This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.
This chapter reviews the relevant literature on entrepreneurship with a focus on female entrepreneurship in the context of a developing country. There are remarkable differences in what is perceived as entrepreneurship in the western world and what is actually the case in developing countries. The process of entrepreneurship and the experiences of female entrepreneurship from these two different parts of the world differ greatly. This study will first look into the genesis of entrepreneurship, the literature focusing on the theoretical background of entrepreneurship in general, women entrepreneurship in particular and specifically rural women entrepreneurship. It is divided into sections which address the nature of rural female enterprises, the entrepreneurship process, and the performance of female-owned enterprises.
3.1 Origin of entrepreneurs and entrepreneurship
This section will discuss the genesis of entrepreneurship, what is an entrepreneur and discussing the perennial issue of whether entrepreneurs are born or created.
3.1.1Genesis of entrepreneurship
The concept of entrepreneurship is universal and this study discusses the genealogy of the concept. The word entrepreneur is said to have originated from France long before there was a general concept of an entrepreneurial function. As late as the sixteenth century men who were engaged in leading military expeditions was referred to as entrepreneurs (Buame, 1996:81). The main element here is that of risk taking and adventurous undertakings. According to Said (1993), this group of entrepreneurs includes historic, western, sea-faring discoverers like Livingstone, Marco Polo, Mungo Park, Columbus, and Diego d'Azambuja. Hence, from this usage, it was easier to apply the concept of entrepreneurship to other types of adventures. Sociologists have described entrepreneurship as the process of generating income from property and other personal assets like capital, land and labour for productive reasons. On the other hand, psychologists have described it as a situation where the entrepreneur can assert his own control with a sense of independence (Brockhaus and Horwitz, 1982:43).
The importance of entrepreneurship in production was first formally documented by Alfred Marshall in 1890. In his famous treatise Principles of Economics, Marshall identified four factors of production: land, labour, capital and management. He put management as the coordinating factor which brings the other factors together, and he believed that entrepreneurship is the driving force behind organization. By creatively organizing, entrepreneurs can create new commodities or improve "the plan of producing an old commodity" (Marshall, 1994). In order to do this, Marshall believed that entrepreneurs must have a thorough understanding of their industries, and they must be natural leaders. Additionally, Marshall's entrepreneurs must have the ability to foresee changes in supply and demand and be willing to act on such risky forecasts in the absence of complete information. Marshall (ibid) also suggests that the skills associated with entrepreneurship are rare and in limited supply. He claims that the abilities of the entrepreneur are immense in such away they are not visible to many people. Marshall, however, implies that people can be taught to acquire the abilities that are necessary to be an entrepreneur. Unfortunately, the opportunities for entrepreneurs are often limited by the economic environment which surrounds them (Pasanen, 2005:94).
Moreover, according to Elkan (1988), entrepreneurs share some common abilities; for example in Africa; despite the diversity of the background, there is one quality that most of successful African entrepreneurs might have in common; that is, they share the local equivalent of the Protestant ethic that was so important in Europe's nineteenth century economic development. For example, in several countries Jehovah's Witnesses have been prominent entrepreneurs. A high proportion of successful shopkeepers and progressive farmers in Zambia in the early 1960's were Jehovah's Witnesses, imbued with the notion that the way to the New Kingdom was through material success. In Uganda in the 1950's, many small entrepreneurs and progressive farmers were walokole, "saved ones". These were the mirror image of similar sects in Europe that had earlier played such a crucial role in commercial and industrial development (Elkan, 1988). Dana (2009) argues that religion may influence a person's values which may shape how the person undertakes entrepreneurship activities.
All entrepreneurs are different and their success depends on the economic situations in which they attempt their endeavours (Marshall, 1994). From this point of view, entrepreneurial activity is linked to the existence of marginalized groups, non-integrated minorities, that have contributed disproportionate amounts to the supply of entrepreneurs; for example, Dissenters in England, Protestants in France, Chinese in South East Asia, Indians and Arabs in Africa (Greenfield and Strickon, 1995:515). Because these groups felt discriminated and socially marginalized, they tried to overcome this through their entrepreneurial activity in order to achieve status.
Since the Marshall's era, the concept of entrepreneurship has continued to undergo theoretical evolution. For example, whereas Marshall believed entrepreneurship was simply the driving force behind organization or management, many economists nowadays, but by no means all, believe that entrepreneurship is, by itself, the fourth factor of production that coordinates the other three (Arnold, 1996). Unfortunately, although many economists agree that entrepreneurship is necessary for economic growth, they continue to debate over the actual role that entrepreneurs play in generating economic growth.
As Schumpeter (1934), Kitzner (1979) and Ngaleya (2005:15) state; entrepreneurship, is in most cases, difficult and tricky, as many new ventures fail. An entrepreneur is seemed to be a founder who creates value by offering a product or service; and he/she should have strong beliefs about the market opportunity and should organise available scarce resources in the optimum combination to achieve the output that should modify the existing interaction. On the other hand, Stevenson and Sahlman (1986), described entrepreneurship as an economic behaviour characterized by the strategic orientation, commitment of opportunity, resources provision and control, concept of management and completion policy. Sexton and Bowman-Upton (1990:12) add that it is an approach to general management that begins with opportunity recognition and ends with the exploitation of the opportunity. This implies that owning a small business alone does not necessarily classify a person as an entrepreneur (Sexton and Bowman-Upton, 1990). Some scholars see entrepreneurs as being willing to accept high levels of personal, professional or financial risks to pursue that opportunity; but the growing evidence shows that they are more passionate experts than simply gamblers (Schumpeter, 1934).
