Article by Professor Addis G. Birhanu
It is even tougher when you are thrown into that global pandemic, which forces you into your home, with the ability to meet people only remotely, whilst also having to take care of your family at the same time.
COVID was a challenge even for serial entrepreneurs like Richard Branson or Elon Musk. But, would their entrepreneurial venture be more troubled due to the pandemic if they were women entrepreneurs instead?
That is what my colleagues based in the USA and Canada and I researched. We were keen to understand the impact of the COVID pandemic on businesses, and whether there was a difference in its impact on men vs women-owned businesses.
To do so, we analyzed 20,000 businesses across 38 countries, using data from the World Bank’s ongoing COVID-19 tracking survey and World Bank’s Enterprise Survey (WBES). These datasets among other things provide information about the monthly performance of the businesses in their sample, the size of the businesses, and women’s ownership stake.
Using these data, we found that the sales growth of women-owned businesses was reduced by 3% due to the pandemic compared to businesses not owned by women. Besides, we also found that women-owned businesses were closed for a longer period of time than other businesses. The underlying reasons for this are likely to be twofold.
The first has to do with the reinforcement of the stereotypical role of women in the household during the lockdown. It left them with limited to no time and energy to lead their business successfully and overcome the challenges posed by the pandemic. This skewed household responsibilities toward women during the lockdown was also shown in the survey conducted by the Office of the National Statistics (ONS), UK. The ONS survey revealed that working mothers carried out two-thirds more childcare duties per day than men.
The second underlying reason has to do with women’s sensitivity toward the health risks of the pandemic and the higher protective measure they took to keep their safety and the safety of their significant others. Women were particularly more careful at the beginning of the pandemic when little scientific information was available about the nature of the pandemic. These measures might have restrained women entrepreneurs from opening their businesses and/or undertaking certain operations that might put them and their employees at risk of infection. So their sensitivity to health risks might lead them to protect lives instead of livelihoods and hence lower the performance of their businesses.
Entrepreneurs were not left to fend for themselves during the pandemic. Governments introduced various interventions to address the pandemic. We, therefore, examined the effectiveness of government health and economic policy intervention in addressing the gendered effect of the pandemic using data from the COVID-19 Government Response Tracker. We found that sound public health measures, such as the provision of credible public health information corrected perceptual bias of the health risk of the pandemic and the reinstitution of public services with appropriate safety measures took off the brunt of childcare and other houshold tasks from women. These gave women entrepreners the opportunity to be back to the drivers’ seat of their business and reduce the adverse effects of the pandemic. However, economic support policies did not have a similar effect. This could be because women entrepreneurs were able do as much as their men counterparts with the economic support of governments and the return on women enterprises was in par with that of men but not more. More importantly, this policy aimed at solving the consequence of the pandemic on businesses but not on the root cause that led to disparity in the performance women with respect to men entrepreneurs during the pandemic.
Overall, our study highlights the higher barriers women entrepreneurs face especially in times of adversity and global crises like the COVID pandemic by triggering and perpetuating traditional gender roles. The effectiveness of health policies than economic support policies to tackle the gendered effect of the pandemic also alludes to the importance of policy interventions to address gender disparities in entrepreneurship when they target the root cause of the disparity than its consequences.
Addis G. Birhanu is an Associate Professor of Strategy at emlyon Business School, France. Her research interests are at the nexus of non-market strategy and corporate governance, and their implications on firm performance.
