As a dutiful mother of five children, Isuzu Murakami’s life was filled with endless domestic tasks to juggle on a daily basis. As Isuzu was completely consumed with nurturing and caring for her children, no thought of life outside her busy home truly existed in her mind, and certainly no thought was given to a potential career.
This took a far different turn, however, when Isuzu’s youngest child reached middle school age, allowing her to have more time to herself. Isuzu was already in her 40s when she started to feel an urge to explore options beyond life as a homemaker.
Incidentally, she heard about a newly built shopping mall in her neighborhood that was in need of a drugstore tenant. The timing seemed right. She crammed for an examination to obtain a pharmacist license, passed the exam and used all of her small savings to open a tiny corner store in the mall. Little did she know it would be the beginning of her journey as an entrepreneur who became the owner and operator of one of the largest drugstore chains in western Japan.
This is my mother’s story.
I must humbly confess that I did not think her small drugstore venture would go very far because she had no prior business experience. However, she proved me downright wrong. Because she was so different and unique in the industry, where almost all retail businesses were run by older men, she was able to identify a number of newly emerging trends and opportunities more quickly and accurately than her competition. It immediately gave her a competitive advantage.
In the early 1990s, the Japanese retail industry was in the midst of deregulation, which allowed new categories of larger-scale stores to enter the marketplace. The consumption trend was also shifting to reflect a lifestyle change with more people driving to stores to make volume purchases.
The demographic change was already becoming apparent in Isuzu’s hometown of Matsue, Shimane Prefecture. The rapidly aging population was starting to create new demand for products related to nursing care. All of these new trends were easier to spot for Isuzu because her own profile was identical with those of her target clientele.
While Isuzu’s shrewd business sense for consumers’ tastes and needs helped her develop competitive product lineups and marketing strategies, her gender was a barrier when it came to raising funds in order to expand her business. Local banks were not interested in extending loans to a former housewife and there was virtually no venture capital money available for startups run by women like her. Loans and investments were made available only when my father intervened. His male name carried more weight on loan documents than her’s. Eventually the company my father worked for took a stake in her company and provided much-needed capital, thus empowering and enabling Isuzu to grow her business.
Isuzu was lucky to have help from her husband. However, not all female entrepreneurs are as fortunate. In fact, studies show access to finance is one of the most pervasive obstacles for female entrepreneurs globally. A recent OECD report titled “Missing Entrepreneurs” points out that women are only half as likely as men to be self-employed. Across OECD economies, 4.9 percent of women are actively working to start a business, compared with 7.4 percent of men.
Those women who do go on to successfully start a business typically operate smaller enterprises. Among many challenges women face when starting a business, availability of funds is cited as one of the top barriers. This is particularly true for early stage capital projects, which are routinely denied to females. One study in the United States indicated a mere 2 percent of all venture capital was invested in female-owned businesses in 2017. Corresponding statistics are hard to find in Japan, but one can safely assume the ratio here would be similar or less.
Such an enormous gender gap in access to finance implies women are systematically denied opportunities to start and grow their own businesses. There is a silver lining, however, even within this harsh reality.
Several surveys in the U.S. have reported that venture capital investments in female entrepreneurs have produced higher returns when compared to male counterparts. A recent report published by the Boston Consulting Group explains that one of the most likely reasons behind the superior performance by women is the sheer fact that female entrepreneurs do work harder because their gender creates more challenges and pushbacks to overcome compared to men.
Another reason cited for successful woman-owned startups is the tendency among female founders to be more conservative in their projections, whereas men tend to over-pitch with bold projections for their ventures. Lastly, the powerful purchasing power of women in most economies naturally gives female entrepreneurs a competitive edge over male counterparts when it comes to familiarity and understanding of consumers’ needs and trends. Some studies suggest over 80 percent of purchasing decisions are made by women.
Similar surveys have not been conducted in Japan, but all three reasons cited for better returns from women-owned startups are exactly the same reasons my mother succeeded with her venture. This phenomenon of women producing higher investment returns in the U.S. is, therefore, a noteworthy trend that may signal investment opportunities not to be missed in Japan as well.
Gender inequality remains embedded in many layers and segments of Japanese society. Access to finance, however, is particularly critical because there is nothing more important than entrepreneurship to revive a stagnant economy facing serious demographic challenges.
March 8 is International Woman’s Day. We should take a moment to reflect on what we can do to narrow the gender gap. On this important day, let me call to attention the fact that women are equally, if not more, innovative and entrepreneurial as men. We simply need equal access to resources and opportunities as well as the same level of encouragement that men have always enjoyed. No special treatment is required. Creating a level playing field for female entrepreneurs would unleash the tremendous potential of this country.
Yumiko Murakami is head of the OECD Tokyo Centre, where she engages in policy discussions between the OECD and governments, businesses and academia in Japan and Asia, covering a wide range of economic policy issues. The views and opinions expressed in this article are those of the author and do not reflect the official view of the OECD.