British economists like Adam Smith, David Ricardo and John Stuart Mill briefly explained the concept of entrepreneurship, though they referred to it under the broad English term of "Business Management". It's only Mill who went further to stress the significance of entrepreneurship for economic growth, whereas Smith and Ricardo seemed to ignore this important aspect. With this lack of common conceptualization of the entrepreneur, Bull and Willard (1993:185) comments," entrepreneurship and the entrepreneur have been defined by a combination of interacting situations as well as behavioural and personal variables". Vesper (1980), on the other hand, sees the overall concept of entrepreneurship as nothing more than the creation of new enterprises by individuals or a small group of individuals. From this point of view, the role of entrepreneur could be regarded as that of businessman, philosopher and politician.
According to Gibb and Ritchie (1982:1), amongst the main reasons proffered for this difficulty in the conceptualisation is the idea that entrepreneurship is a widespread economic, and in particular, business phenomenon embracing a wide range of economic activities, and that definitions differ and vary as they try to adopt specific characteristics of the different economic endeavours. As Steel argues (1997:8), it is not easy to find appropriate definitions of entrepreneurship since business activities do not occur in a vacuum. There are a number of fields available for entrepreneurial activities and they take place in different forms and scope. There is also variation in profitable market activities and again, this may vary depending on the stance of the society in question, i.e. whether it is capitalist, socialist or if it is a developed or less developed. Thus social as well as economic contexts shape enterprise (Kosgaard and Anderson, 2011)
According to Buame (1996), entrepreneurship research has been carried out from multidisciplinary approaches, including sociology, history, anthropology, political science psychology management and economics. Research has been carried out using different methods and concepts, thus yielding fragmented results (Mazzarol, 1999:48; Anderson et al, 2012). Nonetheless, entrepreneurs, and entrepreneurial behaviour, can be found in all forms of professions such as teaching, medicine, research, law, politics and social work.
From the above exploration, it can be argued that the concepts of entrepreneur and entrepreneurship are of western origin. Despite its origin, entrepreneurship can be disembodied (Anderson and Jack, 2002) from its western perspective and applied to other societal perspectives provided the phenomenon described is universal, to the extent that not only all human endeavours involve uncertainties and risk but also resource organising. In most cases entrepreneurship is associated with economic or business endeavours. But a number of authors, for example, Gartner (1985) have pointed out that the art of organizing and recombining available resources of production into products and services of a higher social value stretches to a wider range of spheres other than economic means of production. Thus, entrepreneurship can be viewed from different angles. In a society, there could be political entrepreneurs, (Merton, 1968:78), moral entrepreneurs (Becker, 1963; Anderson and Smith, 2007) and theological entrepreneurs (Rand, 1996; Young, 1971) as well as innovative business entrepreneurs (Casson, 1982). Extensive literature search undertaken by this study reveals many authors and researchers have tried to conceptualize the activities and processes involved in entrepreneurial phenomenon. Yet there is no consensus by the social scientists on the definition of entrepreneurship.
3 3.1.2 Who is an entrepreneur?
The term "entrepreneur" is frequently used in economic matters, in academia, by mass media, and also by ordinary people in their daily interactions. However, as indicated earlier, there is no definite definition applicable to all parties involved. An entrepreneur is considered as a person in a possession of a company, enterprise or venture and assumes total responsibility for the inherent risks and the outcome. The modern myths about entrepreneurs include the idea that they assume the risks involved to undertake a business venture, but that interpretation now appears to be based on a false translation of Cantillon's and Say's ideas (Schumpeter, 1934). According to them, the research data showed that successful entrepreneurs were actually risk averse. But Schumpeter says their success was a result of the passion for an outcome that lead them to organise available resources in the more profitable ways. A person, who can efficiently organise these resources in pursuit of an opportunity to add value, may develop the resources and become successful.
Just after the 1700's, the term entrepreneur was largely applied by the French government to imply civil engineering contractors in road works, bridges, and sometimes fortification contractors and later on architects. It was French the economist Richard Cantillon (1755) and Jean-Baptise Say (1805), who are reported to have first used the concept of 'entrepreneur' as a technical one. They put the importance of entrepreneurship into the function of the entrepreneur to bear uncertainty. They regarded anybody engaged in any economic activity as an entrepreneur. Cantillon formally defines the entrepreneur as the "agent who buys means of production at certain prices in order to combine them" into a new product (Schumpeter, 1951). He was the first to recognise the central role of the entrepreneur in economic development based on personal property rights. According to him, of the three classes in society recognised, entrepreneurs were the important class and were the central economic actors (Schumpeter, 1951). The other two classes were land owners and workers (Deakins and Freel, 2003:4). In the 1800's, a number of writers and French economists gave a specific meaning to entrepreneurship and entrepreneur, though with differences in the characteristics of the area of economic sector they were interested in. In his book "The Catechisms of Political Economy", Jean-Baptise Say (1816), who was a French aristocratic industrialist with practical experience in business, added to Cantillon's definition by including the idea that entrepreneurs had to be leaders. Say claims that an entrepreneur is one who brings other people together, in order to build a single productive organism. Schumpeter (1951) gave a classic definition, which to some extent was to survive the test of time until the twentieth century. He defined an entrepreneur as: He defined entrepreneurs as the person who is responsible for putting together all factors of production to make quality products and hence use the resources in low productivity to high productivity areas.
