Small Businesses, Research Paper Example

Introduction: Women in Middle Eastern and North African (MENA) countries have, in recent decades, made significant strides in educational achievements and participation in the workforce, both positive signals of women’s empowerment in this region (McIntosh & Islam, 2010, p. 103). However, in the field of business entrepreneurship women in MENA countries lag significantly behind their sisters in many other parts of the world, with a very low rate of business ownership (p. 103). And yet, in the United Arab Emirates (UAE) and other Gulf states there are encouraging signs of a new trend towards women’s entrepreneurship, with more women starting businesses in ‘non-traditional’ fields, rather than pursuing public sector jobs.

The important questions, then, pertain to what factors and influences are positively correlated with the success of female Emirati entrepreneurs. Why are more Emirati women pursuing entrepreneurial careers and business ownership, and what social and human capital do they draw upon to succeed? Through the lenses of social networking theory and social support theory, the behavior of an agent is seen to be determined by the nature and types of social connections they have, and the support that they derive from them (Erogul, 2011, p. 8). From this perspective, the success of an agent’s entrepreneurial activity will be positively correlated with human capital, i.e. level of education and work experience, and social capital, i.e. family, friends, and associates capable of furnishing motivational, ideational, informational and operational support.

The hypothesis, then, is as follows: level of education and other forms of human capital, as well as social capital in the form of familial and other interpersonal networks, are positively correlated with female Emirati entrepreneurs’ success. The following literature review gives an account of the current state of knowledge regarding female Emirati entrepreneurs, the challenges Emirati women face, and those factors correlated with the success of female Emirati entrepreneurs. The study itself will utilize a number of qualitative methods, including questionnaires, guided interviews, and conversations with female Emirati entrepreneurs and their family members.

The questions here raised are of considerable importance, inasmuch as the UAE and other Gulf states, as well as other MENA states to some degree, have undergone and are undergoing precipitous societal changes. The progress of women in education and participation in the workplace is both a symptom of broader societal trends correlated with development, and a very important sociocultural and socioeconomic change in its own right. This research will seek to highlight some of the more salient predictors of Emirati women’s entrepreneurial success, in order to cast further light on ways in which they and their sisters throughout the Middle East and North Africa can attain greater success and empowerment.

Literature Review: Despite a relatively progressive legal regime under the UAE Constitution, whereby women as well as men are guaranteed considerable “freedom of movement and residence”, there is a pervasive strain of patriarchy within Emirati jurisprudence (Erogul, 2011, pp. 3-4). By way of example, Article 34 of the Emirati constitution “holds a woman’s guardian responsible if he has consented to “employment” or “business” that violates these provisions” (p. 4). The cardinal problem here is that the law does not recognize women as being capable of making their own decisions (p. 4). Still, sociocultural mores constitute even greater obstacles to women’s empowerment and entrepreneurial activity in the United Arab Emirates (UAE) : Emirati society is deeply conservative, committed to traditional gender roles and the importance of the family (pp. 4-7). A case in point is a strong cultural taboo against gender-mixing: although there is a great deal of variation amongst Emiratis on this point, many Emirati families exert considerable pressure against gender-mixing, effectively precluding a great deal of entrepreneurial activity (p. 4). Many husbands, in particular, are often opposed to their wives going into business (p. 4).

However, despite these significant obstacles to women’s empowerment, there are also encouraging and significant signs of progress. The government of the UAE has taken a progressive line on the subject; indeed, late president Sheikh Zayed was quoted as saying that “’[w]omen have the right to work everywhere… What women have achieved in the Emirates… makes me both happy and content’” (qtd. in Erogul & McCrohan, 2008, p. 179). Women do work in Emirati society, in considerable numbers: “41.5% of all employees in education, 35% in the health sector and 20% in social affairs” (p. 179). And in a mere ten years, Emirati women have reversed the educational gap with men, with a number of women receiving Masters and PhDs (p. 180). However, in the Emirati workplace there is a very strong emphasis on the public sector: both women and men are often encouraged by their families to obtain public sector jobs, with their “generous benefits, comfortable working hours, and less demanding work regimes” (Goby & Erogul, 2011, p. 331). Both governmental policy and many familial pressures tend to encourage women in particular to work in the public sector, because public sector jobs are deemed to present less of a conflict with traditional gender norms and roles, and are thus less threatening (p. 332).

