More than half of workers in developing economies are self-employed business owners, and most of their businesses fail. Billions of dollars poured into training by governments and nonprofits barely move the needle. A yawning gender gap means that female entrepreneurs are even less likely to succeed.
However, there may be a simple way to tweak training and mentorship programs to give women a better chance, according to University of Notre Dame’s Frank Germann, Texas A&M’s Stephen J. Anderson, Chicago Booth’s Pradeep K. Chintagunta, and London School of Economics’ Naufel Vilcassim. That would be pairing up businesswomen with female mentors.
The researchers’ findings come from a 2015 field experiment in Uganda, where they worked with a sample of 930 male and female entrepreneurs, splitting them into a control group of 400 and a treatment group of 530. They randomly matched those in the treatment group with volunteer mentors recruited by the nongovernmental organization Grow Movement.
About 40 percent of the entrepreneurs were women; the typical participant was 31 years old, married with two children, and had at least a high-school education. Their businesses on average had been open four years, with a small paid staff, and had reported monthly sales of about 4.4 million in Ugandan shillings (US$1,200). Of the businesswomen, about 36 percent were paired up with female mentors from across the world.
Over the next two to six months, the mentors worked with the entrepreneurs, using videoconferencing, phone calls, texts, and shared documents, sometimes several times a week, on how to expand their businesses. Two years later, the researchers did a follow-up survey, reaching 79 percent of the original participants.
The results demonstrate a clear advantage for the businesswomen who worked with female mentors. The impact of men-to-women mentoring on sales and profits was negligible when compared with the control group. Yet the women who worked with female mentors expanded monthly sales by about 1.6 million UGX on average, or 34 percent compared with the control group, the researchers find. Their monthly profits rose by an average of 250,000 UGX, or about 30 percent compared with the control group.
Words of wisdom … and bonding
The analysis finds that female mentors used significantly more words that suggest they were more engaged with their female mentees than their male counterparts, potentially improving the effectiveness of their business advice.
The intervention was also effective for businessmen, especially when considering sales growth. However, follow-up analyses showed that businessmen benefitted equally from male and female mentors.
So why did women in business benefit from working with other women? The researchers speculate that having an aspirational model of the same gender helped the women overcome the sticky stereotypes and gender-specific roles of entrepreneurs in developing countries. Moreover, analyzing written meeting summaries the mentors provided about their interactions with the mentees, the researchers find suggestive evidence that women mentor-mentee arrangements were characterized by more positive engagements. For example, compared with male mentors, female mentors used significantly more words indicative of engagement (for example, “email,” “phone,” and “schedule”) as well as more words such as “friend” and “family,” suggesting they were more socially connected with their mentees.
In the study’s surveys, women entrepreneurs who worked with women mentors were more likely to have improved their customer relationships.
The researchers suggest that business mentorship programs in developing countries should focus more on matching women entrepreneurs with women mentors.
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