The increasing number of female entrepreneurs narrows gender gap in the UK

The UK has witnessed a significant rise in the number of start-ups in the past decade, with the number of female entrepreneurs rising faster than men. Despite the rapid increase, overall, men are still nearly twice as likely to be entrepreneurs than women (10.4% of men versus 5.5% of women).

A new research from Aston University and the University of Strathclyde found that the number of women who went into business over the last decade rose by 45% compared to just 27% among men.

Entrepreneurship is defined as any attempt at new business or new venture creation, such as self-employment, a new business organisation, or the expansion of an existing business by an individual or team.

The team of researchers studied data from 60 countries around the world and discovered clear geographical disparities when it comes to the gender ”enterprise gap”. The research using used data from the Global Entrepreneurship Monitor (GEM), the largest and most comprehensive study of entrepreneurship globally.

There are large regional differences

Most regions in the UK saw sizeable jumps in the proportion of female entrepreneurs over the past decade, but in the South West and North East, the proportion fell.

Women in the South East are the most likely to start their own business, with 7% describing themselves as early-stage entrepreneurs. In the Nort East, only 2.8 of women fall into this category.

The West Midlands is the region closest to gender parity, with 74 new female entrepreneurs for every 100 male ones there, compared to just 33 in the North West, which is the worst-performing region.

The research suggests that the regional differences could be explained by the presence of a high number of graduates and international migrants.

Mark Hart, professor of small business and entrepreneurship at Aston Business School, explained: “The regional disparities we observe in male and female start-up rates across the UK are striking. The closing of the ‘enterprise gap’ in the Midlands (West and East), in particular, may be partly explained by internal and international migration patterns.”

In Scotland, the proportion of women early-stage entrepreneurs grew from an average of 3.2% of working age women in 2003-6 to 5.4% in 2013-16, bringing the Scottish rate into line with the UK average of 5.5%.

Scotland now ranks as the third highest region in the UK in terms of gender parity for entrepreneurship, with 64 early-stage female entrepreneurs for every 100 males.

Across both sexes, researchers found there were more early-stage entrepreneurs in the UK in 2016 than the previous year.

The UK is still the start-up capital of Europe

The UK was confirmed as the start-up capital of Europe with an early-stage entrepreneurship rate of 8.8% of the population, compared to 5.3% in France and 4.6% in Germany. However, the figure is still significantly lower than in the US  where 12.6% of people are entrepreneurs.

Minister for Small Business, Consumers and Corporate Responsibility, Margot James said: “Supporting innovation and entrepreneurs is a central pillar of this Government’s Industrial Strategy, so it is great to see more women throughout the country engaging in entrepreneurship in Britain.

“The UK remains among the best places in Europe to start a business, but we must continue working to ensure that this positive trend continues. From reducing corporation tax rates to providing £3.4 billion in finance through the British Business Bank, we know small business support is key to building a strong and thriving economy.”

Dr Karen Bonner, a senior researcher at Aston Business School, explained the reasons behind the continuing disparity between male and female entrepreneurship rates were complex:

“On the one hand, we could point to different societal expectations, with women still taking on the bulk of unpaid caring roles and entrepreneurship still stereotyped as a ‘male’ career choice in our wider culture,” she said.

“When asked why they started their business women are significantly more likely to cite ‘greater flexibility for my personal and family life’ and the desire for ‘freedom to adapt my own approach to work’ than men. But despite these differences, and controlling for other factors like sector, age and start-up capital, both men and women display similar levels of ambition when it comes to growing their businesses, ” added Karen Bonner.

In Europe, Spain registers the closest male/female ratio when it comes to start-ups, with 74 Spanish women entrepreneurs for every 100 male ones, compared to 53 for the UK.

Many developing economies display even higher rates of female entrepreneurship. In Ecuador, 31.9% of women are entrepreneurs, while other Latin American and South East Asian nations dominate the top spots. Indonesia and Brazil are the only participant countries where there are more female entrepreneurs than male.

At the global level, the UK’s rates of female early-stage entrepreneurship remain well below many other advanced economies. Canada has the highest absolute rate of female early-stage entrepreneurs at 11.6%, while Spain has the closest male/female ratio of any developed economy, with 74 Spanish women entrepreneurs for every 100 men, compared to 53 for the UK.

Researchers also observed a tendency for women generally to be more risk-averse, especially in places where there are other employment options which allow them to work more flexibly around caring responsibilities.

“At the national level, it’s encouraging that more women are seeing entrepreneurship as a career option and a route to financial independence and that may be a reflection of a more supportive ecosystem and private sector-led initiatives to highlight the success of female role models in business.”