Women Entrepreneurship in a Developing Country – an Institutional Theory Perspective Master Thesis

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Master Thesis

Women Entrepreneurship in a Developing Country –

an Institutional Theory Perspective

Submitted by

Merete Nevermann

B7002635, S3476006

m.s.nevermann@student.rug.nl

MSc Advanced International Business Management

Supervisor Newcastle University: Dr. Stefanie Reissner

Supervisor University of Groningen: Dr. Bartjan Pennink

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Abstract

Women entrepreneurship in developing countries has been increasingly addressed by research from an institutional theory perspective. While developing countries already constitute a challenging environment for entrepreneurs of both genders, women often face additional challenges. The key objective of this research is to explore what institutional factors enable and constrain women entrepreneurs in the African country of Rwanda and how entrepreneurs respond to them. 11 semi-structured interviews with male and female entrepreneurs were conducted in Kigali, the capital of Rwanda, and subsequently analyzed. Based on the findings, a model was created which demonstrates the encouraging institutional context for Rwandan women entrepreneurs. The findings suggest that women entrepreneurs are already well empowered by their institutional context. Most importantly, female entrepreneurs felt supported by the government and society in general, which enables them to grow their business and “give back to society”. This finding is specifically relevant for policymakers in developing countries who want to foster women’s entrepreneurial activity.

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Acknowledgements

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List of Figures

Figure 1: Data Structure ... 30 Figure 2: The Encouraging Institutional Context ... 54

List of Tables

Table 1: Overview Interviews with Entrepreneurs ... 24 Table 2: Ethical Issues ... 28 Table 3:The Rwandan Research Context ... 33

List of Abbreviations

AWEP African Women’s Entrepreneurship Program PSF Private Sector Federation

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1. Introduction

Women entrepreneurship in sub-Saharan Africa has been increasingly addressed by research (Boateng, 2018). While female entrepreneurs in developing countries have been called the “rising stars of the economies” (Vossenberg, 2013), studies have also revealed that women entrepreneurs in sub-Saharan Africa still face a variety of gender-related constraints (Amine & Staub, 2009). These constraints are often embedded in the institutional environment of the entrepreneur (Welter & Smallbone, 2010). For instance, regulative discrimination regarding property ownership can discourage women from pursuing an entrepreneurial career, as well as societal belief systems that do not accept women as entrepreneurs (Amine & Staub, 2009).

Developing countries are challenging for entrepreneurs of both genders, as their institutional environment is typically characterized by formal institutional voids and weak governance structures (Mair & Marti, 2009), such as corruption or bureaucratic barriers. Hence, African women entrepreneurs must overcome market- as well as gender-related constraints to grow their business, which impedes their ability to contribute to the economic growth of their country. This underlines the need for research to examine the influence of institutions on female entrepreneurship. Consequently, policymakers can address these institutional barriers to reduce institutional voids.

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How does the institutional context influence women’s’ experience as an entrepreneur? This study adopts an inductive approach to explore women entrepreneurs’ experiences within the institutional context in the African country Rwanda. While not much is known about women entrepreneurial activity in Rwanda, the country constitutes a unique case considering its stringent gender policies and impressive development gains since the genocide in 1994 (World Bank, 2018). 11 semi-structured interviews with female and male entrepreneurs were conducted in the capital of Rwanda, Kigali. The findings of the interviews were first analyzed and then illustrated in a dynamic model. The model underlines the encouraging factors of the Rwandan institutional context for women entrepreneurs. This could be especially relevant for policymakers who want to foster women entrepreneurial activity in their country.

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2. Literature Review

Although grounded theorizing is committed to “discovery” through direct contact with the social world studied, coupled with a rejection of a priori theorizing, this does not mean that researchers should begin their studies without the general guidance provided by some sort of orienting theoretical perspective (Locke, 2005). Instead, they should bring preconceived constructs to their data gathering and analysis. Sensitizing concepts give the researcher “a general sense of reference and guidance in approaching empirical instances” (Blumer, 1954, 7) without reviewing the literature extensively or exhaustively. It is necessary to first discover relevant concepts for the purpose of theory building that can guide the creation and validation of constructs for theory generation (Gioia et al., 2012). This entrepreneurship study emphasizes the link between the concept of gender and the institutional context in a developing country. Therefore, the sensitizing concepts Understanding Gender within Entrepreneurship Research (Chapter 2.1), Institutional Theory and Institutional Voids in Entrepreneurship Research (Chapter 2.2) and Women Entrepreneurship within the Institutional Context (Chapter 2.3) serve as a starting point and will raise questions for this explorative study.

2.1 Understanding Gender within Entrepreneurship Research

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7 The Concept of Gender

The concept of gender can be understood in various ways. Feminist theory distinguishes between two dominant feminist theoretical perspectives, namely the liberal and the social feminist theory. The liberal feminist theory has its roots in liberal political philosophy, which has the basic belief that all human beings are equal and a human is defined by her or his ability to think rationally (Fischer et al., 1993). Liberal feminist theory believes in individual psychological differences and that every human has the same potential (Fischer et al., 1993). Hence, any subordination of women must depend on discrimination or on structural barriers, such as the unequal access to education (Ahl, 2006). In contrast, the social feminist theory views men and women as essentially different (Fischer et al., 1993). Men and women undergo different socialization processes, for example through early childhood experiences, which will condition them to think and view the world in a fundamentally different way.

Besides feminist theory, another perspective views similarities and differences of men and women as socially constructed (Harding, 1987). It raises the question how masculinity and femininity are constructed and what effects this construction has on social order. Gender is regarded as something that is “done” or “accomplished” in different contexts rather than something that “is” (Ahl, 2006). Here, an individual’s biological sex is not relevant. Rather, it is important to understand that certain social practices and characteristics are associated with femininity or masculinity (Acker, 1992). Gender as a socially constructed sex is a result of upbringing and social interaction. It can be used as an analytical category that can be tied to anything, for example concepts, jobs, industries, language, disciplines and also businesses (Ahl, 2006).

