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The role of necessity-based female entrepreneurship in job creation

Against all odds, necessity-based female entrepreneurship catalyses job growth, challenging traditional gender roles and fostering economic empowerment.

As economies worldwide grapple with the monumental task of creating new jobs, the critical role of entrepreneurship is becoming more important. Yet, the potential impact of necessity-based female entrepreneurship (NBFE) on job creation remains a puzzle, despite its prevalence worldwide. NBFE, where women embark on entrepreneurial ventures to fulfill basic needs or to balance economic pursuits with domestic care responsibilities, often faces criticism for underperformance and limited growth potential.

The United Nations’ SDG report for 2021 highlights that women shoulder, on average, 2.5 times the burden of unpaid domestic and care work compared to men. In addition, women often perceive family responsibilities as more legitimate than economic activities, recognising legitimacy as an essential catalyst for entrepreneurial survival and success. Hence, this raises a fundamental yet critical question: can NBFE lead to new job creation, and if so, under what legitimacy framework?

A study by a team of academics from Northwestern Polytechnical University, Xi’an Jiaotong University, and University of Adelaide, offers fresh insights into the interplay between institutional logic, legitimacy, and entrepreneurship. The study also challenges traditional perceptions of female entrepreneurship. It examined 1,890 female entrepreneurs from 20 countries, drawing data from the Global Entrepreneurship Monitor (GEM) Adult Population Survey (APS) 2013 dataset.

Legitimacy in female entrepreneurship

In the business world, the level of trust and support for female entrepreneurs is crucial. It entails getting approval from business partners, customers, and others, constituting legitimacy in the business sphere. Conversely, at home, it hinges on support from family and friends, who typically perceive women as caregivers, thereby representing legitimacy in their private lives. Succeeding as a female entrepreneur requires meeting expectations from both sides. Striking a balance between business and family is key to making a positive impact.

Can necessity-based female entrepreneurship fuel job creation? The key to this lies in the level of is how much support extended to female entrepreneurship, particularly these women get both from their families and from the business community.

Wei Deng

Dual legitimacy as a catalyst for enhancing job creation

Figure 1. Legitimacy of female entrepreneurs under family and market logics
Credit. Authors

Condition 1: In this scenario,  necessity-based women entrepreneurs receive respect and support both at home and at work. This creates a harmonious balance between family and business goals, allowing these women to pursue their mission without experiencing conflicts between the two spheres. Such favourable situations empower women to effecrively manage both entrepreneurship and family responsibilities effecrively, ultimately leading to the creation of more job opportunities.

Condition 2: Here, women who start businesses out of necessity don’t get much respect at home but are valued in the business world. Despite their familial responsibilities, they feel pressured by market demands, leading to a perpetual juggling act that can be draining. This constant juggling between meeting market demands and attending to family responsibilities can lead to challenging decisions for female entrepreneurs. This delicate balance may potentially jeopardise their businesses and job prospects, posing a challenging predicament for these women. 

Condition 3: This scenario shows that necessity-based female entrepreneurs are respected at home but are not taken seriously in the business world. So, they priorotise family needs over business demands. While they may not benefit from extensive market support, support from families and friends assists in job creation.

Condition 4: Here, women who start businesses out of necessity enocunter a lack of respect from their families and the business world. They face challenges from limited resources and support, leading them to run small businesses with minimal staffing. However, owing to low expectations, they experience less emotional strain. This results in less impact on job creation when compared to Condition 2.

Importance of female entrepreneurship

Female entrepreneurs can effectively balance both family and business demands by integrating their goals, values, and strategies from both sides. This challenges previous expert opinions and significantly impacts our understanding of job creation and entrepreneurship.

Actionable implications for female entrepreneurs, stakeholders, and policymakers

  1. Encourage business acceptance: Female entrepreneurs can boost their businesses by grasping local rules and expectations and utilising personal connections to gain community acceptance. This can then facilitate job creation.
  2. Enhance legitimacy: Both families and the business community can help women starting businesses be seen as legitimate. This, in turn, fosters job creation for necessity-based businesses.
  3. Improve government support: Governments can enact supportive policies and initiatives tailored specifically for women starting necessity-driven businesses. This includes provisions of training, mentoring, and financial assistance, aimed at bolstering the acceptance and success of such businesses.

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Journal reference

Deng, W., Liang, Q., Zhang, S. X., & Wang, W. (2023). Beyond survival: necessity-based female entrepreneurship as a catalyst for job creation through dual legitimacy. Asia Pacific Journal of Management, 1-28. https://doi.org/10.1007/s10490-023-09930-4

Wei Deng is an associate professor at the School of Management, Northwestern Polytechnical University. His research interests include social entrepreneurship, female entrepreneurship, and innovation management. His work has been published in journals including Entrepreneurship Theory and Practice, Journal of Business Research, Journal of International Management, Asia Pacific Journal of Management, among others.

Stephen X. Zhang is a professor of entrepreneurship at the University of Adelaide. He studies how entrepreneurs and top executives behave under uncertainties. Stephen has published articles in top journals in entrepreneurship (e.g., Entrepreneurship Theory and Practice), management (e.g., Academy of Management Journal), as well as COVID-19 research in health journals.

Wei Wang is an assistant professor at the School of Economics and Finance, Xi’an Jiaotong University. His research interests include entrepreneurship, innovation, and electronic commerce. His research studies have been published in journals including Entrepreneurship Theory and Practice, Technological Forecasting and Social Change, among others.