class: center, middle, inverse, title-slide # THE ROLE OF FEMALE ENTREPRENEURS ## IN DEVELOPING THE LOCAL MARKETS<br />IN THE REGIONS OF THE POST-COMMUNIST WORLD ### Alexander Shemetev ### For London Conference ### 2021/09/07 (updated: 2021-09-08) --- # Goal: answering the research questions: Female entrepreneurs could become a free marketing data source for the people who gained capital in the 1990s? -- What were the reasons most of the original female-run businesses disappeared in the 2000s? -- Target country: Russia --- # Topics: 1) Entrepreneurship, environment and work in the USSR -- 2) Reasons why women in Russia wanted to become entrepreneurs in 1990-s -- 3) Confirmation in terms of the analysis of the focus groups -- 4) Confirmation in terms of financial logics -- 5) Confirmation in terms of the economic theory -- 6) Results, conclusions, and discussion --- class: inverse, center, middle # Entrepreneurship, environment and work in the USSR --- # Results: 1) The image of an entrepreneur was generally negative in the popular mind -- 2) No legal experience of entrepreneurship in the Soviet Union to be passed to the future generations -- * There were no internet or business books as well -- 3) Only very serious factors could force women to become entrepreneurs en masse [after the USSR] --- class: inverse, center, middle # Reasons why women in Russia wanted to become entrepreneurs in 1990-s --- # Results: 1) % of unemployed women could be around three quarters in the 1990s (to N unemployed) -- 2) there were practically no more than 10% of working women in the most promising sectors of the economy -- 3) The factors that forced women to do business had to be very serious: -- - poverty, -- - the lack of substantial social guarantees, -- - the difficulty of getting a good job for women, -- - exponential growth of the N of single mothers in the 1990s -- - the need to feed the family --- class: inverse, center, middle # Confirmation in terms of the analysis of the focus groups --- # Results: 1) No preserved unbiased data for the time of the 1990s (regarding the female entrepreneurship) -- 2) The analysis of the focus groups is the remaining trustworthy way to confirm the validity of results --- class: inverse, center, middle # Confirmation in terms of financial logics --- background-image: url(data:image/png;base64,#1.jpg) class: inverse, bottom, inverse background-size: contain -- # The integration of the growth rate --- # Results: - WACC->C(ImA+MA): WACC supports the business processes (through assets)¹ -- `$$C(PPE_{B})<C(PPE_{S})$$` -- `$$C(C_{B})<C(C_{S})$$` -- `$$C(LTFI_{B})<C(LTFI_{S})$$` -- `$$C(AR_{B})<C(AR_{S})$$` -- `$$C(DTA_{B})<C(DTA_{S})$$` -- `$$C(M_{B})<C(M_{S})$$` -- `$$C(STFI_{B})<C(STFI_{S})$$` -- `$$C(IP_{B})>C(IP_{S})$$` [1] Please, see the Appedix I slide for abbreviations --- # Results: `$$\frac{E_{B}}{D_{B}+E_{B}}*r_{e}+\frac{D_{B}}{D_{B}+E_{B}}*r_{d}*(1-T)<$$` `$$<\frac{E_{S}}{D_{S}+E_{S}}*r_{e}+\frac{D_{S}}{D_{S}+E_{S}}*r_{d}*(1-T)$$` -- `$$WACC_{S}>WACC_{B}$$` -- Thus, the financial benefit of small business units was only caight by: `$$C(IP_{B})>C(IP_{S})$$` --- class: inverse, center, middle # Confirmation in terms of the economic theory --- class: inverse, center, middle # USSR equilibrium for labor --- # Results: Let²: `$$U(c,l)=log(c)+F(l)$$` -- `$$C=w*N^{S}+\pi-T;\pi=0;T=>0;w\ge 0;l\in [0;1];h\in [0;1]$$` `$$=>C\le w*(1-l)$$` -- `$$\begin{cases} \frac{\partial L}{\partial c}=\frac{1}{c}-\lambda=0\\\frac{\partial L}{\partial l}=\frac{\partial F(l)}{\partial l}-\lambda w=0\\c=w(1-l) \end{cases}$$` -- `$$l^{*}=1-\frac{1}{F'(l^{*})}$$` Leisure depends on F(l), but not on wages [2] Please, see the Appedix II slide for abbreviations --- class: inverse, center, middle # The 1990-s equilibrium for labor --- # Results `$$\pi \ge 0$$` Leisure is a commodity: `$$U(c,l)=log(c)+log(l); C \le w*(1-l)+\pi$$` -- `$$\begin{cases} \frac{\partial L}{\partial c}=\frac{1}{c}-\lambda=0\\\frac{\partial