Women-Owned SMEs and Trade Barriers

Julia V. Sekkel
2020-04-02

Executive Summary

This report looks into how trade barriers affect the participation of women-owned small and medium enterprises (SMEs) in exporting. The key findings of the report are that:

• Women-owned SMEs are less likely to identify obstacles that prevented them from exporting, relative to men-owned and equally owned enterprises;
• Once exporting, however, four obstacles affect a larger proportion of women-owned SMEs relative to their counterparts: logistical obstacles, border obstacles, administrative obstacles in the foreign market, and administrative obstacles in Canada.

In order to understand the reasons underlying those findings, this report analyzes the gender differences in selected business characteristics of SMEs, namely size, industry of operation, years of managing experience, and destination of exports. Here is the main evidence stemming from that analysis:

• Technology and e-commerce seem to reduce export entry barriers in industries with a greater proportion of women-owned enterprises, such as retail trade and information and cultural services.
• Women-owned exporters tend to be disproportionately concentrated in retail trade, which entails cross-border movement of goods. As such, women-owned exporters face many of the same barriers affecting goods exporters: logistical, border, and foreign market administrative. Additionally, women-owned exporters tend to have slightly fewer years of managing experience than men and to be more diversified, having a larger proportion of exporters oriented toward non-U.S. markets. These factors also appear to be related to observed gender differences in the perception of barriers while exporting.

Introduction

Increasing women-owned small and medium enterprise (SME)’s participation in international trade would have positive implications for Canada’s economic growth, gender equality and social cohesion. Under the inclusive trade agenda, Canada is interested in understanding the impacts of trade on different segments of society, including women, indigenous people, SMEs and others, to ensure that they are able to participate in and benefit from trade.

As it relates to women-owned SMEs, the underlying assumption of that approach is that trade is not gender neutral. Trade policies, in the form of tariffs and non-tariff barriers, can affect sectors and industries differently. Since women-owned businesses are not equally represented among industries, changes in trade barriers will have unequal effects on men-owned and women-owned businesses. On the other hand, the fact that women-owned and men-owned businesses have different characteristics – not only in industry of operation, but also in size and productivity – creates differences in their ability to deal with trade barriers and engage in international trade.

While a number of studies focus on trade barriers faced by female entrepreneurs in developing countries (ITC, 2015; World Bank, 2015; Kiratu and Roy, 2010), only a few relate to developed countries (The National Board of Trade Sweden, 2020), or Canada in particular (Orser et al. 2004). Women exporters in developing countries face disproportionately higher trade barriers, such as greater difficulties in complying with regulatory and procedural requirements, poorer access to information and markets, exclusion from male-dominated distribution networks, time and mobility constraints, and higher risk of abuse, including corruption and harassment at the border.

However, in most developed countries, domestic policies have been evolving to significantly increase gender-equality entrepreneurship and trade. A recent study conducted by the Office of the Chief Economist at Global Affairs Canada shows that the participation of women-owned SMEs in exports has significantly increased between 2011 and 2017. Based on data from the Statistics Canada’s Survey of Financing and Growth of Small and Medium Enterprises, the share of women-owned SMEs among exporters doubled, from 7.4% in 2011 to 14.8% in 2017. Over the same period, the probability that a women-owned SME would export increased from 5% in 2011 to 11.1% in 2017, almost reaching the overall SME average, at 11.7%, and the men-owned SMEs export propensity, at 12.2%.

While these results show significant improvement, the gender gap in entrepreneurship is still very large in Canada. Among all SMEs (exporters and non-exporters), the share of men-owned enterprises reached 63.5%, which is four times larger than the share of women-owned SMEs, at 15.6%, while the remaining 20.9% was represented by equally owned businesses.

This report looks into the role played by trade barriers in limiting access of women-owned SMEs to entering the export market, as well as barriers for women-owned SME exporters while they export, relative to the other groups of ownership gender, namely men-owned and equally owned SMEs. Looking at how differences in their characteristics may affect their perception of trade barriers, the report is intended to inform policy responses for gender-specific barriers.