As noted by Buame (1996:82), an entrepreneur is seen as the pivot of the economy, and a catalyst for economic transformation and development. In this way, the entrepreneur is seen as being close to the traditional mainstream, as someone willing to take the risk of bringing different factors of production together (Deakins and Freel, 2003:4). For this case, both Cantillon and Say belonged to the French school of thought known as 'physiocrats', so called because of the physical nature of the agrarian economy that dominated their thinking.
Because of this view, it can be argued that developments in the concept of the entrepreneur were not seen as being relevant to the nineteenth century industrial economy until later when the modern concepts of the entrepreneur were developed. Some of these views were developed within the 'Austrian School' of thought. One of the commonly held theories is that entrepreneurs emerge from the population on demand, from the combination of opportunities and people well-positioned to take advantage of them. An entrepreneur may be seen as one among few to recognize or to be able to solve a problem. From this view, two sides should be considered: the distribution of information available to would-be entrepreneurs, and how environmental factors alter the rate of a society's production of entrepreneurs (Schumpeter, 1951).
From the above, the difference is that the entrepreneur is considered to be crucial to economic development and a catalyst for dynamic change. This has made the Austrian School writers to support much of the current theory of entrepreneurship, and therefore much of modern day research on the characteristics of the entrepreneur (Deakins and Freel, 2003:4).
Other school of thought on entrepreneurship considers the role of the entrepreneur to be that of taking risks in case of unpredictable and unforeseen circumstances. (Hill and McGowan, 1999:7). In such cases, the entrepreneur will only take risk of new venture if assured of getting profit (Swoboda, 1983). Even if the risk bearing component is incorporated in many current theories on entrepreneurship, the risk-bearer theory alone is not sufficient enough to explain why some individuals become entrepreneurs while others do not. For example, if any person bears the risk of any loss or uncertainty, then such a person could be called an entrepreneur (Mises in Swoboda, 1983). Thus, in order to build a development model of entrepreneurship, it is necessary to look at some of the other characteristics that help explain why some people are entrepreneurs.
Another modern school of thought claims, according to Schumpeter, that the role of the entrepreneur is that of an innovator; however, the definition of innovation is still widely debated. Kirzner (1985:10) suggests that the process of innovation is actually that of spontaneous "undeliberate learning". Thus, the necessary characteristic of the entrepreneur is alertness, and no intrinsic skills - other than that of recognizing opportunities - are necessary. Other economists in the innovation school, side more with Mill and Marshall than with Kirzner; they claim that entrepreneurs have special skills that enable them to participate in the process of innovation. Along this line, Leibenstein (1995) claims that the dominant, necessary characteristic of entrepreneurs is that they are gap-fillers: they have the ability to perceive where the market fails and to develop new goods or processes that the market demands, but which are not currently being supplied. Thus, he posts that entrepreneurs have the special ability to connect different markets and make up for market failures and deficiencies. Additionally, drawing from the early theories of Say and Cantillon, Leibenstein (1995) suggests that entrepreneurs have the ability to combine various inputs into new innovations in order to satisfy unfulfilled market demand.
While the idea that entrepreneurs are innovators is widely accepted, it is difficult to apply this theory of entrepreneurship to developing countries. In most cases, the developing countries entrepreneurs are not true innovators in the traditional sense of the word. For example, entrepreneurs in these countries rarely produce brand new products; but rather, they imitate the products and production processes that have been invented elsewhere in the developed countries. This process, which also occurs in developed countries, is called "creative imitation". It is argued that creative imitation takes place when the imitators have a greater understanding of the application of an innovation and the demand of that innovation. Thus, the innovation process in developing countries is basically that of copying and adapting, instead of the conventional concept of new product or process discovery and development (Drucker, 1985).
According to Mill's writings, entrepreneurship requires "no ordinary skill" and he laments the fact that there is no acceptable English equivalent word to encompass the definite meaning of the French term 'entrepreneur' (Schumpeter, 1951).
3 3.1.3 Can an entrepreneur be created?
There a number of arguments and theories trying to explain the reasons why some people are more entrepreneurial than others and why people decide to start entrepreneurial activities. Some authors have used planned behaviour theory (Ajzen, 1991) to explain the firm creation decision. They argue that the intention to become an entrepreneur depends on individuals' personal attitude, their perceived control over the firm creation behaviour, and perceived social pressure to become or not to become an entrepreneur (Krueger, 2007; Kolvereid and Isaksen, 2006; Fayolle and Gailly, 2004; Fayolle and De George, 2005).
