Female entrepreneurship and the digital divide

India is riding high on the entrepreneurial wave with active engagement from government, business, and foreign players. Women entrepreneurs have also gained prominence in India’s entrepreneurial journey. According to an IBEF report,  there are 13.5-15.7 million women-owned businesses, and around 432 million working age women that are empowering India’s start-up eco-system. However, the journey is far from over.  According to a Mckinsey report,  India has a massive potential of boosting the nation’s GDP by $770 billion by advancing women equality. This goes in line with UN SDGs goals of achieving gender equality which is pivotal for economic growth and prosperity. And thought at the face of it, the entrepreneurial movement may be genderless, women entrepreneurs encounter considerable barriers while nurturing their business to success. In this regard, digital adoption becomes crucial in alleviating their woes, however it may also become a double-edged sword since digital technologies may further deteriorate existing gender gap.

The pandemic has witnessed rapid adoption of digital technology as a means of overcoming unprecedented economic shocks, like the ongoing Covid-19. This extends even more for women led enterprises which during the onset of the pandemic were not in a position to transition their business to online platforms. The ability to utilize digital platforms such as social media, e-commerce platforms, and digital payment services are a way for expanding customer base, expanding networks, and grow the business. Another key aspect of digital adoption is that it enables firms, especially SMEs to foster network ties with global firms and thereby fostering integration into global value chains (GVCs). In a recent paper published in Information Economics and Policy,  we show that the use of emails and website to communicate with consumers enables firms from emerging and developing economies, achieve trade integration through GVCs. Hence, digital technology access, and adoption becomes pivotal for making enterprises more flexible and robust. However, failure to adopt these measures could result in catastrophic outcomes in the current sphere of tech-driven entrepreneurship in the country. According to the recently released World Bank data on informal economy, among the 2460 enterprises surveyed, only 8% of female owned enterprises report to use digital payments, while 92% male owned enterprises cite using digital payments.  The numbers are also similar in terms of enterprises using digital means to reach out to customers. These figures unambiguously reveal gender inequality in terms of digital adoption, which could further widen the gender cap.
 

In this regard, in order to ensure such digital divide does not result in greater gender disparity requires urgent policy intervention. Specifically, measures that assist female owned enterprises in transitioning towards digital operations and training that provides necessary skills. Further, encouraging greater industry-academia linkage that facilitates linkage between women owned firms and technical consultants who could play a guiding role in firm’s decision of adopting certain digital measures, would help in swift transition towards digital platforms. For instance, the Digital Kit  is an initiative in Spain that caters to small and medium enterprises (SMEs) and self-employed workers, and promotes digitalization and offers market solutions aimed at strengthening managerial and digital skills of the enterprise. Ensuring digital adoption is also crucial in a country like India where there exists huge entrepreneurial potential in Tier 2 cities, and leveraging that would push India to a faster growth trajectory. It is important to note, that there exist government schemes such as Bharathiya Mahila Bank Business Loan, Dena Shakti Scheme, among other that caters to women enterprises. However, a policy focusing on providing broad-based digital literacy, and training in key ICT services essential for businesses in the post-covid era to women entrepreneurs is the key in enabling them to participate effectively in today’s digital economy is needed to ensure the growth of female entrepreneurs in India. These are all consistent with the Prime Minister’s clarion call from the Red Fort on the Independence Day, of Nari Shakti with a freshly energised and renewed vigour and rigour.

Ketan Reddy is an Assistant professor of Economics at Indian Institute of Management Raipur and a Visiting Research Fellow of the King’s India Institute, King’s College London. Subash S is an Associate professor of Economics at the Indian Institute of Technology Madras. Badri Narayanan Gopalakrishnan is Lead Adviser, Trade and Commerce, NITI Aayog, Government of India.

  1) https://www.ibef.org/blogs/women-entrepreneurs-shaping-the-future-of-india 

  2) https://www.mckinsey.com/featured-insights/gender-equality/the-power-of-parity-advancing-womens-equality-in-india-2018

  3) https://www.sciencedirect.com/science/article/pii/S0167624522000117?via%3Dihub

  Based on Authors’ computation using World Bank Data