What factors and variables, then, distinguish successful female Emirati entrepreneurs? McIntosh and Islam (2010) found that women who especially demonstrated adherence to Islam, specifically by wearing the hijab, were more likely to profit from access to the social capital of business networks (p. 106). Social capital, then, is a key factor affecting the degree of success female Emirati entrepreneurs are likely to attain. Unsurprisingly, McIntosh and Islam also found that supportive families were another predictor of success for female Emirati entrepreneurs, in that supportive families tended to facilitate access to business networks (p. 106). In this vein, Erogul  (2011) highlighted the importance of male network partners (MNPs) for female Emirati entrepreneurs, finding that many Emirati businesswomen received a great deal of help and support from husbands and male family members (p. 14). Husbands and male family members, Erogul found, provide support in a variety of ways, ranging from the moral support of motivation and optimism to advice to operational and informational support (p. 14).

Thus, Erogul’s (2011) findings suggest that far from being obstructions to the progress of Emirati women’s empowerment, many men serve as facilitators (p. 15). These findings are in accordance with the study done by Erogul and McCrohan (2008), which also found a significant connection between familial support and entrepreneurial success for Emirati women (p. 182). Personal networks also play a key role in helping Emirati businesswomen to secure venture capital for their enterprises: inasmuch as only about 35% of Emirati businesswomen secure funding from Emirati banks, most female Emirati entrepreneurs must resort to using their own savings, or securing funding from someone in a social network (Goby & Erogul, 2011, p. 331). In fact, business networks can provide female Emirati entrepreneurs with start-up capital from “business angels”, venture capitalists who “seek to invest in a business venture that exhibits the prospect of profitability within the foreseeable future” (p. 331). Business angels are often known to female Emirati entrepreneurs as friends, colleagues, or by way of a third party (p. 331).

However, in some cases the role of men has been a more negative, less supportive and more adversarial one. As Erogul and McCrohan (2008) explained, some Emirati businesswomen became entrepreneurs in order to support themselves and their families, due to husbands being either unemployed or irresponsible (p. 182). One woman explained that she had become an entrepreneur in order to support herself and her children after her husband divorced her and left “’all the responsibility on my shoulders’” (p. 182). One woman reported that she became an entrepreneur despite her husband’s active discouragement: “’He was the against the idea of a working woman… I went and bought all the needed equipment and he couldn’t say no after that…’” (p. 183). However, the woman in question did receive a great deal of support from her sisters, who encouraged her to “’face my husband and make him listen’”, and even found her first customers (p. 183). Other Emirati businesswomen became entrepreneurs in order to become independent, or to express themselves, or even to make use of free time and feel more fulfilled (p. 181).

Human capital, representing level of education achieved as well as all relevant skills and knowledge, is very clearly another factor affecting the success of Emirati female entrepreneurs. Throughout the Middle East, there is a very marked trend toward women pursuing degrees in “traditionally female areas such as liberal arts, nursing, and teaching”; however, in the Gulf, including the UAE, there is a trend towards greater numbers of women pursuing advanced degrees in ‘non-traditional’ professional and technical fields (McIntosh & Islam, 2010, p. 104). McIntosh and Islam found that Emirati women who pursued advanced degrees and gained a greater variety of work experience were more likely to pursue non-traditional careers, and to have higher aspirations for their businesses (pp. 106-107). This concurs with the observations of Goby and Erogul (2011) that higher levels of education have a salutary, positive effect on the entrepreneurial drive (p. 332). In particular, business education can equip individuals with both the technical skills for success—such as “accounting, marketing, finance, etc.”—and the mental and psychological mentalities to seek it, i.e. “’self reliance, independent action, creativity, and flexible thinking’” (Mueller & Thomas, 2001, qtd. in Goby & Erogul, p. 332). It can be no accident that Emirati women with higher human capital, in the form of higher degrees and a greater degree of work experience, are also more likely to secure funding from Islamic banks (p. 107). Interestingly, and as an aside, McIntosh and Islam also found a lack of support for the hypothesis that access to social capital influences the type of business that Emirati women entrepreneurs pursue (p. 107).

From the perspective of social networking theory, the social capital of networks—encompassing both the nature and the structure of said networks—influences behavior (Erogul, 2011, p. 8). This is ascertainable to a considerable degree in the above findings: many female Emirati entrepreneurs enjoy the support of social networks, consisting of husbands, children, and other male family members. The role of the “business angels”, in particular, is an interesting one, inasmuch as it evinces the willingness of male venture capitalists to invest in business enterprises founded and run by women. Obviously the role of human capital is important in its own right: women with higher levels of education are more likely to become entrepreneurs, especially in ‘non-traditional’ business enterprise fields, and are likely to have higher goals and aspirations for their careers.