Conversely, role theory suggests that the role behaviour is a product of socialization at various stages of the individuals' life cycle (Thomas and Biddle, 1996). These scholars believe that role models provide an observational learning experience for individuals (Scott and Twomey, 1988; Scherer at el, 1989; Lent at el, 1994); role models' behaviour impacts both perceived desirability and feasibility of the role for the individual (Krueger and Brazeal, 1994; Krueger, Reilly and Carsrud, 2000) and thus, if the role is a career role such as entrepreneur, role models can help shape both the outcome expectations and self-efficacy of the individual leading to intentions of pursuing that career (Lent et al, 1994; Nauta, Epperson and Kahn, 1999). Conclusively, according to the role theory, role models affect entrepreneurial intentions by changing attitudes and beliefs (Krueger et al, 2000). From these arguments, Dyer's (1994) model of an entrepreneurial career claims that children of entrepreneurs are more likely to be entrepreneurs than those of non-entrepreneurs. Likewise, children with self-employed parents are likely to develop the desire to become owners and managers of similar firms to that of their parents (Caroll and Mosakowski, 1987). To support this, Scott and Tomwey (1988) argue that parental role models and experience lead to the perception of oneself as an entrepreneur. This self-perception, when added to a triggering factor and a business idea, can lead to an entrepreneurial career preference. However, other authors have argued that the performance of role models was not as important as the very existence of the role models (Scherer et al, 1989). In the above notions of entrepreneurship, women were not included. Thus we can say that entrepreneurs are both born and created, however for this type of entrepreneurs under study are created and manipulated by the external factors mainly social and cultural factors.
3.2 Female entrepreneurship
This section gives a description of female entrepreneurship focusing on its history, trends, profile; role of culture and gender relations as far as female entrepreneurship is concerned.
3 3.2.1 History of female entrepreneurship
Amongst the earliest published work about women's entrepreneurship was that of Schwartz (1976), which examined characteristics, motivation, attitudes and barriers of female entrepreneurs. Subsequent studies that followed Schwartz's mostly centred on personal characteristics, which were generally explored through the lens of human capital (Brush, 2006: xiv).
Although women have owned enterprises ever since, the public policy and popular press interest in women business owners is a relatively recent phenomenon (Brush, 2006:18). Women in many African countries have started enterprises as the only alternative on hand in order to overcome or alleviate their poverty, rather than actively pursuing business ownership through choice (Richardson, 2004:17).
The economic changes in the modern world have also changed perceptions about the value of women in modern society (Laukkanen and Niittykangas, 2003; Stein, 2007:54). As noted in Chapter two, since World War II, there have been changes which have forced women to enter the men's world of workplace and business ownership. Following the recent transformation of economies, women's capabilities and qualities have proved to be very valuable (Ufuk, 2001:300).
Participation of women in entrepreneurship is said to be a recent phenomenon in the world, especially in developing countries (Ufuk, 2001:299) like Tanzania; although women have been involved in entrepreneurial activities for ages (Geiger, 2005). However the number of women involved in entrepreneurial activities has risen rapidly (Wilson, 2004:178). Statistics on women-owned businesses in the United States, suggest that the gender gap, in terms of entrepreneurial activities and new venture creation, has been closing rapidly (Mueller, 2004:199). That is, women-owned businesses represent thirty-eight percent of all businesses in the United States of America (Simonin, 2006:66). In Tanzania almost eighty percent of people involved in micro and small businesses are women. At least one-third of all SME operators in developing countries are thought to be women (Richardson, 2004:1).
3 3.2.2 Trends of women entrepreneurship
The level of women entrepreneurship in meaningful entrepreneurial activities is relatively low compared to men. They engage in low growth retail and service sectors and they have lower confidence than their male counterparts (Fuller-Love, 2006:431). Women-led businesses grow more slowly than male-led businesses and employ fewer employees (Minnitti et al, 2006) because of their nature.
It is evident that there has been an increase of women business owners in most economies. For example, in the US from 1970 to 1988, the percentage of women owned business increased from five percent to thirty percent (New Economic Realities, 1988) indicating that women are starting businesses at a rate more than twice that of men (New Economic Realities, 1988). Despite this remarkable increase in the number of women owned enterprises, and their impact on society and the economy, there are limited studies researching women business owners (Brush, 2006:18).
3 3.2.3 Profile of women entrepreneurs
Previous research proved that there are disparities in entry, re-entry and repositioning of small enterprises based on social factors, and especially the owner's characteristics (Rasheed, 2004:113). Gender, age, education and ethnicity have all been suggested to influence entrepreneurial performance (Rasheed, 2004:115). In different traditions and cultures, people of different gender, age and education levels tend to be treated differently and assume different roles in the society.
As explained earlier in Chapter one, many women in Africa spend most of their resources on the household, especially on food and education for children (Simonin, 2006:14). This makes many of them afraid of investing their limited resources into a meaningful business for fear of failure (Simonin, 2006:15) that may jeopardize the whole life of the family
In rural areas, most women entrepreneurs are characterized by the lack of access to financial resources, lack of access to technology and other strategic factors to developing business; and relatively lower human capital levels (Wortman, 1996; Smallbone et al, 2000; Dabson, 2001). They are mostly concentrated in the services sector (Muhammad, 2007), which is characterised by relatively small initial investments, requiring a minimal amount of financial capital (Simonin, 2006:17).
