Diversity in Entrepreneurship C18TP Enterprise Concepts and Issues © Goodfellow Publishers 2016

Lecture Overview The value of diversity Who are diverse entrepreneurs 1.We will explore 6 different groups of entrepreneurs 2.We will discuss the policy implications for each of the groups Enterprise Concepts and Issues © Goodfellow Publishers 2016

The Value of Diversity Diversity refers to groups of individuals of varied race, culture, gender, ethnicity, sexual orientation, social background, age, disability, political beliefs and other traits. In theory, diversity within the global population should be reflected in entrepreneurial activity but does it? ….Entrepreneurship is relatively homogenous. Research has shown that diversity affects the motivations and challenges faced by entrepreneurs Key Reading: (Audretsch et al., 2008). Enterprise Concepts and Issues © Goodfellow Publishers 2016

Who are Diverse Entrepreneurs? Women entrepreneurs Ethnic minority entrepreneurs ‘Other’ minority entrepreneurs including: Graduate entrepreneurs LGBT (lesbian, gay, bisexual and transgender) entrepreneurs Grey entrepreneurs Disabled entrepreneurs Enterprise Concepts and Issues © Goodfellow Publishers 2016

Women Entrepreneurs Key stats: In 2012, 126 million women reportedly were starting or running their own business in 67 economies around the world (Kelley et al., 2013). Women-led businesses comprise approximately 1/3 of businesses globally and 29% of the self-employed population in the UK  contributing £75 billion in Gross Value Added annually (BIS, 2013). In the US, 1/10 businesses are women-led, the highest in any developed economy (Kelley et al., 2014). Enterprise Concepts and Issues © Goodfellow Publishers 2016

Women Entrepreneurs Research focus: One of the fastest growing entrepreneurial populations internationally (Brush et al., 2009; Carter and Shaw, 2006) Why are men twice as likely as women to start a business? (Marlow et al., 2012). What are the individual and contextual components affecting women entrepreneurs? Focus of research since 1980s Enterprise Concepts and Issues © Goodfellow Publishers 2016

Women Entrepreneurs Five thematic research areas of female entrepreneurs (Bruni et., 2004 p.15) 1.The ‘breeding grounds’ of female entrepreneurship; 2.Patterns of female entrepreneurship; 3.The barriers against female entrepreneurship; 4.The motivations of women entrepreneurs; 5.The ‘enterprise culture’ of women entrepreneurs. Enterprise Concepts and Issues © Goodfellow Publishers 2016

Women Entrepreneurs 1.The ‘breeding grounds’ of female entrepreneurship; Service-oriented Low capital requirements for entry, Traditionally female oriented sectors, Less skilled Low value add Key Readings: Carter et al., 2015, Carter and Shaw 2006 Enterprise Concepts and Issues © Goodfellow Publishers 2016

Women Entrepreneurs 2.Patterns of female entrepreneurship; Described within the context of life course and role within the family rather than from a rational business perspective Undervalue their work and legitimacy of their business View their business as a temporary solution Contrast to the hetero-normative male ‘hero’ descriptions used for male entrepreneurs Enterprise Concepts and Issues © Goodfellow Publishers 2016

Women Entrepreneurs Exercise: In groups, discuss: 1.Think of the words commonly used to describe entrepreneurs. 2.Would you mostly associate these words with men or women? 3.Can you think of any words used to describe women entrepreneurs only? Enterprise Concepts and Issues © Goodfellow Publishers 2016

Women Entrepreneurs 3. Barriers against female entrepreneurship; I.Socio-cultural barriers – status of women II.Less access to formal business networks III.Less access to capital due to: i.Structural dissimilarities in business profiles ii.Supply-side discrimination iii.Demand-side risk-aversion Enterprise Concepts and Issues © Goodfellow Publishers 2016

