Stones on the road: Women scaling up

Research Paper Title:

“Questioning boundedly rational frameworks in practice: The case of women entrepreneurs in Kumasi, Ghana”

Authors:

Arielle Badger Newman (Syracuse University)

Sharon Alvarez (University of Pittsburgh)

Background:

Gender has been left out of the assumptions of boundedly rational models and the use of these models often advantage men at the expense of women. As the authors found in the inductive qualitative case study of informal entrepreneurs in Kumasi, Ghana, women entrepreneurs do not formalize their business ventures, not because of exclusion or prohibitive expense, but due to prevailing norms regarding the role of women in society and the structural delegitimization of their traditional roles as entrepreneurs in the formal, regulatory institutions.

Highlights:

• This work addresses how the notion of rationality that models Western, male-centric business concerns is not universal. Gender has been left out of the assumptions of boundedly rational models and the use of these models often advantage men at the expense of women

• Inductive qualitative case study of informal entrepreneurs in Kumasi, Ghana

• Women entrepreneurs in Ghana do not formalize their business ventures, not because of exclusion or prohibitive expense, but due to prevailing norms regarding the role of women in society

Methodology:

• Sample Size: 200

• Analytical approach: Qualitative inductive

Hypothesis:

1. What are the structural obstacles based on bounded rationality that are imposed on women's business decision-making?

2. How do these obstacles constrain the potential of female entrepreneurs?

3. And finally, what can be done to alleviate the structural constraints caused by adherence to economic norms of male-dominant bounded rationality?

Results:

Gender has been left out of the assumptions of boundedly rational models and the use of these models often advantage men at the expense of women. The work in this paper explores the absence of gender in the assumptions of bounded rationality and how this theory is applied in emerging contexts. The paper explores the structural obstacles based on bounded rationality that are imposed on women's businesses and their decision-making and how these obstacles constrain the potential of female entrepreneurs. The paper examines these issues through 220 interviews with stakeholders in the Kumasi Central Market social system in Kumasi, Ghana. The evidence shows that when considering business registration, what is most salient to entrepreneurs is the prevailing cultural expectations for men and women, despite female economic and social prowess as entrepreneurs that predated these business registration laws for centuries. This tension between expectations for female entrepreneurial competency and the simultaneous marginalization of female entrepreneurs using frameworks based on bounded rationality is explored.

Conclusion:

There are 252 million female entrepreneurs worldwide, and women entrepreneurs are primarily concentrated in developing economies (GEM Consortium, 2019). As such, traditional views of bounded rationality that favor male practices, leave out business decisions made by a significant portion of the world's entrepreneurs - women. Norms of bounded rationality are not universal; indeed, they have been built on developed economy male notions of rationality. What the authors have observed in Kumasi, Ghana is that bounded rationality is an imposed system on women that will continue to disenfranchise women unless changed. Although the specific steps to solve all systemic problems originating from this taken-for-granted assumption are complex, the first step is the most important step, to acknowledge the pervasiveness of the male privilege found in bounded rationality and its impact on women and the societies they live in. Only then can policy changes start to be considered that will benefit all members of society, not just those few privileged individuals. The assumptions of bounded rationality have thus far served to perpetuate economic and social systems that continue to subjugate women and others to secondary statuses. This special issue called scholars to question, is being rational really rational? And the authors’ answer emphatically not only is not rational, but it also doesn't even include half the world's population. It is time we challenge these taken-for-granted standards of economic policy and acknowledge the harm disproportionately born by women. As Alice Walker wrote, We are the ones we have been waiting for (Walker, 2006).