3 3.2.4 Role of culture in women entrepreneurship development
Culture is the system of values, beliefs and assumptions that influence activities and the way in which things are done. Cultural environment in terms of values and beliefs, and the legitimacy of the entrepreneurial activity, provides incentives for the exploitation of opportunities (Cuervio, 2005:306). Several authors have commented on the importance of culture on entrepreneurship development. Herbig and Miller (1992) argue that a culture that promotes entrepreneurial behaviours has a propensity to develop innovations and a culture that promotes conformity is less likely to promote such behaviours. In a society where values and social norms are high and people are strongly committed to respecting them, there is trust and the tendency to engage in opportunistic behaviour is limited (Cuervio, 2005:307).
Perceived congruence with cultural norms is a crucial predictor of intentions and motives (Ajzen,1991; Krueger and Carsrud, 1993); and there is a link between cultural norms and subsequent entrepreneurial activity, cultural values reflect the degree to which the society considers entrepreneurial behaviours to be desirable (Hechavarria and Reynolds, 2009:425). Culture plays an important role in building an institutional structure which promotes a more equalitarian society and which lets women face the entrepreneurial career with more guarantees of success (Santos, 2009:344). However, many developing countries may lack this kind of culture.
Throughout the world, but especially in indigenous societies, economic activities and business are interwoven with, and embedded in, social and cultural aspects of society (Granovetter, 1985:504; 2005:35; Fletcher, 2006:423). Morison et al (1998) suggest that the process of entrepreneurship begins with a person's intuition, and society and culture. Thus, each individual in the society and the level of entrepreneurial spirit within a society play the major role in initiating the entrepreneurship process.
Culture, as the fundamental system of values peculiar to a specific group or society, is responsible in transforming certain personality traits and can motivate individuals to develop behaviour specific to that society (Mueller and Thomas, 2000). Culture determines the attitudes of individuals towards the initiation of entrepreneurship (Vernon-Wortzel and Wortzel, 1997). Certain cultural institutions may facilitate, or hinder, entry into entrepreneurship, thus, culture beliefs of societies and the characteristics of people living in these societies, impacted by certain innate personality traits, will influence the degree to which entrepreneurship is initiated (Morrison, 2000).
According to Erez and Earley (1993) culture shapes the cognitive schemas which ascribe meaning and values to motivational variables and guide choices, commitments and standards of behaviour. As values are normally determined early in life (Hofstede, 1980; Barnouw, 1979), they tend to be programmed into individuals' minds resulting in behaviour patterns which are consistent with the cultural context and they last over time. Entrepreneurial activity (new venture creation) may be one of these behaviours which vary across countries, due to differences in cultural values and beliefs. Basing on these arguments, Huisman (1985) and McGrath et al (1992) concluded that cultural values influence entrepreneurial behaviours as they found that entrepreneurs differed significantly from their career professional counterparts in culture-based values and beliefs.
The figure below shows the key features associated with culture which may influence the entrepreneurship process.
Figure 3.1 Features associated with culture
Source: This diagram was influenced by the work of Morrison, 2000.
According to Morrison (2000), each entrepreneur's personal motivations and characteristics have to be blended with host society and business environment, which is then translated into entrepreneurial activities and behaviour. Gibb (1996) on the other hand, argues that the ways in which the young are conditioned from an early age through the formal education system, play a major role in instigating of characteristics commonly associated with entrepreneurial behaviour. Deakins (1999) also noted that a characteristic of entrepreneurship is that it tends to encompass family life, with many entrepreneurs being unable to separate business from social living.
The dominant cultural attitudes, values and beliefs of a population will depict the common mind-set in relation to the degree to which entrepreneurship is supported by society (Anderson and Warren, 2011). The extent to which these cultural attitudes are communal or individual has been identified as significant for entrepreneurship. Societies that predominantly hold strong communal and collective values do not support individualistic wealth creation through entrepreneurship, while those with strong individualistic values generally support individualistic wealth creation through entrepreneurship (Gilder, 1971). Thus, this suggests that some cultures and societies are more conducive to the pursuit of entrepreneurial activity, resulting in national and regional differences in new venture creation rates (Mueller, 2004:203).
The rate of economic growth, arguably, largely depends on the emergence of a great number of enterprises in all sectors. But the creation and maintenance of an environment that is favourable to the development of existing enterprises is crucial in the creation of a wide base of population capable of successful entrepreneurial behaviour (Shivani et al, 2006). Thus, an entrepreneur is a product of one's socio-cultural surroundings (Shivani et al, 2006). Therefore, the argument becomes that structural settings make development possible, while cultural factors determine whether the possibility becomes a reality (Lipset, 2000). Studies conducted in India by Berna (1960), Fox (1969) and McClelland (1961) linked the then prevailing economic backwardness with the Indian culture.
3.2.5 Gender imbalances
Female entrepreneurial activity rate is lower than that of male (Minniti et al, 2005; Verheul et al, 2006; Longowitz and Minnitti, 2007). Traditional male stereotyping of entrepreneurship may discourage women from pursuing new ventures (Bird and Brush, 2003).
Social feminism highlights differences between masculine and feminine behaviours (Le Brasseur, Robichaud and Zinger, 2007:347). Since young girls experience a different socialization process from that of young boys, women develop different skills, understandings and outlooks on life (Fischer et al, 1993). Because of that, Robichaud (2007) believes that eventually males and females tend to acquire distinctive skills, thus giving rise to gender-specific entrepreneurial behaviours.
