Entrepreneurial psychology and the role of gender and culture

Understanding the role of psychology in entrepreneurship can play a significant role in the success of a new venture, such as a start-up. 

In fact, according to a 2021 Forbes article, every entrepreneur should study psychology:

“Understanding psychological principles can help you in every aspect of growing your business, from marketing and selling to leadership to knowing when your ego is getting in the way of progress,” the article states. “Every entrepreneur should gain a working knowledge of psychology if they want to take their companies – and themselves – to the next level.”

Another article from the U.S. Chamber of Commerce suggests that what separates successful businesses from those that fail comes down to an entrepreneurial mindset – and this theory is backed by years of psychological and entrepreneurship research. This entrepreneurial mindset has three elements:

“Successful entrepreneurs tend to be reasonably self-confident,” the article states, “more risk-averse than you might think, and extremely passionate about their ideas.”

So while it’s clear psychology and entrepreneurial success are linked, it’s also important to consider the role factors such as gender and culture play in entrepreneurial psychology. Female entrepreneurs, for example, face unique challenges that are not often encountered by their male counterparts, while cultural factors such as personal values, beliefs, and social norms can influence the entrepreneurial process. 

Understanding these influences can provide valuable insight for the business world – and even help contribute to entrepreneurial and self-employment success.

What is entrepreneurial psychology?

Entrepreneurial psychology is the study of the psychological factors that influence entrepreneurship. It is an area of social psychology, and considers personal factors such as:

• personality traits
• attitudes
• motivations
• cognitive processes.

For example, research has shown that successful entrepreneurs tend to be creative and innovative.

Entrepreneurial psychology can also help explain why some individuals are more likely to become entrepreneurs than others, and can provide deeper insights into the factors that contribute to entrepreneurial success.

What is the role of gender in entrepreneurship?

Gender – and gender stereotypes – can play an important role in entrepreneurship. Even as many societies work towards greater gender equality, research indicates that women entrepreneurs disproportionately face greater barriers to entry, and reduced feelings of self-efficacy as a result. Other challenges to female entrepreneurship can include:

• Difficulties accessing funding, such as venture capital funding, which restricts entrepreneurial opportunities and economic growth.
• Lower levels of social and professional support.
• Gender biases, such as assumptions that women are better at mediating over assertiveness, or that the male demographic is allegedly more agentic, with stronger entrepreneurial intentions and decision-making skills.
• Fewer female role models to inspire, guide, and motivate women starting entrepreneurial activity. This can impact aspiring female business owners from a young age, even when at school or as university students, as well as at higher levels, all of which can influence career choices – and potentially even halt budding entrepreneurial careers.

For example, a few years ago the graphic design company 99designs conducted a survey of more than 500 entrepreneurial respondents. The answers to their questionnaire highlighted some stark gender differences in terms of women’s entrepreneurship:

• Men were twice as likely to raise $100,000 (USD) in funding.
• 64% of women raised less than $10,000 (USD) for their ventures, compared to just 14% of men.
• Men start their companies at a younger age. 40% of them had started by age 35 (compared to 33% of women), and 8% of them had started before the age of 25 (compared to 3% of women).

Another article by USA-based artificial intelligence business AI bees – Gender in Entrepreneurship: Does it Still Matter in 2023? – highlights the gender gap by pointing out a variety of metrics, differentials, and other types of meta-analysis. For example, the article notes that only 6% of the Standard and Poor’s 500 have a female CEO.

Despite these challenges, though, women have been found to be highly successful entrepreneurs, with some studies suggesting that female-led businesses outperform those led by men in terms of profitability and revenue growth.

The European Chamber of Digital Commerce, for instance, cites several sources and notes a number of ways women perform as entrepreneurs.

• Women-owned firms generate significantly higher revenue than male-owned firms.
• Female-owned firms create significantly more jobs than their male-owned peers.
• Women are more effective in senior leadership roles.
• Women executives significantly improve company performance when compared with men.
• Women have a much larger appetite for growth and success than their male counterparts.

What is the role of culture in entrepreneurship?

Like gender, culture plays a significant role in entrepreneurship. Cultural factors such as community values and beliefs – known as social capital – can influence the entrepreneurial process. For instance, in some cultures, entrepreneurs may have access to extensive support networks and resources, while in others, they may face significant barriers. 

In other cases, a person’s socio-economic background or standing within their culture can adversely affect their ability to access funding and interest, particularly in the nascent entrepreneurship phase. According to the Global Entrepreneurship Model (GEM), nascent entrepreneurs are people in the initial stage of their ventures, working to commit resources to get their businesses started. This stage is crucial, and is one of the key predictors of entrepreneurial success.

What is the relationship between culture and gender in entrepreneurship?

The relationship between entrepreneurship culture and gender can be complex. In some cultures, entrepreneurship is seen as a predominantly male pursuit, with women facing significant barriers to entry. However, in other cultures, entrepreneurship may be more gender-neutral, and seen as a viable career option for women. The level of support and resources available to entrepreneurs can also vary depending on the cultural context.

By better understanding the relationship between entrepreneurship culture and gender, business leaders can help to identify, for example, the barriers and opportunities that exist for female entrepreneurs.

What is entrepreneurial culture?

When considering the intersectionality of gender and culture in terms of entrepreneurial psychology, it’s also important to consider entrepreneurial culture. 

Entrepreneurial culture refers to the set of values and beliefs that are associated with entrepreneurship. This culture may include a focus on innovation, or risk-taking, or an emphasis on individual initiatives. 

How to make entrepreneurship more inclusive

Ensuring that all people – regardless of their personal characteristics – can develop entrepreneurial behaviours and successfully launch a new business can pay dividends in terms of global economic development and regional development at a country level. It can also help steer businesses in exciting new directions because it diversifies the human capital across various sectors.

Achieving this, though, requires a few key interventions.

1. More research. Future research in this area, using strong methodology, can help to highlight the benefits of inclusion in entrepreneurship. 
2. Entrepreneurship education. Ensuring people have access to education, training, mentorship, and other forms of guidance can help level the playing field.
3. Accessible resources. Whether it’s a case study about women in entrepreneurship, or articles about minority representation in small business economics and SMEs (small and medium-sized enterprises), having plenty of online resources available for anyone to read, watch, or listen to can help showcase entrepreneurship as attainable for anyone, regardless of their demographics.
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