Networking Essential to Women Entrepreneurs in Asia

February 27, 2013

By Kate Bollinger, Nina Merchant-Vega

While many nations limped into the new year under the weight of somber economic forecasts, strong GDP predictions gave Asia a reason to ring in the Year of the Snake on a more positive note. This is certainly good news, but also consider this: over half of Asia’s population is women who, according to UN estimates, could be helping the region grow by an additional $89 billion annually, but instead face barriers that keep them from reaching their full economic potential.

Women’s role as economic drivers of growth is increasingly recognized. As former U.S. Secretary of State Hillary Clinton declared at the second Asia-Pacific Economic Cooperation (APEC) Women and the Economy Forum, “Limiting women’s economic potential is for every country like leaving money on the table.” So, what exactly is limiting their potential?

To find out, The Asia Foundation partnered with the U.S. Department of State and APEC to conduct quantitative and qualitative research in three Southeast Asian countries – Malaysia, Thailand, and the Philippines APEC – to assess areas that encourage or deter access to trade and growth of women-run or owned small or medium enterprises (SMEs).

The just-released research findings, available on APEC’s web site and highlighted in this Asia Foundation video, reveal a distinct set of economic, policy, and social factors that affect women-run and owned SMEs. Some of the most telling findings highlight how the availability of support networks and role models impact women’s businesses.

Previous studies suggest that social capital and networks are important factors influencing entrepreneurial behavior. According to the Global Entrepreneurship Monitor, people that start businesses are more likely to know and interact with other entrepreneurs than those who do not. The same study notes, however, that women who start businesses tend to know fewer entrepreneurs than men. In other words, men have more social connections that enable them to access business opportunities, information, and contacts than do women. In this way, women are disadvantaged from the start, having fewer professional connections, role models, and mentorship opportunities, which can adversely affect their businesses in the long run.

The evidence from our research bears this out. The survey of all three countries showed that a higher percentage of women business owners – 34 percent compared to 26 percent of men owners – reported never interacting with business associations. This kind of limited access to networks can have far-reaching effects for women in business. For example, in all three study economies, women reported finding new clients to be more difficult than did men.

Findings revealed a significant benefit for women’s businesses that do interact with outside networks. Women-owned firms that interact with business associations are on average 38 percent larger than those that do not. Interactions with informal networks such as peer groups are also correlated with business success. In Thailand, women business owners who engage in informal networks are 54 percent more likely to report that they had a profit in the last year than those that do not. Similarly, in Malaysia, women owners who engage in informal networks are 25 percent more likely to say that they would expand their operations over the next three years.

The value of business women’s connectivity was further reinforced by the importance of role models for entrepreneurs. Seventy-six percent of female owners and 75 percent of male owners reported having at least one relative who ran their own business. For women business owners, having a female relative in business in particular was found to be a big boost for the likelihood to go into business. The impact of female role models on businesswomen may help normalize or mitigate social pressures and family obligations which might otherwise deter women from starting a business in the first place.

Women business owners may themselves also become role models for their female employees. Across the surveyed countries, women business owners hired 17 percent more women employees than did men business owners. One businesswoman interviewed in the Philippines who worked in handicrafts said she regularly hired women from the squatter areas surrounding her production locale, explaining that she was happy to learn that these women were now more self-reliant and no longer had to depend solely on their husbands for income.

These findings highlight the important role businesswomen’s connectivity can have on their success. In fact, when asked about the government services most useful to them, at least 70 percent of women exporters in each economy participated in trade fairs, an answer clearly indicative of the concrete value they place on opportunities to network, learn about opportunities, and showcase services.

To further enhance these opportunities, governments and regional bodies such as APEC can work to build the capacity of business associations and networks to reach out to women-owned firms to help them engage more effectively at the local, national, and regional levels. [Read how The Asia Foundation is helping to support women’s business networks across Asia.] In addition, mentorship programs that link women to experienced mentors in their fields, as well as exposure visits across the region, are valuable learning opportunities and build on findings which highlight the value of role models to women-run businesses. Building the potential of women-run businesses to engage in national and regional economies will have important and lasting positive outcomes for individuals, communities, and economies across Asia.

Kate Bollinger is a program officer for The Asia Foundation’s Women’s Empowerment Program and Nina Merchant-Vega is the Foundation’s associate director for the Economic Reform and Development program. They can be reached at [email protected] and [email protected], respectively. The views and opinions expressed here are those of the individual authors and not those of The Asia Foundation.

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