Women Entrepreneurs Pull factors Supplementing of income Ease of access criteria Flexibility. Family reasons Business idea Market Opportunity Push factors Independence and autonomy Professional self- fulfilment Supplementing of income Social mobility Social mission 4. The motivations of women entrepreneurs Enterprise Concepts and Issues © Goodfellow Publishers 2016

Women Entrepreneurs 5. The ‘enterprise culture’ of women entrepreneurs Evolutionary approach to business planning Consensus approach to leadership. Slower at gestation with lower performance Remain small and exit early Utilise family resources Often out-survive male businesses. Enterprise Concepts and Issues © Goodfellow Publishers 2016

Ethnic minority entrepreneurs Ethnic entrepreneurship - a “set of connections and regular patterns of interaction among people sharing common national background or migration experiences” (Waldinger et al., 1990, p.33). Immigrant entrepreneurship - “the self-employment efforts by individuals that voluntarily migrate to a different country and engage in business ownership” (Chaganti et al., 2008, p.115). ‘Immigrant’ entrepreneur is often used interchangeably or refers specifically to migrant living status In the UK 7% of SME’s are led by minority ethnic entrepreneurs (2014, Small Business Service) Enterprise Concepts and Issues © Goodfellow Publishers 2016

Ethnic Entrepreneurs Motivations Specific cultures are more or less likely to engage in entrepreneurship than others The US has benefited from high migration of entrepreneurs in computing, information technology and the Internet industries Performance also varies across different ethnic groups Edelman et al. (2010) found black entrepreneurs are 50% more likely to start-up a business than white entrepreneurs, though to be less successful than white- owned businesses Enterprise Concepts and Issues © Goodfellow Publishers 2016

Ethnic Entrepreneurs Pull Factors Increased alertness in identifying opportunity in new resident market Strong propensity to pursue entrepreneurial opportunities, Shared ethnicity within business networks can have advantages Push Factors Economic disadvantage Challenges in gaining employment and promotion within corporate world Racial discrimination Motivations Enterprise Concepts and Issues © Goodfellow Publishers 2016

Ethnic Entrepreneurs Challenges Barriers to financial resources include lack of access to finance due to poor credit scorings or poor track record, a lack of formal savings, collateral shortages (DCLG, 2013). Narrow market segments with lower barriers to entry Services and retail industries Inexperience in starting a growth oriented venture Deficit in higher education, Optimal use of technology Lack of language skills within country of residence Enterprise Concepts and Issues © Goodfellow Publishers 2016

Ethnic Entrepreneurs Photograph: Ian Walton/Getty Images Photograph: twitter.com/RekhaMehr Exercise: Can you think of any other ethnic minority entrepreneurs? Enterprise Concepts and Issues © Goodfellow Publishers 2016

Ethnic entrepreneurs Two UK government programmes that invite foreign entrepreneurs to the UK: 1.the Global Entrepreneur Programme, for high growth international technology businesses that can establish a UK headquarter 2.the Sirius Programme, for global graduate entrepreneurs to relocate and start-up a UK business (12-month programme with financial, business and visa support) Enterprise Concepts and Issues © Goodfellow Publishers 2016

Graduate Entrepreneurs Defined as engagement by a higher education graduate into self-employment or new venture creation soon after graduation. Companies are more likely to have higher qualifications, intellectual property and high growth potential (Pickernell et al., 2011). Strong link between entrepreneurship programmes and increased entrepreneurial intentions Exercise: What skills are you gaining from this entrepreneurship course? Enterprise Concepts and Issues © Goodfellow Publishers 2016

Graduate Entrepreneurs The biggest challenges for graduate entrepreneurs are 1.Lack of business skills 2.Access to finance Exercise: If you were starting a business, which one of these would be the biggest challenge? How can you mediate any associated risks? Enterprise Concepts and Issues © Goodfellow Publishers 2016

