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Challenges facing women entrepreneurs in Montenegro

Center for Entrepreneurship and Economic Development (CEED), Podgorica

CEED Series: Business Idea Editor of the Series: Veselin Vukotic, Ph.D. Editor of this book: Petar Ivanovic Layout: CEED Cover Design: Nebojsa Klacar, Studio Arh-angel Printed by: Montcarton, Podgorica The CEED is the first consulting center established in Montenegro to support entrepreneurship and economic development. The mission of the CEED is—through its programs, projects, and advocacy activities—to promote and practically implement in Montenegro the ideas of a free market, entrepreneurship, and private ownership in an open and democratic society; and the rule of law. The primary services offered by the center include: (i) research, economic surveys, and SME database development; (ii) policy analysis and recommendations; (iii) business consulting services; (iv) business plan development for aspiring entrepreneurs; (v) basic and advanced business training for start-up and established firms; (vi) support for women entrepreneurs; and (vii) publishing. Internet: http://www.visit-ceed.org E-mail: cfepg@cg.yu Copyright ©2003 CEED All rights reserved. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system without the prior written permission of the publisher. Published with support from United States Agency for International Development (USAID), within the partnership program between the Center for International Private Enterprise (CIPE) and the Center for Entrepreneurship and Economic Development (CEED).

The Center for International Private Enterprise Washington DC, USA

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The Center for Entrepreneurship and Economic Development Podgorica, Montenegro


Challenges facing women entrepreneurs in Montenegro

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Challenges facing women entrepreneurs in Montenegro

This paper was the final step in completing the requirements for an MBA from Durham University. When the time came to select a topic, I wanted to find something that would satisfy my examiners, but having recently arrived in Montenegro, I also wanted to write about something relevant to my new home. I finally decided to focus on gender issues, for several reasons. First, the idea that women entrepreneurs can help boost a country’s economy significantly, particularly if they benefit from training and other types of support, is rapidly gaining acceptance all over the world. I believe it is deserving of further exploration. Second, although a great deal of research on the challenges facing entrepreneurs has been carried out in Montenegro, none of it has been gender specific. This would be a useful addition to the growing body of gender research in the Republic. Finally, I had met a number of wonderful women through my work at the Center for Entrepreneurship’s Women’s Business Center. I thought it would be enjoyable to spend more time with them, and worthwhile to learn about their lives. As I anticipated, carrying out the research for my project proved to be a very positive experience. The six entrepreneurs I interviewed were generous with their time, and all had interesting stories to tell. The work on this project was carried out from March-July 2002. I graduated in December 2002, and I am very pleased that my dissertation will now reach a wider audience. I would like to thank CEED and CIPE for having this paper translated and published in Montenegro. I also offer thanks to my interpreter Maja Drakic, my advisor Lindi Lumsden, and the six women who shared their stories with me. I wish them all continued success.

The Author

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Challenges facing women entrepreneurs in Montenegro

TABLE OF CONTENTS

ABSTRACT

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CHAPTER 1. INTRODUCTION 1.1 Historical Background 1.2 Demographics 1.3 Women in Montenegro 1.4 Objectives

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CHAPTER 2. LITERATURE SEARCH 2.1 Entrepreneurship and its Importance 2.2 Increasing Entrepreneurship 2.3 Women Entrepreneurs 2.4 Characteristics of Women Business Owners and their Establishments 2.5 Barriers Faced by Women Entrepreneurs 2.6 Summary

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CHAPTER 3. METHODOLOGY 3.1 Surveys 3.2 Focus Groups 3.3 Case Studies 3.4 Data Gathering Methods and Target Subjects

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CHAPTER 4. CASE STUDIES 4.1 Marina Markovic 4.2 Olgica Nikcevic 4.3 Albana Bazovic 4.4 Edita Klein 4.5 Mila Mirkovic 4.6 Milica Radinovic

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CHAPTER 5. DISCUSSION OF RESULTS 5.1 Review of questions

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CHAPTER 6. CONCLUSION AND RECOMMENDATIONS 6.1 Review of Objectives 6.2 Evaluation of methodology 6.3 Conclusion

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APPENDIX I

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APPENDIX II

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BIBLIOGRAPHY

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Challenges facing women entrepreneurs in Montenegro

ABSTRACT Although it is not immediately apparent when first visiting the country, Montenegrin society is a patriarchal and traditional one. Women are perceived primarily as daughters, wives and mothers, and although many of them work their professional opportunities are more limited than those of their male counterparts. The current business environment in Montenegro is quite difficult. Since the end of the Balkan wars, the country has been undergoing an economic crisis, and gender issues are not at the forefront. However, as the situation begins to improve, it will be useful to understand the issues in order to find relevant solutions. This dissertation looks first at issues concerning women entrepreneurs on a global scale, and then in greater depth at six Montenegrin women business owners. Chapter 1: Introduction This chapter presents some background on Montenegro and the current situation in the country. Due to the years of war in the Balkans, the countries of the former Yugoslavia are behind the other ex-communist countries in the region in terms of reform. Montenegro is currently undergoing a major overhaul of its economic and legislative systems that will hopefully allow it to catch up with its neighbors. All of the county’s citizens are suffering, but women seem to be having a harder time. They face a higher unemployment rate, lower salaries, and usually work in menial positions. Chapter 2: Literature search The first section in this chapter examines general findings about entrepreneurs, and then looks at women entrepreneurs in particular, both in rich and poor countries. According to the literature women business owners, wherever they are from, share a number of similar characteristics, and also face similar obstacles. Chapter 3: Methodology As there is no mechanism for identifying all the women business owners in the Montenegro, even those who are legally registered, the author chose to use case studies as a methodology. While the sample is small, this allowed the issues to be explored in greater depth. Chapter 4: Case Studies The author interviewed six women entrepreneurs who are running their own businesses in Montenegro. The women differ in age, educational background, and type of enterprise. Chapter 5: Discussion of results Despite their differences, the women in the sample face many similar issues. Business owners of both sexes in Montenegro today must deal with high taxes, a complicated bureaucracy, and other obstacles that appear to supercede gender specific obstacles. In fact, most of the subjects had not thought about gender issues before, and none of them believe them to be a major problem. While this may be true, it has not been the case in other transitional economies. The author suspects that as the economy improves, women may begin to focus more on their professional environment. Chapter 6: Conclusion and recommendations The research shows that women are a valuable resource that can make important contributions to a country’s economy. This section lists a number of actions that can help women business owners become more successful. This would benefit not only Montenegrin women, but also the society as a whole. 5


Challenges facing women entrepreneurs in Montenegro

CHAPTER 1. INTRODUCTION When I arrived in Montenegro in October 2001, I knew almost nothing about my new home. My first, superficial impression was a very positive one. Thanks to the Italian influence, there is a strong café culture, and in the evening when the weather is nice one can see all the young people sitting outside drinking coffee or wine with their friends. The people here are tall and attractive, and dressed stylishly in the most recent fashions, thanks to smuggled clothes coming in from Italy. Sitting in one of the trendy bars lining the main street of the capital, it would be impossible to tell that this country has suffered from 10 years of sanctions, that it is undergoing a severe economic crisis, and most important for my research, that despite the high heels and short skirts it is in fact a very traditional and patriarchal society. As I started to get to know some of the locals, I realized that my initial impressions required some readjusting. First of all, the fancy clothes and the nights on the town are very deceptive. Wages are low and unemployment is high, and when invited to a local’s home it becomes clear that the economic sanctions have hit hard. Secondly, I began hearing stories about the conservative values system. Finally, I started to look at data about women in business, and realized that in fact they have a long way to go to catch up with their male counterparts. As I learned more about the situation, I became interested in designing a dissertation topic on the challenges facing women entrepreneurs in Montenegro. 1.1 Historical Background Montenegro, a small picturesque land on the Adriatic Coast, today is along with Serbia one of the two remaining republics of the Federal Republic of Yugoslavia. The country’s history dates back to Roman times, and like much of the region is filled with stories of war and violence. The Montenegrins are known as “the warrior Serbs” and locals are still proud that during Ottoman times much of the country remained independent, although this may be due to the fact that the Ottomans couldn’t be bothered with the mountainous little country rather than the fact that the brave Montenegrin fighters were able to keep them at bay for 500 years. The Kingdom of Serbs, Croats, and Slovenes was formed in 1918; its name was changed to Yugoslavia in 1929. After WWII, Marshall Tito took control and was able to hold the country together until his death in the 70’s. However, in the early 1990’s everything began to unravel and Slovenia, Croatia, Bosnia and Herzegovina and Macedonia all declared their independence. Montenegrins fought in the Yugoslav Army during the war on Croatia in 1991, but remained neutral in the later wars in the region. However, the country has suffered severely over the past 10 years. The NATO bombings did not do major damage, but the economic sanctions against Yugoslavia did almost irreparable harm to the economy. Per capita GDP has declined by over 50% since 1990. Concerned about stability in the region, the US government and the EU are currently pouring money into Montenegro to support programs to put the country back on its feet. This includes among other things fiscal, monetary, tax, pension and legal reform and a full overhaul of the banking system. Although the Montenegrins have historically identified themselves with the Serbs, the last 10 years have opened up some gaps, and the main political item on the agenda today is whether or not Montenegro will become independent. The two republics have reluctantly agreed to stay together at least for the next three years, but the long-term future remains uncertain.