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when examining gender aspects of entrepreneurial learning and opportunity recognition (Ettl. & Welter, 2012). Moreover, research has also adopted the socially constructed perspective of gender to investigate gendered contexts and institutions (Brush et al., 2009). The perspective of gender as socially constructed also serves as an interesting perspective for this research, as it “may be used for the purposes of exposing power relations between male and female” (Ahl, 2006, 612). Hence, the underlying study also adopts a constructionist research approach which focuses on the understanding of women entrepreneurs’ experiences and on the processes which surround them in their social world. In the next step, the awareness of gender will be applied to the entrepreneurial context.

Gender within Entrepreneurship Research

The study of entrepreneurship goes back to the 1930s, when Joseph Schumpeter, one of the pioneers and most cited economists in entrepreneurship theory, published his work The Theory of Economic Development (1934). Schumpeter claims that the entrepreneur has a “creative destruction” innovation by replacing an existing economy by a better, advanced one. One popular definition of entrepreneurship in the scholarly field stems from Venkataraman (1997, 120). According to him, entrepreneurship research “seeks to understand how opportunities to bring into existence future goods and services are discovered, created, and exploited, by whom, and with what consequences”.

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(Ahl, 2006). This perspective particularly addresses the question what kind of traits and characteristics an entrepreneur needs to successfully grow their business. For example, McClelland (1961) focused on psychological traits like risk taking, achievement and locus of control that were identified in samples of young men, which led to the development of measurement tools for these traits (Bruin et al., 2006).

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realities and essence of women entrepreneurial behavior. Therefore, research needs to focus more on women entrepreneurs to capture their reality as well. The question arises:

How is the reality of women entrepreneurs constituted?

Besides acknowledging that women are underrepresented in research, many scholars argue that not only the individual matters when investigating entrepreneurial activity, but also the socio-cultural context (Brush et al., 2009). Hence, the institutional environment could affect conditions for entrepreneurship for both men and women, but perhaps in a different way for men than for women (Ahl, 2006). This would mean that by not recognizing the contextual differences among groups of men or women, understanding the complexities of the entrepreneurial process may remain difficult (Bruin et al., 2006). Therefore, research related to the institutional environment of entrepreneurs and its influence on entrepreneurial activities of both men and women will be described in the following sensitizing concept.

2.2 Institutional Theory and Institutional Voids in Entrepreneurship Research

The previous chapter discussed the concept of gender within entrepreneur research and raised the question how the reality of women entrepreneurs in particular is constituted. This chapter goes beyond the entrepreneur as an individual and raises the question in what way the institutional context has an influence on entrepreneurs’ experiences, with particular regard to the environment in developing countries.

The Institutional Context

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“macro environment” could also be described as the institutional context of an entrepreneur, which can be analysed through different perspectives. From a new institutional economics perspective, institutions solely refer to shared laws, structures and “rules of the game”, which reduce transaction costs, opportunism and uncertainty (North, 1990). Contrarily, the sociological perspective views institutions as a set of pressures which provide structure to social behavior and enable communication. A popular attempt to describe the “macro environment” of an entrepreneur is to combine the different streams of sociology, economics, organizational theory and political science, in one holistic framework, as created by Scott (1995, 2001). This framework integrates regulative, normative and cultural-cognitive perspectives of institutions. These three pillars can be viewed as three different institutional forces which surround the individual, in this case the entrepreneur. Institutional theory can help to analyse which activities, beliefs and attitudes have become taken-for-granted or rule-like in a respective environment, thus in turn enabling and constraining entrepreneurship (Bruton & Ahlstrom, 2003).

Researchers have successfully established theoretical links between institutional systems and entrepreneurship (Bruton et al., 2010). For instance, Busenitz, Gómez and Spencer (2000) observed that differences between national institutions influence the level of entrepreneurial activity in each country. Furthermore, Eijdenberg et al. (2018) investigated the institutional context of entrepreneurs in sub-Saharan Africa, which is specifically challenging for entrepreneurs. The following section underlines challenges both male and female entrepreneurs may face when operating in developing countries. Institutional Voids

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entrepreneurial activities, stable markets are necessary, which require specific institutions and rules in order to exist and function (North, 1990). The expected role of institutions is the stabilization and governance of markets to create a well-functioning market economy. Efficient institutions structure aspects such as property rights, governance structures, conceptions of control, rules of exchange, money and autonomy (Mair & Marti, 2009). In developed countries, these institutions are viewed as stable and efficient and ideally, every economy would provide a range of institutions to facilitate the functioning of markets. However, developing countries fall short in a number of ways (Tarun & Palepu, 1997). Certainly, it is unclear whether any institutional context is obviously superior to others and if there is an “ideal” institutional context everyone should move toward (Tarun & Palepu, 1997). However, it is clear that many developing countries lack a well-functioning institutional field to advance their economy.

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seen as a large barrier to entrepreneurship (Saini & Bhatia, 1996). Long registration procedures can also negatively influence entrepreneurial activities. For instance, in Tanzania, Eijdenberg et al. (2018) point out that it takes 28 days at significant cost to register a business.

In many developing countries, people living in poverty cannot participate in markets due to the weakness or complete absence of supportive institutions (Mair & Marti, 2009). As exploiting opportunities depends on the institutional and political environment of the entrepreneur, a weakness of governance structures in developing countries hampers all kinds of entrepreneurial activities (Mair & Marti, 2009). This makes developing countries a more challenging environment to operate in than developed countries, for both men and women. Most of the research in institutional theory-led entrepreneurship research continues to focus on entrepreneurship in developed countries, or adopts a quantitative approach to investigate the institutional voids (Su et al., 2017). Hence, the following question arises:

In what way does the institutional context influence the experience of male and female entrepreneurs in developing countries?