Although the above findings are of considerable importance and explanatory power, important questions remain. A question of particular relevance is the role of other women in providing support to female Emirati entrepreneurs: Erogul and McCrohan (2008) related a singular case of a woman whose sisters encouraged her to stand up to her unsupportive husband and become an entrepreneur; as seen, these sisters also provided her with her first customers (p. 183). To what degree, then, do other women facilitate the success of female Emirati entrepreneurs, by providing moral support, contacts, informational and operational support? For the most part, the studies here emphasized the support of families in general, with particular emphasis on the role played by supportive husbands and male relatives.

Methodology: The purpose of the study itself is to evaluate, as stated, what factors and influences are positively correlated with the success of female Emirati entrepreneurs. From the literature, the first key factor appears to be access to social capital, in the form of supportive husbands and other family members, as well as venture capitalists known as “business angels”, who are typically known to female Emirati entrepreneurs as friends, relatives, or through a mutual acquaintance. The second key factor would appear to be human capital, specifically more education and greater and more diverse work experience.

In order to test this model, eighty-four female Emirati entrepreneurs were selected by means of references from local contacts, and by using business directories. A questionnaire was mailed to each, in English and in Arabic, and sixty-five completed the questionnaire and returned it. The questions on the questionnaire asked the participants about their life and family history, especially marriage and children; level of education, motivations for going into business, support received from husbands and other family members, and whether or not they had sought and obtained funding from an Islamic Bank. In particular, the questionnaire incorporated questions about support—whether motivational, informational or operational—received from male and female family members, respectively. The questions were selected with an eye towards gathering salient information about the human and social capital available to female Emirati entrepreneurs, in order to evaluate the context and process of entrepreneurship. The focus was on the female Emirati entrepreneurs and their support networks.

The next phase entailed guided interviews with female Emirati entrepreneurs, and conversations with them and their family members. These were often quite difficult to arrange, but in the end twenty-three female Emirati entrepreneurs agreed to interviews and conversations, and select family members of twelve of these agreed to conversations as well. In the interviews and conversations, the female Emirati entrepreneurs were asked to elaborate upon their responses to the questionnaires. They were also asked about what, in their opinions, would facilitate greater progress for Emirati women in the field of entrepreneurship. These questions were asked in order to obtain a more complete picture of these female Emirati entrepreneurs’ life stories: their motivations; their education and experiences, and what these meant to them, the challenges encountered in going into business, etc. In total, the time-frame was a few months, from the time that the questionnaires were mailed out to the last of the interviews and conversations.

The expectation of the study was that successful female Emirati entrepreneurs would tend to hold advanced degrees, and would enjoy a great deal of support from family members. The results were analyzed by comparing the responses to the questionnaires, interviews and conversations, in order to synthesize a qualitative picture of the success of female Emirati entrepreneurs, and the ways in which such success might be increased. In particular, the responses from the interviews and conversations were carefully scrutinized, in order to ascertain the influences of human and social capital in the stories of female Emirati entrepreneurs. Of course, there were reliability and validity concerns, mainly centering around whether or not the female Emirati entrepreneurs would be receptive to answering such questions about their lives to strangers; however, the interviews and—where applicable—conversations proceeded very well.

Findings and Recommendations: The sixty-five completed questionnaires revealed that participants displayed a marked trend towards advanced degrees: indeed, forty-nine respondents (75.38%) had them. This is the first main point, inasmuch as it supports the hypothesis that advanced degrees as a form of human capital are indeed positively correlated with entrepreneurial ventures on the part of Emirati women. Of particular relevance, thirty-eight respondents, 58.46% of the total, had advanced degrees of a Master’s or greater in business or a business-related field. This figure is 77.55% of the number of respondents who had advanced degrees, and is therefore of considerable interest.

The second significant finding concerned work experience. All respondents had previous employment experience; fifty-nine out of the sixty-five (90.77%) reported that they had worked in the public sector, while the remaining six did not specify their place(s) of employment. Thirty-three respondents (50.77%) reported ten or more years of employment experience prior to starting their own businesses. This lends further support to the hypothesis that work experience as a form of human capital is correlated with successful careers for female Emirati entrepreneurs.

