Why Women’s Entrepreneurship Matters: Expanding Capabilities
Poverty is not gender neutral. While income is crucial in assessing poverty, its gendered dimensions necessitate a more comprehensive framework that considers the distinctive factors contributing to poverty among women. Consequently, measures of progress against poverty should include not only calculations related to basic needs, income, and consumption but should also extend to an analysis of the opportunities and choices afforded to women. Amartya Sen argues that poverty isn’t just about a lack of income—it’s about the lack of real opportunities to lead a fulfilling life. This means having both: access to essential resources and the freedom to achieve one’s potential. In fact, building on this idea, the United Nations Development Programme now incorporates a capabilities-based approach into its Multidimensional Poverty Index (MPI) to better measure deprivation. According to this view, expanding women’s capabilities requires addressing not just economic barriers but also other intersecting challenges such as those related to gender and social class. In this context, my review of the literature emphasizes the importance of women’s entrepreneurship as a powerful tool to enhance capabilities.
Poverty isn’t just about a lack of income—it’s about the lack of real opportunities to lead a fulfilling life. This means having both: access to essential resources and the freedom to achieve one’s potential.
Why Women’s Entrepreneurship Matters: Cascading Impacts
Entrepreneurship is recognized for its potential to bring about economic and social transformation, offering individuals the chance to increase their income and gain a sense of achievement and self-reliance. Beyond personal success, entrepreneurs also contribute to their communities by creating jobs and driving local economic growth. Importantly, for women entrepreneurs, starting their own ventures also provides opportunities for enabling and enhancing capabilities and increasing wellbeing. Additionally, women entrepreneurs bring fresh ideas and innovative solutions, particularly in resource-constrained settings where they find creative ways to overcome financial and logistical challenges—whether by starting small agribusinesses or using digital platforms to expand their reach. Interestingly, studies show that women reinvest more of their earnings into their families than men do, prioritizing children’s education, healthcare, and overall household well-being. This ripple effect helps break cycles of poverty and fosters long-term economic stability.
Studies show that women reinvest more of their earnings into their families than men do, prioritizing children’s education, healthcare, and overall household well-being.
Despite its many benefits, women entrepreneurs still face significant obstacles, not just in launching businesses but also in scaling and sustaining them.
Women’s Entrepreneurship: Compounding Challenges
Female entrepreneurs represent the fastest growing category of entrepreneurship worldwide. Yet surprisingly, it is low-income countries that display the highest rates of early-stage entrepreneurial activity by women (TEA) at 15.1% and have smallest TEA gender gap(Bosma & Kelley, 2019). Likewise, entrepreneurial intentions are highest for women in low-income countries (28.2%) and lowest in high-income countries (11%). But, a closer look at these statistics shows that the reasons behind the high entrepreneurship rates reflect the challenges that women face. I find that with limited job opportunities and higher entry barriers in the formal market, women in developing countries have no choice but to turn to entrepreneurship as their best chance to escape poverty.
Based on a review of research in the field and published recently as a book chapter (Chatterjee, 2025), women entrepreneurs face multiple challenges, from lack of family support and financial constraints to balancing business with household duties and navigating restrictive policies. Many struggle to access funding due to outdated risk perceptions and limited collateral, often worsened by unequal land ownership laws. Cultural norms and a lack of role models reinforce self-doubt, highlighting the crucial role of mindset in entrepreneurial success. Moreover, my research shows that women who experience domestic violence are even less likely to start a business, as it erodes their confidence and increases fear of failure, making entrepreneurship even more difficult.
Women entrepreneurs face multiple challenges, from lack of family support and financial constraints to balancing business with household duties and navigating restrictive policies.
Although structural changes take time, there are immediate steps that policymakers, institutions, and businesses can take to support women’s entrepreneurship including: expand access to microfinance and digital banking; foster entrepreneurial education and skill development; strengthen mentorship and networking opportunities; address social barriers through holistic policy reforms. While such efforts can influence women’s entrepreneurship and result in more productive, innovative, and persistent efforts, there are also some downsides that should be kept in mind when taking steps to promote women’s entrepreneurship.
Caveats: Keep in Mind the Dark Side of Women’s Entrepreneurship
While entrepreneurship offers a path out of poverty, it is not without its risks. Women often face immense pressure to balance business with domestic responsibilities. Some may experience backlash from conservative communities, while others struggle with the emotional toll of running a business with limited support. Business failure is a real possibility, and economic instability can force women into precarious, low-return ventures. Additionally, as seen from an examination of the literature, microfinance has a paradoxical effect on gender-based violence—while it reduces risk for some women, it increases it for others.
Microfinance has a paradoxical effect on gender-based violence—while it reduces risk for some women, it increases it for others.
To be truly effective, interventions must go beyond individual efforts and address both economic and social barriers, advocating for systemic change to create a more equitable entrepreneurial environment.
Conclusion: A Worthwhile Investment
Women’s entrepreneurship is more than an economic strategy—it is a catalyst for societal transformation. By promoting women’s entrepreneurship, we can unlock unprecedented potential for economic growth and social progress. Universities, policymakers, businesses, and civil society must work together to create an enabling environment where women entrepreneurs can thrive. Women’s entrepreneurship is not just about equity. The evidence is in the data: it is estimated that gender parity in entrepreneurship could add US$ 5-6 trillion in net value to the global economy – and each women-led firm is six times more likely to hire female employees than male-led ones. Women’s entrepreneurship is an investment in a more prosperous and inclusive future for all.