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2.3 Women Entrepreneurship within the Institutional Context

The previous chapter (2.2) examined the institutional context of developing countries and raised the question how it influences entrepreneurs of both genders. This chapter focuses on women entrepreneurs’ experiences in the institutional context, with specific focus on sub-Saharan Africa.

Institutional theory has proved to be a fruitful perspective with regard to women entrepreneurship in sub-Saharan Africa. For instance, Amine and Staub (2009) developed an institutional framework which addressed women entrepreneurs’ challenges in sub-Saharan Africa. Furthermore, Lugalla and Karsten (2018) adopted an institutional theory perspective to explore Tanzanian women entrepreneurs’ experiences and growth aspirations. Langevang et al. (2018) identified several response strategies by Tanzanian women entrepreneurs in response to their institutional context. These studies serve as a good starting point to get sensitized to women entrepreneurs’ experiences in sub-Saharan Africa. Scott’s (2001) three pillars of institutional theory, the regulative, the normative and the cultural-cognitive pillar, will serve as a guideline of analysis.

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property to use as collateral for bank loans (Armine & Staub, 2009). Hence, these rules lead to women not having access to financial capital, which is needed to foster their entrepreneurial activities.

Second, the normative pillar mainly refers to informal institutions, such as societal values (what is preferred), norms (how things are to be done, consistent with those values) and belief systems (Scott, 2001). Organizations comply with normative rules in order to gain legitimacy and thus be accepted and appreciated by society. Whereas some of those beliefs apply to all members of society, there are others which only apply to certain groups of a population which are given specific roles (Scott, 1995). Informal institutions and the general attitude of a society towards entrepreneurship can greatly influence the perception of entrepreneurial opportunities (Salimath & Cullen, 2010). Challenges of a normative kind are not only faced by women in sub-Saharan Africa or developing countries. For instance, Mikkelsen (2018) found that German and Danish women entrepreneurs still face gender-stereotypical discrimination at the workplace and are not being regarded as equal business partners. As such, the association of entrepreneurial activity with masculine qualities could impede women’s ability to start and grow a business (Armine & Staub, 2009). Moreover, male-dominated social structures that lead to household and childcare responsibilities delegated mostly to women prevent those from pursuing an entrepreneurial career (Mikkelsen, 2018; Brush et al 2012; Langevang et al. 2015; Welter & Smallbone, 2010).

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by local authorities instead of a monetary bribe, which discourages them to grow their business (Lugalla & Karsten, 2018). However, normative aspects which create positive environmental conditions favouring female entrepreneurship are, for instance, social support from family and friends and from society in general (Armine & Staub, 2009). Third, Scott defines the cultural-cognitive pillar, which is mainly derived from social sciences (DiMaggio & Powell, 1991). Cognitive rules represent models of individual behavior based on subjectively constructed rules and meanings that limit appropriate beliefs and actions. The cultural-cognitive system recognizes “the shared conceptions that constitute the nature of social reality and the frames through which meaning is made” (Scott, 2001, 57). This includes the knowledge and skills possessed by people in a country, which can become part of a shared social knowledge or can become institutionalized.

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entrepreneur” (Amine & Staub, 2009). Also, institutional training in business and technology is an aspect which shapes the national cognitive system in which entrepreneurs live and function (Amine & Staub, 2009).

However, besides exploring the institutional barriers affecting women entrepreneurs building on previous studies (Amine & Staub, 2009; Baughn et al., 2006; Welter & Smallbone, 2010), the responses of women entrepreneurs to institutional voids remain relatively unknown (Langevang et al., 2018). A recent study in sub-Saharan Africa by Eijdenberg et al. (2018) found several responses of male and female entrepreneurs to institutional voids, which were grouped into entrepreneurial responses such as seeking and acquiring capital through microloans or another business, personal responses such as inner strength, or interpersonal responses like joining associations or community engagement. Moreover, Eijdenberg et al. (2018) found that changing gender perceptions may give both advantages and disadvantages to women. However, it remained unclear what challenges, enablers and responses specifically concern women entrepreneurs. Another recent study by Langevang et al. (2018) explored these response strategies by Tanzanian female entrepreneurs within their institutional context. They found that typical response strategies by women included joining women-based associations, locating their business at home or becoming a role model for other women. However, literature about women entrepreneurs’ strategic responses to institutional constraints in sub-Saharan Africa is scarce and further research is needed to explore women’s experiences as an entrepreneur more fully. Therefore, this research will not only explore the institutional context of women, but also their responses.

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questions about women entrepreneurship in particular, as focused on in Chapter 2.1, and about the institutional context in developing countries, as outlined in Chapter 2.2. Thus, this sensitizing concept raises the following questions for this research study:

What role does the institutional context have in fostering women entrepreneurship in developing countries?

What challenges emerge from the institutional context for women entrepreneurs?

How do women entrepreneurs respond to the institutional context?

To summarize, this chapter has examined three sensitizing concepts, which served as a starting point for this explorative research to answer the research question:

How does the institutional context influence women’s experience as an entrepreneur?

The first sensitizing concept Understanding Gender within Entrepreneurship Research (Chapter 2.1) outlined the concept of gender from a liberal and social feminist point of view. Consequently, the social constructionist perspective of gender was explained, which will be adopted in this study to make sense of women entrepreneurs’ experiences and realities. This also goes in line with the interpretivist philosophy of this study. Furthermore, entrepreneurship theory was criticized from a gender perspective, as it may not fully capture women entrepreneurs’ experiences. Hence, the question was raised:

How is the reality of women entrepreneurs constituted?

