Worldwide, few women decide to engage in entrepreneurship and even fewer in export. The Middle East and North Africa have the lowest rates of female entrepreneurship worldwide (World Bank, 2019). Only 19% of formal businesses in Tunisia are headed by women. While governments across the globe operate programmes to improve firms’ capabilities, evaluations suggest many have modest impact and little evidence exists regarding effective measures to promote female entrepreneurship and export.
Testing how barriers to female entrepreneurship can be erased
In this research study, we examine whether helping small women-led firms connect and establish a joint legal entity, an export consortium, eases the following barriers to their (export) activity.
Pooling resources - Women-owned firms tend to be small-scale and less productive therefore the collective action of the consortia could help overcome these shortcomings. By pooling resources, the consortia could reduce the fixed costs associated with exporting. Consortia members could also learn management skills from each other and from consultants during the creation and establishment process, thereby improving firm productivity.
Expanding networks - Female entrepreneurs typically have smaller networks which are essential for entering new markets and establishing relational contracts in international trade. Furthermore, women are concerned about unfamiliar (legal) business environments, and have limited trust in predominantly male trading partners. Export consortia can offer female entrepreneurs a new network of like-minded peers, distinct from their family and friends. Regular interactions with peers may boost (business-related) self-confidence as the consortia may also serve as a formal platform for female entrepreneurs to conduct international business in a safe environment.
Examining the role of export consortia
We partnered with the international German cooperation, GIZ and the Tunisian export promotion agency to study the effect of export consortia on female entrepreneurs in Tunisia through a randomised controlled trial. In a nationwide communication campaign, we recruited 176 eligible and interested female-led SMEs. Out of the 176 female-led SMEs, 87 were randomly invited to become a member of one of four consortia (Agri-food, Handicraft, Services, Information Technology and Communication), with the remaining firms serving as a pure control group for comparison.
The first period of the intervention - Consortia Creation - focused on creating the consortia and strengthening entrepreneurial self-confidence, business and exporting skills, and networks of female entrepreneurs. Female entrepreneurs received a bundle of workshops, personal coaching, and took part in a series of networking events. At the end of this period, firms had to decide if and in what format they would like to continue cooperating and sign a cooperation agreement.
The second period – Consortia export promotion – focuses on making the consortia operational and promoting their exports and is currently ongoing. In the following, we present results that were collected in a midline survey after Phase 1 - Consortia Creation.
Measuring impact - business networks, empowerment, knowledge transfer, and export performance
Business networks and the power of collective networking
At the programme's midline, female entrepreneurs gather regularly in groups of two (Figure 1), and those who opt to participate in the consortium, gather with up to three additional female entrepreneurs to discuss business.All female entrepreneurs randomly assigned to the treatment group receive an invitation to participate in the activities of the first treatment period, Consortia Creation. However, only around two thirds of them regularly attend the sessions, and participation in the sessions is strongly correlated with the decision to join the consortium.As a result of participating in the consortium, the number of female CEOs that treated firms regularly meet has doubled from three to six. Consequently, female entrepreneurs have now more female CEOs than male CEOs in their networks.
Figure 1: Impact of consortium participation on number of female CEOs met by treated firms
Notes: This figure shows how consortia participation affects the number of female CEOs that treated firms regularly meet. The y-axis shows the average number of CEOs met regularly to talk about business. The green bars represent male CEOs and the orange bars represent female CEOs. The height of the bars shows the average number of CEOs met regularly by control group firms (left side, not invited to the consortium creation workshops) and the treatment group firms (right-side, invited to the consortium workshops). The figure shows, treatment group firms meet with significantly more female CEOs than control group firms. On average, control group firms meet with 3.67 female CEOs regularly, while treatment group firms meet with 5.86 female CEOs regularly. This difference is statistically significant (p-value < 0.01).
Entrepreneurial empowerment through building confidence and breaking barriers
Female entrepreneurs in the treatment group exhibit a 5% increase in perceived empowerment compared to their counterparts in the control group. This effect appears to be particularly pronounced among women who initially reported lower levels of entrepreneurial confidence, as they demonstrated higher confidence levels following participation in the consortia creation workshops (Figure 2). Entrepreneurial confidence and empowerment are measured as a series of six self-affirmations about one’s capacity to manage business and master administrative and logistic processes for export on a 5-point Likert scale. In addition, a list experiment designed to reveal sensitive information suggests that none of the female entrepreneurs in the treatment group felt compelled to seek advice from a male authority figure (such as husband, father) prior to making a strategic business decision, while 13% of female entrepreneurs in the control group reported feeling such an obligation.