Source of data and definitions

The source of data used in this report was the Survey on Financing and Growth of Small and Medium Enterprises conducted in 2017 and released in 2018. In the survey, SMEs are defined as companies having between 1 and 499 employees and annual gross revenue of $30,000 or more. These firms are sub-classified as small enterprises when the number of employees lies between 1 and 99 employees, and medium enterprises, when they have 100 to 499 employees. Large companies are those with 500 employees or more and are not analysed in this report.

Gender ownership is determined in the survey by the percentage of the business owned by women, defined by five categories that were classified as:

• Men-owned SMEs: 0% or 1%-49% female ownership;
• Equally owned by men and women: 50% female ownership and;
• Women-owned SMEs: 51%-99% or 100% female ownership.

The survey also identifies categories of “obstacles to trade” and “reasons for not exporting,” as follow:

1. The local nature of your business (only applied to the question on “reasons for not exporting”);
2. Administrative obstacles in Canada (e.g., rules, regulations and legal requirements);
3. Administrative obstacles outside of Canada (e.g., foreign customer requirements, product standards, technology requirements);
4. Border obstacles (e.g., tariffs, non-tariff barriers, import quotas, customs duties, border security issues);
5. Logistical obstacles (e.g., distance to customers, transportation costs, brokerage fees);
6. Market knowledge issues (e.g., lack of knowledge of local language and culture, unaware of potential export markets);
7. Intellectual property issues (e.g., concerns about violation of IP rights);
8. Lack of financing/inadequate cash flow;
9. Financial risk (e.g., longer payment terms or risk of non-payment from customers);
10. Other.

Firms are classified according to the North American Industry Classification System. Financing and leasing companies, non-profit organisations, government offices, schools, hospitals and other public sector organisations are not included in the survey.^{Footnote 1}

Obstacles for Women-owned SME’s entry into exports

Since the seminal work of Melitz (2003), many studies have focused on understanding the dynamics of trade barriers on firms’ entry to export markets based on firms’ characteristics (see Trefler, 2004; Lileeva and Trefler, 2010; and Baldwin and Yan, 2015, for a summary about Canada). They show that, in order to export, firms need to reach a certain level of productivity that will allow them to overcome the fixed and variable costs of exporting. Consequently, policies that lower barriers to trade, reduce the productivity level required to enter into exporting and encourage less productive firms to start exporting.

Canada has recently seen significant progress in the participation of women-owned SMEs in exporting. Between 2011 and 2017, the share of women-owned SMEs that exported has doubled, increasing from 7.4% to 14.8% in 2017. While women-owned SME exporters are still a minority, the distribution of SME exporters by gender of ownership in now very similar to the distribution of all SMEs by gender of ownership, as shown in Figure 1. These results suggest that, despite the continuing gender gap in SME entrepreneurship, the gender gap in exporting has been essentially closed, and that women-owned SMEs have almost the same likelihood as men-owned SMEs of starting to export.

Figure 1 – Distribution of SMEs by Gender of Ownership, 2017

Data: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2017.
Source: Office of the Chief Economist, Global Affairs Canada.

Text alternative

	Women-owned SMEs	Men-owned SMEs	Equally-owned SMEs
Exporting SMEs	15%	66%	19%
All SMEs	16%	64%	21%

Looking to understand the role played by barriers to export entry, the Survey of Financing and Growth of Small and Medium Enterprises asked enterprises that did not export in 2017 what were the reasons for not exporting. Reasons were identified in a list of pre-defined options including the nature of the business as well trade-related obstacles. A particularly interesting feature of this question is that it identifies two groups of non-exporters: those that did not try to export (nature of business) and those that would have otherwise exported in the absence of obstacles.

A large majority of enterprises identified the “Local nature of the business” as the main reason for not exporting (not included in the Figure 2). 95% of both women-owned and equally owned SMEs, and 93% of men-owned SMEs, chose that reason to explain why they were not exporting. This suggests that most SMEs are not likely to export, and only a modestly larger share of women-owned SMEs find that the nature of their business keeps them from exporting. This is interesting given the rather different structure of businesses that women-owned SMEs are primarily engaged in, which will be discussed later in the report.

SMEs that did not indicate the local nature of their business as a reason for not exporting then had the option to indicate other potential reasons for not exporting. Across all of the obstacles, the proportion of women-owned SMEs was below those of men-owned and equally owned businesses. In other words, women-owned enterprises were less likely to identify obstacles that prevented them from entering the export market.

