Do women-owned businesses perform better?

Introduction

Entrepreneurship is a key element for economic recovery as global economies limp back from the recession. This is true even for economies such as India and China where the slowdown was mild and the growth rate is expected to accelerate. With women constituting approximately half the population in most countries, economic development would require investing in the improvement of women's entrepreneurial skills and capabilities.

At 495.74 million women account for 48.3% of India's population, as per the census in 2001

In India, micro and small enterprises provide opportunities for women to own and lead enterprises. With 495.74 million women accounting for 48.3% of India's population there is a significant potential for women-owned enterprises to contribute to the growth of the Indian economy. A survey conducted in 2006-07, found that 12.99 lakh women managed small scale enterprises in India.

Professor V. Nagadevara of IIMB has analysed differences between small scale enterprises owned by women (women enterprises) and other small enterprises in India. The study set out to understand if women enterprises perform better. Is their composition significantly different than those of other enterprises? Do they face the same set of challenges as other enterprises? What can be done to improve the effectiveness and performance of women enterprises?

Government initiatives for women entrepreneurship

The government of India has formulated several schemes for the development of women enterprises. One such scheme, the Trade Related Entrepreneurship Assistance and Development, is aimed at encouraging entrepreneurial ventures, particularly by women in non-farm activities. 
 Some of the other schemes targeted towards women entrepreneurs include:

• Micro & small enterprises cluster development program
• Credit guarantee fund scheme for micro and small enterprises
• Support for entrepreneurial and managerial development

 The numbers behind women enterprises

Enterprises with 51% or more ownership by women are termed as “women enterprises”.

Professor Nagadevara analysed about 1.4 million Small Scale Industries (SSI) and Small Scale Service and Business Enterprises (SSSBE) units across the country. The database contained information on assets, revenue for the past 3 years, employment and profits. 
 The data was then categorized into “women enterprises” if the extent of ownership is more than 51% and “other enterprises”. The consolidated data on the nature of enterprises surveyed is shown in Table-1.

Total Small scale units in sample	1,348,451
SSI units	879,936
SSSBE units	468,515
Women enterprises in the database	10%
Women enterprises in rural areas	51%

Table -1: Number and composition of enterprises surveyed Findings

The data collected through a survey of the enterprises shown in Table 1, was analyzed with respect to various characteristics such as loans and borrowings, growth of revenue, productivity of employees, profit margins, value of export, value of exports per employee and exports as a percentage of gross value of output. 
Some of the findings revealed by the analysis are presented below:

• Revenue The average value of revenue, the value of exports and the average net worth of the units is smaller in women enterprises for both SSIs and SSSBEs.
• Growth The revenue growth of SSI women enterprises over the past 3 years, is significantly higher than that of other enterprises.
• Exports The value of exports as a percentage of revenue is significantly higher in case of women enterprises for both SSIs and SSSBEs.

Challenges

Women enterprises did not face any significant power shortage, labour or managerial problems. However, there are a number of issues that need to be addressed for women enterprises. 

These include:

• Debt Access to credit is a key problem faced by SSIs, with only 22% of women enterprises having outstanding loans
• Marketing 46% of women enterprises report marketing as another major problem for their enterprise.

Conclusion

In India, women enterprises are about a tenth of the entrepreneur universe. Whilst the government has a variety of schemes to encourage women enterprises, greater effort needs to be made to educate women about these schemes.

Specific efforts need to be made to improve the marketing for SSIs and SSSBEs and to help them in selling their products. With these efforts, the number of women in an entrepreneurial role can be increased to be more representative of their national percentage and this will reflect on the development of India's economy as a whole.