Women Entrepreneurs Are Negatively Affected by Gender Inequality in Trading Partner Countries

“Entering new export markets and importing quality goods are crucial for firms to grow. Finding evidence that female entrepreneurs are less active in trading partner countries that display high levels of gender inequality can therefore have adverse implications for business performance in general,” says Ina Jäkel, co-author of the study “Beyond Borders: Do Gender Norms and Institutions Affect Female Businesses?”.

According to the study, female entrepreneurs export and import less than their male counterparts. Gender inequality and institutional biases against women in trading partner countries explain, at least in part, these gender differences in export and import behavior: In particular, female entrepreneurs trade less with countries where gender inequality is higher. These findings highlight the potential role of cross-country policy efforts in combating the constraints faced by women entrepreneurs. Therefore, policy efforts to address gender inequality in trading partner countries can improve economic outcomes for female entrepreneurs at home.

The authors use detailed trade data on Danish start-ups from 2001-2019. By leveraging the Danish microdata, the researchers uniquely identify the principal entrepreneur as the person responsible for starting and running the business, and then link this to country-level data on gender inequality from the World Bank and the World Economic Forum.

The Danish data also show the concrete success of gender equality policies in trading partner countries. In 2004 Norway, ranked second in the World Economic Forum’s 2023 Gender Gap Index, required companies to have at least 40 percent female representation on their boards. As a result, the export participation of female entrepreneurs from Denmark in Norway increased substantially.

“Norway's policy change had a concrete impact on Danish female entrepreneurs, showcasing the positive influence that a more advanced country taking the lead can have across borders” says Jäkel. “This illustrates that even in the wealthiest economies, gender inequality remains a barrier to internationalization – and thus to the growth of new businesses started by women. However, determined policy efforts to increase women's economic participation can make a difference.”