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both genders. As institutional theory-led entrepreneurship research has mostly focused on developed countries or adopted a quantitative approach to investigate developing countries (Su et al., 2017), the question was raised:

In what way does the institutional context influence the experience of entrepreneurs in developing countries?

The third sensitizing concept Women Entrepreneurship within the Institutional Context (Chapter 2.3) examined additional challenges women entrepreneurs’ may have as opposed to their male counterparts in relation to their regulative, normative and cultural-cognitive environment. Moreover, the importance of exploring women’s response strategies was pointed out (Langevang et al., 2018; Eijdenberg et al., 2018). This sensitizing concept brought all three concepts together by addressing the following questions:

 What role does the institutional context have in fostering women entrepreneurship in developing countries?

 What challenges emerge from the institutional context for women entrepreneurs?  How do women entrepreneurs respond to the institutional context?

These sub-questions will be taken into account while attempting to answer the research question. The next chapter will outline the methodological choices which were made to answer the research question.

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3. Methodology

This chapter first introduces the study’s research design. Then, the sample selection as well as the data collection are explained, and key ethical issues and how I mitigated them are described. Finally, the data analysis process is outlined and the quality of the research design is assessed.

3.1 Research Design

The study’s research design will be explained by means of the research “onion” (Saunders et al., 2012). While the outer layers of the “onion” represent the study’s underlying assumptions, the inner layers are concerned with the general plan of the research conduct. The outer layers of the research “onion”

The study’s underlying assumptions follow the philosophy of interpretivism. This refers to three major ways of thinking, namely Ontology, Epistemology and Axiology.

Ontology refers to the researcher’s view of the nature of reality or being (Saunders et al., 2012). This study adopted a subjective point of view, as the entrepreneur’s world is believed to be socially constructed. Women entrepreneurs, the social actors, may place various different interpretations on the situations they experience within their institutional context. I aimed to explore their different subjective realities and to understand their detailed meanings. This also includes women entrepreneurs’ interpretation of being a woman, since gender is believed to be socially constructed (see Chapter 2.1).

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themselves and the subjective meanings and details they gave regarding their social roles as female entrepreneurs.

The dimension of Axiology is about the researcher’s view of the roles of values in research, and whether the research is conducted value-free or value-bound (Saunders et al., 2012). In this study, a value-free and independent conduct of research could not be guaranteed, since I was part of what was being researched, and interpreted the situation from my perspective. Although I tried to be value-free, this is very difficult to achieve. Thus, the research was value-bound and conducted from my subjective point of view. The study followed an inductive approach, meaning that this research was first collecting data to explore the research topic, with the aim to formulate a theory about the interactions between women entrepreneurs’ experiences and their institutional context (Saunders et al., 2012). Especially the how of the research question suggested an inductive research approach, which enabled me to understand and interpret women entrepreneurs’ social world. Hence, the focus was not on the cause-effect link like in deductive research, or on finding best or most likely explanations like in an abductive approach (Saunders et al., 2012). Rather, the holistic and complex picture of what influenced women entrepreneurs’ experience as an entrepreneur was explored in great detail and then transformed into a theoretic model.

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22 The inner layers of the research “onion”

In order to understand women’s experiences of and responses to institutional factors, a qualitative exploratory approach was used (Saunders et al., 2012) as part of an embedded single-case design (Yin, 2014). Drawing on Yin (2014, 16), “a case is an empirical inquiry that investigates a contemporary phenomenon in-depth and within its real-world context, especially when the boundaries between phenomenon and context may not be clearly evident.” As this research aimed to explore the “real world” of women entrepreneurs from an institutional perspective, a case study represents a suitable design to answer the open-ended research question of the study: How does the institutional context influence women entrepreneurs’ experience as an entrepreneur?

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3.2 Sample Selection

This study included 11 in-depth interviews with entrepreneurs. To be able to make more reliable inferences about the institutional environment and gender-related issues, both female and male entrepreneurs were interviewed. Saunders et al. (2012) suggest a minimum sample size of 5-25 participants for interview studies. Hence, the study’s sample size of 11 entrepreneurs is suitable for this study. Seven interviews were conducted with female entrepreneurs, while four were conducted with men.

The sampling procedure was following a volunteer sampling approach, which is considered appropriate for exploratory research (Saunders et al., 2012). Entrepreneurs were initially identified through my network in Kigali and various entrepreneurship organizations. Subsequently, snowballing was used (Saunders et al., 2012) as it was difficult to identify entrepreneurs who had time and agreed to participate in an interview. Thus, after each interview, I asked the participants if they knew other entrepreneurs who would be willing to take part.

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24 Table 1: Overview Interviews with Entrepreneurs

Number Entre-preneur Relation-ship to business Gender (female/ male) Industry Year registered Number of employees Age Family status Special remarks

E1 Founder female Textile 2016 3 full-time 2 part-time

27 single -

E2 Founder female Services 2016 1 full-time 42 single -

E3

Co-founder

female Textile 2012 28 full-time 31 married, one child

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E4 Founder female Food Pro-cessing 1995; registered: 2015 0 63 widow Translator was needed E5 Founder female Food

Pro-cessing 2017 9 full-time 2 interns 26 single - E6 Business partner female Textile 1994 founded by mother, joined 2015 0 28 single - E7 Co-founder female Services 2007 founded, registered 2015 10 37 married, four children Did not agree to recording, only notes taken E8 Founder male Tourism 2013 5 full-time

4. Findings and Discussion

This chapter presents the findings of this research. After briefly introducing the Rwandan research context, the chapter discusses the themes which emerge from the interviews (see figure 1). Relevant literature is used to evaluate whether new concepts have been discovered and to contextualize the findings. Finally, a dynamic grounded theory model is presented.

