Care enterprises founded by women are transforming the care economy and lifting other women

Introduction

For the past three years, Kore Global has been leading a consortium to conduct research and disseminate evidence on businesses and social enterprises that are working to recognise, reward, redistribute and reduce care work for women in Latin America, Africa, and Asia as part of the IDRC-funded Care Economy Knowledge Hub (CEKH). By care enterprises, we refer to businesses that provide a range of products and services from childcare and elder-care, to formalised domestic work, to energy-efficient cookstoves and water collection solutions. Having mapped 150 and profiled 59 such businesses, we then dove deeper into 20 enterprises to understand their business models and their impact. 

As we got to know these businesses better, we started to notice some exciting patterns - 73% of the profiled businesses had a woman founder. This is remarkable, considering that in 2023, women accounted for only 13.2% of start-up founders globally. We set out to find out what ripple effects women’s involvement in care economy business founding and leadership might have on the approach of the enterprise and its impact on other women, guided by our learnings from evaluating gender-lens impact ventures for British International Investment and for Proparco.

In our evaluation of BII’s gender-lens investment portfolio, we found that gender-diverse ownership and leadership in companies and funds tend to benefit women employees and contribute to stronger gender-smart business practices. Does the same hold true for care economy businesses founded and/or led with strong female involvement? This is what we found from a statistical analysis of our sample of 59 business profiles.

💡 Insight 1: Women are surpassing men in founding high-impact care economy businesses

Of the 59 businesses we profiled, 50% were solo-founded by women, and 73% had women co-founders. Comparatively, men solo-founded 27% of the businesses, and 58% of the businesses had a male co-founder. The apparent dominance of women as founders in the care economy is unprecedented and promising not only for women’s entrepreneurship but for both women employees and women consumers of those businesses. 

There is evidence to suggest that women-led firms across a variety of sectors and geographical contexts may be more likely to hire, train, and promote women. There is also reasonable evidence to suggest that they are more likely to adopt Environmental, Social, and Governance (ESG) policies, although this evidence is mostly from high-income countries, and there is more limited evidence on how and in what ways women in leadership may contribute to the prevention of gender-based violence and harassment (GBVH) in the workplace. Evidence further suggests that women-led firms are more likely to foster female-friendly and gender-equitable workplace cultures, with effective management practices. 

We are beginning to better understand the mechanisms through which women business leaders may bring about positive change for other women. For example, there is some evidence suggesting female directors often prioritise kindness and fairness more than male directors, while also putting less emphasis on enforcing power hierarchies. Such attitudes are aligned with the core values underpinning gender lens investing in the care economy - providing fair wages to care workers (“Reward”), and promoting a more equitable redistribution of care work to promote women’s empowerment (“Redistribute”). 

Women founders of care businesses likely have an intimate and personal understanding of the disproportionate burden of care work on women and its negative impact on women’s labour force participation as well as career progression and involvement in leadership roles, and qualitative research with female founders supports this. It appears that more women are putting first-hand knowledge into practice by establishing enterprises that tackle the care burden head-on, strengthening the care economy ecosystem not only for their own sake but for other women, including those of lower socioeconomic class such as those employed as domestic workers or childcare providers.

💡 Insight 2: Women-founded care businesses hire and promote more women into leadership roles

If you’re concerned with women’s leadership, you need to be concerned with women’s entrepreneurship, because women-founded businesses tend to hire and promote more women. In our sample, 92% of female-founded or co-founded businesses met the 2X Leadership Criteria, i.e. the share of women in senior leadership roles exceeded 30%. In comparison, only 38% of the care businesses that were solo-founded by men met the 2X gender-diverse leadership criteria. This association between female entrepreneurship and female leadership was statistically significant (p < 0.001), suggesting this pattern is not merely a coincidence. 

While our data did not contain figures on overall female employment across the 59 care economy businesses, broader evidence suggests that gender-diverse leadership also translates into greater employment opportunities for women employees in non-leadership positions. Substantive evidence indicates that women in leadership are more likely to hire women than their male counterparts. This holds true across various geographies (especially in Central Asia and Central Eastern Europe), as well as across different sectors and types of businesses. Female-led businesses are also more likely to provide training and, with other female employees participating in that training, they can promote knowledge-building and empowerment. Further, women have better prospects to advance when employed by female-led companies. This propensity for female leaders to hire, train, and promote other women supports women’s representation in the labour market, increases their professional development, and reduces their risk of poverty or welfare dependency. These benefits also extend more broadly to households and communities, positively affecting people beyond the company. Female leaders may also act as role models for other women.

