How fe­male-owned busi­nesses com­pare

Jamaica Gleaner - - OPINION & COMMENTARY - Vanus James and Ros­alea Hamil­ton Guest Colum­nists

WOMEN IN busi­ness typ­i­cally bear a dou­ble bur­den — they shoul­der the re­spon­si­bil­ity of their chil­dren/fam­ily as well as the re­spon­si­bil­ity to cre­ate and sus­tain a prof­itable busi­ness. So how do fe­ma­le­owned busi­nesses fare when com­pared to their male-owned coun­ter­parts?

In­valu­able in­sights into the an­swer to this ques­tion come from anal­y­sis done by the Sco­tia­bank Chair in En­trepreneur­ship and De­vel­op­ment at the Univer­sity of Tech­nol­ogy, Ja­maica, us­ing data col­lected un­der the Sco­tia­bank En­ter­prise-Wide Risk Man­age­ment and Fi­nanc­ing (SERMAF) project ex­e­cuted dur­ing the pe­riod 2014 to 2015.

There is no con­sen­sus on how to de­fine a ‘fe­male-owned busi­ness.’ Def­i­ni­tions vary ac­cord­ing to the pres­ence/ab­sence of women as own­ers, the per­cent­age own­er­ship of the busi­ness and/or the de­gree of con­trol of the busi­ness by women in lead­er­ship po­si­tions.

In the SERMAF sur­vey, we re­fer to fe­male-owned busi­nesses as busi­nesses where the in­flu­en­tial and dom­i­nant own­ers are women with at least 15 per cent of the own­er­ship of the es­tab­lish­ment or ex­er­cis­ing a con­trol­ling in­flu­ence on de­ci­sion-mak­ing in the busi­ness. Us­ing this def­i­ni­tion, busi­ness risk rat­ings and pro­files have been de­ter­mined for 739 ran­domly se­lected male and fe­male owned es­tab­lish­ments in Ja­maica. From this data, we can make a com­par­i­son be­tween male and fe­male-owned Ja­maican busi­nesses.

MAN­AG­ING BUSI­NESS RISKS

Own­ing a busi­ness in­volves sig­nif­i­cant risks which must be man­aged. ‘Busi­ness risk’ can be de­fined sim­ply as the prob­a­bil­ity of mak­ing a loss or earn­ing less than an­tic­i­pated prof­its. This risk is in­flu­enced by many fac­tors, in­clud­ing fi­nan­cial fac­tors (such as sales, price, in­put costs); psy­cho­log­i­cal fac­tors (such as per­son­al­ity, opin­ions, at­ti­tudes); as well as en­vi­ron­men­tal fac­tors (such as mar­ket com­pe­ti­tion, the over­all eco­nomic cli­mate and gov­ern­ment reg­u­la­tions). So is there a dif­fer­ence in the man­age­ment of these risks be­tween men and women?

The data re­veals that among the top 100 es­tab­lish­ments with the best risk rat­ings, fe­male-owned es­tab­lish­ments are do­ing well com­pared to their male coun­ter­parts. The ma­jor­ity of the top 100 fe­ma­le­owned es­tab­lish­ments are mi­cro en­ter­prises.

Fe­male-owned es­tab­lish­ments are less well rep­re­sented among the small, medium and large-sized es­tab­lish­ments. The data re­vealed the fol­low­ing: 1. Fe­male-owned es­tab­lish­ments make up 43 per cent of the top 100 es­tab­lish­ments but 37 per cent of all es­tab­lish­ments, sig­nif­i­cantly out­per­form­ing male-owned es­tab­lish­ments. By com­par­i­son, fe­ma­le­owned busi­nesses are some­what un­der­rep­re­sented in terms of their share of the 398 First-Tier es­tab­lish­ments (A-rated) busi­nesses (33 per cent) rel­a­tive to the share of all busi­nesses (37 per cent). 2. Fe­male-owned mi­cro es­tab­lish­ments make up 27 per cent of the top 100 as com­pared to 22 per cent for male-owned mi­cro es­tab­lish­ments of the top 100. They are also out­per­form­ing ma­le­owned es­tab­lish­ments in this re­gard. 3. As much as 63 per cent of the fe­male-owned es­tab­lish­ments in the top 100 per­form­ers are mi­cro es­tab­lish­ments (as com­pared to 39 per cent of male es­tab­lish­ments in the top 100). So why are fe­male-owned es­tab­lish­ments do­ing bet­ter than their male coun­ter­parts? Data on the psy­cho­log­i­cal pre­dis­po­si­tions of male and fe­male busi­ness own­ers may of­fer some clues.

PSY­CHO­LOG­I­CAL PRE­DIS­PO­SI­TIONS

Im­por­tantly, the data re­vealed the riskre­duc­ing im­pact of cer­tain psy­cho­log­i­cal pre­dis­po­si­tions and pref­er­ences on the use of per­cep­tion and judge­ment of busi­ness own­ers. The av­er­age im­pact ex­ceeds 20 per cent of the risk level that is ex­pected to pre­vail in the ab­sence of the favourable pre­dis­po­si­tions. For ex­am­ple, it was found that busi­ness own­ers who find it easy to com­mu­ni­cate in so­cial set­tings have a 31.3 per cent lower prob­a­bil­ity of mak­ing a loss than busi­nesses whose own­ers do not pos­sess that char­ac­ter­is­tic.

These pre­dis­po­si­tions tend to help busi­ness own­ers make bet­ter de­ci­sions about labour em­ploy­ment, tech­nol­ogy, and man­age­ment, lead­ing to a su­pe­rior en­abling busi­ness cli­mate, higher labour pro­duc­tiv­ity and lower busi­ness risk which, in turn, means bet­ter prospects for prof­itabil­ity.

The find­ings also sug­gest that lower busi­ness risk de­pends heav­ily on pre­dis­po­si­tions that can be en­hanced by ed­u­ca­tion to pro­mote in­no­va­tive­ness and eco­nomic prof­itabil­ity and thus cre­ate a bet­ter client for the fi­nan­cial sec­tor.

Im­por­tantly, the data re­vealed that ed­u­ca­tion and knowl­edge as­sets are ma­jor risk-re­duc­ing ad­van­tages for fe­ma­le­owned busi­nesses. The data re­vealed that the fe­male-owned busi­nesses that have the best risk rat­ing also have a rel­a­tively high level of ed­u­ca­tion and knowl­edge as­sets. These re­sults sug­gest a long run pol­icy ori­en­ta­tion to favour the use of ed­u­ca­tion to de­velop and spread the most im­pact­ful risk-re­duc­ing char­ac­ter­is­tics among both male and fe­male mi­cro, small and medium sized en­ter­prises (MSMEs).

JAMES

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