MODEL ANSWER TO ASSIGNMENT 1 M.

Ed OBSTACLES TO WOMENS ENTREPRENEURSHIP Introduction Women Entrepreneurs may be defined as the women or a group of women who initiate, organize and operate a business enterprise. Government of India has defined women entrepreneurs as an enterprise owned and controlled by a women having a minimum financial interest of 51% of the capital and giving at least 51% of employment generated in the enterprise to women. Like a male entrepreneurs a women entrepreneur has many functions. They should explore the prospects of starting new enterprise; undertake risks, introduction of new innovations, coordination administration and control of business and providing effective leadership in all aspects of business. In the present section, we will review in more detail the specific obstacles that are posed to womens entrepreneurship when it comes to the entrepreneurial process itself. This section is divided into four different parts: general obstacles to women engaging in entrepreneurship (opportunity recognition and willingness to start firms); specific obstacles to start-ups (assembling necessary information, financial and human resources to start a firm); specific obstacles to managing a small firm; and specific obstacles to growing firms. The lack of role models in entrepreneurship. There exists a strong connection between the presence of role models and the emergence of entrepreneurs (Shapero & Sokol, 1982) and women as they historically have not been present as entrepreneurs in general lack close role models. Role models are persons that by their attitudes, behaviours and actions establish the desirability and credibility of a choice (in this case becoming an entrepreneur) for an individual. An individual will be more influenced by another individual of the same sex, as ones aspirations and choices tend to be more influenced by persons of the same sex (Deaux & Lafrance, 1998). Lack of experience. All stages in entrepreneurship are dependent on relevant experience, from the identification of opportunities to the execution of running a business. Human capital theory posits that individuals with more or higher quality human capital achieve higher performance in executing relevant tasks (Becker, 1975).women lack the experience needed to identify and exploit opportunities. Here, recent research on developed economies has identified a potential problem when it comes to womens entrepreneurship: highly educated women seem to choose other career options than self-employment and entrepreneurship. Entrepreneurship is therefore relatively more
1

dominated by unskilled women .If women are relatively less skilled than their male counterparts, then the firms they will create will have a lower probability of survival and growth than firms created by men. Lack of relevant networks and of societal position. Women have in general a lower social position than men, which affects the kind of networks they can access or are part of. There is evidence to prove that women are less involved in networks than men are, and their type of network is different. The strong and personal networks that women traditionally engage in are well suited to purposes linked to the family related tasks that may prove to be a hindrance in the marketplace (Lin, 1999). Thus, women differ to men in the kind of networks they use and in the social capital available to them through the network. Women have therefore less access to critical resources, support and information needed to successfully start and manage a new firm compared to men. Lack of wealth. A prerequisite for starting a firm is to have capital in terms of financial assets and in terms of relevant knowledge assets. Womens position in society has led to a lack of assets in both these aspects. The constraints of family obligations make it harder for women to take on work on a full time basis and to engage in a career. This in turn decreases the range of possible work opportunities for women, leading to jobs in lower paid sectors. Being a part-time worker with low pay is not a good basis for creating personal wealth. For example both legal and cultural obstacles make it impossible or at least very difficult for women to save enough money to start a firm or reinvest money into the growth of the firm, because at any moment a male family member (husband, brother, brother in-law) can confiscate the accumulated capital for no other reason than that he is allowed to, and there exists no protection for women in the respect (de Groot, 2001; Mayoux, 2001). Competing demands on time. Another recurring obstacle for women to engage in entrepreneurship is the perceived lack of time or competing demands on time. Because women are responsible for so many different domestic chores and the raising of children, they do not have enough free time to develop either their entrepreneurial skills to become entrepreneurs or to develop an existing business. The lack of free time does not allow them time to travel to support institutions, banks and other finance houses for advice and information on credit, to attend training programmes to acquire skills, or to seek out better customers or suppliers. The results suggest that lack of time is a barrier for most women, in most economies, independent of the level of development. Women's family obligations also bar them from becoming successful entrepreneurs in both developed and developing nations. "Having primary responsibility for children, home and older dependent family members, few women can devote all their time and energies to their business" (Starcher, 1996, p. 8).The financial institutions discourage women entrepreneurs on the belief
2