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Challenges facing women entrepreneurs in Montenegro

1.2 Demographics The Republic if Montenegro is located in South Eastern Europe and has a population of about 620,000. Its territory is about 13,812 square kilometers and the population consists of a majority of Montenegrins (62%) along with Serbs (9%), Albanians (7%), Muslims (15%), Croats (1%) and others (based on the 1991 census). The majority of the population belongs to the Orthodox Christian tradition (Montenegrins and Serbs); there is also a large Muslim population and smaller numbers of Roman Catholics. The form of government is Democratic Republic. 1.3 Women in Montenegro According to the 1991 census, women make up 51% of the population of Montenegro. In certain post-Communist countries such as Bulgaria, women enjoy close to equal status with men, a leftover from their former governments’ philosophy. This is not the case in Montenegro, where the ideal role women for women is still seen as mother, wife, homemaker. However, this is slowly changing. Around 27% of all enterprises established since 1997 are women-owned as compared to just 5% in 1990. 1.3.1

Employment

Although the privatization program is moving ahead in Montenegro, the state is still the biggest employer. After the insecurities of the past decade, both men and women are afraid to be entrepreneurs, feeling more secure to work for state-owned companies. Furthermore, it is very difficult to get financing. The majority of entrepreneurs borrow money from friends and family in order to start their businesses. No exact analysis has been done, but looking at the figures it seems that more women were forced to leave their jobs than men in the past 10 years as the economy declined. Current estimates on unemployment range from 20%-40%, with 59.5% made up of women. However, this is deceptive as a large number of people work under the table. Women make up 40% of the legal workforce, and they are estimated to make up around 60% of the gray economy. 1.3.2

Business ownership

According to the results of a survey carried out by the Center for Entrepreneurship, out of 100 firms, 16% are owned by women (www.cfem.org). Women tend to work in areas traditionally associated with their gender; thus 38% of all women-owned enterprises are in the retail trade as opposed to just 26% of male owned firms. In another survey carried out by the same organization, out of 100 women-owned enterprises, 56% were involved in retail. 22% in services, 14% in production and 6% in wholesaling. Women in general establish micro companies, usually with only one or two employees (According to another study by the Institute for Strategic Studies and Prognoses, out of a total of 250 firms, only 57% of male owned firms employ fewer than 10 workers compared to 79% of women owned firms). Home remains the main business location, not only for financial reasons but also to remain close to children and family. 1.3.3 Legislative Environment At the moment, the situation is quite confusing, as in some cases the old laws from the Federal Republic of Yugoslavia (FRY) apply, while in others the new Montenegrin laws apply. In general, 7


Challenges facing women entrepreneurs in Montenegro

under the old laws women enjoyed equal status, but in practice this was not the case. Women’s salaries are almost always lower than men doing the same job, and you rarely find a woman in a high position. This may have been a result of over-protection. In ex-Yugoslavia, a woman could take one year paid maternity leave after the first baby, 18 months after the second and three years after the third (then back to one for the fourth). The new laws currently in Parliament for approval are based on EU law and are somewhat more reasonable. 1.3.3

Role of Advocacy

Around 40% of the membership of the Trade Unions is made up of women. However, there are few women in decision-making roles. In operative committees within firms, men make up 95% of members while women make up just 5%. An organization called “Woman Today” was formed in 1999 to bring topics relevant to working women on the agenda as much as possible. There are a number of women-oriented non-governmental organizations (NGOs), but the majority of them are focused on family issues, or spousal abuse, another major problem here. In June 2001 the Women’s Business Association (WBA) was founded, with its mission to improve the state of women in business. It has been a little slow getting off the ground, but could be a powerful tool to help bring women’s issues to the forefront. 1.4 Objectives Although I am aware that there is already a plethora of research out there on women’s issues, the topic has been neglected in Montenegro, and I believe it will be useful to explore the specific challenges businesswomen are facing. The objectives of this paper are: • • •

• •

To investigate whether women, both in rich and poor countries, make up a smaller percentage of entrepreneurs. To identify the specific challenges faced by women entrepreneurs in the business world. To discover which if any external factors, such as lack of access to funding, discrimination, legal structure etc., cause female Montenegrin entrepreneurs to have a harder time starting or expanding their businesses than men. To identify values held by female Montenegrin entrepreneurs that would lead them to conduct business in a different manner than their male counterparts. To determine how the issues faced by Montenegrin women compare to issues facing women on an international level. • To identify policies that will help women entrepreneurs in Montenegro conduct business more effectively.

The first part of the paper will examine the existing literature on women in business, focusing specifically on women entrepreneurs in developing economies. The second part will contain details on 5 case studies. I intend to interview women in a variety of situations: those who have been in business for some time and those who are just starting out, those with tiny enterprises and those with larger ones. The final section will contain a summary of my findings and any recommendations.

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Challenges facing women entrepreneurs in Montenegro

CHAPTER 2. LITERATURE SEARCH While there has been a great deal of research done on entrepreneurship in general, the spotlight has only been focused on women in recent years. The percentage of studies about women entrepreneurs/business owners comprises less than 10 percent of the total published work in the field. (Brush & Hart et al 2000 p. 4). In fact, most of the studies in this area comment on the lack of adequate data about women entrepreneurs. There are several possible reasons for this scarcity. First, economic data tends to focus on larger companies as opposed to the small and medium sized enterprises (SME) where women business owners are usually found. Second, official statistical data is not usually gender specific. (Baygan 2000 p. 5). The majority of the research that does exist in regards to women in business mainly covers the wealthier countries, even though women entrepreneurs are an equally significant force in the developing world. Despite the lack of information, some important themes do emerge from the existing literature, and certain assumptions can be drawn. Governments in recent years have become more aware of the powerful resource they have in their women business owners and there has been a call for further studies. As the body of research grows over the next years, it will be interesting to see how these themes develop. 2.1 Entrepreneurship and its Importance When we hear the word “entrepreneur”, we often think of some of the well-known business people in the technology industry who made it big in the 90’s. These individuals did have an amazing impact. Although “Entrepreneurial Growth Companies” made up just 4% of new companies between 1988-1992 in the US, they created 60% of new jobs. However, most small business owners typically have less ambitious goals. They wish to keep their businesses functioning effectively, to support their families, and achieve a measure of independence. (National Commission on Entrepreneurship 2001 p. 8). Rather than dreaming of becoming Bill Gates, most aspiring entrepreneurs initially have low growth expectations for their enterprises. (Delmar & Davidson 1999 www.babson.edu). Nevertheless, the contribution even these smaller entrepreneurial enterprises make towards a country’s GDP is significant. Research has shown that there is a relationship between entrepreneurship and economic growth. According to the Global Entrepreneurship Monitor (GEMS), a study carried out in 21 different countries in 2000, countries with high levels of entrepreneurship typically achieve high levels of economic growth. (Reynolds, Hay et al 2000 p. 10). The literature increasingly puts forth the idea that entrepreneurship thrives in countries that have an “entrepreneurial culture.” This includes not only economic and political conditions, but also a certain cultural framework. (Morrison 2000 p. 62). In America, where failure is thought of as a positive learning experience, entrepreneurship is strong, while in a number of European countries where failure is not forgiven there is less entrepreneurship. (OECD Observer 1997 p. 18). A study comparing people in the US and Ireland found both cultures to be high on “achievement motivation,” but while it was common for Americans to open their own businesses, the Irish were far less likely to do so due to cultural constraints. (Pillis 1998 www.babson.edu). Asians are even more extreme. Business people in Singapore and Indonesia stated “they would only start a business if it was a sure thing.” (Begley & Tan 2001 p.537). The GEMS study supports this. Entrepreneurship has a stronger presence in countries where it is perceived as socially legitimate. In Brazil 1 in every 8 adults is starting a business, compared to 1 in 10 in the US, 1 in 33 in the UK and 1 in 100 in Ireland and Japan. (Reynolds & Hay et al 2000 p. 8).

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Challenges facing women entrepreneurs in Montenegro

Some of the factors that allow entrepreneurship to take off include: • Demography (a young, expanding population) • Economic order (government presence, tax system, education, participation of women, etc.) • Entrepreneurial framework conditions (entrepreneurial opportunity and capacity, financing, information technology, etc. (Reynolds & Hay et al 2000 p. 32) Without a conducive environment, entrepreneurs will at best operate their businesses in the gray economy, and at worst will not bother opening a business at all. A World Bank study in 100 countries discovered that if efficient and formal institutions exist, people will start businesses, while in countries where, for example, the process of registering a business takes a lot of time and money, they will not bother. (The Economist, Sept. 2001). An in-depth study in China also discovered that entrepreneurial personality traits are important in starting a business, but intentions to grow the business are linked to how business owners perceive the environment. (Busenitz & Lau 2001 p. 5). Governments willing to take a proactive approach towards creating an environment where entrepreneurship will thrive will clearly benefit from the long-term gains. 2.2 Increasing Entrepreneurship The number of entrepreneurs worldwide has grown significantly in the last 20 years, with the average number of entrepreneurs in the OECD countries rising 36% between 1985 and 1999. (Baygan 2000 p. 13). Entrepreneurs have many characteristics in common, no matter which country they are from. They tend to be young (the majority aged 25-34), and socially adept (Markman & Baron 1998 p. 3) and are described by the OECD as “enterprising individuals who show a readiness to take risks and to start up new businesses.” (OECD 2001 p. 24). Other typical qualities include a willingness to assume risk, ambition, the desire for control over one’s life, perseverance and decisiveness. Also required are insight – the ability to recognize business opportunities – and the business skills necessary to run a company. (Hatch & Zweig 2000 p 68). They also have comparable reasons for becoming entrepreneurs. For example, despite the enormous cultural and environmental differences, the factors pushing individuals to start their own businesses in the United States and in Russia are very similar. The top motivational factors mentioned in a study comparing US and Russian entrepreneurs were: lack of job satisfaction, desiring independence, economic necessity and opportunity. (Hisrich & Grachev 1995 p. 3). The research has also found that Russian entrepreneurs share a number of characteristics with their Western counterparts, including a strong internal locus of control, a need for achievement and the Protestant work ethic. (Green & David et al 1996 p. 50). However, despite a similarity in motivation and personality, business people in transitional economies may carry out their work differently due to specific environmental issues. One study found that entrepreneurs in the former Communist countries are “short term and non-growth oriented and directed towards economic spheres with low barriers to entry and exit,” due to the unstable environment they are forced to work in. (Yan & Manolova 1998 p. 139). One of the ways entrepreneurs have chosen to battle the inherent instability in the developing world is to develop networks of cooperation with their peers. Entrepreneurial firms are more likely than larger ones to use cooperative strategies. (Steensma & Marino et al 2000 p 591). In Russia, it was discovered that a strong network of resources had a positive economic impact on small enterprises. (Batjargal 1999 www.babson.edu). It is becoming clear that “a network of firms as self-help devices for SMEs is based on the idea that contacts and cooperation with other firms are the best way for an SME to solve its problems.” In this way, enterprises can support and learn from each other. (Arzeni & Pellegrin 1997 p. 27). 10


