Pathways: A new approach for women in entrepreneurship

03. Under-participation: overview of causes

We now begin to apply the model described in Chapter 2 to the problem under investigation in this report, namely, why does our society exhibit such extreme differences in entrepreneurship participation rates?

In this chapter, we first identify and describe the proximate causes of under-participation in entrepreneurship^[33]. Based on our analysis, we next assert that all of these proximate causes ultimately originate from a small number of root causes. In the chapters that follow, we consider each proximate cause in turn and map its chain of cause-and-effect.

Exposing this anatomy of cause-and-effect then enables us to identify interventions that simultaneously directly address the root causes of under-participation and mitigate their effects in the shorter and medium term.

In stating the proximate causes below, we are referring to the majority experience, or mainline case. Naturally, participants in an ecosystem will have a range of experiences, which approximately follow a normal distribution. This analysis positions itself towards the centre of that distribution, whilst recognising that some participants will still become successful entrepreneurs even when confronted by an entrepreneurial ecosystem that does not adequately support their particular demographic. Of course, we celebrate such individuals, but our present task is to create an entrepreneurial ecosystem in which many more people have a fair opportunity to be successful entrepreneurs because of that ecosystem rather than despite it, where women are not immediately at a disadvantage at the outset or must rely on exceptional personal circumstances and support in order to succeed.

From our research, there are five major proximate causes of under-participation in entrepreneurship:

Relative to men, women are often more logistically constrained, making participation in entrepreneurship difficult.

Society commonly assigns the primary-carer role and the home-manager role to women, and then doesn't provide sufficient balancing support. This state of affairs isn't compatible with the intensive demands of an entrepreneurial career-path.

Women frequently have a sense of "not belonging" in entrepreneurship, which affects their confidence and self-belief.

The sparsity of women in entrepreneurship establishes a vicious circle leading others to conclude that entrepreneurship isn't a natural environment for them, which then further drives this sparsity.

Formally-defined pathways into entrepreneurship are unclear, while informal pathways and networks underserve women.

Developing an understanding of how to become involved in entrepreneurship and how to successfully move through its various stages largely relies on informal networks which are heavily orientated towards men. Formal support is correspondingly less well organized, disproportionately affecting women.

General education and the normalisation of entrepreneurship as a valid career path is largely not present in the education system.

This point naturally affects all demographics, but its impact is greater for women in the presence of the other proximate causes.

Women receive far less investment than men at all stages of the entrepreneurial journey from the investment community.

For example, firms led solely by women receive less than 2p for every £1 of total external investment^[34]. Of the Scottish companies that received external investment in 2022, 12% were female-led and 73% were male-led^[35]. Even in the university spinout sector – which is often perceived to exhibit better female participation rates - only 12% of university spinouts that successfully secure funding include female founders, with only 4% boasting all-female founders (compared to 75% for all male founders)^[36].

Having identified these proximate causes of under-participation in entrepreneurship, it would be tempting to immediately move to proposing various mitigations that could be applied to alleviate their worst effects. But, as discussed in the previous chapter, this approach would, on its own, only have a temporary and somewhat limp impact upon under-participation. This is because these proximate causes each have their own causes. Left unaddressed, this tree of deeper causes would continually act to re-establish the proximate causes.

Therefore, in the chapters that follow, we will also examine the intermediate and, ultimately, the root causes of each of the above proximate causes, and we will demonstrate the relationships between them. But for now, let us simply state that it is essential, within a set of recommended interventions, that we include those that directly address the root causes of under-participation.

In the following analysis, it will probably already be obvious to many readers that the root causes we identify lie behind extreme under-participation in entrepreneurship, and other fields for that matter. But they are rarely to be found in reports intended to improve these imbalances. Certainly, to discuss them is to make many of us uncomfortable. And to address them is inconvenient. Much easier is to identify some mitigations to our proximate causes, to tell women that, for example, they need to be more confident and so on, and turn the page. But, if we want to permanently change the imbalances under discussion here, there is no other way but to include these root causes in our considerations.

We will next examine in chapters 4 through 8, each of our proximate causes in turn^[37]. In each case, we'll walk the cause-and-effect tree, surfacing various intermediate causes and, ultimately, their root causes. In each case, we will then explore what category interventions could be applied to address these causes. These will ultimately inform the report's concrete recommendations.

We also consider, in Chapter 9, the further issue that there is an insufficiency of consistent and detailed dynamic data into participation rates in entrepreneurship. This deficiency both obscures a proper investigation into under-participation and undermines efforts to measure progress. For the purposes of the present exercise, we combined several research methods and sources, to build a detailed understanding of current participation rates. These are detailed in Appendix A.