LGBT Entrepreneurs Key stats: Little is known about the lesbian, gay, bi-sexual and transgender (LGBT) entrepreneurs as a group 94% of the UK population self-identified as heterosexual, 1.5% declared themselves as gay, lesbian or bisexual leaving 4.5% as unknown Estimated that 34% of gays in the UK and 41% in the US and are closeted in the corporate workplace Enterprise Concepts and Issues © Goodfellow Publishers 2016

LGBT Entrepreneurs Pull Factors Perceive that self- employment would be easier than employment More opportunity to be treated equally Easier to be open about their sexuality Give back to the LGBT community Push Factors Corporate discrimination Homophobic investors, suppliers or customers Reluctance of well-known companies to publicise their ties to the gay community Motivations Enterprise Concepts and Issues © Goodfellow Publishers 2016

LGBT Entrepreneurs Exercise: Reading: Schindehutte, M., Morris, M., and Allen, J. (2005), ‘Homosexuality and entrepreneurship: implications of gay identity for the venture-creation experience’, International Journal of Entrepreneurship and Innovation, Vol 6, No 1, pp 27– 40. Schindehutte et al (2005) outline two types of gay entrepreneur; 1.‘the identifiers’ identify as gay first and entrepreneur second 2.‘the independents’ identify as an entrepreneur first and their sexual orientation is inconsequential. What are the benefits and drawbacks of each approach? Enterprise Concepts and Issues © Goodfellow Publishers 2016

Grey Entrepreneurs Key characteristics Aged 55+, often referred to as silver, senior, older, or third age Concerns about aging population and dependency ratio (workers v retirees) Formal education qualification less likely High levels of technical, industrial and management experience Superior personal networks Strong financial asset base Enterprise Concepts and Issues © Goodfellow Publishers 2016

Grey Entrepreneurs Pull Factors Reduced /controlled work stress Flexibility to reduce work hours Reduced physical effort Reduced managerial responsibilities Greater freedom through financial security Push Factors Lack of quality jobs Negative impacts on wages, pensions and health benefits Accommodation of health conditions Declining energy levels Reluctance of employers to hire and retain older workers Motivations Enterprise Concepts and Issues © Goodfellow Publishers 2016

Disabled Entrepreneurs Disability is defined as an impairment that causes a sustained limitation on daily activities (World Health Organisation / World Bank, 2011). Often a temporary state which many will experience at some point in their lives and more likely with age Despite adversity, there are higher rates of self- employment among disabled people than able- bodied people in both Europe and the USA (Schur, 2003). Enterprise Concepts and Issues © Goodfellow Publishers 2016

Disabled Entrepreneurs Challenges include Lack of access to start-up capital Loss of social welfare benefits Lack of knowledge, skills and confidence Limited aspirations Consumer discrimination Enterprise Concepts and Issues © Goodfellow Publishers 2016

Disabled Entrepreneurs Pull Factors Autonomy Flexibility in work tasks, pacing, hours, location An alternative route to accomplishment A potential rehabilitation vocational tool Push Factors A persistent disability which limits their capacity to maintain employment Employment discrimination Limited employment opportunities Motivations Enterprise Concepts and Issues © Goodfellow Publishers 2016

Policy – Women Entrepreneurs Mentoring and coaching programmes Build up skills Strong role models Place greater value on their entrepreneurial activity Access to capital for women entrepreneurs Alleviation of the risk components of lending for both lenders and borrowers. Support mechanisms to help balance family life Childcare and carer supports. Enterprise Concepts and Issues © Goodfellow Publishers 2016

Policy – Ethnic Entrepreneurs a ‘one size fits all’ policy is difficult. Targeted and local policy initiatives (Carter, 2015) Government openness of their immigration policies and visa access for entrepreneurs How can governments encourage entrepreneurs to stay when the formal support (e.g. financial, mentoring or visa) runs out? Increase their likelihood of staying and converting to citizenship - help to build a sustainable business, awareness of continued support and embeddedness into the local ecosystem Enterprise Concepts and Issues © Goodfellow Publishers 2016