Challenges facing women entrepreneurs in Montenegro

2.3 Women Entrepreneurs The figures below present a picture of women’s involvement in the global economy: • Women own 64% of firms employing 10 people or more in Russia • Women have started 25% of the new business in China since 1978 • Women have started more than 40% of new business in Hungary since 1990 • Women head one in four firms in France • Women make up one fourth of the self-employed sector in Great Britain • In the EU, one third of businesses are started by women (Jalbert 2000 p. 10) According to the Avon Global Woman survey, which included 30,000 women in 43 countries, “Leading women entrepreneurs worldwide collectively generate $139 billion US dollars in revenues, and employ over 150,000 people. Their businesses are headquartered in 22 different countries; 27% are in manufacturing, 25% are in retail trade, 10% are in real estate, and 18% are in multi-industry conglomerates.” (www.globalwomen.org). Looking at these numbers it becomes clear why governments have become more interested in offering support for women entrepreneurs. The level of success achieved in spite of the numerous challenges could increase significantly in a more positive environment, adding to the wealth of the host country. 2.3.1 Rising female entrepreneurship In recent years, the number of women entrepreneurs has increased in most countries. In the past decade, it is estimated that women started 10% of new businesses in North Africa, 33% in North America and 40% in Germany. (Jalbert 2000 p. 37). This may be a result of the fact that during difficult economic times, women are the first to lose their jobs, and then have no choice but to start their own businesses. Even if they are lucky enough to be employed, wage discrimination remains a problem, even in the rich countries. According to a survey conducted in 4 EU countries, women’s salaries are lower than men’s, and the difference increases as women move up the corporate ladder. (The European, 1997). The glass ceiling is a further frustration for professional women. The number of women in management remains low, and those who do make it often face discrimination. (The Economist, 1996). One study in Thailand found that companies that had women in higher positions did not suffer in terms of performance. The conclusion was that the practice of not promoting women was a characteristic of the discriminatory corporate culture rather than a decision based on sound business practice. (Appold & Siengthai et al, 1998 p. 538). These are all factors that could push women out of the boardroom into starting their own enterprises. On a more positive note, the move towards entrepreneurship may also be a result of the more flexible work environment that has developed in recent years. Nevertheless, men still make up the majority of entrepreneurs in most countries. Although the balance varies, with the ratio 2:1 in Brazil and Spain to 12:1 in France, the general pattern holds in all 21 countries in the GEMS study. (Reynolds & Hay et al 2000 p. 8). In countries where the overall entrepreneurial rate is higher, such as in the US, Canada and Israel, the business start-up rate is close to the same for men and women, but in countries where it is lower, such as Germany and Japan, women entrepreneurs make up a much smaller share of the total. (Baygan 2000 p.17). 2.3.2 Push vs. pull factors Women become business owners for a variety of reasons. The majority are in the “push” group, in which women have no choice but to start their own business as an alternative to being unemployed, as opposed to the “pull group” where women become entrepreneurs out of a wish for independence. For example, Danish women are motivated by a desire for flexibility and better balance between 11


Challenges facing women entrepreneurs in Montenegro

home and work. In France, women are motivated by a desire for professional and personal independence. In Madagascar, the first generation of women entrepreneurs started their own businesses after not being able to compete successfully with men, but today’s women have been forced into their own businesses as a way of surviving the economic downturn. In Hungary, although women are better educated than men, they were the first to lost their jobs. Entrepreneurship is a response to the high unemployment levels. (OECD 2001 p. 39). Other research supports the fact that women are more likely to move into entrepreneurship because of “push” factors than men. (Orhan & Scott, 2001 p 233). According to a study conducted in 25 countries, both developed and developing, women are consistently poorer than men, as a result of “national tendencies, habits and practices regarding women’s employment and wages.” (Pressman 2002 p. 17). This is especially the case in transitional economies, where poverty and unemployment have grown out of proportion. In Ukraine 80% of women are unemployed, while in Russia the number is slightly less at 75%. Women’s wages are also lower-as of 1998 in Russia they were 40% of men’s. In such an environment, women have no choice but to find another way to survive. In Russia, a common solution is to operate a micro-enterprise, usually outside of the formal economy. This could be selling fruits and vegetables on street corners or producing handicrafts. There are also several success stories of women opening offices, with the help of business incubators. (The Russia Journal July 8 2000). The situation in Russia points to one of the factors that make it difficult to collect data on women entrepreneurs: many of them work outside of the formal sector. Especially in poor countries, women tend to conduct their businesses illegally. According to certain estimates, over 50% of women in Sub-Saharan Africa, a third in northern Africa and Asia and 30%-70% of women in Latin America are involved in the gray economy. (www.globalwoman.org). It is extremely difficult to gather data on this population, and moreover they suffer as a result of not being eligible for any of the support programs their governments and donor agencies may be offering. 2.3.3 Financing issues Even when operating legally, women business owners have a harder time than men getting financing for their enterprises, in developed countries as well as poor ones. More than 90% of the venture capital funding in the US in the late 90’s went to men. (Forbes July 9 2001). This is the case despite the fact that women own or co-own 40% of all US firms. (Financial Times Global News Wire January 14 2002). Women in the developing world have perhaps an even harder time acquiring financing. That may be because their enterprises are perceived as less attractive investments: they tend to be small, and grow more slowly. On the other hand, women-owned firms have lower bankruptcy rates and women tend to pay back their loans on time. (Celcee Journal, 2001). Some studies have found that bankers believe that men are better qualified to be entrepreneurs than women and structure their loans accordingly, demanding higher collateral agreements from females. (Brush & Hart et al 2000 p. 8). Another study found that bankers are reluctant to give loans to smaller companies, regardless of whether they are owned by men or women. However, the same study found that women are usually offered more unfavorable rates than their male counterparts. (Coleman 1998 www.babson.edu). This is evidence of sexual discrimination that has a strong negative impact on the development of female entrepreneurship. 2.4 Characteristics of Women Business Owners and their Establishments While their reasons for becoming entrepreneurs vary between rich and poor countries, once women become entrepreneurs they are surprisingly similar. According to a survey sponsored by IBM, women business owners in 16 countries share a number of characteristics, and they also share 12


Challenges facing women entrepreneurs in Montenegro

similar concerns. Although they face numerous challenges, most of them are optimistic about the future of their businesses (www.nfwbo.org 1998). Jalbert also found women business owners share many qualities regardless of where they were from: • Risk taking propensity • High energy level • Personal motivations • Married, first born • Self employed father • Social adroitness • Financial competence • Interpersonal skills • General business management skills (Jalbert 1999 www.cipe.org) However, while entrepreneurs across cultures have been proven to have a number of traits in common, there are also cultural differences that influence their behavior. (Thomas & Mueller 2000 p. 287). A woman who grew up under communism is likely to run her business differently than one who grew up in a capitalistic society. The majority of women-owned businesses have traditionally been in the stereotypically feminine fields of services and retail. This can be explained partly because of the lower entry cost, and also because women tend to migrate towards more relationship-oriented businesses. (Jalbert 2000 p. 24). This is the case in developing countries like Mexico, where women own more than 30% of business, mostly in services, and in the wealthier Denmark, where women own 25% of businesses, but only 10% of those are in the field of technology. This is slowly starting to change, and today women business owners can be found in fields such as manufacturing, construction and transportation. Nevertheless they still lag behind in the increasingly important field of technology. (Baygan 2000 p. 22). 2.4.1 Is there a difference between male and female entrepreneurs? According to a study conducted by the National Foundation for Women Business Owners, there is a key difference is how male and female entrepreneurs define and achieve success. “Both sexes believe money is an important component of success, but opinions diverge beyond that point. For women, success is having control of their own destinies, building ongoing relationships with clients and doing something fulfilling. Men describe success in terms of reaching goals.” Other differences emerged in terms of the way men and women carry out business. • • • •

Men emphasize “left brain” thinking while women emphasize “right brain” thinking Women tend to solve problems intuitively while men make decisions based on logic Women business owners are more internally oriented than their male counterparts, while men pay more attention to external events. Women perceive men as being better at delegating, while men believe women are better at building relationships and juggling numerous tasks. (Romano 1994 p. 7)

A study on Norwegian entrepreneurs also found that male and female entrepreneurs carry out business in distinct manners. During start-up, women tend to write fewer business plans than men, they have a larger need for outside funding than men (perhaps because they have less money of their own), they hire fewer employees, and the start-up process tends to take longer. However, the interesting conclusion was that despite these differences, the end result was the same. Women and men have equal success in starting new businesses. (Alsos & Ljunngren 1998 www.babson.edu). 13


Challenges facing women entrepreneurs in Montenegro

2.4.2 Why are women-run businesses smaller than men’s? Women-owned businesses tend to be smaller than men’s, and have fewer employees. (Alsos & Ljunngren 1998 www.babson.edu). The question is: Why? The research in this area is contradictory, and there is clearly a need for more in-depth work. Some researchers believe that there is an “iron ceiling” keeping women-owned companies from growing too big. Women are outside of the “old boy’s” network and do not have the necessary connections to make deals, and furthermore their nurturing personalities do not prepare them to negotiate deals successfully. (Brush & Hart et al 2000 p16). However, according to other research this could be a matter of personal choice. Many women business owners do not have the intention to grow their business, but instead are just looking for a certain measure of financial security and independence, while at the same time being able to focus on their families. (Good & Mistick 1999 www.babson.edu). Furthermore, women may wish to keep control of their firms and may not be willing to give up a majority stake in their establishments in return for financing. (Brush & Hart et al 2000 p15). Many women instead turn to family and friends for funding. (Baygan 2000 p 21). However, this limits the amount of money they can receive and in turn the growth potential of their businesses. 2.5 Barriers Faced by Women Entrepreneurs Despite their importance to the global economy, women face a number of barriers that prevent them from achieving the same level of entrepreneurial activity compared to men. The same issues kept coming up repeatedly in the literature. The table below gathers together responses taken from a number of surveys that were conducted with women business owners all over the world: Factors Negatively Affecting Women Entrepreneurs Access to credit and capital for business growth Access to networks (domestic and international) Access to technology Burden of being business woman and homemaker Limited business experience Inadequate business education Access to business management training Problems specific to transitional economies: Banking Political contacts Customs tariffs Complicated bureaucracy Political instability

Maintaining business profitability Managing cash flow and bill payment Finding and keeping quality employees Sexual stereotyping of occupations Societal prejudice against working women Gender descrimination under patriarchal conditions

Government corruption Complying with government laws and policies State of country's economy Poor infrastructure

Source: Jalpert 2000 p. 25; Baygan 2000 p. 18; Avon Global Woman Survey 2000 www.globalwomen.org; NFWBO Survey 1999 www.nfwbo.org.