that they can at any time leave their business and become housewives again. The result is that they are forced to rely on their own savings, and loan from relatives and family friends. External finance and sex discrimination. In general, women have lower personal financial assets than men. This means that for a given opportunity and equally capable individual, women must secure additional resources compared to men in order to exploit the opportunity because they control less capital. Four areas have been identified as potential or real problems for women when it comes to financing: a) women may be disadvantaged in raising the initial capital to start a new firm; b) collateral needed for external financing may be above the wealth level of most women; c) women entrepreneurs relationship with different financial institutions might suffer because of gender stereotyping and discrimination (Carter et al., 2001; Storey, 1994). d) finance for an existing firm may be less available, because women are less likely than men to penetrate informal financial networks; The financial institutions are sceptical about the entrepreneurial abilities of women. The bankers consider women as higher risk than men . The bankers put unrealistic and unreasonable securities to get loan to women entrepreneurs. According to a report by the United Nations Industrial Development Organization (UNIDO), "despite evidence that women's loan repayment rates are higher than men's, women still face more difficulties in obtaining credit," often due to discriminatory attitudes of banks and informal lending groups (UNIDO, 1995b). Results also indicate that women still perceive a negative attitude from financial institutions such as banks and other lending institutions. This negative attitude, it is argued, arises due to two possible reasons: a) women are not viewed as entrepreneurs due to the attitudes formed by traditional gender roles; b) women engage in industries that the financial institutions are not used to handle (as personal services, care, etc.). c) also in the personal networks and the family it is harder for women to find financial resources to start a business. d) especially in developing economies, women still have important problems to obtain finance because of their weak social position, or that

they are not even allowed to seek finance as individuals and that husbands or brothers must seek it in their place instead (Mayoux, 2001). The male - female competition is another factor, which develop hurdles to women entrepreneurs in the business management process. Despite the fact that women entrepreneurs are good in keeping their service prompt and delivery in time, due to lack of organisational skills compared to male entrepreneurs women have to face constraints from competition. The confidence to travel across day and night and even different regions and states are less found in women compared to male entrepreneurs. This shows the low level freedom of expression and freedom of mobility of the women entrepreneurs. Low-level risk taking attitude is another factor affecting women folk decision to get into business. Low-level education provides low-level selfconfidence and self-reliance to the women folk to engage in business, which is continuous risk taking and strategic cession making profession. Investing money, maintaining the operations and ploughing back money for surplus generation requires high risk taking attitude, courage and confidence. Though the risk tolerance ability of the women folk in day-today life is high compared to male members, while in business it is found opposite to that. Knowledge of alternative source of raw materials availability and high negotiation skills are the basic requirement to run a business. Getting the raw materials from different souse with discount prices is the factor that determines the profit margin. Lack of knowledge of availability of the raw materials and low-level negotiation and bargaining skills are the factors, which affect women entrepreneur's business adventures. Knowledge of latest technological changes, know how, and education level of the person are significant factor that affect business. Many women in developing nations lack the education needed to spur successful entrepreneurship. They are ignorant of new technologies or unskilled in their use, and often unable to do research and gain the necessary training (UNIDO, 1995b, p.1). Although great advances are being made in technology, many women's illiteracy, structural difficulties, and lack of access to technical training prevent the technology from being beneficial or even available to females ("Women Entrepreneurs in Poorest Countries," 2001). This lack of knowledge and the continuing treatment of women as second-class citizens keeps them in a pervasive cycle of poverty ("The Female Poverty Trap," 2001). The studies indicates that uneducated women do not have the knowledge of measurement and basic accounting.