WOMEN ENTREPRENEURS IN SMEs: Realising the Benefits of Globalisation and the Knowledge-based Economy Paris, 29-30 November 2000 ISSUES PAPER Workshop No. 2 Increasing Women Entrepreneurs Participation in International Trade and the Global Economy: Technologies and Partnering Prepared by the OECD Secretariat Organisation for Economic Co-operation and Development 2000 Organisation de Coopération et de Développement Economiques
HIGHLIGHTS 1. Enhancing the export potential of a business is an important step in internationalising operations and becoming an active player in the global economy. There are indications, however, that women-owned businesses are only beginning to become involved in international trade and other forms of globalisation, which may be a factor preventing them from reaching their full potential in trade, investment and market opening networks. As the growth in the number of women-owned businesses outpaces the rate of start-ups overall in a number of countries, and as globalisation brings fundamental challenges but also opportunities to an increasing number of firms, the performance of women-owned businesses with respect to globalisation represents an important policy concern for governments. 2. It is difficult to determine the extent to which women entrepreneurs are currently involved in international trade (as exporters and importers) in different countries around the world, or the degree to which they are confronted with specific obstacles in this area. Ad hoc studies carried out in different countries point to varying levels of international involvement by women-owned businesses. However, comprehensive studies are lacking and there exist important information gaps in statistics on SMEs in international trade broken down by gender. The service sector, which now constitutes the biggest sector of the global economy and accounts for an increasing proportion of global trade, and in which many womenowned businesses can be found, suffers particularly from statistical problems and underreporting. 3. Furthermore, there are indications that women entrepreneurs involvement has been limited in other forms of international co-operation, such as foreign direct investment (FDI), joint ventures, and strategic alliances. On the other hand, the advance of new technologies, particularly information and communications technologies (ICTs), are bringing new opportunities which have the potential to fundamentally alter the role of women-owned business in the globalisation process. It is important to obtain a better understanding of strengths and weaknesses, and opportunities and risks in these areas, and the implications they hold for policy makers, business organisations, and other relevant actors. 4. This issues paper aims to provide an overview of current developments concerning women entrepreneurs participation in international trade as well as determine areas for future action by various actors. It will examine some of the opportunities that new technologies and networking/partnering offer women-owned businesses for internationalisation, as well as the challenges, obstacles and problems. It is intended to raise pertinent questions and stimulate discussion during the conference workshop; ultimately, it should contribute to the formulation of workshop recommendations. Policy issues for discussion: To what extent have women entrepreneurs internationalised their businesses through trade? What have been the particular strengths and weaknesses of women-owned businesses in other types of international business activity, such as FDI and strategic alliances? Are women-owned businesses witnessing new trends in participation in the global economy? 1
What are the implications of new technologies and organisational changes for women-owned businesses in trade and globalisation? Challenges for the internationalisation of women-owned businesses 5. In general, small businesses are relatively dependent on local resources and markets, and less able than larger firms to benefit from economies of scale and other size-related advantages that play an important role in international exchange. This applies to many women-owned businesses, which may also face additional obstacles related to the characteristics of their businesses or gender. 6. Women entrepreneurs face a number of challenges to internationalisation and participation in the global economy. First, their business strategies may be particularly risk-averse with respect to certain international dimensions, and there are a number of explanations for this phenomenon. It may be due to a lack of previous entrepreneurial and management experience; for example, while it is quite clear that international careers in large enterprises prepare men and women for entrepreneurship in a global context, the number of women in high-level managerial positions with an international dimension remains very low. 7. Difficulties in obtaining the finance necessary to undertake investment is also a major impediment for internationalisation, and women may face particular challenges in this regard. For instance, because of a lack of collateral, the sectors in which their businesses are found (the service and retail sectors), or other reasons, women entrepreneurs may in some cases have particular trouble gaining access to financing and guarantees for exports. 8. Another important challenge stems from information asymmetries, which are a serious impediment to taking on fixed costs in foreign markets. The importance of networks in gaining access to foreign markets is now well established; yet women have often been left out from these primarily maledominated networks. Male executives have long had access to associations, networks and clubs (business, social or sports clubs) where they discuss business and negotiate deals. Women entrepreneurs have historically been excluded from these influential old boys networks and informal business networks that are so instrumental for internationalising operations. Furthermore, women entrepreneurs may not have equal access to government and corporate procurement contracts, both nationally and internationally. 