With regards to social capital, there were a number of interesting findings. Specifically, support from family relations was very high: 80% of the respondents (52) reported that they had received support from family members, whether motivational, informational, or operational. In general, the Emirati businesswomen identified male relatives, such as fathers, brothers, cousins, and uncles, as the main providers of support from within their families; however, ten respondents (15.38%) answered that female relatives had been more supportive. Husbands were also significant sources of support: thirty respondents (46.15%) indicated that their husbands had been very supportive. Here, mention should be made of the fact that the questions concerning familial and spousal support and approval were not mutually exclusive: in other words, a number of the respondents, twenty-eight in fact (43.08%) reported high levels of support from both husbands and families. Of particular significance, only sixteen respondents (24.66%) reported that they had obtained funding from an Islamic Bank, although twenty-four respondents (36.92%) reported that they had sought such funding. Of the remainder other than the sixteen, twenty (30.77%) secured funding from a “business angel” who was not a close friend or family member, another fifteen (23.08%) secured funding from a close friend or family member, and the remainder used their own savings. In sum, these findings confirmed the hypothesis that levels of social capital are positively correlated with the success of female Emirati entrepreneurs.

The interviews and conversations lent further support to these hypotheses. The twenty-three participants were all agreed that their education and work experience greatly contributed to their motivation to become entrepreneurs. The breakdown according to specific motivations was especially revealing, and constitutes the fourth main significant finding of this study: fifteen interview participants (65.22%) stated that their primary motivation for becoming entrepreneurs was to attain greater independence and capacity for self-expression. Of the remaining eight, five stated that financial pressures were the main driving factor, while three stated that financial pressures and personal goals and aspirations were of equal importance. Conversations with family members were also revealing, and constitute the fifth significant finding of this study: of the twelve participants with willing family members (including husbands), 1-5 family members per respondent were willing to converse, for a total number of twenty. Of these, eleven were male and nine were female. All of the family members interviewed were very proud of the businesswomen in their family, and expressed a great deal of loyalty and enthusiasm.

From these findings, it is clear that for Emirati businesswomen to overcome challenges and better access resources, human and social capital are the most important dimensions. If policymakers in the UAE wish to advance the progress of Emirati women, they must promote education in non-traditional fields, make it easier for women to gain funding from Islamic Banks, and encourage a loosening of restrictive sociocultural mores. Successful Emirati businesswomen should network with each other and become “business angels” in their own right, in order to invest in aspiring female entrepreneurs. A particularly encouraging observation is that the trend of female Emirati entrepreneurs seems to be catching on and growing.

References

Erogul, M. S. (2011). Social capital impediments in the United Arab Emirates: A case of Emirati female entrepreneurs. Journal of Enterprising Culture, 19(4), pp. 1-25. DOI: 10.1142/S0218495811000829

Erogol, M. S., & McCrohan, D. (2008). Preliminary investigation of Emirati women entrepreneurs in the UAE. African Journal of Business Management, 2(10), pp. 177-185.

Goby, V. P., & Erogul, M. S. (2011). Female entrepreneurship in the United Arab Emirates:

Legislative encouragements and cultural constraints. Women’s Studies International  Forum, 34, pp. 329-334. DOI: 10.1016/j.wsif.2011.04.006

McIntosh, J. C., & Islam, S. (2010). Beyond the veil: The influence of Islam on female entrepreneurship in a conservative Muslim context. International Management Review, 6(1), pp. 103-109.

 

 

Appendix 1: Questionnaire:

 

  1. Place of Birth:
  2. Current residence:
  3. Married? Y/N
  4. Children? Y/N, number.
  5. Education—highest degree completed.
  6. What Field?
  7. Work Experience—places of employment and years employed.
  8. What were your motivations for going into business? Check all that apply:

-Independence/Creativity

-Career goals

-Financial

  1. What difficulties have you encountered? Please check all that apply.

-Unsupportive family members

-Unsupportive spouse

-Unable to get financing

-Unable to get customers

-Other (please specify)

  1. Who has supported you, in any way (motivational/informational/operational)? Please check all that apply.

-Family members (women)

-Family members (men)

-Spouse

-Other

  1. Have you sought funding from an Islamic Bank? Y/N
  2. If you answered ‘yes’ to question 11, were you able to get it? Y/N

 

 

Appendix 2: Interview Template:

 

  1. Let’s talk about your education: why did you study X? Has your degree benefited you?
  2. I see you worked as an employee with X before becoming an entrepreneur. What was that like?
  3. Tell me more about your motivations for going into business. I see from your responses to the questionnaire that you said X, and I’d like to hear more about that.
  4. Tell me more about some of the difficulties you’ve encountered in going into business.
  5. On your questionnaire, you stated that your greatest sources of support was/were your (husband/family/self). What are some of the forms of support that this person/these people/you have provided you with?