Lack of access to credit is one of the primary complaints, and is heard from women in both rich and poor countries. Women are also hampered by limited business experience, inadequate business education and a lack of useful business contacts. According to a study carried out by the National Foundation for Business Owners in the US, 59% of men had an entrepreneurial role model compared to 43% of women. Around 50% of the men had had previous managerial experience compared to just 23% of the women. This can lead to problems with low self-esteem. Perhaps as a 14


Challenges facing women entrepreneurs in Montenegro

response to this, women are more likely to confer with their families and fellow business owners than men are. (2001 www.nfwbo.org) Lack of access to technology is also a problem for women entrepreneurs. “Structural difficulties, and lack of access to technical training prevent technology from being beneficial or even available to females.” (Celcee Journal 2001). This could be one of the reasons women’s businesses remain small. Without using the most modern equipment, it is hard to catch up with competitors. Surprisingly, discrimination issues often were mentioned at the bottom of the list. This of course varies from country to country, with women in Muslim societies having the hardest time of it. Even there, change is in the air. A generation ago in Saudi Arabia, there were very few women-owned businesses, while today they make up around 10% of the total. This is despite the numerous restrictions. Even today, women cannot hire a mixed staff, they cannot drive their own cars, and they still cannot leave the country without permission from their closest male relative. (BBC January 2001). Emirati women are also becoming business owners, despite numerous barriers. In the past, the majority of women business owners were widows, divorced or unmarried, as husbands were not willing to allow their wives to work, and women were perceived as not being able to run a business. With the support of the government, more women are becoming entrepreneurs, but it is still not easy (www.adcci.gov.ae) Discrimination is also an issue in certain transitional economies, which despite their communist backgrounds remain strongly patriarchal. Regulations exist in many of these countries to protect women’s rights, but they are often not enforced. For example, according to the constitution of the Russian Federation women enjoy the same status as men. Nevertheless there are a number of problems with age discrimination, avoidance of paying for maternity leave, the division of labor into men’s and women’s work, wage disparity, etc. This has led to a serious decline in the number of women in the official labor force. (CEDPA 1998 p. 3). The external environment in transitional countries is also far more challenging that it would be in for example, any of the EU countries. Issues with bureaucracy, corruption, etc. are all problems faced not only by women but also by their male counterparts. 2.6 Summary Although the area of women entrepreneurs remains under-researched, there are a number of themes that emerge from the literature. • Men make up the major share of entrepreneurs in the world. • The majority of women become entrepreneurs because of “push” factors, and a large number of them work in the gray economy. • Most women still own businesses in services or retail, although they are starting to enter less traditional fields. • Especially in transitional economies, women struggle with a number of gender-neutral issues. • Women all over the world face similar gender-specific problems, including external issues such as lack of access to capital and self-imposed issues such as low self esteem because of a lack of managerial experience. The following chapters in this paper look specifically at Montenegrin businesswomen to determine whether or not they fit into this pattern.

15


Challenges facing women entrepreneurs in Montenegro

CHAPTER 3. METHODOLOGY As can be seen from the literature search, despite the fact that women’s entrepreneurship is a growing area and has the potential to contribute greatly to a country’s economy, it is a topic that is under-researched, especially outside of the wealthier countries. Nevertheless, it is clear from the research that has been conducted that there are some overriding themes. While women choose to become entrepreneurs for a number of different reasons, the issues they have to deal with once they start their own businesses seem to be similar in countries as varied as France, India and Turkey. The purpose of the primary research in this paper was to examine whether the same holds true for women in Montenegro. While there has been some research conducted in Montenegro on the general entrepreneurial environment, this was the first time the focus was on the female population. Several methodologies seemed as if they would be appropriate to gather the necessary data: survey, focus groups and multiple case studies. After weighing the pros and cons, case studies stood out as the most appropriate methodology. 3.1 Surveys This at first seemed like the obvious choice. It is the methodology used in some of the major studies conducted in this area. The GEMS study consisted of a questionnaire that was given to 43,000 women all over the world. The Avon study’s questionnaire was given to 30,000 women. However, identifying a large sample of Montenegrin women to partake in the study would be extremely difficult. A number of the businesses that are officially listed as being owned by women, especially trade companies, are in fact run by their husbands.1 A greater challenge would be tracking down the large number of women-run enterprises in the gray economy. Even if it were possible to find them, as they are operating illegally, it is unlikely they would be willing to fill out a survey, especially if they were asked to do so by a foreigner. This problem was mentioned in some of the earlier studies. Some researchers solved it by surveying women attending conferences on entrepreneurship. Even if that had been possible to do here, the women who attend such conferences do not typically represent the general population. At any rate, it would not be a realistic option in Montenegro as there is only one Women’s Business Association, which was established in 2001, but never got off the ground. For these reasons, I ruled against conducting a survey at this time. However, given the right resources as well as local connections, I believe it would be an excellent follow-up to this initial exercise. 3.2 Focus Groups This would be a very difficult methodology to use in Montenegro. People here are not used to being given the opportunity to speak in front of their peers. Information is power, and trust comes very slowly. As the topic is rather sensitive, it would be hard to get honest answers in a group environment. Furthermore, some of the locals do not seem to understand the concept of spontaneity, and come to events with long speeches prepared on scraps of paper. Because life is quite difficult for many people here, they tend to use such sessions to share their complaints rather than for constructive discussion.

1

A number of loans were given to trade companies run by women, but once the women collected the money, their husbands took over the businesses.

16


Challenges facing women entrepreneurs in Montenegro

3.3 Case Studies The factors above caused me to narrow my sample down even further. Although conducting case studies limited the number of women interviewed, there were a number of advantages. The more informal atmosphere of one-on-one interviews creates a more comfortable atmosphere, making the local women more at ease and more willing to open up, allowing the collection of in-depth information. Moreover, I hope that this will be just the first part of a larger research project. Gathering descriptive data allows the most important themes to be identified. Results can be used as a basis for designing a survey in the future that will target the entire population of female entrepreneurs. 3.4 Data Gathering Methods and Target Subjects As the author is an outsider in this culture and would not be able to anticipate exactly what turn the interviews might take, data was gathered through semi-structured interviews. The structure allowed the conversations to move into other areas that pertained to the topic. A set of questions to guide the sessions can be found in Appendix I. These were used for all of the interviews. The women entrepreneurs studied for this project were identified in a number of ways. Some were recommended by friends of the author, while others were tracked down through lending programs. All participated on a voluntary basis. The subjects were female entrepreneurs working in a variety of conditions in Montenegro. These women are similar only in that they are female Montenegrin entrepreneurs. The goal was to gather information about the different situations women might find themselves in. Subjects included: • A woman from a relatively wealthy family who owns a chain of dry cleaning stores • A doctor who has had her own medical practice for 10 years, throughout the war years • A woman who owns a beauty parlor, who received a loan from a micro enterprise fund • A women who received government credits to start her company • A woman operating in the gray economy. Two of the interviews were conducted in English, while the other four were conducted in Serbian with the help of a translator.

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Challenges facing women entrepreneurs in Montenegro

CHAPTER 4. CASE STUDIES 4.1 Marina Markovic Eleven years ago Marina Markovic was 24 years old, newly married and working as an instructor for a Croatian sewing machine manufacturing firm with a branch office in Montenegro. When war broke out, the company closed their office in Podgorica and she lost her job, and sadly she also lost her husband during the offensive against Dubrovnik. Her brother became her mentor, and has supported her through difficult times. She struggled unsuccessfully to find work during the war period, and during that time she came up with the idea of opening a new sewing school to replace the one that had shut down. In 1999, she approached a local consulting firm to help her write a business plan to open a sewing school and tailor shop. This organization is supported by the United States Agency for International Development (USAID) and did the job pro bono. She received a grant of around $6,000 from the state-sponsored Employment Fund. This was enough to rent a small studio and purchase equipment. Initially, this seemed to be a promising business. Traditionally many local women have taken courses to learn how to make their own clothes, and Moda Machine was the only school in town. But traditions are changing, and now women tend to buy their clothes from boutiques. Even though the courses are not expensive (a 1-month course, with thirty five 45-minute units costs €40), business is not very good. Marina has a lot of ideas how to help her business succeed, such as direct mailing, offering courses in different locations, etc., and the only thing holding her back is a lack of money. She has only paid back 1/3 of her loan, and the rest of her money goes to taxes, which she believes are too high. Therefore she has very little left over to spend buying materials or on marketing. When she starts a new course, all she can afford is to run ads in one or two newspapers. She doesn’t use any other media, and she doesn’t advertise the tailoring services. She does not get any walk-in business, as despite the fact that her store is located in a very good area, it is down a flight of stairs and tucked in a dark corner. Marina only knows how to work with women’s clothes. This is typical for Montenegro-there are no women doing men’s clothes in all of Podgorica. She would like to learn how, but would need to attend a training course, as it is more difficult. As a result, she has been mostly associated with women throughout her professional life. She believes it is more difficult for women entrepreneurs, especially for small business owners, as they do not have the connections and networks that men do. She is not a member of any association, but if there were a working Women’s Business Association she would be happy to join, as she does not believe one can succeed alone. Despite her difficulties, she is still optimistic. She loves what she does, and is willing to keep working long hours to make it do well. She is very critical of herself and her abilities as a businesswoman, but she is filled with ideas on how to market the business and how to adapt it as the demand for sewing services is changing. She believes that after the war, Montenegro became a trade-based economy, and it needs to shift back to production. While she doesn’t feel she has become successful yet, she intends to keep trying. 4.1.1 •

18

Summary

External factors that cause obstacles: Marina is an exception to the rule as she received credit to start her business easily, but it would be hard to get a second loan as sewing schools are no longer popular businesses. She faces a number of challenges which are gender neutral,


Challenges facing women entrepreneurs in Montenegro

4.2

including a decline in demand and high taxes, and one which is gender specific: a lack of connections. Value system: She is very critical of herself, which as stated in the literature search is more common among female business owners than males. This may make her more hesitant to take risks. Nevertheless, she remains positive and determined to succeed. Global comparison: Like many women in transitional economies, Marina was pushed into starting her own business, as it was the only way for her to continue working in the industry she was trained for.