L}{\partial l}=\frac{1}{l}-\lambda w=0\\c=w(1-l)+\pi \end{cases}$$` -- `$$c^{*}=\frac{w+\pi}{2}$$` -- `$$l^{*}=\frac{\pi+w}{2w}$$` --- background-image: url(data:image/png;base64,#2.jpg) class: inverse, bottom, inverse background-size: contain -- background-image: url(data:image/png;base64,#2_1.jpg) class: inverse, bottom, inverse background-size: contain -- # The suggested income and substitution effects for consumption and leisure for Russia in the 1990s³ -- [3] Please, see appendix III for notes --- class: inverse, center, middle # Results, conclusions, and discussion --- # Results 1) Women were less preferred as employees because of physiological issues like potential pregnancy -- the government abandoned the idea of the strong maternal support of women in those years -- 2) Some researches indicate that women were up to 3 times more often unemployed [at “point G” in terms of Fig. 2] -- 3) Thus, women had to decide whether to consume zero (leisure time is 100%) -- or depend on what a spouse earns with low salaries of the 1990s, -- or to run their own business. --- # Results 1) The marketing information was the source for receiving the benefits from small businesses -- 2) Gradually this commercial secret depreciated -- 3) Big companies received information from these small business units -- 4) The effect of scale made the weighted average cost of capital for big businesses lower than for the small business units --- # Results 1) Thus, small women-run companies had to surrender their market positions to big chain companies in the regions of Russia in the 2000s. -- 2) These women provided the first free marketing data to the big companies. --- # Results 3) The high value of the debt capital (around 1000% per annum) reduced the opportunities to apply the financial leverage -- 4) This led to the fact that equity (own capital) was a much cheaper and stable source of income than liabilities (borrowed capital). -- 5) This led to an interesting situation when the marketing and IP data was the main competitive advantage of small business units at the 1990s --- class: inverse, center, middle # Thank you for your attention! --- # Abbreviations (appendix I slide): PPE – property, plant, and equipment so that C(PPE) is the cost for maintaining and keeping the PPE; C – cash so that C(C) is the cost for having cash; LTFI – long-term financial investments so that C(LTFI) is the cost for maintaining and keeping the LTFI; AR – accounts receivables so that C(AR) is the cost for maintaining and keeping the AR; DTA – deferred tax assets so that C(DTA) is the cost for maintaining and keeping the DTA; M – materials [including raw materials, materials in production, finished products] so that C(M) is the cost for maintaining and keeping the M; STFI – short-term financial investments so that C(STFI) is the cost for maintaining and keeping the STFI; IP – intangible assets [intellectual property] so that C(IP) is the cost for maintaining and keeping the IP; B - big business; S - small business. --- # Abbreviations (appendix II slide): Each person decides whether to consume general commodities (c) or leisure (l). Let the time for leisure is normalized to 1. The market offers wage rate w. Log(c) catches the utility from the changes in consumption (c). F(l) is just a function of leisure where we do not know what is inside of it for the Russian conditions of the 1990s. T=0 is somehow justified, because otherwise there is no tool to restore the true tax rate paid by the Russian business agents in the 1990s (no true accounting books preserved; nobody is willing to share the secrets of the tax policies and interactions with the public officials from those days). π=0 in the USSR. The governmental policy forced people to abandon any idea of the non-labor income by punishments --- # Abbreviations (appendix III slide): Moving along the same indifference curve – is a substitution effect; shifting to a new indifference curve is an income effect.