9. They may also face obstacles to the uptake and use of new information and communications technologies (ICTs), which are becoming more and more instrumental to international business activity. At the societal level, despite the fact that progress has been made in recent years, scientific and technological professions continue to be dominated by men, and this carries over to entrepreneurship as well. This situation may reflect imbalances in the education, training and socialisation processes, which may not offer equal opportunities to girls and boys in the fields of study, or which may, directly or indirectly, encourage boys to take up certain fields and girls others. 10. The fact that women may be generally less familiar with science and technology has an impact on not only the sectors in which they start their businesses, but also their use of technologies in running the business. In addition to a lack of information or limited awareness of their potential benefits, other challenges to the uptake and use of ICTs include the costs and quality of network infrastructure, the demands of assimilating continuous technological advances, and a shortage of technical skills and management knowledge. 2
For discussion: Do women-owned businesses face particular difficulties in internationalising their operations? Do women-owned businesses in different countries and different sectors of activity encounter the same challenges to internationalisation? To what extent do these obstacles compromise the sustainability and growth potential of women-owned businesses? Overcoming obstacles to the internationalisation of women-owned businesses: technologies and partnering Information and communications technologies (ICTs) 11. In the context of today s global economy, trade, FDI, strategic alliances and other forms of internationalisation are critical for capturing the benefits of globalisation, and ICTs offer many opportunities in this regard. Technology and information systems are bringing about deep-seated changes in the ways small firms conduct business. Effective application of new technologies are helping to level the playing field between big and small firms, and enabling more companies to grow and internationalise. Electronic and mobile commerce and the internet are increasingly important for new and established firms to innovate, improve their products, production and services, expand their markets, and become more dynamic. 12. Integrating the use of ICTs in daily business operations may offer special opportunities for women-owned businesses, particularly for overcoming barriers related to firm characteristics as well as gender. These include the size and sectors in which women-owned businesses can be found, but also their geographic location. International trade in services, a sector in which the majority of women-owned businesses can be found, is growing as a proportion of global GDP, in large part as a result of the advances in technologies for delivering these services to foreign markets. Electronic and mobile commerce can reduce the importance of geography and distance for marketing and sales, as well as product and service delivery, along with the high costs associated with being strategically located. ICTs can also increase the opportunities for efficiency gains through outsourcing, and other forms of supply chain reorganisation; this can be of particular value to women entrepreneurs seeking to establish forms of international co-operation such as FDI and strategic alliances. 13. ICTs can also help women entrepreneurs work under more flexible conditions and therefore balance the double burden of family and professional responsibilities more successfully. They can also help women entrepreneurs overcome discrimination they may face in conducting business; as more and more deals are made online, it is easier to evaluate the quality of projects, products and services without being influenced (consciously or unconsciously) by the gender of the business owner. 14. Furthermore, new, more user-friendly technologies are contributing to improving access to ICTs, thereby helping to reduce some of the fixed costs associated with going international. For example, internet-based applications services providers (ASPs) can improve access to foreign markets at a reduced cost for investment in software. ICTs can also be instrumental in reducing informational obstacles to internationalisation; this includes facilitating the development of informational networks for trade, foreign investment, etc. (see below). They can also be harnessed as a tool to deliver training, for example, e- learning about international trade, including skill-building, cross-cultural training, etc. 3
For discussion: What opportunities do ICTs offer to women-owned businesses in the area of international trade and other types of international activity? What areas are most promising for the development of e-commerce by women-owned SMEs (e.g. business-to-business or business-to-consumer segments, particular sectors, parts of supply chains, virtual trade missions, etc.)? What can be done to increase the uptake and use of new technologies by women-owned businesses, and harness ICTs as a tool for internationalisation? Networks/partnerships for women entrepreneurs in trade 15. International networks (online and offline) and partnerships have been found to support and encourage internationalisation; entrepreneurs who develop and maintain ties with other entrepreneurs tend to outperform those who do not. There is evidence, however, that women entrepreneurs may not exploit to the same degree as men the benefits that come from networking with other business owners working in similar sectors and at different levels in the supply chain around the world. 