Figure 2 – Proportion of SMEs Reporting Obstacles as Reasons for Not Exporting, by Majority Gender of Ownership, 2017*

Data: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2017.
Source: Office of the Chief Economist, Global Affairs Canada.
*The graph does not include the “Local nature of the business” category

Text alternative

	Logistical	Domestic administrative	Foreign administrative	Border	Financial risk	Market knowledge	Financing/cash flow	I.P. issues	Other
Men-owned	7%	6%	6%	6%	6%	5%	4%	1%	9%
Equaly-owned	8%	6%	7%	6%	7%	6%	4%	2%	7%
Women-owned	4%	4%	3%	4%	3%	4%	2%	1%	8%
All SMEs	7%	6%	6%	5%	5%	5%	4%	1%	9%

None of the listed barriers stand out as being especially problematic. Logistical obstacles were perceived as being the most prohibitive barrier by the three gender groups. It is also notable that this barrier shows the largest gap in perceptions between men and women, with 4% of women identifying this as a barrier compared to 7% for men.

Domestic administrative obstacles are the next most important barrier for both women and men. Domestic barriers are, by their nature, something that should be under the control of Canadian policy-makers, but there is no specific information on the nature of those barriers. The difference in perceptions between women and men is among the smallest of any of the barriers, suggesting that despite their importance at least there does not appear to be a gender bias.

Foreign administrative obstacles, border issues and market knowledge rank as the next most important obstacles for women-owned businesses in entering export markets. These are all barriers for which the Trade Commissioner Service (TCS) could potentially play a role by providing information, or that Canada’s trade agreements could potentially address.

Lack of financing and cash flow, which has been generally identified as a strong barrier for women exporters in other countries (ITC, 2015), had the second lowest importance as a reason for not exporting among women-owned SMEs. This is consistent with Huang and Rivard (2020), which use the same survey to show that there are no significant gender differences in the probability of considering obtaining financing as an obstacle to SMEs growth. However, women-owned SMEs are significantly more likely than men-owned SMEs to be discouraged borrowers. Discouraged borrowing has been associated with less managing experience (Scotiabank, 2020). As shown by Coleman (2000) and Orser et al. (2006), controlling for size, age of the venture and industry, gender differences in access to and the terms of financing (rates of loan approvals, collateral requirements) tend to disappear. These results may suggest that there might be limitations on the demand side behaviour. IP issues are minor obstacles, consistent with other findings that only firms that use IP intensively find these issues to be a significant problem (Boileau and Sydor, 2011).

“Other” is the most significant category, suggesting that there are other barriers not currently identified by the survey. A joint report by OECD-APEC (2006) shows that non-exporting SMEs tend to identify internal capabilities and issues internal to the firm as being more significant obstacles for internationalization than trade barriers. Consequently, internal issues and any other unlisted barrier may have been reported under “Others”.

While the same question was not included in the 2011 iteration of  the survey to compare potential shifts between groups, these results are consistent with the finding that most of the growth in overall export propensity of SMEs between 2011 and 2017 is explained by the growth of women-owned businesses that exported, rather than men-owned or equally owned enterprises. Over that period, the proportion of women-owned businesses that exported increased much faster (from 5% to 11.7%) than that of men-owned (from 11.8% to 12.3%) and equally owned (10.0% to 10.5%) SMEs. Without establishing any causal relationship, these trends may suggest a correlation between the reduced perception of obstacles to export participation by women entrepreneurs and the observed increase in the rate of export participation of female-owned businesses.

Obstacles for Women-Owned SME exporters

Firms that manage to overcome the costs and barriers to exporting do so because they were productive enough to surpass them. It does not mean, however, that these costs disappear. According to Yu (2019), while most new exporters in Canada are SMEs, only 30% of them are still exporting after four years. Baldwin and Gu (2003) show that Canadian manufacturing firms that started exporting and later on exited, also witnessed productivity losses. Moreover, even though most new exporters are SMEs, their survival rate is very low, and half of them stop exporting after the first year (Yu, 2019).

This section will focus on SMEs that already export and how trade barriers are perceived among the gender groups, using results from Statistics Canada’s assessment of SMEs’ perception of obstacles while exporting. Based on a list of pre-defined categories of trade-related barriers, respondents could report them as being ‘not an obstacle’, ‘minor’, ‘moderate’, or ‘major’ obstacles.

