People who study or advocate entrepreneurship often point admiringly to North America. In particular, my own home country, the United States, is famously proud of its entrepreneurial spirit and the rags-to-riches stories that are part of its history.
Many do not realize, however, that higher levels of self-employment are typical of nations with low per capita incomes. As a share of total employment, for instance, self-employment in the United States is only 7%, one of the lowest in the world, with Canada still close by at 9.2% (this according to most recent OECD reports). In comparison, Greece and Mexico are about 35% and Turkey is 39.1%. So, clearly, the idea that self-employment, as such, is a positive thing—an attitude quite common these days–merits some critical examination.
Hughes thus focuses her sights closely on the progress and experience of women in Canada, using interviews and surveys as well as published statistics to support her case. Right off the bat, of course, there are all kinds of definitional issues such as what “counts” as entrepreneurship—the definitions always seem to push most women’s businesses out of the category on the basis that they are home-based, “hobby” or “lifestyle” businesses, are unincorporated, or just don’t have enough employees or growth. Hughes wisely gestures to these definitional skirmishes, notes the gender prejudices embedded in them, and then proceeds with her analysis, offering a proviso about labeling her data.
She dives into the question of women’s motives for going into business for themselves. Acknowledging that economic constraints figured in some way for most of her respondents, even though few had actually been forced into entrepreneurship by a lost job or some other crisis, she observes that most were drawn by “pull factors,” such as the promise of independence and a positive work environment. But then she points out that one must be careful labeling such factors as “pull” or “push” because the women were often seeking a positive work environment specifically to escape a negative one in their formal job.
I was reminded of the impetus for Dame Stephanie Shirley and the women who formed her workforce: a profoundly negative environment in the formal workplace that did not allow women to advance and completely forbade them to work and be mothers.
Hughes goes on to show that Canadian women who are self-employed are markedly more likely to report satisfaction in their work than were female employees, as well as scoring higher on other measures of positive working experience, such as feeling they had opportunities for creativity and personal fulfillment.
Interestingly, the women tended to work long hours in self-employment (and the “vast majority” had children), but were nevertheless satisfied with their work/life balance. This suggests, of course, that having control over your work schedule and being able to blend home and work life more fluidly—which could also occur with flextime, if employers would use it—was a major benefit of being self-employed. And, indeed, this was a major reason the women gave for going into business in the first place. However, Hughes found that most of them, in fact, were leading fairly stressful lives and having to make up the difference by having no time to themselves. (I did yearn for more comparative figures here, since I think employed women also have very little time for themselves.)
The downsides, however, were sobering. Self-employed women were less secure, often struggling to make ends meet, and were not able to manage long-term goals such as retirement that would be expected in formal employment. I particularly noticed her finding that some 40% of her respondents had at some point used personal credit (especially credit cards) to finance their business. Last summer, an exposé of Mary Kay was largely based on the fact that the reps were using credit card debt to finance inventory. I suspect that the use of personal credit for business purposes is a consistent feature of women’s entrepreneurship in the West. I suspect it results from an unwillingness, especially as compared to men, to encumber major family assets, combined with hesitancy, as compared to men, to deal with financial institutions. In any case, using credit cards only increases the risks the women undertake. Hughes quite rightly chides the media and others, who consistently slap a positive face on self-employment—offering awards and the like—and don’t give a balanced perspective of the risks.
Overall, Hughes’ interviews and the available statistical data seem to converge in a picture where the self-employed are much happier with their autonomy and work environment, report being satisfied with pay at about the same levels, but miss the benefits of insurance and so forth typical of formal employment.
Hughes then proceeds to analyze the role played by policy in encouraging and facilitating entrepreneurship. Her comments about Canadian national and local governments wishing to promote new business startups on the one hand, but not wanting to produce and fund the supports that are needed—such as various forms of insurance, especially health care and retirement—on the other, could be made about the attitudes of many governments around the world. She particularly points to the tendency of training programs to assume a high-growth motive for entrepreneurs, when a significant subset of women actually prefer a more flexible, controlled approach to growth. These failures to provide services and supports appropriate to all entrepreneurs, but particularly to women, seemed to undercut government’s averred lust for the sparkle and growth of entrepreneurial spirit.
By 2010, Canada’s self-employment rate was back to its 1990 level. It would be interesting to know what the thinking is on why that surge was so short-lived. I expect some of Hughes’ observation about the risks and the lack of support would answer the question for both men and women.
In any case, Female Enterprise in the New Economy continues to be one of my favorite books on the whole question of women and economics. Much of what Hughes observes resonates with reports from other countries about women’s entrepreneurship, but also with findings about women’s participation in the workforce generally–the problem of time poverty, of family unfriendliness, of poor working conditions, and so on. Continuing to read across nations, across sectors, and across time will help us all to understand the dynamics better and this book is a very good place to start.
I am pleased to say also that Karen Hughes will be speaking at the Oxford Forum for Women in the World Economy, sharing the stage with me for the opening presentations.