Olgica Nikcevic

Olgica Nicevic is the 39-year old owner and manager of Charm Beauty Center, a well-known cosmetics salon in Podgorica. Even as a child, she dreamed of working in the beauty industry, and after finishing high school she attended a cosmetics school. Her mentor, a female professor who had lived in France for many years, pushed her in the direction of the French cosmetics style, setting her on a path that she continues to follow today2. After graduating, Olgica opened her own salon. She has been running the establishment for almost 20 years, and believes her success has a lot to with her commitment to quality and her strong marketing skills. She has continued to learn about new trends in cosmetology, and has specialized in 20 subjects. She identified Centella, the French cosmetic manufacturer, as her partner 17 years ago, and 9 years ago she became the company’s sole representative in Yugoslavia. Not only does she use the products at Charm, but she also sells them to her clients and to other salons. She is a member of the International Cosmetics Association as well as the associations in Serbia and Montenegro. The salon offers services related to face, hair and body. One of the challenges she faces is finding qualified employees. Until recently, there was no adequate training available in Montenegro-if a woman wished to learn this skill she had to go abroad. In response to this, Centella has opened a school that teaches cosmetology, pharmacology, anatomy, marketing, and other skills necessary to run a beauty salon. Olgica is one of the 12 lecturers at the school, all of who went to France for training. The school has been running for 2 years now, and over half of the graduates have opened their own salons. However, although the school has received all the necessary approval from the International Confederation of Cosmetics Schools, Olgica is still working to register the school in Montenegro. The old Federal law is still valid, and until the new Law on Education makes it through Parliament, she will only have tacit approval from the Ministry of Education. Despite these obstacles, she is optimistic that the school will improve the reputation of the industry. Until now, as it is a relatively profitable business, many unqualified people have opened salons or work in them, leading to many dissatisfied customers. She believes that stricter licensing requirements for operators and employees both would also help with this issue. The salon is filled with modern equipment that Olgica was finally able to purchase in the last 2 years. She and her husband have over the years put all their capital into the company, but were not able to make major investments. She had tried repeatedly to get a loan from one of the local banks, and was turned down each time despite the fact that her business was profitable, even during the war years, and she was willing to make all her financial statements available. She says the reason she was turned down is that she is not willing to beg. Furthermore, during the war years services 2

After the war years Olgica met up with her former teacher, who cried for joy to see that her protégé had continued to thrive despite the difficult circumstances. 19


Challenges facing women entrepreneurs in Montenegro

were not considered attractive investments. She finally received a loan from Microcredit Montenegro3, and a second one a few months later from the Montenegrin Development Fund, which was set up by the government to give small loans to local businesses. She used the money to buy a skin treatment machine for $15,000, and this investment has paid off. She keeps her prices low in order to bring in repeat business (1 treatment costs $20, compared to around $150 in the US), and people are lining up. She also has several other pieces of high-tech equipment, which she was able to get at a discount as she is the local representative for the equipment manufacturer. Olgica does not believe that Montenegrin women are disadvantaged compared to men in terms of doing business. She believes anyone with skill and ambition can succeed, as long as their expectations are realistic. However, her professional peers are all women, as unlike in Europe, in Montenegro it would not be acceptable for a man to run or work at a beauty salon. She knows that her situation is somewhat unusual for this part of the world-her husband Miodrag, who sat proudly by her side during the interview, helps her with raising the kids and is also involved in the business, joining her on all her trips abroad. Without such support, she believes she couldn’t have done so well. Her plans for the future are to look for a new space for her studio, as it is quite cramped. She is thinking about approaching Opportunity Bank for another loan4. However, her major focus is on expanding the beauty school. She would like to have a place where the students are able to get practical experience, and that can’t be her studio as her clients would not accept it. She is quite optimistic that her business will continue to expand-the only question is in which direction. 4.2.1

Summary

External factors that cause obstacles: Olgica faces a number of challenges, all of which are gender neutral and are related to the local legislative, banking and educational system. Value system: She is extremely confident in her abilities, and thinks of herself as a “business person” rather than a “business women.” Global comparison: Rather than being “pushed” into starting her business, Olgica knew exactly what she wanted to do and opened her salon as soon as she finished school. She learned many of her skills in France, and in fact her confidence and her aggressive plans for the future are more reminiscent of female entrepreneurs from developed countries than from transitional ones.

• • •

4.3

Albana Bazovic

Ulcinj, a small resort town on the Montenegrin coast populated mostly by Muslim Albanians, is a very traditional town. Many girls do not finish school, get married young, raise their families and never work. Albana, who was the first woman to ride a motorcycle in Ulcinj, was encouraged from an early age by her father to follow a different path. She started working at age 11 at one of her father’s convenience stores, where she learned everything from customer service to accounting. After high school she attended tourist technical school, and was studying English in Kosovo when the war interfered with her studies. She returned home and apprenticed herself to a well-known hairdresser in the bigger town of Bar, 25 kilometers down the coast. Five years ago, when Albana was 21, her father converted one of his shops into a beauty salon as a present for his daughter. At first she was reluctant to take it over, as she wanted to get away from 3 4

An organization funded by the United States Agency for International Development Opportunity Bank used to be Microcredit Montenegro; it is now a bank that gives larger loans.

20


Challenges facing women entrepreneurs in Montenegro

her small hometown, but he managed to convince her to take on the job. All of the other salons in town are either for men or women, but she decided to flout convention and open a unisex salon. In a town of 11,000 connections are everything, and as word got around the business began to thrive. However, as refugees began to come into Montenegro from Kosovo, she wanted to do something to help. Three years ago she took a job first with the United Nations High Commission for Refugees, and later with the International Catholic Migratory Commission. She moved to Podgorica, hired a manager for her shop, and returns home on weekends and works both days. In a resort town like Ulcinj, business is best during the summer months and slows to a trickle in the winter. Albana brings friends in to work in the salon in July and August. She has used her own capital to make some minor renovations in the salon and to buy new equipment, and pays all her taxes. She is not motivated by money and loves the work. However, she believes that it would be much more difficult to manage if her father did not own the property. She and her staff are members of a Montenegrin hairdressers’ association, and regularly go to trade fairs in Podgorica and in Belgrade. She would not be interested in joining a woman’s business association, as she does not believe there would be any advantage. According to her, people are either good business people or they are not, regardless of whether they are men or women-the key is to be in a business you enjoy. She does not see any difference in the way she manages the shop and the way her male manager runs it. She does acknowledge that Ulcinj is a very patriarchal town, and that she is what she is thanks to her parents, who spent time in Zagreb and Sarajevo, where they picked up a more modern way of thinking. Women in her town are just beginning to exhibit signs of strength (she can still remember the first time a woman drove a car through the town), and many do not have the advantage of her early business education. Albana is very work-oriented. The interview was held the day before she departed for her first vacation in 5 years. She feels that things are starting to improve, and people have more money than they did a few years ago. However, she does not wish to expand her salon or open a new one in Montenegro. She is very satisfied with her career at present, and would like at some point to work abroad. 4.3.1 • •

Summary

External factors that cause obstacles: All the issues Albana mentioned were gender neutral. Value system: She does not believe that men and women conduct business in a different manner. She thinks that the two sexes enjoy working in different areas, leading to little overlap between them. Global comparison: Albana was “pushed” into her career after the Balkan wars, as at that time there was no work in tourism. Her father then convinced her to start her own business. However, the purpose was not survival but rather to keep her close to her family. This, combined with the facts that she owns the property and doesn’t have to worry about monthly rent and does not wish to expand her business, frees her from many of the concerns faced by other women in Montenegro and abroad.

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Challenges facing women entrepreneurs in Montenegro

4.4

Edita Klein

Edita Klein is 48 years old and is a member of one of the 2 Jewish families in Podgorica. She moved to Podgorica from her native Croatia in 1980, to join her new Montenegrin husband. She had recently graduated from university with a degree in economics, and spoke German, English and Italian as well as her native Serbo-Croatian. For 5 years, she worked as a translator at a local firm that produced earthmoving equipment. However, she found when she wanted to move into the marketing department, that all the good positions were being given to locals, so they would have the opportunity to travel abroad. At this time she had some money from the sale of a piece of family property in Croatia. She was trying to decide between buying an apartment and starting a business, and her family convinced her to open a dry cleaning store. At the time there was only one other competitor, located on the other side of town from where she decided to locate her shop. Today Penguin Drycleaners, open for 17 years, is one of the better-known landmarks in Podgorica. Even today there are only 2 other competitors. Edita enjoys the work because she gets to meet a lot of people. Customers come to her from all over the country, and she is well known in all the big cities. All doors are open to her, which comes in very handy in a country where relationships are paramount. Edita has 5 female employees working for her, 3 of which are full time. She pays taxes on all of them except one who is a refugee from Bosnia and does not have a work permit. She also pays a flat sales tax. She focuses on quality and customer service, and business is good. She is in the process of opening a new store in Budva, a medium sized town on the coast. She is using her own capital for this, but will need to take out a loan to open the next store in Bar. She took out a 5-year loan 12 years ago to purchase new equipment, and she also took out a 3-month loan in 2001. While she is able to get credit due to the fact that she is well known in town, she believes it is very difficult for most people. Edita found it challenging to become accepted in the business community, mostly due to the fact that she was an outsider rather than the fact that she is a woman. However, there are not many important Montenegrin businesswomen. She believes Montenegrin women are put at a disadvantage because of the patriarchal attitude. Men do not like it if their women have greater success than them. Today more women are starting to see that they need to take a greater role in the business community, but many of them are working in the gray economy in small trade operations. Men are also more aggressive in their business style than women. When her ex-husband came to her store, he was shocked to find that she sat down and drank coffee with her staff. She believes that her style is more successful, and that she has created a team that she can trust. She is able to leave them alone and focus on other things. While she is not a member of any international organizations, in 2001 she joined the board of the Montenegro Business Alliance, a local business association. She is committed to working to bringing local business owners into a market economy, and is also looking for ways to solve the country’s long-term problems, such as the electricity crisis. The biggest challenge facing a business owner in the current environment is competing with the gray economy. Many people are still officially employed by state-owned companies, and are also running illegal business on the side. If all these business could be brought into the legal economy, private business would grow and the tax base would increase, even though individual taxes could then be lowered. The government would be able to invest in roads, schools and other infrastructure projects. As it stands today, projects are started for politicians to gain publicity, but once they get their picture in the paper the work is halted.