As shown in Figure 3, the most significant obstacle (reported as moderate or major) for exporting SMEs in general are logistical (distance, transportation, brokerage fees), which is also reported to affect women-owned exporters more intensely, displaying the largest gender gap. Border obstacles are the second major barrier, also with a large gender gap. Foreign administrative obstacles were the third largest barrier, especially for equally owned enterprises, with a large gap between women-owned and men-owned exporters. While these barriers are generally related to factors specific to the destination market, some could be mitigated under trade agreements, such as tariffs and quotas, through trade facilitation measures (single-window system, reduction of red-tape at the border), or support from the TCS with information on foreign standards and requirements.

Financial risk and lack of financing, which were not considered major obstacles for entry into exports, seem to be relatively more important for exporting SMEs, but are not perceived to affect women-owned exporters more than their counterparts. Market knowledge also gained importance as a barrier for SME exporters overall, but again, it does not appear to be affecting women-owned exporters more than men-owned exporters.

Domestic administrative obstacles significantly lost importance for exporters relative to non-exporters. While it appears as being a generally lower barrier for exporting SMEs, it affects women-owned exporters more strongly than men, but with the smallest gender gap.

The perception of barriers to trade is quite different between non-exporters (presented in the previous section) and exporters, not only for SMEs in general but also among the gender groups. The barriers to entry into exports are reported at a fraction of the rate as the barriers faced by exporters. Logistical barriers, for example, are reported by almost 20% of exporters compared to about 7% for those considering exporting. Similarly, the differences by gender are sharp; while women-owned SMEs report barriers to entering into export at a lower rate than men for all types of obstacles, the differences for exporters vary more among types, with some affecting women-owned exporters more and others affecting men-owned exporters more.

Differences in perception of obstacles to trade between exporters and non-exporters were also identified in other studies for developed countries (Moini, 1997; OECD-APEC, 2006). While non-exporting SMEs report internal capabilities as limitations for exporting, those that already have experience in exporting identify trade issues in the domestic and foreign environment as more significant obstacles to exporting. This distinction between non-exporters and exporters indicate that once SMEs surpass internal obstacles and enter international markets, they become more aware of their business environment and barriers to trade.

The “Others” category is, relative to the specific obstacles, a lot less important for exporting enterprises than non-exporters. This may suggest that the specific obstacles are capturing most of the issues encountered by exporters.

Figure 3 – Proportion of SMEs Reporting Obstacles While Exporting as Moderate or Major, by Gender of Ownership, 2017

Data: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2017.
Source: Office of the Chief Economist, Global Affairs Canada.

Text alternative

	Logistical	Border	For. Admin	Financial Risk	Mtk Knowledge	Financing/Cash-flow	Dom. Admin	I.P. Issues	Other
Women-owned	24%	22%	19%	11%	11%	9%	11%	3%	5%
Equally-owned	19%	17%	21%	16%	16%	10%	8%	2%	13%
Men-owned	19%	17%	14%	16%	14%	14%	10%	7%	9%
All SMEs	20%	18%	16%	15%	14%	13%	10%	5%	9%

Firm size

A large body of evidence shows that smaller firms are less likely to start exporting and more likely to export less. The reason for this is that selling abroad requires firms to overcome fixed and variable costs, and in order to do so, firms need to have a certain level of productivity, which is generally hard to achieve by small firms (Arndt et al., 2012). With limited resources and less capacity to withstand risks, trade barriers that increase fixed or variable costs may strongly affect the competitiveness and export performance of small firms (OECD, 2006). However, other evidence shows that firm size and exports are not significantly related and small firms can still have a competitive advantage for specific products in specific markets. (Wolf and Pett, 2000; Moen, 1999). In Canada, for example, many small and less-productive firms export, which Lilleva and Trefler (2010) called the “paradox of unproductive exporters.”

As illustrated in Figure 3, women-owned exporters are disproportionately concentrated among micro enterprises, relative to other gender groups: 63.9% of women-owned exporters have between 1 and 4 employees compared to men-owned and equally owned exporters, 43.3% of which are in this group. Furthermore, women-owned exporters have smaller shares in other size categories, and the gap becomes larger the greater the firm size. In other words, women-owned exporters tend to be significantly smaller than equally owned and men-owned exporters.

