Canadian Women Grabbing the Baton

Small and medium business establishments are well recognized as a significant component of the economic landscape in Canada, driving industrial renewal and innovation and helping the economy to stay competitive in a rapidly changing world. These businesses, characterized as employing fewer than 500 people, represent 99.8% of employer-establishments and are an important
source of job creation, accounting for more than 50% of private-sector payrolls. Moreover, as highlighted in an earlier RBC Economics Research report1, SMEs are a significant source of productivity gains in Canada, a major
driver of GDP growth and therefore real personal income growth and living standards.
Given the contributions of small and medium businesses to economic activity in Canada—representing an estimated 40% of GDP2
— encouraging greater participation in business ownership, particularly for females, by addressing potential obstacles could yield significant benefits to the overall Canadian economy. Female majority-owned business establishments have made headway in the Canadian SME landscape with the share of firms with greater than 50% female ownership rising to 15.6% in 2011 from an estimated 14.9% in 2007 and 13.7% in 20043. Much ground has yet to be covered, however, as the relatively low share of majority female owned firms suggests female entrepreneurs represent an untapped resource of growth potential.
Over the past three decades, the increased participation of females in the labour force represented an important driver of economic growth. We estimate that this increase in female participation resulted in a $130 billion contribution to economic activity in 2012, equivalent to approximately 7% of GDP4. Female participation rates have stabilized in recent years, however, and a demographic shift taking place in Canada raises concerns about the ability to sustain rates of comparable economic growth going forward. That being said, a further narrowing and eventual elimination of the gap between female and male participation rates over the next 20 years would result in a 4% boost to GDP in 20325. To assess the potential for female entrepreneurial activity to contribute to achieving such economy-wide benefits, this report focuses on the characteristics of female majority-owned small and medium sized enterprises (SMEs)using the Survey on Financing and Growth of Small and Medium Enterprises6.

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