3.3 Analysis of rural female entrepreneurship
This section describes how the background of an entrepreneur affects his/her decision to undertake an entrepreneurial activity, the nature of the rural enterprises owned by women and the entrepreneurship process in the rural setting. Moreover, it describes the performance of rural women entrepreneurs; education and management skills and finally the barriers and constraints facing rural women entrepreneurs.
3 3.3.1 Background experience
In the developed economies, women may engage in small business after becoming dissatisfied with their careers (Orhan, 2002:233). In these countries, women seek entrepreneurship for flexibility and autonomy; satisfaction and personal growth; and income and prestige (Goffee and Scase, 1985; Orhan and Scott, 2001; Winn, 2004). This may be due to unsatisfying employment experiences (Winn, 2005); frustration with demanding and inflexible work environments (Hewlett, 2002); failure to break through the glass ceiling to higher paid managerial positions (Glasser and Smalley, 1999; Weiler and Bernasek, 2001) and forced unemployment (Shannon, 2003). However, in developing countries, particularly for rural poor women, engagement into small entrepreneurial activities is the only available alternative for survival.
3.3.2 Nature of rural women's enterprises
Women entrepreneurs in rural areas are often hindered from running competitive businesses by their relative low education and skill levels, which generally limit their access to various support services (UNIDO, 2001). As a cultural outcome, most of the rural enterprises owned by women are smaller than those owned by men, whether measured by size, number of employees or revenue (Winn, 2005). Women are more likely to use existing technology and use less start-up capital (Minnitti et al, 2006).
3 3.3.3 Entrepreneurship process
This section explains the process of entrepreneurship in terms of opportunity recognition and risk taking by rural women entrepreneurs.
18.104.22.168 Opportunity recognition
Social networking has been identified as the important factor affecting opportunity recognition (Singh, 2000); entrepreneurial intention (Hmieleski and Corbett, 2006); entrepreneurial orientation (Ripolles and Blesa, 2005); vocational decision to become an entrepreneur (Davidson and Honig, 2003; Morales-Gualdron and Roig, 2005; DeClercg and Arenius, 2006) and entrepreneurial growth (Lee and Tsang, 2001). As other writers believe, social networking can provide information, access to finance, access to skills, knowledge and advice, social legitimacy, reputation and credibility (Harnsen, 1995; Jensen, 2001; Ripolles and Blesa, 2005; Welter and Kautonen, 2005). So it is argued by Klyver et al (2008:332) that people embedded in networks containing entrepreneurs tend to be more entrepreneurial; but the entrepreneurial networking behaviour might differ among entrepreneurs living in different cultures and such differences vary throughout the entrepreneurial process. However, the existence and non-existence of networks at start-up was not found to be a distinguishing characteristic of female owned businesses (Carsrud, Olm and Gaglio, 1989). But still, Hills et al (1999) believe that networking is a requirement for an ability to recognize more opportunities. Although very informal, networks in this study have been found to be one of the most important ways of communication and for entrepreneurs to assist one another
According to Christensen, Madsen and Peterson (1989:3), opportunity recognition was defined as either perceiving a possibility to create new business or significantly improving the position of an existing business resulting in new profit potential. Opportunity recognition is said to be essential element in entrepreneurship research (Jamali, 2009), as it is an important entrepreneurial capability and a source of competitive advantage (DeTienne and Chandler, 2004). Different factors have been identified to affect the level of opportunity recognition among entrepreneurs. It is argued that utilization of entrepreneurial opportunity depends on the environment in which the individual live and work (Romanelli and Schoonhoven, 2001:41).
Gender differences in opportunity recognition have also been identified. These differences have been linked to differences in human capital variables, including education and work experience (Carter and Brush, 2005). It is argued that women posses less human capital to invest into self-employment which negatively affects their opportunity recognition and exploitation potential (Jamali, 2009).
Another factor is that of lack of motivation among women entrepreneurs. Motivation is a set of processes that determine individual choices. These processes are influenced by families and friends throughout a life time. As discussed earlier, it is believed that people coming from business oriented families or who knows someone who has started a business, stand a better chance of becoming entrepreneurs (Davidson and Honig, 2003; Menzies et al, 2006; Morales-Gualdron and Roig, 2005; Arenius and Kovalainen, 2006; DeClercq and Arenius, 2006). Studies from industrialized countries have noted a dramatic influx of both men and women into the small business sector over the past two decades, as well as significant gender differences in the types of businesses and organizations women and men create, their motivations, business approach, and their economic success (Brush, et al, 2005; Carr, 2000; Hughes, 2005; Minniti et al, 2005; Moore and Buttner, 1997). Others were motivated to be entrepreneurs by different motives such as the desire to create something new, the desire for autonomy, wealth and financial independence, the achievement of personal objectives and the propensity for action (www.rediff.com/money/2005).
As noted earlier, western-based models assume that the entrepreneurial career is chosen, this is not true for Africa, as most entrepreneurs are forced into it by the need to earn a living (Olomi and Rutashobya, 1999:170). Thus in the Tanzanian context most women are "pushed, rather than "pulled" into enterprise.", so motivation is largely necessity. Although theoretical models of new venture creation processes differ in the assumption and variables they contain, they do include some common elements (Mueller and Thomas, 2000). Shapero (1975) sees the prospective entrepreneur's readiness to act as determined jointly by prior experience and the perception of current opportunities. However, Gartner (1985) on the other hand describes motivation for the creation of new ventures as an interaction among four dimensions, which are; the personal characteristics of the entrepreneur (individual), competitive entry strategies (organization), push and pull factors (environment), and the actions taken by the entrepreneur to bring the enterprise into existence (process).