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Challenges facing women entrepreneurs in Montenegro

Edita is very confident in her skills as a businesswoman. She believes it is in her blood, and also that she received excellent training during her years as a translator, when she spent a lot of time in Western Europe. Since the end of the war years, she has participated in a number of international seminars, and is certain that she has been doing the right thing. She is very ambitious and filled with business ideas, but is afraid the lack of money and human capital in Montenegro will make it difficult to move ahead quickly. However, she is willing to work through the MBA and the recently formed Women’s Business Association, of which she is also a board member, in order to allow the next generation to have a better life. 4.4.1 •

• •

Summary

External factors that cause obstacles: Edita believes Montenegrin businesswomen face a number of gender specific challenges, but she is considered an outsider and is able to avoid them. Her problems are gender neutral, and are related to the economy and legislative matters. Value system: Her thoughts that women have a different business style than men, which allows them to build strong organizations, are consistent with the literature. Global comparison: With her educational background and language skills, Edita had no problem finding a job. However, she started her own business as she did not think she would be able to move up the corporate ladder in a big company. This sort of motivation is more typical of women in wealthy countries, as in transitional countries they don’t always have the luxury to concern themselves with self-satisfaction.

4.5 Mila Mirkovic Mila, her husband Slavko, and their twin daughters arrived as refugees in Montenegro in 1992, having been forced to flee their village in the mountains of Bosnia. They are now in their mid-40s. They both attended university, and at home she worked as a lawyer and Slavko as an economist. However, she has been unable to work in her profession in Montenegro. With the country experiencing an economic crisis, the few good jobs that are available tend to go to locals rather than outsiders. For the first three years she took several jobs in various offices, but it was very difficult to work the long hours, walk home because she didn’t want to spend the money on the bus, and have enough energy left over for her family. In 1995 she decided to take a stall at the Tuzi Put market, a large outdoor market where one can find everything from food to clothing to tools. As a refugee it was difficult to get a spot in the market, and she had to pay 800DM up front on top of the monthly rent. During the war years the market thrived. People came from all over the war-torn region to find goods that they could no longer get in their home countries, such as the underwear Mila sells at her stall. The country was under sanctions, and much of the stock sold in the market was smuggled in, and most of the vendors were not paying taxes. Business was brisk, and at one point Mila had 3 stalls, with an assistant to help her with the increased business. Her husband quit his job and spent most of his time traveling to Turkey or Bulgaria to buy merchandise, while Mila ran the business. Life has gotten progressively more difficult since the war ended. With the sanctions over, people no longer have to travel from Kosovo or Serbia to shop. Furthermore, the tax collection system has improved and vendors now have to pay a flat tax based on the minimum wage every month (it is currently around €70). When bringing goods into the country, not only does the family have to pay the customs tax, but they often have to bribe customs officials with cash or part of their shipment. This has become unsupportable, and Mila is now only going to the market on weekends. She is running low on merchandise, but with such low margins she does not have the cash to increase her 23


Challenges facing women entrepreneurs in Montenegro

inventory. Refugees are eligible for loans from Alter Modus, a local non-governmental organization, but this money is used for the family’s daily survival (rent, food, utilities). At one point they had managed to save enough money to buy a car, but now she is planning to sell the car in order to subsidize the purchase of more underwear. The last two years have been the most difficult Mila has ever had to live through. She realizes that she may have to start a different type of business, as under current conditions a “small fish” like herself will have a hard time surviving. She has a lot of ideas in her head, but it is difficult to start anything without capital. A friend lent the family some money to buy back their old flat in Bosnia, but having gone back they realized that the village is now mostly Serbian and holds only bad memories for them. They are now trying to sell the flat, and will either buy a small one in Podgorica with the proceeds, or use it to start a business. She finds the new government measures very restrictive however and is not sure if she can afford to do anything if she has to pay such high taxes. Almost all the vendors at the outdoor market are women. Mila believes that women make better salespeople, as they are kinder and friendlier. She feels her major challenges come from the fact that she is an outsider in Montenegro, not because she is a woman. Furthermore, she believes the environment is very bad. People are suspicious and pessimistic after over 10 years of hardship, and no longer have faith in government institutions. The switch first from the Dinar to the DM, and then the DM to the Euro has caused a lot of confusion, and prices have certainly gone up, while at the same time people have no money to spend. However, the biggest problem is that the economy is now based on trade rather than production, which makes things very difficult. According to Mila, the politicians need to shift the focus away from politics and concentrate more on fixing the economy. 4.5.1 •

• •

Summary

External factors that cause obstacles: Mila was “pushed” into her career as a matter of survival, and the challenges she faces, such as high taxes and customs tariffs, are all at a basic and gender neutral level. Value system: She thinks that men and women have different skills, and that women are better at certain kinds of jobs. Global comparison: Mila’s story is typical of transitional economies, where men and women with university degrees have had to work menial jobs in order to survive. Her situation is even more difficult, as she is also an outsider in her new home, and good jobs are likely to go to locals first.

4.6 Milica Radinovic Milica is originally from Serbia and moved to Podgorica with her Montenegrin husband. She is owner and managing director of Yugrafic, a graphic design studio. Milica worked as a construction engineer, and knew nothing about graphic design. But when her husband died 6 years ago, she was unwilling to let go of his 4-year old firm. Furthermore, she had two young boys to support, and she could not make enough money working in her own field. So at age 40, she took on a major challenge. The first several years were extremely difficult. The first task was learning the business. She was determined to keep the staff intact, and as they also wished to keep their jobs they were willing to teach her how to do things. Learning how to be “boss” was an even greater challenge. She had 24


Challenges facing women entrepreneurs in Montenegro

always worked as part of a team in the past, something which growing up under socialism prepared her for. Being in charge was not a responsibility she had ever wanted. Her husband’s management style had been strict and authoritative. She believes women are kinder and softer, which can cause some problems. Even after 6 years, she does not believe she has learned to be tough enough for certain situations. She is very critical of her capabilities. However, she also believes women manage relationships better than men. She is very flexible and open with her staff of 11, and is always willing to accept comments and feedback from them. She is very happy with the performance she gets from them. In order to start the business, Milica’s husband sold everything they owned. A few years later, he took out a loan in order to buy a piece of machinery. Milica is a much more risk-averse businessperson. Since she took over, she has not even tried to get credit. She would like to invest in new equipment, but she does not want to try to expand the business in today’s difficult environment. Also, she knows it is very difficult to get credit today. The competition is buying new machinery and going for economies of scale, but she has chosen to concentrate on smaller jobs, where she knows she can do the work well. And with clients often taking a very long time to pay their bills, it is less risky to stick to the small jobs. It is important to her to keep the business liquid, as she pays all her taxes and debts regularly, even if her cash situation is poor. Business is OK, but it was better last year. Milica’s initial response was that it is no more difficult to be a woman in business than a man. Women worked in high-level positions under communism, so people are accustomed to seeing them in business. However, she did mention that while women are very strong in Montenegro, they exercise their strength in subtle ways. It is important to make a good first impression in business, otherwise you lose respect. Her staff is about 60% female, but men occupy the top 3 positions. One of the jobs requires physical strength, but Milica also mentioned that men are more reliable and come to work more regularly. Furthermore, she has had several female employees take a full year of paid maternity leave, and she cannot afford to have anyone in these three positions gone for so long. Currently she is not a member of any association, and would only join one if she were assured of its value. She is completely focused on the business, and hopes her sons will be able to take it over. After the difficult time the first few years, she has learned to like the work. However, she does not believe Montenegro will recover quickly. The last 10 years have taken a huge toll, and morale is quite low. The value system has been destroyed, and people are struggling to survive, many of then in the gray economy. Despite the fact that many of them are well educated, after so many years under socialism they do not know how to function in the new environment. In fact she wonders if the people will be happier than they were before, once they have money. 4.6.1 • •

Summary

External factors that cause obstacles: Milica faces a number of challenges, many of which are gender neutral and are related to the poorly performing economy. Value system: She struggles at being an effective boss and believes her style remains too feminine. She has to work at gaining the respect of peers, but her softer attitude has also allowed her to build a loyal and hardworking team. She is also risk averse, as her priority is not growing the business but providing a safe home for her two sons. Global comparison: Milica was “pushed” into running her husband’s business when he passed away and she had to support her family.

25


Challenges facing women entrepreneurs in Montenegro

CHAPTER 5. DISCUSSION OF RESULTS The women interviewed for this project were a diverse group, in terms of age, background, and type of business. In certain ways their stories fit with what was learned in the literature search, but in other ways they differ. 5.1 Review of questions 5.1.1 What is your age, educational and professional background? The subjects range in age from 26-48, with an average age of 38. While three of them attended vocational school, the other three have university degrees. As the sample was small, it is difficult to draw conclusions about Montenegrin women business owners. However, it is interesting that only Olgica and Marina are still working in their original fields. The others have moved away from what they studied and have had to learn new skills due to external circumstances. Edita opened her own company because she felt as an outsider she would have a hard time getting promoted, and the other three women had to start new professions as a result of the Balkan wars. 5.1.2

Why did you start your own business?