4.1 The Rwandan Research Context

The institutional context of Rwanda could be seen as unique when looking at the country’s recent economic development and gender policies. Since the Genocide in 1994, in which more than 800.000 people died within 100 days, Rwanda’s government has implemented several policies to foster economic growth as well as gender equality. The promotion of women’s rights, in turn, could encourage women to pursue entrepreneurship. Table 3 gives an overview of various policies and strategies, which could influence Rwandan women entrepreneurs’ experiences and should be known before turning to the evidence of the interviews.

Table 3:The Rwandan Research Context

Economic Development Gender Equality  National strategy of transformation

to knowledge based economy

 Government put in place two Economic and Poverty Reduction Strategies to realize the “Vision 2020”

 Reduction of poverty from 44% in 2011 to 39% in 2014

 Anually GDP growth rate of around 6%, peak: 13% in 2002 (1990: -2.4%) (World Bank, 2018)

 Ease of Doing Business Index 2017: Rank 41 / 190 (World Bank, 2018)

1994: Rank 158/168 countries

 2003: New Constitution which gave equal rights to men and women (also regarding property rights and

inheritance laws), Quota of 30% of women in parliament

 2008 legislation: Domestic violence is now a crime which gets punished  September 2018: 64% women in

parliament (worldwide highest percentage)

 Gender Equality and Women’s Empowerment Strategy 2013-2018  Control Mechanism for Gender

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4.2 Institutional Enablers

After briefly addressing Rwanda’s research context, this chapter discusses the findings from the interviews with regard to the aggregate themes of the institutional enablers.

A. Easy Bureaucratic Procedures

The evidence from the interviews shows that easy bureaucratic procedures encourage female and male entrepreneurs in Rwanda with their business. This includes a fast and easy registration process of a company and a corruption-free environment. Previous literature suggests that the process of starting a business in Africa is known to be time-consuming, costly and cumbersome (Amine & Staub, 2009). That is why a considerable number of business owners decide to stay informal (Eijdenberg et al., 2018; Lugalla & Karsten, 2018) or operate semi-informally (Langevang et al., 2018). However, the interviews with entrepreneurs suggest that this is not the case in Rwanda. E1 described the registration process as follows:

You simply have to walk into RDB [Rwanda Development Board] and register online, and a few hours later you get your online certificate of registration and you are done, you have a business.

All 11 entrepreneurs interviewed were registered. E3 described that it is very easy to open a business in Rwanda because the authorities do not question your plans, like in other countries:

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Besides the easy registration process, corruption does not seem to be an issue in Rwanda, as confirmed by the entrepreneurs (E6, E9, E10). However, E6 described that it could become a problem when expanding to other countries:

In Rwanda corruption is like a curse word, if they catch you with corruption here, you are more in trouble than you would have been not doing it, it is really, really hard to do any kind of funny stuff. But in other countries you can, and that is one thing I am afraid of.

This demonstrates that contrary to the findings in the Tanzanian context by Lugalla & Karsten (2018) and Eijdenberg et al. (2018), female and male entrepreneurs in Rwanda are not directly constrained by corruption. A corruption-free environment at least does not discourage female entrepreneurs since they do not have to fear sexual harassment as corruption practice, nor have to deal with additional bureaucratic barriers besides their household responsibilities, as pointed out by Amine & Staub (2009).

B. “Made in Rwanda” Campaign

The interview material suggests that Rwanda’s government specifically supports female and male entrepreneurs who produce “Made in Rwanda” products. This includes all entrepreneurs who process or manufacture a product in Rwanda, whereas imported products are not included. E1 states that she hopes for monetary benefits, which she can use to grow her business:

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Similarly, E2 got support from various governmental institutions, for instance the Private Sector Federation (PSF), which helped her with her business. However, she also underlines that entrepreneurs have to actively approach the government:

PSF is great, and all of a sudden, I got support from the Ministry of Commerce, the Ministry of Trade Industries, they also helped financially. You know, the government is doing a great job, people don't know it maybe, they have to go and interact with them. What they will offer, you will get. It is real.

Furthermore, E1 and E3 received individual support to grow their business. The women entrepreneurs benefitted from free travel to exhibitions in Shanghai, Milan and London to promote Rwandan fashion. E3 explained the governmental support as follows:

[RDB pushes] in all areas, but especially in the creative and tourism area, they have that program to support. So they have a facility for anything which helps Rwandan people to export, I think they really want to grow the export.

While E1 and E3 experienced governmental support in the creative industry, E8 benefitted from support in the tourism sector:

I work with RDB, Rwanda Development Board. We had a campaign together, what we called Tembera U Rwanda. Same as Travel Rwanda. So I was invited by different media coverage, like TV or newspapers. I am the one who came with the idea of promoting domestic tourism in Rwanda, I am a pioneer. That is why I was chosen to work with RDB because they found that I am able to perform this well.

All in all, the interview evidence suggests that Rwandan female and male entrepreneurs equally benefit from the “Made in Rwanda” campaign. However, the interviews also indicate that the government is promoting women in particular. E1 says:

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The governmental support for women is also noticed by men, as demonstrated by the statement of E9:

With the support of the government empowering women and gender equality everywhere, there is lots of sensitization, and I think things are changing tremendously. […] In fact, sometimes us men feel that the government promotes the rights of women more than the rights of men, but I think it all goes in our history. In the past governments, women were always put down, women were not supposed to be in leadership positions. And so this government is trying very hard to make sure that men start viewing women as people who are also responsible. In the government, the majority are women. So even in business I see many women, which is good. Amine & Staub (2009) pointed out that the will of the government to introduce necessary systematic changes is crucial to empower women entrepreneurs. The interview evidence as well as new gender equality policies in recent years (see Chapter 4.1) suggest that the government intends to promote women entrepreneurs in Rwanda. Women entrepreneurs are encouraged to start a business and they do not have to fear discrimination because of their gender.