Motivations for becoming an entrepreneur have commonly been categorised as either push/pull situational factors, or personal characteristics. Research have shown that new venture creation is a result of situational pushes or pulls, that include frustration with present life style, childhood, family environment, education, age, work history, role models and support networks (Hisrich, 1990; Martin, 1984; Moore, 1986; Krueger, 1993; Scheinberg and MacMillan, 1988). Several researchers found that some individuals are pushed into entrepreneurship by negative factors, such as dissatisfaction with existing employment, loss of employment and career setbacks. Thus, entrepreneurs are characterized as misfits, rejects of society or displaced people (Brockhaus, 1980; Shapero, 1975; Kets de Vries, 1977; Gilad and Levine, 1986). However, other positive factors such as, early training and exposure to business which encourages the search for business opportunities have been identified to pull individuals into entrepreneurial activities (Krueger, 1993; Mancuso, 1973; Gilad and Levine, 1986; Scheinberg and MacMillan, 1988).
Personal characteristics, or the personality traits, have also been identified as influencing new venture creation. McClelland (1961) asserts that qualities associated with a high need for achievement (n-ach), such as preferences for challenge, risk bearing, are essential characteristics of successful initiators of new businesses. Other studies have distinguished entrepreneurs from the general population on the basis of motivation (Spangler, 1992; Johnson, 1990), values (McGrath et al, 1992) and attitudes (Robinson, et al 1991).
22.214.171.124 Risk perception
According to Forlani and Mullins (2000), risk reflects the level of uncertainty and possible loss related with the outcomes as a result of a specific behaviour or a set of behaviours of an individual. Yates and Stone (1992) add that the element of risk construction is potential losses and the significance of those losses. A number of factors have been put forward as common determinants of risk; including lack of time, lack of information and lack of control over an alternative course of action (MacCrimmon and Wehrung, 1986). Entrepreneurial activity is determined by the characteristics of the human being, such as the will to face uncertainty (Kihlstrom and Laffont, 1979), accept risk and seek achievement (McClelland, 1961); all of which distinguish entrepreneurs from the rest of individuals in the society. However, Sexton and Bowman-Upton (1990) argue that women entrepreneurs are less willing than men entrepreneurs to become involved in situations with uncertain outcomes. According to Henning and Jardin (1977), women view risk as negative: it is loss, danger, ruin and hurt; men see risk as negative and positive; as loss or gain, danger or opportunity. Women and men also differ in their perspectives on the consequences of risk taking. For women, taking a risk means jeopardizing the 'here and now', it means endangering all they have achieved so far. Men see risk as affecting the future gain and career advancement (El Namaki et al, 1986:11). Thus, these arguments suggest that women do not embrace risk that may exist in the future and as a result, a woman may avoid controversial action that may endanger the present without taking into account its potential benefit in the future.
3.3.4 Female entrepreneurship performance
Women have a tendency to evaluate their performance through the prism of various non-financial criteria, such as the satisfaction levels of employees and clients, as well as the balance between work and family (Changanti, 1986; Cliff, 1998; Kaplan, 1988) compared to men who place greater weight on economic objectives such as profit and growth (Kent et al, 1982; Stevenson and Gumpert, 1985). As women-owned businesses are comparatively less well studied in the entrepreneurial domain (Menzies, Diochon and Gasse, 2004), factors influencing the performance are inconclusive and scarce (Brush and Hisrich, 2000).
It has been argued that many women rely on passion, rather than planning, mistaking business for a hobby and neglecting to ascertain whether their business idea is viable and potentially profitable (Greenstreet, 2004). Stein and Bailey (1973) propose that women are motivated to achieve, but their achievement efforts are directed toward areas related to the traditional feminine role. Thus, women would define success and failure in terms of traditional female values, such as a successful marriage, a close relationship to friends and the like (El Namaki, 1986). Women have been criticised by limiting the growth of their business (Brush et al, 2004; Carter et al, 2003) but the combination of undercapitalization and family obligations may conspire to keep their business small (Winn, 2005:388).
3 3.3.5 Education and management competence
Management and financial skills are particularly crucial in young enterprises (Thornhill and Amit, 2003). It has been argued that the type of education positively affects business success; formal and non-formal education play an important role in transferring cultural values from one generation to another (Winn, 2005; Gamini de Alwis and Senathiruja, 2003), although education per se is not an essential ingredient to owning a business (Hagen, 1962). Many women gain their first management experience in their own business (Winn, 2005:384). Carter and Brush (2005) argue that gender differences in opportunity recognition are associated with the differences in human capital variables such as education and work experiences. From this point of view, it can be argued that for rural poor women, who have low education levels and have never worked outside the household circle, so have no work experience. Consequently they stand little chance of identifying any meaningful entrepreneurial opportunity.