Montenegro is still a very poor country, and most people look at work as a means of survival rather than a way to achieve personal fulfillment. Of the six women, only Albana does not depend on her business to support herself and her family. Olgica is the only one who is following her lifelong dream. Edita started her own company when she realized she could not move up in the firm she was working, but she did not have a problem finding employment. The others were all “pushed” into running their businesses. Milica was unable to make enough money in her field, and Mila found she was unable to take care of her children working 12 hours days in a private company. However, even if their career moves were led by outside circumstances rather than long-term career goals, all of the women, except perhaps Mila, are doing things that they enjoy. Even Milica, who had no choice but to take over her husband’s business, has learned to take pleasure in it. As Olgica said, “If I did not love what I do, I would not be able to dedicate such long hours to my business.” According to Albana, this is characteristic of women. They choose their business based on what they like to do, while a man is more pragmatic and looks at what kind of business would be the most profitable. This dedication helps the business to thrive. 5.1.3

What kind of business do you run?

In the sample for this study, four of the women run “female oriented” enterprises. The two women who operate more “male oriented” businesses were both born outside of Montenegro, and one of them took over the business only when her husband passed away. In looking for subjects to interview for this study, the author wished to find women in a variety of businesses. However, it quickly became clear that most of the female-owned businesses in Montenegro are in typically “feminine” areas. This is consistent with the findings from other countries. Even in the developed countries, women-owned businesses are most prevalent in retail or services. However, this trend is particularly extreme in Montenegro.

26


Challenges facing women entrepreneurs in Montenegro

As seen in the table below, out of 88 new businesses, 32 of which were started by women, the only area where there is major overlap between men and women is in the tourism sector. Male/Female-owned Businesses According to Edita, Montenegrin women are not encouraged to challenge their men. It appears that when deciding what sort of business to open, women are limited by cultural expectations. 5.1.4

How did you finance the start up of your business?

Marina used a loan from the Employment Fund to start her sewing school; all the other companies were started by personal money.

30% 25% 20% 15% 10% 5% 0% se wi

ng

re ta il*

sp m re m ed an la or te ts ica uf d ac l to t u fo rin od g pr od uc ts/ an im als

se sto loc co ba re to ur la rv ra al te ism kery ice sme ge cr d tic s af /ca to s ts au te rin to m g ob ile s

Source: Montenegro Employment Fund

5.1.5

w omen

men

Do you want to expand your business? How big would you like it to be?

Albana enjoys her work in the humanitarian field, and is not interested in expanding her business. Milica is not willing to take any risks. All the other women have numerous ideas how they can expand their existing businesses or move in new directions. However, in order to do this they require access to credit. 5.1.6

Have you put additional money into it since you started?

Since she took over her husband’s company, Milica has not spent any additional money on it. Albana has only made minor renovations to her shop, and Marina has been barely able to make ends meet yet alone make investments. Mila has not invested further, but she is now at the stage where she has to invest in new merchandise in order to continue her work. These four women have limited their investments to what was necessary to keep their businesses going. However, both Edita and Olgica have put a great deal their own money into their businesses and are now contemplating applying for new loans. They believe it is necessary to continue investing in new equipment in order to bring the customers in. 27


Challenges facing women entrepreneurs in Montenegro

5.1.7 Have you applied for/received outside funding? Have you had problems accessing financing? Before foreign donor organizations came to Montenegro in the late 90’s, it was very difficult to access credit without strong connections. Even now, there are only 2 banks that are not microcredit organizations, and interest rates are considered high. Albana and Milica have never applied for credit, but all the other women have. As Edita’s business is well known, she has not had any difficulty, but Olgica tried for years before she succeeded in getting a loan. Marina got a small loan start-up loan, but believes she would not be able to get another one. Mila has access to special loans for refugees, but they are very small and used to cover household costs rather than to allow her to purchase the new merchandise she needs. 5.1.8 What do you see as your primary challenges as an entrepreneur? While Albana is the most positive, all the women perceive today’s business environment in Montenegro to be extremely challenging. Issues such as high taxes, competition from the gray economy and various legislative issues came up repeatedly. 5.1.9 Do you think male business owners in Montenegro face the same challenges? Although Marina believes men have an easier time because of their connections, all the women agreed that male Montenegrin business owners face the same challenges as women. 5.1.10 What is it like working as a woman business owner in Montenegro? The respondents all agreed that in general, in today’s environment, it is difficult for both male and female business owners. However, Milica pointed out that she feels she needs to prove herself to male colleagues to gain their respect, and Edita believes local women are not encouraged to surpass their men. Olgica said she has no problems-but acknowledged that there are no men working in her industry to compare herself to. This is also the case for Mila, Marina and Albana, although she does have a male manager in her store. 5.1.11 Does your family support your career? All the women receive strong support from their families. Olgica, Edita and Mila work with their husbands, Marina takes advice from her brother, Milica could not have taken over the business if her mother in law had not helped out with the kids, and Albana would not have started her business without her father’s encouragement. Those who receive support from male family members acknowledge that this is not the norm for Montenegro. 5.1.12 How do you rate yourself as a businesswoman? Do you believe you have the necessary skills to make your business thrive? Interestingly, the three most successful women have the most confidence in their business skills. Olgica, Edita and Albana all believe they are running their businesses very effectively. The other three women are less confident in their skills, and constantly question their competence. 5.1.13 Do you think you manage your business differently than a man would? Almost all the women agree that men and women have very different management styles. While men are aggressive and dictatorial, women are kinder, gentler and more relationship oriented. 28


Challenges facing women entrepreneurs in Montenegro

While Milica says this has sometimes been a problem for her in terms of maintaining authority, all the subjects agree that women are able to build better and more loyal teams. This is consistent with what was found in the literature. Women all over the world tend to manage differently than their male counterparts. 5.1.14 Do you have a mentor? Or are you a member of any network that offers you support? Olgica cited one of her old teachers as her mentor, while the rest of the women mentioned family members if anyone. While Olgica and Albana are members of professional associations, only Edita is involved with a general business association. As demonstrated in the literature, women, especially ones who start businesses in areas that are new to them, are less likely than men to have professional mentors, making the learning process that much more challenging. The general business association in Montenegro is still relatively new, and is expected to be a source of support to entrepreneurs in coming years, while the lack of a functioning women’s business association is a gap that will also hopefully be closed shortly. However, only 3 out of the 6 women said they could see any value in such an organization. 5.1.15 What would you like to see happen in Montenegro to help you succeed in your business endeavors? Two of the women said the economy needs to move away from trade to production. Other suggestions included eradicating the gray economy, strengthening regulations, and raising salaries. While Milica agreed that the economy needs to recover, she also mentioned the value system, which she believes has been destroyed in the past 10 years. The country is currently undergoing a major economic reform process, and many of these issues are in fact being dealt with. However, conditions are likely to continue to be difficult for the next several years.

CHAPTER 6. CONCLUSION AND RECOMMENDATIONS 6.1 Review of Objectives 6.1.1 To investigate whether women, both in rich and poor countries, make up a smaller percentage of entrepreneurs. As seen in the literature search, in most countries male entrepreneurs outnumber female ones. In Montenegro, there is little official data available. As many of the businesses in Montenegro are not registered, it makes it particularly difficult to discover the truth. Out of 88 new projects funded by the Employment Fund, 36% were started by women, similar to the figure of 37% quoted by Opportunity International. A recent study by the Institute for Strategic Studies and Prognoses shows 43% of women starting a new business in 2001 compared to 57% of men. However, this does not take into account women working in the gray economy, who do not have access to formal credit. 6.1.2 To identify the specific challenges faced by women entrepreneurs in the business world This topic is covered extensively in section 2.5 of the literature search chapter. To summarize, women all over the world face a number of obstacles, the main ones of which are:

29


Challenges facing women entrepreneurs in Montenegro

• • • •

Lack of access to credit Limited business experience Inadequate business training Lack of useful business contacts

There are also issues specific to transitional economies, including among others: • Weak banking systems • Corruption • Complicated bureaucracy While many of these topics are gender neutral, and are issues that both men and women business owners must deal with, some obstacles are specific to women or are more difficult for them to overcome. For example, according to the literature it is harder in many countries for women to access credit. Also, women are expected to take care of the family at the same time they are running their businesses. Often they have to overcome patriarchal attitudes. These additional challenges can make it more difficult for women entrepreneurs to succeed than male ones. 6.1.3 To discover which if any external factors, such as lack of access to funding, discrimination, legal structure etc., cause female Montenegrin entrepreneurs to have a harder time starting or expanding their businesses than men Not surprisingly, all the women agree that it is very difficult to run a business in the current environment. However, they all think of themselves as business people rather than business women, and do not believe they have a more difficult time due to the fact they are women. Gender Neutral The challenges mentioned by female Montenegrin entrepreneurs are in many ways similar to those of their counterparts in other transitional economies. The critical issues mentioned were: • The ongoing economic crisis • Lack of access to credit • High taxes • The uncertain legislative environment • A focus in the economy on trade rather then production • The government’s focus on political rather than economic issues All the women agreed that the move away from socialism combined with the war years have been traumatic for the country, and that it will take some time before life returns to normal. While except for Mila they are all committed to making their businesses succeed, they are all aware that it will not be easy. Gender Specific Gender issues were not perceived as a hindrance in running a business. Those women who are married say they are lucky to have the support of their husbands, as they work long hours and are not able to give their families as much time as is typically expected of wives and mothers in Montenegro. Both Edita and Milica said that once a woman gains the respect of her peers, they treat her as an equal. However, in a country where men run all the major companies, women receive lower salaries, and everyone acknowledges the patriarchal attitude, the author finds this difficult to accept. There are several theories that could explain this: 30


Challenges facing women entrepreneurs in Montenegro

• •

Life is so difficult right now for people that they are concentrating on survival rather than gender issues. Under communism, men and women were supposed to be equals. Montenegrins are not used to thinking of things in terms of gender roles, and in fact the interviewees found the interview questions related to gender somewhat surprising. Currently male and female business owners have little contact with each other, as their businesses are in different sectors. It will be interesting to see what happens if this starts to change.