Figure 4 – Firm Size Distribution of Exporters by Gender of Ownership, 2017

Data: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2014 and 2017.
Source: Office of the Chief Economist, Global Affairs Canada.

Text alternative

	Women-owned exporters	Men and equally owned exporters
1 to 4 employees	64%	43%
5 to 19 employees	28%	34%
20 to 99 employees	8%	17%
100 to 499 employees	1%	5%

When it comes to reasons for not exporting, there is little discernible pattern by firm size. Micro and small SMEs are roughly just as likely to report a barrier as medium size SMEs. This is consistent with other studies showing that size is not necessary an impediment to export participation, and the role of firm size in export decision has been reduced with lower trade barriers (Esteve-Pérez et al., 2011; Wolf and Pett, 2000; and Verwaal and Donkers, 2002). It is therefore difficult to associate the generally smaller size of women-owned SMEs to the barriers reported for entering export markets.

When looking at obstacles while exporting and SME size groups, the likelihood of reporting barriers as being important increases with firm size. Logistical, border, foreign and domestic administrative obstacles seem to affect larger firms more than smaller ones. Women-owned exporters, which are mostly small, are more likely to be affected by those barriers than their counterparts. These trends suggest that the average size of women-owned exporters does not seem to explain the observed differences in perception of barriers to exporting, and other factors might come into play.

Industry of operation

Women entrepreneurs tend to start businesses in different sectors than men. Women are more likely to own businesses in services-related sectors, while men-owned businesses concentrate in manufacturing (The National Board of Trade Sweden, 2020). In Canada, retail trade and information and cultural services accounted for almost 50% of women-owned SMEs in 2017. Similar differences in industry distribution across genders are also reflected among exporting SMEs. It is possible that these differences in industry distribution are also related to gender differences in perception of trade barriers.

As shown in Figure 5, almost one-third, or 31.9%, of women-owned exporters were in retail trade in 2017, compared to 6.5% for men-owned and equally owned businesses. Professional and scientific services represented the second highest share of women-owned exporters, at 22.1%, compared to 25.6% for their counterparts.

Figure 5 – Industry Distribution of SME Exporters by Gender of Ownership Group, 2017

Data: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2017.
Source: Office of the Chief Economist, Global Affairs Canada.

Text alternative

	Women-owned exporters	Men and equally owned exporters
Agriculture	1%	4%
Construction	1%	3%
Manufacturing	9%	19%
Wholesale Trade	7%	11%
Retail Trade	32%	6%
Transportation & Warehousing	7%	10%
Professional, Scientific & Tech. Services	22%	26%
Accommodation & Food Services	2%	4%
Other Services	8%	2%
Information, Cultural & Public Services	11%	15%

Moreover, as depicted in Figure 6, the proportion of women-owned enterprises among SME exporters in retail trade more than doubled from 2014 to 2017, reaching 46.2%. At the same time, the share of that industry among women-owned SMEs has decreased, and the proportion of women-owned enterprises in the total number of SMEs has slightly increased over the same period. These results suggest that women-owned SMEs were more able to start exporting.

Figure 6 – Women-owned Exporters Share of Total Exporters by Industry

Data: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2014 and 2017.
Source: Office of the Chief Economist, Global Affairs Canada.

Text alternative

	2014	2017
Agriculture	5%	0%
Construction	8%	0%
Manufacturing	8%	9%
Wholesale Trade	9%	7%
Retail Trade	46%	22%
Transportation & Warehousing	11%	10%
Professional, Scientific & Tech. Services	13%	10%
Accommodation & Food Services	8%	20%
Other Services	41%	17%
Information, Cultural & Public Services	11%	16%

For SMEs in retail trade and information and cultural services, obstacles to export participation are not considered major barriers relative to other industries. One potential explanation is that with increased access to technology, many retailers have the possibility to perform online sales, which may reduce their perception of export entry barriers.^{Footnote 2} Ahmed and Melin (2017) show that Canadian small businesses that use e-commerce platforms are nine times more likely to export. E-commerce is considered to have the same effects on trade as liberalization policies, reducing barriers to export participation (Lendle and Vezina, 2013). These factors can be a potential explanation for the gender gaps in perception of obstacles to export entry, in that women-owned SMEs are less affected relative to the other gender groups.