16. Networking provides value-added by increasing the flow of information. It not only serves to exchange information and experiences, but also as a means to access technology and increase familiarity with business cultures in foreign markets. Networks take different forms (e.g. formal or informal) and serve different objectives. For example, some networks, such as business associations, provide information and the opportunity for groups of firms to exchange ideas or develop broad forms of co-operation locally, nationally and across national boundaries. Others address more specific objectives (such as joint export ventures). Networks of ethnic minorities that trade with their country of origin play an important role in international activity in some countries. 17. Public/private partnerships can also play an important role in helping businesses internationalise. Partnership initiatives currently underway in different countries cover an array of activities to promote internationalisation, for example, trade missions (real and virtual), virtual trade shows, export guarantees and credits, training programmes and access to new technologies, among others. 18. Networks can facilitate accelerated and peer-based learning. Furthermore, business networks can help entrepreneurs innovate, by allowing them to reconfigure relationships with suppliers. And they can allow the sharing of overhead costs and the exploitation of specific scale economies present in collective action (such as bulk purchasing of inputs). Indeed, a driving goal behind some networks has been that, in achieving an inter-firm distribution of labour, they will allow companies to attain efficient scale in particular phases of a production/marketing process, permitting effective competition with larger enterprises. This kind of co-operation among firms may be particularly relevant for reducing the costs and overcoming the challenges associated with internationalising operations. 19. Women entrepreneurs are increasingly setting up their own networks, and becoming more integrated in existing ones; they are also beginning to form and participate in virtual associations, networks and online forums. Regional, national and international women entrepreneurs associations have been found in particular to provide an important source of information and support to nascent, new and established women business owners. Women are forming associations to increase their access to technology, increase familiarity with business cultures in foreign markets and access these markets more effectively. These associations also provide mentoring and training, and catalyse the process of building 4
networks with government and corporate procurement officials. All of these developments are contributing to promoting a pro-active entrepreneurial culture for women and facilitating the transition to international activity. 20. Thus, in many respects, women-owned businesses may be in the process of overcoming obstacles in many of the areas crucial for internationalisation. The extent to which women entrepreneurs seize the opportunities offered by networking and new technologies is critical for their ability to grow and internationalise, and fulfil their potential as major players in the global economy. For discussion: How can networks, including public/private sector partnerships, contribute to spreading awareness of the opportunities offered by different forms of international co-operation? What new forms of flexible/innovative inter-firm organisation can be developed to lower the barriers to internationalisation for women-owned businesses? The way forward: policy recommendations 21. This workshop should produce policy recommendations designed to foster increased participation by women-owned businesses in international trade and the global economy. For discussion: What measures are warranted by governments, the private sector and civil society to promote the participation of women-owned businesses in trade and other international business activity? How can good practices be further developed and disseminated? 5
REFERENCES AND ADDITIONAL READING Duchéneaut, B. (1997), Women Entrepreneurs in SMEs, background report for the 1 st OECD conference on Women Entrepreneurs in Small and Medium Enterprises: A Major Force for Innovation and Job Creation, Paris. National Foundation of Women Business Owners (1999), International Trade Opens New Doors for Women Entrepreneurs, Economic Reform Today, Fall 1999, Center for International Private Enterprise. OECD (1997), Globalisation and Small and Medium Enterprises (SMEs), OECD, Paris. OECD (1998), Women Entrepreneurs in Small and Medium Enterprises, OECD, Paris. OECD (2000a), Women s Entrepreneurship: Improving Knowledge and Statistics, OECD background report for the 2 nd Conference on Women Entrepreneurs in SMEs: Realising the Benefits of Globalisation and the Knowledge-based Economy, Paris, France. OECD (2000b), Financing for Women-owned Businesses, OECD background report for the 2 nd Conference on Women Entrepreneurs in SMEs: Realising the Benefits of Globalisation and the Knowledge-based Economy, Paris, France. OECD (2000c), A New Economy?: The Changing Role of Innovation and Information Technology in Growth, internal document. OECD (2000d), International Strategic Alliances: Their Role in Industrial Globalisation, STI Working Paper 2000/5, OECD, Paris. OECD (2000e), Realising the Potential of Electronic Commerce for SMEs in the Global Economy, unclassified OECD background document, Conference for Ministers responsible for SMEs and Industry Ministers on Enhancing the Competitiveness of SMEs in the Global Economy: Strategies and Policies, 14-15 June, Bologna, Italy. OECD (2000f), Local Partnership, Clusters and SME Globalisation, unclassified OECD background document, Conference for Ministers responsible for SMEs and Industry Ministers on Enhancing the Competitiveness of SMEs in the Global Economy: Strategies and Policies, 14-15 June, Bologna, Italy. 6