However, Amine & Staub (2009) also argue that besides governmental support, “real life consequences” are crucial to encourage women entrepreneurs. Societal norms and the belief system play a significant role.

C. Changing Societal Norms:

The interview evidence suggests that Rwandan women are increasingly encouraged by society to start their own business. This has not always been the case, as described by E2:

Back then, there was no space for women to do business. But now, we are in a generation where women are encouraged and supported to do business.

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Being a woman entrepreneur is very empowering in the sense of I am responsible for my money and I had to find a way to really push myself beyond the society norms that are set for me.

Both statements underline that societal norms in Rwanda have not always encouraged women to be entrepreneurs. Entrepreneurship used to be regarded as a masculine activity, as also pointed out by Langevang et al. (2018) in the Tanzanian context. However, the interview evidence suggests that societal norms have been changing in Rwanda and that entrepreneurship is not solely considered a masculine activity anymore. None of the interviewed female or male entrepreneurs say they associate entrepreneurship with gender, but “you do something because you love it” (E3). The entrepreneurs stress the societal support women entrepreneurs receive. E5 states:

Women in leadership positions have become popular, and it is being celebrated.

The statement about women in leadership positions is particularly important when considering an argument made by Njeru & Njoka (2001). They point out that women entrepreneurs may only be accepted by society in some areas, like farming communities, but not as successful entrepreneurs. This seems to have changed.

As outlined by Amine & Staub (2009), women’s social support by family and friends fosters female entrepreneurship. This resonates with the findings. Rwandan women entrepreneurs feel well supported by their family and friends and by society in general (E1, E2, E5). E1 confirms:

Being a woman entrepreneur in Rwanda is well supported, so once you start you can be sure you get support, even from random people, people you have never met. My family also likes what I do, they think I am very passionate about it, and they support me whenever I need their support.

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and take care of the household, which could constrain them from pursuing entrepreneurial activities. E7 experienced this in her marriage, but actively pushed for her rights against her husband:

Sometimes he [my husband] refused for me to go out, he said stay here, but I said no I am not staying. And now I can go everywhere with my friends, and even if it is a man it is not a problem. Before that it was not possible. The problem was our culture, the woman had to stay at home, only at home, and bring the food, but today it is different, but I pushed for it.

E7 employed two babysitters to take care of her three children who also live in her house. One other interviewed female entrepreneur was married (E3). However, she experienced great support from her European husband, who is also the co-founder of her company. Langevang et al. (2018) identified partnering with a spouse as a response strategy by women entrepreneurs. For E3, partnering with her husband actually enabled her with her business. While she is at the office, her husband is working from home. Additionally, they have a nanny to support them with childcare.

The interview evidence suggests that Rwandan society increasingly appreciates Rwandan women in entrepreneurship. Entrepreneurship is no longer regarded as a male activity, but gender inclusive. Moreover, the interviewed women do not accept their traditional role as primary homemakers, but actively pursue entrepreneurial activities, which is mostly being celebrated.

D. National Identity

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of the entrepreneurs’ personal life story. All of the interviewed entrepreneurs were born before 1994 and experienced the genocide in some way, either as a child or as an adult; as a refugee in exile or in Rwanda. E2 describes that her history had the biggest impact on her drive to start a business:

What made me start has a story, my story. I am a genocide survivor, I am so much attached to my country and I am so much into giving back to my community, because so many passed away, including my parents, so it is my responsibility and my task to do more than even I am required to do.

Moreover, the male entrepreneur E9 describes his upbringing in exile, his pride to be part of a nation today and the feeling of belonging somewhere.

There was a time when I didn't have a country. I was born in Uganda because my parents left this country 1959 during the violence. So I was born in Uganda and even when I was born in Uganda, I was not considered a Ugandan. So me and my family were always despised. (…) And so today, being in my country, I have a passport. I have an ID, I can tell I am Rwandan, I feel I am proud to have a nation. I feel I am better than at the time when I was in Uganda, when I did not have a nation to call my country. So I have where to belong now. Before I belonged to nowhere, now I belong somewhere.

The male entrepreneur E10 fought on the front during the genocide and describes his entrepreneurial activity in similar terms.

So, to me it is like switching the front lines. I was in the military, but also fighting for the freedom of the country, but now I am in entrepreneurship, fighting for the well-being of our people. It is like a front line, and I really feel happy, not because I am really getting a lot of money, but because I can see that I am contributing a lot on the development of the families and my country in general. So, I am happy with what I am doing and I am happy that I am doing it for my country and the people.

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part of the normative institutional context. The society’s belief system in turn enables entrepreneurial activity because society respects and appreciates if people engage in business, regardless of the person’s gender. Entrepreneurship is appreciated because the entrepreneur contributes to the economic development of the country and creates jobs. Prior studies in Tanzania have not identified national identity as an institutional enabler of entrepreneurship within the normative context (Eijdenberg et al., 2018; Lugalla & Karsten; 2018). However, national identity as a new concept could be viewed as a result of the unique circumstances of Rwanda’s recent post-war history.

E. Network and Education Opportunities

The interview evidence suggests that the Rwandan and African institutional environment offers a variety of training and networking opportunities for female and male entrepreneurs. First, it was prominent that all seven women entrepreneurs except for E4 had a university degree. Notably, three women graduated in rather “masculine” studies and were partly educated abroad, which supports Theme C that societal norms are changing and women are not limited in their choice of study. E1 studied Information System Engineering in Malaysia and finished her Master of Business Administration (MBA) in the U.S., E6 studied Accounting in the U.S. and started her career as an auditor associate for a worldwide renowned accounting firm in Chicago. E5 studied Business Information Technology in Kigali and graduated with an MBA. Similarly, E2 and E7 studied Business and Finance in Kigali.