Looking at SMEs’ obstacles while exporting, a large proportion of SMEs in retail trade seem to report them as significant barriers. In 2017, 27% of SME exporters in the retail sector reported logistical obstacles as being moderate or major, 7 p.p. above the average, followed by border obstacles at 19% and 1 p.p. above the average. The same barriers are affecting exporters in the manufacturing sector harder. This similarity indicates that, while retail trade is generally identified as a services-related industry, SMEs in that sector are actually selling goods across the border,^{Footnote 3} which entails costs associated with product delivery, tariffs and custom duties, as well as foreign requirements and product standards. These obstacles are also identified as major barriers for women-owned exporters. These findings suggest that differences in the industry concentration of women-owned exporters may be related to gender gaps in perception of barriers while exporting.

Years of managing experience

Another characteristic that could be related to the perception of barriers is the number of years of experience in managing or owning a business.^{Footnote 4} The hypothesis is that more years of experience in managing a business would be related to increased capacity and knowledge to deal with regulations, standards and requirements, which would translate into a lower perception of barriers to trade. Indeed, Shoham and Albaum (1995) indicate that managerial experience can have an impact on the perception of barriers. As such, firms with more operational managerial practice have a lower perception of trade barriers related to documentation requirements, transportation and uncertainties in foreign markets.

As shown in figure 7, although the majority of women-owned exporters have more than 10 years of managing experience, their share in that category is smaller than the SME average. Conversely, women-owned exporters have a proportionally larger than average share of the least experienced managers. The same differences are observed for non-exporting SMEs. However, the fact that, overall, women-owned SMEs have less managing experience than the average does not seem to explain their lower perception of obstacles to export entry relative to their counterparts.

Figure 7 – Percentage Distribution of Exporters by Years of Managing Experience, 2017

Data: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2017.
Source: Office of the Chief Economist, Global Affairs Canada.

Text alternative

	Women-owned exporters	SME exporters
Less than 5 years	14%	5%
5 to 10 years	21%	21%
More than 10 years	67%	73%

Between 2014 and 2017, the proportion of women-owned SMEs among exporters with less than 5 years of experience has grown more rapidly than the other categories, as shown in Figure 8. The large increase was not induced by changes in the distribution of women-owned enterprises amongst categories of years of experience, which only changed marginally during that period. This suggests that more women-owned SMEs with less managing experience have become exporters. These additional new, less experienced exporters may have given more emphasis to trade barriers while exporting, which could also help explain the gender gap in perception of barriers while exporting.

Figure 8 – Women-owned Exporters Share of Total Exporters by Years of Managing Experience

Data: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2014 and 2017.
Source: Office of the Chief Economist, Global Affairs Canada.

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	2014	2017
Less than 5 years	19%	31%
5 to 10 years	10%	15%
More than 10 years	11%	14%

Destination of exports

Overseas exports are associated with higher trade costs due to geographic and cultural distance. For Canada in particular, where most exports go the U.S., it is likely that trade costs with that market are the lowest, so exporting to any other market would seem to have higher barriers (Anderson and Wincoop, 2001).

Many barriers identified by SME exporters, and women-owned exporters in particular, are specific to the market of destination. Figure 9 shows that the majority of women-owned SMEs in Canada exported to the United States. However, they tend to be more diversified than men-owned and equally owned SMEs, with larger percentages selling to Europe, Other countries, and India. Those markets, followed by the U.S., witnessed the largest increases in the proportion of women-owned businesses among exporters between 2014 and 2017.

Figure 9 – Women-owned Exporters Share of Total Exporters by Export Destination (2014, 2017)

Data: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2017.
Source: Office of the Chief Economist, Global Affairs Canada.

