MICROFINANCING | More than money is needed for women to succeed as entrepreneurs

Supporting women with microfinance and entrepreneurship training has long been seen as a quick route to greater gender equality and reduced poverty. But the results have often been disappointing. A new study has identified the types of support that give women greater freedom and empowerment—and those that do not.

Money alone does not change power structures. For initiatives to promote women’s entrepreneurship in developing countries to be successful, more is needed than start-up capital and short training courses. It is about using and transforming resources that enable women to grow – both as entrepreneurs and as social actors.

The researchers behind the study, which was recently published in the scientific journal Entrepreneurship & Regional Development, have analysed almost two decades of evaluations from microfinance and training programmes for women in 34 countries. The results show that the most successful initiatives not only provide resources, but also create environments where women can build several types of capital: financial, social, human, and symbolic.

Effects of the loan

For example, a loan can lay the foundation for new professional skills, a network of partners, and increased recognition in society. When these forms of capital reinforce each other, real change occurs—not only in the form of more businesses, but also through strengthened self-esteem, community, and influence.

Five mechanisms proved to be particularly important: self-development, collective action, structuring networks, resource exchange, and a sense of belonging to a group. These factors help women transform resources into long-term entrepreneurial capital. However, two obstacles recur time and again – unequal power relations and resources being diverted to other household members, often men.

Cash does not make for sustainable business

Successful programs are characterized by self-organized women’s groups, mentoring, practical learning, and support in the form of equipment rather than cash. Less successful are initiatives based on short courses, cash grants, or gender-neutral approaches that do not take into account the specific conditions of women.

The conclusion is clear: women’s entrepreneurship does not flourish on money alone. It requires opportunities to build networks, exchange experiences, and gain respect in their communities. When financial support is combined with social community and learning, a chain reaction occurs where women not only run businesses—they change the conditions for themselves and their communities.

More about the article and the authors
The article Empowering women´s entrepreneurship: an evidence synthesis of policy and practice in developing countries in the journal Entreprenurship & Regional Development is written by: Stephen Knox, Senior lecturer, Management, Work and Organization, University of Stirling, UK, Abdullah Gok, Associate Professor, Business School, University of Exeter, UK, Esra Aydogdu, Postdoctoral Researcher, Adam Smith Business School, University of Glasgow, UK, Sara Carter, Professor, vice Principal and Head of the College of Social Sciences, University of Glasgow, UK, Jonathan Levie, Professor of Entrepreneurship and Regional Development, J.E. Cairnes School of Business & Economics, University of Galway, Ireland, Eleanor Shaw, Associate principal and Charles Huang Distinguished Professor of International Entrepreneurship, University of Strathclyde.