy-driven organizations where those factors are at play. Gender and age also have a role in being an entrepreneur. In the first stage of activity, respondents in all four countries said that credibility vis-a-vis stakeholders is often based on those criteria. But obstacles can be overcome through personal efforts – something that is perceived as more difficult in an organization. Women may also explicitly attempt to avoid a labor market that confines them to insecure and low-paid occupations. In Malaysia and Vietnam many women resort to entrepreneurship and become hawkers, petty retailers or wholesalers because they lack the education and skills to find employment in the formal sector. But this is not unknown in Japan and Korea either, despite their higher educational standards. Likewise, economic necessities such as making a living after a divorce or the need for two incomes in a household to achieve a desirable standard of living appear to be crucial reasons (actually increasingly important) for entering business for many women in all four countries.

As argued by Moore and Buttner: ‘In cases where women are earning less in self-employment than they were in wage employment, it may be that the non-pecuniary benefits of self-employment lead to a utility premium in running one’s own business in excess of the value placed on the loss of income, which is especially relevant in the case of women entrepreneurs.’¹⁴ This could mean, for example, creating an NPO working with handicapped children after 15 years as an investment banker, like one of our Japanese respondents. It may also result from conflicts between life priorities and one’s employment context. For highly paid Japanese and Korean female managers it may be more fulfilling to quit their job in order to rear a child rather than continue in a working environment where holding a managerial position is difficult to make compatible with childcare. In view of the difficulties in returning to a previous post after a temporary career break, and the opportunity cost of deciding to re-enter salaried life in a smaller concern, they may finally decide to start something on their own, generally earning much less than during their managerial career, at least at the beginning. Their intellectual capabilities, business experience and portfolio of contacts allow them to identify and pursue specific business opportunities, making them opportunity entrepreneurs. But the fact that they often say they would probably have pursued their managerial careers if their companies had given them the possibility of balancing private and professional life makes them a type of necessity entrepreneurs as well.

The definition of Moore and Buttner could be also considered as too restrictive. It is difficult to evaluate exactly the economic weight of women-owned businesses or the number and position of female entrepreneurs. Gender-disaggregated figures are scarce, especially in Malaysia and Vietnam, and the existing data should be considered cautiously. First of all, the definition of the term is slightly different from country to country. There is no consensus on what constitutes a woman- owned business. In Korea, in the Women Business Ownership Supporting Law of 1999, it is defined as a company that is owned by a woman or women and is controlled by her (them).¹⁵ In the three other countries there is no official definition of the term.¹⁶ Then (as a direct consequence of the previous point), women’s entrepreneurial activities are not always acknowledged by the official statistics, and thus women’s business participation might be reflected as misleadingly low. In the ubiquitous household-based businesses in Vietnam and Malaysia, women do not always appear in the statistics if the activities are officially performed under the name of the husband. It is likely that more women than men entrepreneurs carry out informal activities, especially in Vietnam, some parts of Malaysia and Korea. In Vietnam, Malaysia and rural Japan, many businesses are co-owned and managed by a group of women, not an individual. Especially in the case of very small businesses (one to ten employees), similar to what is observed in Europe and the United States, many are family-based, with several members of the family having a stake in the activities. It was reported that in Malaysia about one-third of rural entrepreneurial projects are managed by both spouses.¹⁷ Figures for Vietnam are likely to be as high or even higher. Co- entrepreneurship is also common in the two developed countries, Japan and Korea. In 2004 women businesses managed by both spouses in Korea amounted to 32.9 per cent of the total.¹⁸ As a consequence, this study found companies where the female entrepreneur did not have a majority ownership, although it was clear that she was dominant in the decision-making process. Conversely, a notable number of companies are legally registered as owned by women although they are actually managed by men (generally the husband or family members). This is the case for instance in the construction industry in Japan and Korea, mostly for fiscal reasons, but cases are also reported in Malaysia of women playing only a symbolic role.¹⁹ The definition of a woman entrepreneur used in this book is a woman who is a de facto owner or co-owner of a business, is involved in its daily management and is the key decision-maker for devising the business strategy. Women whose names are registered as the owner but who are not actually responsible for running the business are not included, and nor are women business owners with no