Toward Realizing the Potential of Latin America’s Women Entrepreneurs: An Analysis of Barriers and Challenges

October 7, 2020
Recent years have been characterized by women’s increased participation in economic activity. The International Labor Organization (ILO 2016) estimated that the global rate of female participation in the labor force is 49.6%. In Latin America and the Caribbean, the female labor force increased from 48.5% in 2006 to 49.6% in 2015, while male participation decreased in the same period (75.5% in 2006 to 75.1% in 2015). Female business activities and contributions have also increased in recent years (Minniti 2010). It is estimated that, globally, women own and manage more than one-third of companies, including independent workers (or the self-employed) and micro, small, medium, and large-sized enterprises (ILO 2015). 
 
Several studies stated that the start-up, development, and growth of women-owned businesses are influenced by social, cultural, and institutional environments (networks, information, legal, and political framework barriers); therefore, these businesses can’t achieve the same performance as men-owned businesses (Aidis 2006; Baughn, Chu, and Neupert 2006; Aidis, Weeks, and Anacker 2015; Jennings and Brush 2013; Griffiths, Gundry, and Kickul 2013; Terjesen and Amorós 2010; Bernat, Lambardi, and Palacios 2017; Dixit and Moid 2017; Segnestam 2017; Davis 2018; Boitano 2017; Cowan 2017) because the context limits opportunities, individual actions, and business initiatives (Welter 2011). Therefore, different countries are generating measures that promote a favorable social environment for women entrepreneurs.
 
In this context, a study conducted by Dr. Beatrice Avolio Alecchi entitled: " Toward Realizing the Potential of Latin America’s Women Entrepreneurs: An Analysis of Barriers and Challenges" develop an overview of the Latin American women-owned businesses environment in order to analyze the challenges that women entrepreneurs face. Since there is no database providing complete data for this study, the data was collected from several sources that included information of women-owned businesses in Latin American countries from 2010 to 2016. This work is based on documentary research, scientific papers, and secondary sources. 
 
This study is important for several reasons. Women entrepreneurs contribute to higher levels of autonomy, empowerment, and reduction of income inequality (Heller 2010). In addition, women’s entrepreneurship favors economic development, employment creation, family support, and the reduction of poverty (ILO 2014a, Kantor 1999). Nevertheless, legal, institutional, and cultural barriers constitute a set of disadvantages to women-owned businesses (ILO 2014a). Therefore, it is necessary to study the environment surrounding women-owned businesses in the region in order to empower their companies and benefit them, their families, and the countries. The few available studies on the influence of business environment in women-owned businesses are country-specific. This study focuses on analyzing various business environment factors in Latin America.
 
The study was based on the factors of the Integrated Framework Assessment for an Enabling Environment for Women-Owned Businesses, developed by the International Labor Organization. The study examined the situation of women entrepreneurs with regard to: the access to financial services and credit, institutionalism, women entrepreneurs' associations and networks, legal and regulatory framework; the distribution of the use of time, citizen security and gender-based violence, as well as promotion of women entrepreneurship. 
 
The study founded that in recent years, the empowerment of women in Latin America has been increasing. Specifically, the gender gap in the labor market has been reduced, which is reflected in the progressive and steady increase in the female labor force (ILO 2012). Likewise, women’s total entrepreneurial activity is the highest in the region (Kelley, Singer, and Herrington 2016). However, in comparison with their male peers, there are still several challenges. Despite the fact that women-owned businesses favor economic development, job creation, family support, and poverty reduction, they still face environmental, legal, institutional, and cultural barriers (ILO 2014a).
 
In relation to access to credit, in many Latin American countries, the lack of access to financial services is an obstacle to the growth of women-owned businesses (ILO 2014a). The study states that Latin American women entrepreneurs have specific characteristics with respect to access to credit and savings. In spite of the increase of women in the credit system, there are still few women with a bank account. The reasons for this are linked to the lack of money or the fact that another member of the family has an account. However, there are also external factors, such as the institutional, financial, and social factors that affect the relation between women entrepreneurs and the banking system. Credit and financial services have characteristics based on men’s needs. The specific characteristics of women-owned businesses are not taken into account; thus, women entrepreneurs have less access to these services. 
 
In relation to institutionalism, there are international agreements to promote equity in different economic aspects; in spite of this, women entrepreneurs are not included in the agendas of Latin American countries. In this region, the process is still in progress; nevertheless, there are important achievements, such as the constitution of ministries of women, although at present not all countries in the region have ministries for women.
 
In regard to associations, women entrepreneurs are at a disadvantage compared to their male counterparts, since they have less access to associations, information sources, and business formalization. In regard to the legal and regulatory framework, Latin America has made significant progress in the promotion of gender equity, and there has been steady progress in institutional reforms toward equity.
 
The study also found that the social aspect in the use of time, traditional gender roles disproportionately assign household and family responsibilities to women, which limits their development in paid or business activities. In relation to violence, no data have been found about the relationship between violence and women entrepreneurs. However, there are alarming figures in some countries of the region and it might be assumed that violence also affects women entrepreneurs and their leadership. Another factor of business environment is citizen insecurity. Further studies on gender-based violence are recommended to measure the impact that this could have on women entrepreneurs. 
 
Finally, on the promotion of entrepreneurship, it was pointed out that although important initiatives exist, they are not properly articulated in the general policy frameworks, which reduces their impact. 
 
In conclusion, the research has revealed that there are important initiatives related to the generation of a favorable social environment in Latin America for the development of women entrepreneurs; though it is still necessary to promote significant and comprehensive changes that take into account the specific characteristics of this population in each country. 
 
Larr article can be found here
 
Paper's citation: Avolio Alecchi, B. (2020). Toward Realizing the Potential of Latin America’s Women Entrepreneurs: An Analysis of Barriers and Challenges. Latin American Research Review, 55(3), 496–514. DOI: http://doi.org/10.25222/larr.108

 

About Author(s)

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Beatrice Avolio Alecchi
Dr Beatrice Avolio Alecchi holds a Ph.D. in Strategic Business Administration from Pontificia Universidad Católica del Perú and a Doctorate in Business Administration from Maastricht School of Management, the Netherlands. She has also obtained a MPhil from Maastricht School of Management, the Netherlands and a MBA from The Graduate School of Business Administration, ESAN, in Lima, Peru. She obtained a Bachelor’s degree in Business Administration and a Bachelor’s degree in Accounting from Universidad del Pacífico in Lima, Peru. Dr. Avolio is author of several books and academic articles related with her professional and research interests, like Qualitative Research Methods (Cengage Education, 2015); Women and Entrepreneurship: Female Durability, Persistence and Intuition at Work (Gower Publishing, 2014); Financial Accounting (Cengage Education, 2011), Crisis (CENTRUM Católica, 2010); Rutas Hacia un Perú Mejor, Qué Hacer y Cómo Lograrlo [Routes to a Better Peru: What to Do and How to Achieve It] (Editorial Aguilar, 2010), among others. Dr. Avolio was part of CENTRUM PUCP Graduate Business School founder group. He has been Academic Dean, Director General and she currently is Head of Postgraduate Business Department CENTRUM PUCP Graduate Business School. She is the founder of the Center for Female Entrepreneurs at CENTRUM Católica and is conducting research on female entrepreneurs and executives in Latin America, including the role of female executives in large companies, the role of the entrepreneur’s partner and factors that hinder company growth.