Resource acquisition and the complexity of social capital : Perspectives from women entrepreneurs in Tanzania and Pakistan

Abstract: Women entrepreneurs all over the world contribute significantly to innovation, employment opportunities and wealth creation in their respective economies. Despite their importance as drivers of development, there is a lack of research on preconditions for women’s entrepreneurship. In particular, little attention has been given to women’s venturing in developing economies. This is troublesome, since women have the potential to play a crucial role in the development of any society, not least through venturing. Entrepreneurshiphas long been recognized as one of the keys to economic developmentand numerous studies have confirmed its economic value. At the same time, a lack of capital and other resources is a crucial constraint in starting and expanding new businesses, especially in developing economies where the financial markets are often underdeveloped or dysfunctional. Further,previous research shows that women entrepreneurs face particularly high obstacles when searching for capital and other resources, as they have to overcome both formal and informal barriers.The aim of this thesis is to contribute to previous knowledge on women’s entrepreneurship in developing countries, by exploring and describing women entrepreneurs’ resource acquisition. The aim is further to explore the role of formal and informal institutions, as well as the role of social capital in relation to resource acquisition. The thesis is based on two field studies, conducted in two different developing contexts – Tanzania and Pakistan. Extended periods of time were spent in these contexts, where data were collected through semi-structured interviews, a questionnaire and participant observation. The focus is on how women entrepreneurs obtain access to financial and other resources. The focus is further on the role of formal and informal institutions in relation to women entrepreneurs as they acquire resources, and the role of social capital in resource acquisition. Special attention is given to contextual preconditions.The results from the four papers of this thesis show that the studied groups of entrepreneurs use similar financial behavior. In both contexts, women have almost no access to formal capital from banks, and have to rely on informal sources of capital and resources, mainly from family members. In Tanzania, the microfinance sector plays an important role, and other semi-formal actors (e.g. SACCOs and RoSCAs) are commonly used as well. In Pakistan, the microfinance sector is less developed. There are semi-formal actors that can be used (such as so-called “committees”) but it is more common to use one’s own savings and loans or grants from family members. Further, results show that women entrepreneurs have to navigate through a complex interplay of barriers on both formal and informal levels. Although respondents in both contexts recognize that informal contacts (such as family members, friends, and social networks) are important sources of capital and other resources, they clearly express their desire for reliable, well-functioning, formal financial institutions. Lastly, results confirm that social capital is a crucial factor for entrepreneurs. As women in the studied contexts are excluded from formal finance, they are even more dependent on informal capital, and thereby their ability to use social capital. However, it is remarkable how often their social embeddedness is not only complex but counterproductive. Results show both negative outcomes of, and limited access to, social capital for the studied entrepreneurs.