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viewed as a positive example which underlines that Rwandan women do have access to high-level education, although it is not the norm.

Furthermore, the interviewed entrepreneurs joined different associations, which enabled them to connect with other entrepreneurs. Eijdenberg et al. (2018) and Langevang et al. (2018) considered the joining of organizations as a response strategy. However, this study labels the infrastructure of networks as an enabler of entrepreneurs because it is provided by the government or official entrepreneurship clubs. The interviews show that all entrepreneurs (not known for E4) are actively involved in an official entrepreneurship network. For instance, E2 is involved in the Private Sector Federation (PSF) by the government, which enables her in many ways:

The private sector is an umbrella for all of us in the private sector. This is a leading entity in the private sector. Of course, we are directly connected. That way we can get financial and technical support, like trainings, mentorship and investment. The chamber is a networking platform. We connect each other and it provides a space for information about business, about how to do business.

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This was a good way to interact with people who are in business. Before the program, I only knew that I wanted to start a business, but I didn't know how. These people helped me to start.

Moreover, E5 decided to work in a co-working space because it gives her access to people she can brainstorm with and get ideas from. These findings underline the variety of network and training opportunities for women and entrepreneurs of both genders.

Literature points out that “some analysts believe that it may take a generation or more for governments to remedy the severe deficits in functional training and education that affect African women so dramatically” (Amine & Staub, 2009). However, the findings suggest that the interviewed women entrepreneurs in Rwanda are already on a promising way to develop themselves.

Considering all themes discussed so far, it becomes apparent that the Rwandan institutional context encourages women entrepreneurs in a number of ways. Besides the governmental efforts to foster entrepreneurial activities in general, perhaps the most important finding concerning women are the shifting societal norms in Rwanda. Societal appreciation of women in leadership positions and the shift away from viewing women solely as homemakers and child carers are key aspects of encouraging women entrepreneurs.

4.3 Institutional Constraints

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F. Access to Capital

Money constraints are a problem most entrepreneurs in the world face, and Rwanda is no exception. Five out of eleven entrepreneurs financed their business from pocket (E2, E3, E6, E8, E11), while other six entrepreneurs took a small loan from conventional banks in addition to their savings (E1, E4, E5, E7, E9, E10). Getting a loan is not easy for entrepreneurs, as E1 described:

Of course I was working, so I was really supporting my business from pocket in the beginning, and then I applied for a few grants, which I received, which was more of a push. But that was not easy, a lot of applications, a lot of pitching, a lot of waiting, it was not easy.

E3 was feeling concerned about the pressure of loans and preferred to grow gradually: Sometimes this [a big loan] can kind of set you back, instead of growing you, you better grow slowly, add one or two more tailors every year than getting five tailors now first and then struggle to pay very fast. And the interest rates are very high here, it is crazy how high it is.

Regarding the critical questions raised by prior literature about informal rules regarding property rights and inheritance by women (Amine & Staub, 2009; Welter & Smallbone, 2010), it can be noticed that no entrepreneur indicated that they had perceived gender-related discrimination when trying to access capital, or that collaterals are a higher barrier for women than for men. E2 specifically pointed out that youths face high issues of getting collateral, while not mentioning women. Therefore, the data suggests that the Rwandan institutional context differs from sub-Saharan contexts with discriminating informal laws regarding property ownership, as described by previous authors.

G. Patriarchal Norms

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by having to manage the household as well (Amine & Staub, 2009). E5 indicated that sometimes people think women are “too strong or too ambitious”. However, when asking follow-up questions, she said she never experienced this before, but just heard about it. It only happens in the social context, not in a business context. Therefore, it was difficult to interpret this statement with regard to the societies’ belief system.

Although Rwandan women did not feel that patriarchal norms existed in their experience as an entrepreneur, my field notes suggested that these norms may be still prevalent. For instance, when I was invited to a dinner at a friend’s house (male), his wife cooked the entire meal alone and she only started eating when we were finished. She did not sit with us at the table, but sat in the back of the living room.

In another situation I met a women entrepreneur for an interview at a café. She arrived with her cousin, but only briefly introduced herself and acted “shy”. As I learned during my first expert interview, women acting shy is related to the traditional social role of women in Rwanda. Women should not speak loud, seek eye contact or strongly state their opinion, as this is regarded as disrespectful. Already in the beginning of the conversation, I noticed that something was different from the other interviews, as described in my field notes:

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the evidence from the data, my short stay does not allow me to make any inferences about the social role of women.

H. Unskilled labour

While it became evident that the interviewed entrepreneurs were well educated in business management (see theme E), it is difficult for them to find skilled and reliable employees. E1 and E3 both had to train their tailors for their high quality textile business themselves, which required the entrepreneur to acquire additional knowledge about sewing. E3 describes it like this:

Of course most of them [the tailors] had training before and have been sewing before, but to guide them to a different type of sewing than what you see on the market requires knowledge. […] Now, mainly the older ones train the new ones.

While E3 already overcame the constraint of unskilled labour by having long-term employees, E5 is still trying to figure out how to manage her employees best with money constraints. She describes:

I work with a lot of people who have not gone to school, who do not know how to read and write, maybe they can read, but maybe went up to primary school, so it requires a lot of patience to work with people like that. (…) Sometimes, professional training can be very helpful, especially in the kitchen area, there are some companies that offer those kinds of trainings, but for now it is expensive, it is something I cannot afford. So basically working with the local workers requires a lot of patience, and supervision, like you have to be there, to make sure they know what to do, if they do something wrong you correct them. But it is also worrying, because if you keep supervising this person, what happens when you are not there…

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entrepreneurs and are not interpreted as concepts, which only affect the Rwandan institutional context, but most countries with institutional voids.