Figure 2: Impact of consortia participation on female entrepreneurs' entrepreneurial confidence and empowerment
Notes: This figure shows the distribution of scores on 5-point Likert scales measuring female entrepreneurs' locus of control and efficacy regarding their business and export management, where higher scores indicate a greater sense of empowerment. The x-axis shows the total score on the scale (range 6-30), and the y-axis shows the density distribution of points.
Knowledge transfer of management practices and innovation
Consortia participants exhibit a 5% improvement in management practices compared to their counterparts in the control group. This improvement is equivalent to moving from the 30th to the 50th or from the 50th to the 70th percentiles along the distribution of management practices among control group firms at midline. Knowledge transfer primarily occurred from consultants to female entrepreneurs, rather than between entrepreneurs themselves. Our analysis reveals no statistically significant impact on firms’ propensity to innovate their overall innovation output. The latter may be attributable to the emphasis on participant-consultant interactions rather than participant-participant interaction during the initial treatment period.
Export readiness and export performance
While the consortia’s creation does not yet seem to have significantly improved firms’ export performance, there are a few positive indications. Firstly, consortia members are 19% more likely to report positive export investments. Secondly, Figure 3 shows 87% of the firms in the treatment group versus 42% in the control group know about the Common Market for Eastern and Southern Africa (COMESA) trade agreement.
Similarly, 66% in the treatment versus 24% in the control group knew about the African Continental Free Trade Area (ACFTA). Thirdly, firms in the treatment group are 14% more likely to have a potential client in sub-Saharan Africa, a focus of the programme.
Figure 3: Awareness of trade agreements, commercial partnerships, and exporting among female entrepreneurs in Tunisia
Note: Figure 3 The y-axis shows the percentage of respondents who are aware of one of Tunisia’s main trade agreements with other African countries (COMESA, ACFTA (ZECLAF)), have commercial partners in a sub-Saharan country, or have experience in exporting.
Business and export performance
At midline, the consortia seems to increase profits (Figure 4), in particular for those that decided to become members. The positive impact appears to be primarily driven by improvements in sales. Qualitative interviews suggest increases in sales and profit come from joint product offerings and business-making between consortia members.
Figure 4: Distribution of profits among member (treatment) and non-members (control)
Notes: This figure shows the density distribution of profits, after winsorization and inverse hyperbolic sine (IHS) transformation. The x-axis represents the winsorized and IHS-transformed profits, and the y-axis represents the profits density distribution. Winsorization is a statistical technique used to reduce the impact of outliers on a dataset. It involves trimming the extreme values of a dataset, such as the top and bottom 1%. IHS transformation is a nonlinear transformation that can be used to normalise data that is skewed or has outliers. The plot in Figure 4 shows that the distribution of profits is more symmetrical and less skewed after winsorization and IHS transformation. This suggests that winsorization and IHS transformation can be effective techniques for improving the normality of profit data.
We do not yet find impacts on export performance, measured in foreign sales or number of export countries. This is in line with the programme’s theory of change, which focuses on export promotion during the second period.
Take-up and peer quality
We observe two contrasting selection dynamics within the consortia. In three consortia, younger and smaller firms formed the majority, opting to collaborate within the consortium, while larger, more established firms constituted the minority and subsequently withdrew. Conversely, in the fourth group, smaller and less export-oriented companies comprised the minority and eventually dropped out, while the remaining larger, more export-experienced companies joined. These observations suggest that companies prefer to collaborate with similar peers.
Among the more homogeneous firms that decided to join the consortium, those with lower entrepreneurial confidence or management practices experienced smaller increases in either variable at the midline, indicating that positive effects materialise for relatively better-performing peers.
The path forward for female entrepreneurship and export consortia
Overall, supporting firms to organise and come together in a legal network such as a consortium with a common goal like exporting and a shared identity, such as being women-led, has demonstrated considerable success in broadening the networks and boosting the confidence of female entrepreneurs. Additionally, this has contributed to the dissemination of improved management practices and the establishment of profitable business synergies between consortia members.
Considering the consistently positive outcomes and cost-effectiveness of such business network and association interventions, we would recommend that policymakers consider allocating more resources to similar approaches. These initiatives effectively address coordination challenges among private businesses, offer a more promising avenue than traditional business training. For instance, we encourage policymakers to embrace and explore interventions designed to foster connections among firms interested in collaborating for purposes beyond exporting, such as promoting innovation or reducing energy consumption. In the context of female entrepreneurs, we recommend comparing mixed-gender with same gender groups for future research.