Text alternative

	Women-owned SMEs	Men-owned SMEs	Equally-owned SMEs	All SMEs
United States	81%	88%	89%	87%
Europe (excluding U.K.)	36%	25%	21%	26%
Other (Rest of the World)	22%	18%	17%	18%
United Kingdom	20%	16%	15%	17%
Asia (excluding China, India and Japan)	10%	12%	14%	12%
India	9%	4%	4%	5%
Mexico	8%	9%	9%	9%
China	7%	8%	7%	8%
Latin America (excluding Mexico and Brazil)	6%	7%	6%	7%
Japan	5%	7%	4%	6%
Brazil	3%	3%	2%	3%

Considering SMEs that intend to expand sales to destinations outside of Canada, there are no major gender differences in the preferred markets for potential exports. Women-owned and men-owned SMEs were almost as likely to plan exporting to the U.S., with 87.0% for women-owned and 89.8% for men-owned enterprises. In other words, the intended destinations of women-owned exporters are less diversified than their actual exports. This may suggest that the intended market of export destination might be related to the smaller gender differences in perception of obstacles to export participation.

Conversely, as firms begin exporting to culturally distant markets, their perception of barriers increases initially, and exporters to culturally distant markets tend to emphasize the needs of these markets (Shoram et al., 1995). Since women-owned exporters are relatively more diversified than their counterparts, this finding might suggest that the increased presence of women-owned exporters in overseas destinations relative to their counterparts may be another factor explaining the gender differences in barriers while exporting.

Other barriers and gender discrimination

The use of a survey questionnaire approach to identify trade barriers has two types of limitations. The first one is that since the list of barriers is pre-defined, it carries a historical or sector bias in the definition of what a barrier is, and may not include barriers related to new types and forms of exporting (e.g. barriers related to e-commerce). For example, tariffs on imports or domestic regulatory policies on importing affect retail trade and are not explicitly defined, nor are barriers internal to the firm. Secondly, as mentioned before, these types of questions my lead to subjectivity bias and response imprecision.

Results from Orsen et al (2004), who applied an open questionnaire to a sample of Canadian women-owned SME exporters, identified gender-specific cultural barriers including “lack of respect by male business owners, bravado, chauvinism, not being taken seriously, men who refuse to do business with a woman, and verification of decisions through male employees.” 

Obstacles related to gender discrimination have not been explicitly identified in the survey used in this report. It is possible that, in the case of discrimination, women-owned exporters may have been more inclined than men to consider the listed factors as obstacles, or may have identified them as “Other”. Isolating these effects requires a more sophisticated analysis using econometric tools.

Conclusion

Existing domestic gender gaps and gender differences in the characteristics of businesses imply that trade policies are not gender neutral. In order to generate equal benefits, the impacts of trade policies have to be examined with these considerations in mind.

In Canada, the gender gap among exporters seems to be proportionally reflecting the gender gap in entrepreneurship. As shown in this report, trade barriers to entry in exporting markets do not seem to affect women-owned entrepreneurs more than other gender groups, which may explain the large increase in export propensity in that gender group relative to men-owned and equally owned enterprises in recent years. While size does not seem to be related to the perception of barriers to export participation, industry concentration of women-owned businesses, namely retail trade and information and cultural services, does. Technology and e-commerce are potentially the primary mechanisms for reducing entry barriers in those industries. Another plausible explanation is that women-owned SMEs that plan to export tend to have similar preferences for potential destination markets as the other gender groups, so they should not perceive entry barriers to be any higher than their counterparts.

However, a larger proportion of women-owned SME exporters, relative to men-owned and equally owned exporters, consider many trade obstacles as being strong barriers while exporting. Logistical, border and foreign administrative obstacles not only affect women-owned exporters more than their counterparts but were also the most significant barriers for SME exporters in general. Three business characteristics seem to be associated with these gender gaps. First, women-owned exporters are disproportionately concentrated in retail trade, which in practice, entails moving goods across borders, with the associated costs. The second factor potentially related to the gender gap in the perception of exporting barriers is that there has been a significant increase in the proportion of women-owned exporters with less than five years of managing experience, and these exporters may also have less experience in dealing with exporting issues. Finally, women-owned exporters tend to export to non-U.S. markets at a higher rate than their counterparts, so geographic and cultural distances could also increase the perception of barriers by women-owned exporters.

Policies aimed at lowering trade barriers as a way to increase market access for women-owned exporters could be more effective if they are targeting these gender-specific differences in firms’ characteristics. While Canada has been continuously increasing market access through trade agreements that address gender and SME concerns, policies that enhance technology-enabled trade and that provide training programs for new exporters might also be effective in helping women-owned enterprises strengthen their export participation.

References

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