4.4 Responses

This chapter discusses the responses of women entrepreneurs within their institutional context. Two of the entrepreneurs’ responses - “Another Business” and “Becoming an Expert” - coincided with the consulted literature and did not reveal any new insights. Therefore, these will only be briefly discussed before turning to an emerging new concept.

I and J. “Another Business” and “Becoming an Expert”

The following paragraphs discuss the responses of entrepreneurs to the earlier found institutional constraints (see Chapter 4.3).

First, in line with Eijdenberg’s et al. (2018) findings in Tanzania, several of the interviewed entrepreneurs have another job or business to overcome money constraints (E1, E2, E5, E6, E9). For example, while E6 states that she has “never believed in one source of income” and has another corporate job, E2 has several businesses:

I am an interior designer, and I am an event organizer, a wedding planner, so these are the things that they call for, and I am open arms to do so, to generate an income, anything that brings money I go for, and when I know I can do it well, and earn something.

Second, Rwandan entrepreneurs overcome unskilled labor constraints by becoming an expert themselves to train their employees (E1, E3, E5, E6), as already indicated in theme H. E3 described how she got access to knowledge:

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This resonates with the response strategy “Training inhouse staff” identified by Eijdenberg et al. (2018). However, interviewed entrepreneurs do not only become experts to overcome knowledge constraints of their employees, but also of their suppliers who do not know about the product they are selling (E3, E6). E3 explains:

Someone who is selling fabric has no clue if they are selling cotton or not, cotton, or viscose, or a mix, they have no knowledge about it, they just buy and sell anything. In this regard, E6 learned to identify the fabric of the products:

So now even by just touching I can tell the difference [between mixtures of cotton and wool].

To conclude, these two strategic responses can be matched to specific constraints of the entrepreneurs which were examined in Chapter 4.2. Hence, to overcome money constraints, many entrepreneurs rely on a second source of income. To overcome unskilled labor, entrepreneurs start to acquire necessary knowledge themselves. These constraints and responses have already been identified by prior literature (Eijdenberg et al.; 2018). Moreover, the data suggests that these concepts are not gender-related and particularly apply to women or men entrepreneurs.

However, of much higher interest is a concept which emerged from the interview data and has not been mentioned in the consulted literature.

K. Business to Give Back to Society

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The entrepreneurs’ aim can be divided into three further categories, namely empowering women, empowering youths and educating society.

“Giving Back to Society” has not been addressed by the previously consulted literature about institutional-led entrepreneurship in sub-Saharan Africa. Eijdenberg et al. (2018) identified a response strategy which refers to entrepreneurs’ community engagement, such as “supporting schools by giving fabric away”. However, this concept does not seem to be the same, as it does not represent the Rwandan entrepreneurs’ twofold business objective to generate profit but also to have a social purpose. The following paragraphs will examine the three emerging categories from the interviews in more detail.

Empowering Women

Two male and two female entrepreneurs want to empower women with their business (E1, E3, E9, E10). E1 devotes her business especially to women from disadvantaged backgrounds, whom she first trains in tailoring and then hires for decent wages so that they can support their families. She explained why helping women in particular is important to her:

There are so many women that want to elevate their economies but they don't have education or any other background that can help them to get hired in decent employment other than being housekeepers or cleaners or street vendors, so I wanted to give them something better.

Similarly, also E3 sees education and being stuck in the socio-economic background as a major barrier for women to grow. She describes the problem as follows:

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get to know that they have things which open their eyes, they can twist the way they do things and create more opportunities for themselves and the family.

E3’s plan is to open a training facility specifically for women, as more training for women in Rwanda is needed. She also enjoys passing on her knowledge and giving back to society. Furthermore, two male entrepreneurs, E9 and E10, focus on the social impact they can have on girls and women. As E10 explains:

Girls play a big role in the family, and family issues. We used to think that men are very important, but girls or females are a big part of the family, too. So empowering them will be actually empowering families. And the vulnerability of girls is higher than the vulnerability of boys.

According to E10, this vulnerability is especially characterized by girls living in poverty who are forced to sell their body to men in order to survive. That is why he wants to empower young girls in particular by employing them in his manufacturing business. Whereas E9 does not adopt a social purpose of his business, he founded an NGO to give back to the community. Similar to E10, he argues that supporting women will empower the entire family:

We started to do a sewing school, we have about 25 mothers who come to our sewing school every day. The first group is graduating maybe in two months and then we bring another group, and those that will graduate. We want to put them in a kind of association, so that together they can work and improve their living standards in their families and in their village.

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Empowering Youths

One female and one male Rwandan entrepreneur outline the need for youth support in Rwanda (E2, E10). E10 points out the twofold issue that youths do not have enough training and therefore cannot find a job. He addresses this problem by starting to train youths as employees for his business, and even succeeds in getting the professional training for free after some negotiation:

I got a group of young boys and girls from Rwanda and I trained them. I came back from America with this idea. I trained them here in Kigali. It was a training organized by the district and what we only had to do was to register, and start training. Actually, I went to the district and negotiated with them, that I have a big group of youths that will want to do the training, and then they agreed.

This also shows that the Rwandan authorities are willing to invest in the training of youths, however, only after negotiation. Another example is E2, who describes youths as the “engine of the nation” and as the “agent of change of tomorrow”. She wants to empower youths by creating a platform that matches young entrepreneurs with investors: Young ones are facing a tremendous challenge of working capital, and when you go to banks, where they say there is access to finance, they ask for collateral, and youths do not have those collaterals. And for us we are going to create a platform where we will have a fund that will facilitate those young ones who are members to start a business and to sustain those businesses through working with mentors and investors. Because there are people who have money and they want to invest in businesses. So we will create this platform and we train them, have their back.

Women Entrepreneurship in a Developing Country – an Institutional Theory Perspective Master Thesis

Master Thesis