Policy – Graduate Entrepreneurs There is a strong provision of entrepreneurship education at HE level, the focus needs to be driven more towards economic outcome (O’Connor, 2013). Exercise: Discuss how the economic outcome of entrepreneurship education can be measured. Enterprise Concepts and Issues © Goodfellow Publishers 2016

There is a danger that graduates are unable to support themselves financially and pushed towards full-time employment.  Support could enable them to utilise this window of opportunity and engage in start-up activity. Living expenses, financial support or the provision of desk space could entice them. University accelerator programmes or co-working spaces. Policy – Graduate Entrepreneurs Enterprise Concepts and Issues © Goodfellow Publishers 2016

Policy - LGBT entrepreneurs Difficult to address, personal issue Entrepreneurs with strong television or media profiles could help to break down stereotypes Do you have any ideas? Enterprise Concepts and Issues © Goodfellow Publishers 2016

Policy – Grey Entrepreneurs Tax breaks for putting their savings towards their business A government-backed investment fund for the 55+ IT skills training Enterprise Concepts and Issues © Goodfellow Publishers 2016

Policy – Disabled Entrepreneurs Education to increase business and / or technology skills. Ensure co-working spaces consider the needs of disabled entrepreneurs. Reconsider the loss of welfare benefits for those with disabilities in the UK Enterprise Concepts and Issues © Goodfellow Publishers 2016

Diversity in entrepreneurship – So what? Increased understanding of diversity helps us better recognise the motivations and challenges affecting entrepreneurs. Some common themes emerged such as education, access to finance and adapting to technology  need policies that target both the individual entrepreneur and the context in which they operate  Need to address the distinct challenges, rather than the criteria or label through which they are perceived Enterprise Concepts and Issues © Goodfellow Publishers 2016

Lecture Summary The value of diversity Who are diverse entrepreneurs 1.We explored 6 groups of entrepreneurs – women, ethnic minority, graduate, LGBT, grey and disabled 2.We discussed the policy implications for each group  Being aware of diversity in entrepreneurship can help break down barriers to success Enterprise Concepts and Issues © Goodfellow Publishers 2016

Further reading Audretsch D. B., Dohse, D. and Niebuhr, A. (2008). Cultural diversity and entrepreneurship: A regional analysis for Germany, [online]. Centre for Economic Policy Research discussion paper (DP6945). Available at: 45 [Accessed 09 September 2015] Carter, S. and Shaw, E. (2006). Women's Business Ownership: Recent Research and Policy Developments: Report to the Small Business Service, [pdf] Small Business Service. Available at: reports/file38338.pdf [Accessed 09 September 2015]. reports/file38338.pdf Carter, S., Mwaura, S., Ram, M., Trehan, K. and Jones, T. (2015). Barriers to ethnic minority and women’s enterprise: existing evidence, policy tensions and unsettled questions. International Small Business Journal. (In Press). Available through the University of Strathclyde Library website [Accessed on 09 September 2015]. Enterprise Concepts and Issues © Goodfellow Publishers 2016

Further reading Dana, L-P. (2007). Handbook of research on ethnic minority entrepreneurship: A co-evolutionary view on resource management. Cheltenham, UK: Edward Elgar Publishing. Foo, M. D. and Wong, P. K. and Ong, A. (2005). Do others think you have a viable business idea? Team diversity and judges’ evaluation of ideas in a business plan competition. Journal of Business Venturing, 20(3), Kitching, J. (2014) Entrepreneurship and Self-employment by People with Disabilities. [pdf] OECD Project on Inclusive Entrepreneurship. Available at: disabilities.pdf [Accessed 09 September 2015]. disabilities.pdf Ram, M. and Jones, T. (2008). Ethnic minority business: Review of research and policy. Government and Policy (Environment and Planning ‘C’), 26(2), Enterprise Concepts and Issues © Goodfellow Publishers 2016