Women who experience domestic violence are less likely to become entrepreneurs and escape the clutches of poverty, according to studies by Monash University.
Monash Business School’s Dr Abu Zafar Shahriar, in collaboration with Professor Dean Shepherd from the University of Notre Dame in Indiana, are examining how microfinance – small loans to help less privileged people earn an income – can empower women to achieve their business goals.
In addition to domestic violence, the barriers women entrepreneurs face in such communities include a lack of finance and education; increased domestic duties at the expense of business development; and operating in a volatile environment where many businesses fail to generate a sufficient income for owners.
“Entrepreneurial opportunities in low-income communities are limited to small-scale trading and vending activities, such as running small grocery stores, selling prepared foods, rearing livestock in the household farm and tailoring,” Dr Shahriar said.
“Being an entrepreneur requires a reasonably high sense of self-esteem. Individuals who believe in their capabilities are likely to evaluate new business opportunities favourably because they believe they have the ability to overcome setbacks and failures. They associate these challenges with rewards, such as profit, recognition and psychological well-being.”
Dr Shahriar added, “However, as women in developing countries face a number of entrepreneurial barriers and have low self-efficacy, they are likely to associate their business venture with failure, such as bankruptcy, disgrace and psychological stress.”
The study centres on the experiences of 583 women in Bangladesh who received small collateral-free loans to build their own business venture. A survey was conducted prior to the loan with a follow-up survey 12-15 months later.
Out of these women, 156 (or 28 per cent) reported experiencing some form of domestic violence by their husband. Furthermore, women who have experienced domestic violence in the past 12 months are six percentage points less likely to begin a new business venture with microfinance, compared to those who did not.
Additionally, women are 19 percentage points more likely to believe that fear of business failure would restrain them from initiating a new venture. As the number of violent acts by a husband increases, so does their fear of business failure – increasing by 5.5 percentage points.
“Most women in developing countries end up using their microfinance-loans for non-productive purposes, such as general household expenditure. Our research suggests that microfinance, in combination with relevant entrepreneurial training, is essential to empower women for future business careers,” Shahriar said.