Unlocking Women’s Entrepreneurship: The Role of Laws, Capital, and Social Norms Worldwide

The World Bank’s Closing the Gender Gap in Entrepreneurship shows that women’s underrepresentation in business is driven not by lack of ability, but by legal discrimination, limited access to finance, weak support systems, and restrictive social norms. Removing legal barriers and combining reform with finance, skills, and norm-shifting policies is essential to unlock women’s entrepreneurial potential and economic growth worldwide.

Produced by the World Bank’s Global Indicators Group, this paper by World Bank economists Daniela M. Behr and Yue Sophie Xi examines why women remain underrepresented in entrepreneurship despite their growing role in education and the workforce. Drawing on global research and World Bank datasets, the study shows that women are less likely than men to own established and growing businesses, even though they have similar entrepreneurial potential. Across countries, women’s businesses tend to be smaller, less productive, and more concentrated in low-growth sectors. This gap is not driven by a lack of motivation, but by systemic barriers that shape women’s economic choices long before they start a business.

In many low- and middle-income countries, women are more likely to become entrepreneurs out of necessity rather than opportunity. Limited access to formal jobs, inflexible labor markets, and legal restrictions often push women into informal self-employment as a survival strategy. While entrepreneurship can provide flexibility, it also traps many women in low-income activities with little chance to grow.

Laws That Limit Economic Choices

One of the strongest messages of the paper is that legal barriers play a foundational role in holding women back. In many economies, laws still restrict women’s ability to open bank accounts, register businesses, own or inherit property, travel freely, or work in certain industries. These legal constraints reduce women’s access to assets, experience, and networks that are critical for entrepreneurship.

The evidence reviewed shows that countries with more gender-equal laws have higher female labor force participation and more women-owned firms. Reforms to family law, inheritance rights, and mobility rights have led to measurable increases in women’s employment and self-employment. Legal equality, the paper argues, is a necessary starting point for any strategy aimed at closing the entrepreneurship gap.

The Persistent Financing Gap

Even when legal barriers are removed, women face major challenges accessing finance. Women are more likely to be unbanked and less likely to apply for loans, often because they expect rejection or have had negative experiences with financial institutions. When women do seek credit, their businesses are more likely to be denied loans, receive smaller amounts, or face higher interest rates, despite having similar or better repayment records than men.

The gap is even wider in venture capital and equity financing. Female-founded startups receive only a tiny share of global venture capital funding. Investors often evaluate women differently, asking more risk-focused questions and relying on stereotypes about leadership and growth. Grants can help women entrepreneurs, especially at the microenterprise level, but their impact depends on design. Larger or in-kind grants tend to work better than small cash transfers, which are often used for household needs.

Skills, Support, and What Really Works

Governments and donors spend billions of dollars on business training programs for entrepreneurs, but the paper finds that results are mixed. Traditional business training often leads to small or short-lived improvements, especially for women facing deeper structural barriers. Programs that focus on personal initiative, confidence, mentorship, and goal-setting show more promising results.

Accelerator programs can also help women entrepreneurs by improving access to networks, mentors, and investors, particularly in male-dominated ecosystems. However, the evidence is uneven, and benefits often fade once support ends. The paper emphasizes that training and support programs work best when combined with access to finance and embedded in a broader enabling environment.

Norms, Networks, and the Path Forward

Social and cultural norms continue to shape women’s entrepreneurial outcomes. Women carry a larger share of unpaid care work, limiting the time they can devote to businesses. Marriage and motherhood often reduce women’s economic participation, while gender stereotypes influence how entrepreneurs are perceived by investors, customers, and officials. Women also tend to have weaker business networks, reducing access to information and opportunities.

The paper’s empirical analysis shows that countries with gender-equal laws are more likely to have higher female labor force participation and more women-owned firms. Government-led support programs for women entrepreneurs exist in some regions, particularly Europe and Central Asia, but remain uneven globally.

The central conclusion is clear: closing the gender gap in entrepreneurship requires coordinated, long-term action. Legal reform, fair access to finance, effective skills development, and policies that address social norms must work together. Temporary programs can help, but lasting change depends on creating environments where women have equal rights, real opportunities, and sustained support to build and grow businesses.