For a deeper understanding of the South African entrepreneurial landscape and the role that women play, Dr. Professor Ethné Swartz, professor of the department of management of the Feliciano School of Business at Montclair State University in America, together with GIBS Professor Caren Scheepers, Dr. Tracey Toefy, explored the drivers of women entrepreneurship in South Africa.
The paper that resulted from their research, entitled Women entrepreneurs’ opportunity identification of digital platform start-ups: emerging evidence from South Africa, published in the International Journal of Gender and Entrepreneurship, set out to identify what was driving female entrepreneurship in this space. Particular attention was given to how they enact “opportunity development”.
Swartz explains, “Until now, if you look at participation rates for women in the labour market, it is clear that South African women were actually starting to move into managerial positions over the last decade. We would then expect that these women are also building growth-oriented companies and employing others. Looking at entrepreneurship in South Africa, the literature seemed to indicate that women were emerging into entrepreneurship, but primarily into the informal sector. We wanted to investigate that first group of women and tell their stories to complete the picture.”
The project started in 2019 when Swartz returned to South Africa as a Fulbright Scholar. Nearly three decades into democracy, she wanted to see how the market had opened up for women. “I was particularly interested in exploring how the country had started to transform as a society, what was happening, and whether women were finding opportunities as entrepreneurs,” she explains.
The research was to be centred around entrepreneurship in the formal economy. The researchers wanted to know whether women were starting sustainable and scalable businesses and ultimately able to create meaningful employment. “We were looking for women who fitted the description – women who were educated and doing amazing things,” says Toefy.
The macro-economic entrepreneurship landscape for women
Swartz, Toefy and Scheepers not only wanted to identify how many women were creating sustainable, scalable companies, but they also needed to look at what macro-economic conditions shaped these women’s decisions and motivated them to embark on entrepreneurial endeavours. Their focus turned to women in technology because research suggests a link between technology-orientated firms and higher GDP growth in today's digital world.
They first set out to identify what experiences drove women to leave formal employment and start their own businesses. As the paper explains, “Women’s employment choices are circumscribed by local context, and their entrepreneurial endeavours are influenced by necessity, time and location, and flexibility related to family concerns.” The paper noted that policy initiatives to build capacity must be based on the day-to-day realities of women.
They also wanted to understand what value women added to a country’s entrepreneurial landscape. The paper noted, “South Africa has to strategically build new businesses, especially those owned by women, given the evidence of an association between per-capita GDP levels and the gender gap in entrepreneurship.”
But to be of value, entrepreneurial businesses must be sustainable. Existing research suggests that businesses operating in the formal sector are typically more sustainable than those in the informal economy. However, according to Statistics SA 2017 data, 77% of local women-owned businesses were operating in the informal sector, with 21.9% in the formal sector and 1.5% in agriculture. Therefore, to harness the value created by women entrepreneurs, the research suggested that policy should include a focus on the 21.9% in the formal sector. Additionally, how can the country ensure that the 77% in the informal sector obtain the requisite training to make their ventures sustainable?
Another consideration, which had particular relevance to women operating in the field of technology, was education. The paper noted that policymakers should prioritise STEM education for women. After all, if women are to operate successfully in the tech space, they need a sound understanding of science, technology, engineering and mathematics.
Opportunity identification – the making of the woman entrepreneur
In addition to macro-economic influences impacting women entrepreneurship, the paper also wanted to understand what personal qualities women need to possess when embarking on an entrepreneurial journey. Opportunity identification is an academic construct that looks at an entrepreneur’s personality traits, social networks, and prior knowledge as antecedents of seizing business opportunities. In addition, the paper adds experience and entrepreneurial alertness to the list.
Scheepers shared that they found that the South African women in their study acted upon a confluence of circumstances and saw their companies as a vehicle to solve a specific social issue, which they identified as a problem they had capabilities to address. In addition, a woman’s ability to start a business is influenced by her beliefs about her ability to act. Therefore, she needs a high degree of creativity and self-efficacy and a high internal locus of control, risk perception and management. So simply wanting to start something is not enough. These women must find a fit between what the market needs, their abilities, and the resources available to them to make the venture work.