Studies on entrepreneurship in Africa by Harris (1969, 1971); House et al (1993); Kilby (1971); Marris and Somerset (1971); Marris (1968); Nafziger (1971); Kennedy (1998); Marsden (1990) and Rugumamu (1992) stress the role of an enabling environment and quality of management to entrepreneurship growth. Harris, Kilby, Marris and Somerset (1971) have pointed to management as a major obstacle to entrepreneurship in Africa. Also Menzies, Diochon and Gasse (2004) argue that many would be-entrepreneurs fail as a result of skill deficiencies, despite their motivation, ingenuity or creativity. However, Daniel (2004) found that women have better networking skills than men, especially building relationship with others.
3 3.3.6 Constraints and barriers
There are a number of reasons why people start a business. It can be difficult to start a business in any circumstances, but evidence shows that some people or groups of people find it more difficult than others. Women, some ethnic minority groups, the disabled and those in rural areas may all face additional difficulties in trying to start a business (Fuller-Love et al, 2006:430). For women, the common barrier is the difficulty in acquiring resources, especially finance, for their new venture (Brush et al, 2004). However, Ssendi and Anderson (2009) found that a major problem for rural women entrepreneurs was not the acquisition of financial capital but concerns about how to repay it.
Traditional perception about women's role in society creates a less favourable social climate towards female entrepreneurs, with discriminatory treatment by the state administration and/or limited access to bank loans (Erdem, 2002; Carr and Chen, 2004). Women are said to fear for business-related pressures that impinge on their role in the family. Women who are burdened with family responsibilities have less time for learning and/or exploring business prospects (Winn, 2005:387). Winn continues that, even in the most liberal households, boys and girls are presented with different views of the world from an early age; men are expected to work to support themselves or their families and are encouraged to achieve, while women have been socialized to nurture and to find someone to support them. For example, traditional Arab culture view women as mothers and caretakers of the home (Jamali, 2009:237) and household chores are seen as humiliating when done by men (Marikova, 2002).
Other studies have identified ethnicity as another factor influencing participation in entrepreneurship in Africa. House et al (1993) and Macharia (1988) found that exposure to business seems to vary from one ethnic group to another. These findings support studies on the influence of role models and family background of entrepreneurs on entrepreneurship participation by Cooper (1986); Mathews and Moser (1995); Shapero and Sokol (1982) and Timmons (1986).
Lack of information and education has also been identified as a problem for most female entrepreneurs (Blenker et al, 2003). This includes the low use of government services as a source of training and assistance for women (Stanger, 2004).
In Tanzania, factors that have been reported to influence women's entry and effective performance in entrepreneurial activities are lack of access to capital, especially institutional capital, raw material problems, lack of skills and technology, lack of markets and low profitability (Kimbi, 1989; Malambugi, 1991; Mbise, 1992; Mbughuni, 1994; Mbughuni and Mwangunga, 1989; Meghji and Virji, 1987; Omari, 1991; Rutashobya, 1991). Kimbi found that non-availability of capital and credit facilities were a major factor limiting women's effective participation in business in Dar es Salaam. Mbughuni reports that, coupled with time constraints, women's opportunities in business are greatly restricted. The unfavourable legal systems, the lack of equal access to education and sex stereotyping in post-primary education and training have also been reported (Kiggundu, 2002:243).
Gender Issues Research Report Number 9 (GIRR 9, 1995) in Tanzania reported that other things being constant, cultural values, traditions and norms have greatly affected women's participation in entrepreneurship. It also found that the society's construction of what constitutes male and female roles and responsibilities, behaviour and values, which have resulted in distinct gender division of labour in society, have also been manifested in the dynamics and development of female entrepreneurship in Tanzania. However it does not single out exactly what are these cultural values, traditions and norms, and in which ways they affect women's participation in entrepreneurship in Tanzania. This study intends to identify these social and cultural factors and their effects on women's participation in entrepreneurship in Pwani and Arusha.
It has been shown that entrepreneurial activity depends on environmental factors, such as the size and growth of markets, endowment of productive factors and natural resources, the availability of human and technological capital (Cuervio, 2005:98) as well as geographical space. Individual orientations are enmeshed and moulded by economic, legal, normative and societal environments, supporting the idea of entrepreneurship embeddedness in a particular socio-cultural setting (Bruin et al, 2007; Baughn et al, 2006) and directly tangled with meso-level factors, including existing organizational processes, policies and practices (Jamali, 2009). Entrepreneurs are the key determinants of the creation of wealth and dynamism of a particular society: that is they explain the level of income of a society and its dynamics of change.
Few studies have investigated how individuals are motivated or constrained by different cultural values to undertake entrepreneurial activity (Hechavarvia and Reynolds, 2009:420). Most studies has been comparing women and men, but few, if any, compare women among themselves, either in the same or a different locality. As Sang Lee et al (2009:260) argue, no study has yet to compare women who own a small business to their counterpart women who own a small business in other countries.
Moreover, it has been noted that criteria used by Global Entrepreneurship Monitor (GEM) to determine what motivates individuals to become entrepreneurs, do not apply to rural women entrepreneurs in Tanzania. Whether being pull or push factors does not matter for a rural female Tanzanian entrepreneur in this study; what matters is to earn her daily bread. From this point of view, it is very difficult to use available developed models, like the life cycle model (Sonnenfeld and Kotter, 1982), the career development model (Bowen and Hisrich, 1986) and the venture innovation model (Greenberger and Sexton, 1988) to determine what influences rural women in Tanzania to undertake entrepreneurial activities.