Study: Fear of failure and perceived lack of entrepreneurial skills prevent women from becoming entrepreneurs

A recent study published in the Journal of Northern Studies highlights the ongoing gender gap in entrepreneurial potential in Finland over the past decades, despite the country's high standing in global gender equality rankings. The research utilized data from the Global Entrepreneurship Monitor (GEM) from the years 2003, 2009, 2015, and 2021, analyzing start-up intentions, fear of failure, and perceived entrepreneurial skills among different age groups. The study was written by by Martti Saarela, Pauliina Björk, Ossi Kotavaara and Matti Muhos from the Kerttu Saalasti Institute at the University of Oulu, and of Mervi Heikkinen from the Faculty of Education and Psychology at the University of Oulu.
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The role of gender in entrepreneurship has been widely explored over the years, revealing that worldwide, women are less likely to start a business or to be self-employed than men. This widely recognized phenomenon, called the gender gap in entrepreneurship, can be defined as differences in entrepreneurial activity between women and men living in the same country, for any given level of economic development. Although women have been encouraged increasingly to create new businesses through policy measures previous studies have pointed out that the gender gap has reduced only slowly. The under-representation of women in entrepreneurship suggests a potential for increased economic growth and welfare, as higher female entrepreneurship activity has a positive impact on the economy.

To understand the nature and implications of issues related to gender and entrepreneurship, researchers have developed theoretical approaches. Liberal feminist theory, among the most common approaches on female entrepreneurship in leading entrepreneurship journals considers women and men essentially similar whereby women will act in the same way as men when they have access to the same opportunities. Liberal feminist theory assumes that the more egalitarian a society is, the smaller the gender gap in entrepreneurship. In other words, increased gender equality is believed to remove barriers to female entrepreneurship.

Authors used data collected for Global Entrepreneurship Monitor from 2003, 2009, 2015, and 2021 to get closer to this phenomenon in Finland. The sample sizes in the Finnish GEM Adult Population Survey were 1983 (2021), 2007 (2015), 2004 (2009), and 1460 (2003). The answers to the three questions were split by gender (male/female) and by the five age groups provided by GEM (18–24, 25–34, 35–44, 45–54, and 55–64 years).

Authors investigated business start-up intentions of Finnish adult population. In each investigated year, the difference between men and women in the total sample was significant: men had more start-up intentions than women.

Temporal change in women’s and men’s expectations to start up a business within three years overall and by age.

In each studied year, women had a higher percentage of reported the fear of failure in starting a business (37–57%) compared to men (24–38%) in analysis covering the whole population. In the first three years studied, the difference between genders was statistically significant in two groups in 2003 (25–34 and 45–54 years), two groups in 2009 (18–24 and 55–64 years), and three groups in 2015 (18–24, 35–44 and 55–64 years). In 2021, the gender gap was measured with high statistical significance in each age group. In 2021, fear of failure was the highest among women in the four youngest age groups, while men’s fear differed less based on age.

The perceived knowledge, skill, and experience to start a new business was greater among men than women every year in this study, and the difference was significant in every year. In each year, close to 30% of women thought they had the required know-how, while men’s percentages were always higher and varied more, between 43% (in 2009) and 69% (in 2003). Gender difference within age groups was not always significant, but in most of the cases men expressed more positive perceptions of their own knowledge, skill, and experience. Generally, the know-how trend grew with age in both men and women. The group having start-up intentions again displayed a significant gender gap in perceived know-how. Almost half the women with start-up intentions did not think they had the needed skills, knowledge, and experience.

Key insights:

  1. Start-Up Intentions: Men consistently showed higher intentions to start a business within three years across all age groups and survey years, with significant gender differences observed. Notably, while start-up intentions rose for both genders in 2015, a decline was noted in 2021, potentially linked to the COVID-19 pandemic's economic impact.
  2. Fear of Failure: The fear of failure in starting a business was more prevalent among women than men, a trend consistent across all studied years. This barrier was most significant in 2021, younger women particularly.
  3. Perceived Entrepreneurial Skills: Men generally reported higher confidence in their knowledge, skills, and experience to start a business. In contrast, approximately half of the women with start-up intentions did not believe they had the necessary capabilities, indicating a pronounced self-perception gap that affects entrepreneurial engagement.


Publication:
Saarela, M., Björk, P., Kotavaara, O., Muhos, M. and Heikkinen, M. (2024) “Gender Gap in Entrepreneurial Potential in Finland and Reflecting Its Underlying Causes”, Journal of Northern Studies, 16(2), pp. 33–54. doi: 10.36368/jns.v16i2.1124.

Last updated: 15.11.2024