Toefy gives a broad definition of who these women are: “They are smart, they are educated, and they have corporate experience. They understand how industries operate and know they have more to offer the world. They are a generation of women who know how technology operates.” The paper elaborates further, explaining that these women are confident, reject the corporate machine, and want to do work that benefits society. Interestingly, Swartz notes that South African women entrepreneurs differ from their developed market tech peers in that they are looking to uplift society and not just fill a market need.
Scheepers also reported that their research did not find a homogenous group of women who filled all these requirements. There was no one-size-fits-all regarding race, class, ethnicity or sexuality. The paper explains, “Women entrepreneurs must reconcile and integrate identities that might conflict with one another, including belonging to, for instance, a cultural group, womanhood, motherhood, or other identities.” In other words, these women are defining their roles as entrepreneurs despite their personal identities as defined by society and their social circles.
What the research did unearth was a common identification with the Millennial generational identity (those born between 1981 and 1994). The paper noted that, in this instance, an entrepreneur’s actual age was “less relevant than their perspective on the opportunities technology enables in their quest to create social impact”.
Research suggests that younger generations are more concerned with social influence, so in the paper, the term ‘Millennial’ is used to classify common generational identity characteristics that include dissatisfaction in a corporate working environment, a willingness to take risks and to create successful entrepreneurial ventures with social impact. The women who identify with this moniker also have a strong need to balance their work and personal lives.
Although all of the women interviewed said they had a desire to create social change through their businesses, they were not establishing not-for-profit endeavours. Rather, they saw technology as a gateway to creating profitable organisations which could support the sustainable development of the local economy.
Why is this research relevant?
For Swartz, the women highlighted in the study are “pioneers” and examples of what the modern world needs. Many of the women interviewed had rejected the status quo. Instead, they had seized a moment to create businesses that give back.
Swartz, Toefy and Scheepers hope this research gives policymakers and investors deeper insight into what drives these entrepreneurs and the value they add to South Africa’s entrepreneurial landscape.
However, they stress that although the paper provides interesting insights into women in tech-entrepreneurship, the research is limited. “Given the exploratory nature of the research, our results are specific to South African women entrepreneurs who create digital platform start-ups. The results are not generalisable, though this does not detract from the importance of the research,” says Swartz.
The recommendation, however, is clear: more research is needed. “From a policy perspective, we recommend data collection that differentiates women entrepreneurs so that government and private sector initiatives can appropriately support these entrepreneurs in different sectors,” concludes Scheepers.
The data challenge
In researching this paper, Dr. Ethne Swartz noted that one of the biggest challenges when understanding female entrepreneurship in South Africa is a lack of data and academic literature focusing on women entrepreneurs who have moved beyond the informal sector. “There is a gap in that we don’t know how many African women entrepreneurs use digital platforms for market entry and as growth strategies,” she explains.
Finding suitable candidates for the research, alongside statistical data to back up their findings, Swartz says they really needed to dig. She used a platform called Crunchbase to scrape for data. She acknowledges that Statistics SA was willing to help with data, but their data sets do not sufficiently disaggregate women-owned companies. Ultimately, the researchers used personal and professional networks to negotiate access to the entrepreneurs interviewed for the paper.
Swartz called for a greater commitment to funding data collection in the country. “Perhaps some entrepreneur reading this piece will come along and say, ‘I will fund a project to create our own version of Crunchbase’,” she says, hopefully.
TAKEAWAYS
New GIBS research into the drivers spurring female entrepreneurship in South Africa offers six key insights:
- South African women entrepreneurs do not only exist in the informal sector.
- Women are making a positive impact on the formal entrepreneurial landscape.
- Many women entrepreneurs started companies with social upliftment in mind, to create jobs, and grow the local economy.
- Government must create accommodative policies to support these women.
- The private sector needs to improve access to funding for women entrepreneurs.
- South Africa needs more statistical data on women in entrepreneurship.
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