Vietnam, Indonesia and the Philippines buck global start-up gender gap

23 August 2019 Consultancy.asia

 According to a recent BCG analysis, Vietnam, Indonesia, and the Philippines have been found to be among the very small handful of nations where female entrepreneurial activity is outpacing that of its male counterpart – with $5 trillion being left on the table due to the global imbalance.

A recent analysis from Boston Consulting Group performed in conjunction with the Cherie Blair Foundation for Women has found Vietnam, Indonesia, and the Philippines together with Mexico to be the only countries worldwide where more women than men had launched startups in 2016. The strategy and management firm further concluded that should that be the case elsewhere – at least to a point of parity – then the global GDP could expect a potential $5 trillion windfall.

As part of the study, BCG scoured the data from entrepreneurial research platform Global Entrepreneurship Monitor for 73 sample countries worldwide, finding that the percentage of working-age men across all regions who start a new business exceeds that of their female counterparts by around 4 to 6 percentage points – and that in four out ten countries, including advanced economies such as Switzerland, the gender gap is actually widening.

Global economic gains from female entrepreneurship

On the contrary, the gap between female and male start-up activity in half of the countries analysed has in fact been closing – with South Korea cited as one of the nations having made the greatest gains – yet the gendered gap in sustainability and long-term business success remains an issue in every region bar North America. Female-run businesses in the Middle East for example are around half as likely to be still operating after three and a half years compared to men’s.

While noting that many factors for the overall ongoing disparity are at play, such as a persistent lack of access to human, social and financial capital relative to male-founded enterprises (despite, according to a separate study from the firm last year, female-founded businesses generating both greater revenues and returns), BCG contends that the sustainability and growth deficit for female-run start-ups is in a large part due to limited access to support networks.

Here, the firm says that the support of peer-to-peer networks can help encourage women to set higher aspirations for their businesses, plan for growth, and embrace innovation. Author of the study, BCG Partner and Managing Director Shalini Unnikrishnan, elaborates; “It is not just about access to credit or training. The importance of networks for technical knowledge, access to business resources, as well as role models and support elements, shouldn’t be overlooked.”

The design of an effective network

In highlighting the importance of social capital, a critical factor most often overlooked, BCG previously found that higher rates of entrepreneurial affiliation correlate to smaller gender gaps in business sustainability in developing countries. As for Asia, earlier research from The Asian Foundation showed that women-owned businesses in the Philippines, Malaysia and Thailand which had interacted with networks were on average 38 percent larger than those that hadn’t.

In terms of role models in a broader sense, it’s perhaps no coincidence that one of the outliers of BCG’s study – the Philippines – leads the world in respect to gender diversity in business leadership, nearly doubling the global average with roughly 46 percent of the senior management roles in the country held by women. Meanwhile, in yet another BCG study, Vietnam was found to have the most women at board/CEO level of any the advanced ASEAN nations.

And for Asian nations, bridging the gap between female and male entrepreneurial activity could deliver some serious currency. Extrapolating from the countries of its study, BCG concludes that if women and men participated equally as entrepreneurs, global GDP could rise by up to 6 percent, adding between $2.5 trillion and $5 trillion to the world’s economy. The Asia Pacific’s share of that pie is projected at up to as much as $1.7 trillion – greater than the GDP of Australia.