Women in leadership roles often support more gender-equitable and female-friendly cultures within their organisations. Increased female participation in the Board of Directors is associated with greater empathy and sensitivity to social and ethical issues, increased awareness of environmental risks, greater likelihood to implement environmental governance structures/processes, more engagement in corporate philanthropy and social responsibility, as well as carbon reduction initiatives. Additionally, female directors have been found to demonstrate greater benevolence and universalism than their male counterparts, and value power less (defined as the enjoyment and seeking of power derived from the control of resources and employees offered by running a business). 

Moreover, an analysis of German employer-employee data found that an increased number of women in management is related to a decreased gender pay gap for employees. Interestingly, the effect is stronger for women in second-level management positions, rather than first-level management, suggesting that the closer female managers are to their employees, the more impact on the pay gap they may have.  

While the gender pay gap may not be as relevant to care economy businesses that primarily employ women, for example as domestic workers or care providers, the quality of the jobs provided by female-founded and led companies tends to be higher, with greater remuneration and overall reward for female care workers. In our sample, 87% of the care businesses that have both a female founder and female senior leadership (>30%) had business models that met the Reward criteria in providing well-paying and secure job opportunities, as well as training and professional development opportunities to their employees. This correlation was statistically significant (p < 0.05), supporting the observations others have documented.

💡 Insight 3: Female solo founders are more likely to establish nonprofit enterprises, which in turn are more likely to work towards recognising care work.

Of the enterprises we profiled in the Care Economy Knowledge Hub, 13 were nonprofit enterprises. Of these, 9 had a female solo founder (69%). In comparison, 27.78% of for-profit enterprises were female-solo-founded, while female solo founders accounted for 67% of social enterprises. This moderate positive correlation between female solo founders and nonprofit enterprises was statistically significant (p < 0.05). 

Why might women founders be more likely to found a nonprofit than a for-profit enterprise? In addition to female leaders being more likely to prioritise the values of benevolence mentioned above, this may be related to the difficulties female entrepreneurs face in securing capital in the form of either debt or equity to grow their businesses. For instance, only 2% of global venture capital has gone to businesses solo-founded by women. In contrast, businesses with both male and female co-founders attracted 20% of venture capital. This is in part because of women’s difficulty in accessing capital overall, but also due to barriers in accessing mentorship and networks in the investing community compared to male founders. These barriers are less relevant in the context of a nonprofit seeking grant funding, which is primarily based on the enterprise’s social impact, where female leadership has a longer history of being valued, as illustrated by 62% of nonprofit CEO positions (in the US) being held by women.

Impact investors should not ignore these types of enterprises, as many are seeking to develop for-profit enterprises and/or income streams. For this, more patient and blended capital needs to be deployed. Nonprofit care economy enterprises have effective and robust business models and can provide a strong holistic impact, particularly in tackling inequities in the care economy. In our sample, there was a moderate positive and statistically significant (p < 0.01) correlation between nonprofit enterprises and working to recognise care work. Recognising care involves formalising care work and promoting the visibilisation of care work, as well as at times behavioural and normative change and advocacy. The “Recognise” pillar of the 4R framework has great potential for impact and amplification of the Reward & Redistribute pillars, as societal recognition of care work leads to greater public and private investment in the care economy ecosystem, as well as supporting normative changes whereby care work is redistributed more equitably along gender lines. So, if deep and systemic change is what you want to invest towards, nonprofits in the care economy, particularly those founded and led by women, are a very strong bet in the longer term.

Conclusion

Our Care Economy Knowledge Hub research has uncovered significant insights into the transformative potential of women-founded and women-led businesses in the care sector across Latin America, Africa, and Asia. The prevalence of female founders and leaders not only underscores their commitment to tackling the global care burden but also holds hope for their ability to establish more equitable and sustainable business practices. 

It is becoming clear that investing in women-founded care businesses not only enhances economic opportunities for women but also catalyses broader societal shifts towards recognising and valuing care work. Moving forward, these findings serve as a compelling call to action for stakeholders to prioritise and support the vital work of women entrepreneurs in reshaping the global care economy.

Written by Becky Zelikson and Kari Walton, Analysts, Kore Global