Gender export gap in Scotland: research

1. Introduction

We know that there exists a large global gender export gap where firms led by men are almost twice as likely to sell in foreign markets as firms led by women (Korinek & van Lieshout, 2023). The women-led firms are smaller in size and predominantly based in the services sector which in part contributes to the differences in gender when it comes to exporting. Further, women entrepreneurs face a variety of obstacles to exporting, including the lack of access to finance and the high barriers to trade in the service sector where they are the majority (Korinek & van Lieshout, 2023).

Thus, the report aims to understand the gender export gap in Scotland with the intention to:

• build an economic case for addressing a known gender export gap in Scotland and;
• understand what the most effective avenues to address this gender export gap could potentially be and how they could be implemented.

We begin by synthesising the existing body of academic evidence regarding the barriers and drivers for women-led^[1] SMEs to export to complement the existing knowledge from the Scottish Government’s scoping work. The academic studies highlighted numerous barriers for women-led businesses, including: (1) fewer and shallower professional networks which limits their access to market information and opportunities; (2) women-led exporters can be perceived negatively by male business leaders leading to complications doing business; (3) are typically smaller in size and are disproportionately affected by barriers to trade; (4) are less likely to access the finance needed to start and grow businesses; and (5) are more likely to be in less export-intensive sectors.

We present the findings of an extensive inquiry into addressing the aims. We do so by drawing on data from: (1) the Longitudinal Small Business Survey (LSBS) from 2016-2022 to quantify the economic impact of women’s under-participation in exporting on Scotland’s economy; (2) 16 interviews with women entrepreneurs who are exporting; (3) 10 interviews with women who are not exporting; (4) 5 case studies of successful women entrepreneurs who are exporting; and (5) 8 interviews with enterprise support organisations (ESOs).

From the quantitative findings we provide several key insights:

• The proportion of Scottish male-led SMEs that export is historically between 2-9% higher than women-led SMEs.
• The proportion of Scottish women-led SMEs who export is historically between 0-2% lower than UK women-led SMEs.
• Scottish women-led and equally-led SMEs typically have lower turnover and number of employees than male-led SMEs and UK women-led and equally-led SMEs.
• Women-led and equally-led Scottish SMEs typically have a higher sales turnover with a lower number of employees than non-exporter counterparts indicating that they have higher productivity.
• Turnover of Scottish women-led and equally-led SMEs grew after they started exporting, but the growth was lower than for male counterparts. Exporting is linked with about a £2,100,000 one year and £3,650,00 two-year growth on average for women-led and equally-led SMEs and a £4,800,000 one year and £4,800,000 two-year growth for male-led SMEs.
• We did not find a statistically significant relationship for turnover growth after exporting for UK women-led or equally-led SMEs. We found a significant relationship for male-led SMEs, however, turnover coefficients were relatively smaller at about £3,000,000 for one year and £2,650,000 over two years, perhaps indicating that exporting is particularly important for growth in Scotland.
• Typically, after exporting, Scottish women-led SMEs grow employment by about 10 people, although this is not significantly related to exporting and is likely in combination with other productive activities that encourage growth.
• Overall, exporting is imperative for the economy, and reducing the gender export gap could lead to significant benefits – it could increase total turnover between £2.1 billion and £6.3 billion over one year and between £3.4 billion and £10.3 billion over two years.

Several themes from the women participants interviews emerged from the data which included (i) the barriers faced by women exporting and not exporting; (ii) the challenges to the support provided in Scotland; (iii) the opportunities to grow and internationalise; and (iv) the support required for the women to thrive in growing and exporting their businesses. The main themes which arose from the ESO interviews included (i) a lack of awareness and a negative perception of exporting amongst women entrepreneurs (pre-growth); (ii) early-stage of growth was not meeting the criteria for access to support (early growth); and (iii) the challenges accessing skills, resources, and networks to facilitate exporting and enabling international trade (growth).

Based on the findings we propose several recommendations to the Scottish Government to consider for addressing the gender export gap in Scotland. These recommendations include:

1. Running an export awareness campaign specific to women entrepreneurs;

2. Providing a foundation programme of training and information on e-commerce for women-led businesses;

3. Providing a programme of trade missions for women-led businesses;

4. Expanding existing export advisory services to cover all of Scotland for women-led businesses to access;

5. Increasing the international exposure of women’s networks;

6. Providing adequate finance and promoting financial literacy to women entrepreneurs;

7. Investigating the links between exporting and productivity for both men and women-led SMEs;

8. Collating gender-segregated data for exporting in Scotland;

9. Mapping the exporting support programmes and initiatives in Scotland to better understand the landscape; and

10. Aligning policy priorities for women-led SMEs.

Figure 1: Infographic of the findings

The proportion of Scottish male-led SMEs that export is between 2% and 9% higher than women-led SMEs.

Women-led and equally led Scottish SME exporters have a higher turnover with lower number of employees indicating higher productivity compared to non-exporters.

Reducing the gender export gap could increase total turnover between £2.1 bn and £6.3 bn over one year and £3.4 bn and £10.3 bn over two-years.

Women-led SME non-exporters were reluctant to grow often due to caring responsibilities and a want to remain financially stable.

Access to finance and a lack of appropriate support for micro and service based SMEs deters exporting.

Both exporters and non-exporters report being excluded from support that focuses on male dominated sectors and from international trade missions.

For exporters access to information for support, funding, and market opportunities was a big challenge.

Brexit has posed a big barrier for exporters from specific women-led sectors such as cosmetics and textiles.