6.1.4 To identify values held by female Montenegrin entrepreneurs that would lead them to conduct business in a different manner than their male counterparts. In the literature women business owners tend to be very self critical of their management styles. Milica, Marina and Mila all fit into this pattern, but the other three women exude confidence. It is interesting that these are the women’s whose businesses are thriving. They are focused on exploring opportunities, Edita with her new stores, Olgica with her training programs and Albana with working outside the country. The other three are concentrating on keeping their businesses afloat. Excluding Albana, the women agree that women manage their staff differently that men. While Montenegrin men tend to be dictatorial and status conscious, women treat employees as part of the family. According to the respondents, results of this approach are more positive. 6.1.5 To determine how the issues faced by Montenegrin women compare to issues facing women on an international level Female Montenegrin entrepreneurs face a number of challenges. Some are typical of those faced by women all over the world, while others are found in other transitional economies. It is interesting that in other transitional economies such as Russia, Hungary and Romania, women agree that they also have to deal with discrimination, while the Montenegrin women interviewed for this study did not do so. It is possible that Montenegro is unique in this matter, and that men and women are truly equal. However, it will be interesting what these same women say in a few years as the economy continues to develop. 6.1.6 To identify policies that will help women entrepreneurs in Montenegro conduct business more effectively. Most of the literature in this area contains recommendations of how to improve the business environment, thus allowing women to achieve greater success. These recommendations would be applicable in Montenegro as well. Perhaps because this is a relatively new area of study, the policy recommendations found in the major studies are very similar, as can be seen in the table below:

31


Challenges facing women entrepreneurs in Montenegro

Policies Recommended to Help Women Entrepreneurs OECD

Fostering an entrepreneurial culture for women Financing for women-owned businesses Increasing the participation of women in international trade and the global economy Improving knowledge and statistics abount women's entrepreneurship

CIPE

Research, analysis, statistical data gathering Improve access to technology, education, training Improve access to credit Implement legal and institutional reform Build women's business associations Report successes

Government must promote entrepreneurship Offer entrepreneurial education and training Develop formal venture capital and create incentives for private individuals to invest in women-owned businesses In necessary, implement legislative reforms Source: Jalpert 2000 p. 49; OECD 2000 p. 2; GEMS 2000 p. 51 GEMS

Access to Capital This is one of the key recommendations. Proposals include government initiatives, private banking programs and special credits available through women’s business centers. Access to Education and Training Programs Helping women to conduct their businesses more effectively will in turn help them to grow their businesses and make a greater contribution to the economy. Proposals include not only providing training for women who already own businesses, but also involve teaching entrepreneurship in schools so that today’s young women will grow up without the handicaps women today have to deal with. Develop Women’s Associations Women all over the world say they lack the networks and the contacts that men usually have. Building organizations to provide both networks as well as support will strengthen the business communities and help build confidence. These associations can also serve as venues that can provide training and financing and carry out advocacy to push governments to adopt womenfriendly legislation. Conduct More Research Through the existing research, we are starting to understand what motivates women entrepreneurs and what problems they face. We are also realizing what a valuable resource they are to their respective countries, and what a major contribution they could make given the opportunity. However, more research is necessary in order to create policies that will offer the kind of support that women business owners need in order to thrive. There are a number of challenges in doing so, as such a large number of women operate globally in the gray economy and are difficult to pin 32


Challenges facing women entrepreneurs in Montenegro

down. The OECD makes a number of recommendations on several options for gathering consistent data. (Baygan 2000 p. 27). Move women into new sectors One finding that was not explicitly mentioned in the research but is clearly an issue in Montenegro is that women tend to open “female oriented� businesses. These typically have a limited growth span (a beauty salon or a flower shop). The government needs to encourage women to move into other, high growth, areas through incentive programs and training. 6.2 Evaluation of methodology The case study methodology was the best way to gather the data given resources and time available. The one-on-one interviews allowed more in-depth information to be uncovered, and allowed some interesting conclusions to be drawn regarding the situation of women entrepreneurs in Montenegro. One weakness may be that the data gathered was too narrow as the group was quite small. Based on the results of this project, it would be valuable to design a questionnaire to be used on a far wider range of women entrepreneurs in all regions of the country. This would be a challenging project as so many women work in the gray economy. They are hard to identify, and may not be willing to be honest. Nevertheless it would give a more accurate picture of the situation. Furthermore, subjects may be more willing to be honest if the results were anonymous. In a country where tax evasion is one of the major problems, it was surprising to hear that all six interviewees pay all their taxes. 6.3 Conclusion It seems clear that women entrepreneurs struggle with a number of issues that prevent them from fulfilling their potential. As governments around the world begin to realize the contribution women business owners can potentially make to their economies, they are looking for ways to offer then the support they need. It seems clear that Montenegro has a valuable resource in its female entrepreneurs. The subjects for this study were hard working and dedicated to success, and they also wish to work within the system. However, there a number of factors holding them back. Montenegrins are currently experiencing a very difficult time. Citizens have lost faith in politicians, and most people are struggling to pay the bills and feed their families. However, the government is working on creating a better business environment, and the entrepreneurs interviewed for this study are all determined to succeed despite the numerous challenges they face. The government as well as private lending organizations needs to become aware of this valuable resource. It would be worthwhile for them to concentrate on this sector and make the most of this resource. Allowing women access to training and financing will help them to build better businesses, adding to the tax base and building up the private sector.

33


Challenges facing women entrepreneurs in Montenegro

APPENDIX I Questions asked in interviews with female Montenegrin entrepreneurs: • What is your age, educational and professional background? • Why did you start your own business? • What kind of business do you run? • How did you finance the start up of your business? • Do you want to expand your business? How big would you like it to be? • Have you put additional money into it since you started? • Have you applied for/received outside funding? Have you had problems accessing financing? • What do you see as your primary challenges as an entrepreneur? • Do you think male business owners in Montenegro face the same challenges? • What is it like working as a woman business owner in Montenegro? • Does your family support your career? • How do you rate yourself as a businesswoman? Do you believe you have the necessary skills to make your business thrive? • Do you think you manage your business differently than a man would? • Do you have a mentor? Or are you a member of any network that offers you support? • What would you like to see happen in Montenegro to help you succeed in your business endeavors?

34


Challenges facing women entrepreneurs in Montenegro

APPENDIX II What is your age, educational and professional background?

M. Markovic 35, attended sewing school, worked in a sewing machine factory

O. Nicevic 39, attended cosmetics school

A Abazovic 26, completed tourist training school

Why did you start your own business? What kind of business do you run?

Old company closed 3-year old sewing school

It was her dream 19-year old cosmetics salon

Father's idea 5-year old beauty salon

How did you finance the start up of your business? Do you want to expand your business? Have you put additional money into it since you started? Have you applied for/received outside funding?

Loan from Employment Fund

Own money

Father paid for it

Yes No

Yes Yes

No Just a little for minor renovations

Yes

Yes

No

Have you had problems accessing financing?

Initially no, but more would be hard

N/A

What do you see as your primary challenges as an entrepreneur?

Making enough money to cover costscannot spend extra onmaterials or marketing now

Yes-couldn't get loan from local bank, finally for one from foreign donor No licensing requirements leads to unfail competition

Do you think male business owners in Montenegro face the same challenges? What is it like working as a woman business owner in Montenegro?

Men have connections-makes things easier Owning a business in Montenegro is difficult

Yes

Yes

Same as for men-but there are no men in the cosmetics

No difference

Does your family support your career? Do you believe you have the necessary skills to make your business thrive? Do you think you manage your business differently than a man would? Do you have a mentor? Or are you a member of any network that offers you support? What would you like to see happen in Montenegro?

Yes Not sure

Yes Yes

Yes Yes

Doesn't know

No

No

Yes, her brother No

Yes, old professor Cosmetics organization

Yes, father Hairdressers' association

Move away from trade based to production based economy

Stronger industry regulations

Business can only do better if people have more money

If she didn't own the property, it would be hard to make ends meet between rent and the high taxes

35


Challenges facing women entrepreneurs in Montenegro

What is your age, educational and professional background?

E. Klien 48, economics degree from university in Zagreb, Croatia

M. Mirkovic 45, lawyer, refugee from Bosnia

M Radinovic 46, degree in engineering from university in Belgrade

Why did you start your own business?

Family's idea

Survival

What kind of business do you run?

17-year old dry cleaning store

Since 1995, has had stand selling underwear in outdoor market

Husband died, she took over his firm 6 years ago 10-year old graphic design studio

How did you finance the start up of your business?

Had money from sale of property

Do you want to expand your business?

Yes

Have you put additional money into it since you started? Have you applied for/received outside funding?

Yes

Special loans for refugees and help from friends No-it is no longer a viable business Just money to buy merchandise

Yes, big loan in 1990 and small one in 2001 No-business is well known

Yes, from organization that works with refugees Couldn't get money anywhere else

Because of grey economy, taxes are extremely high Yes

High taxes and cusotms duties Yes

Difficult for Montenegrins to adopt capitalist mindset Yes

Women are not encouraged to succeed in Montenegro-but as a Croatian she is treated differently Yes

Owning a business in Montenegro is difficult

Have to gain respect of male collegues

Yes, husband buys merchandise

Yes

Yes

Has skills but environment is poor

Yes-kinder and friendlier

Yes-women are better at selling

Has had to learn-still not totally confident Yes-men much more aggressive

No Yes, Montenegro Business Alliance & Women's Buisness Association Solve the probem of the grey economy; fight patriarchal attitude

No No

No No

Move away from trade based to production based economy

New value system needs to be created.

Have you had problems accessing financing? What do you see as your primary challenges as an entrepreneur? Do you think male business owners in Montenegro face the same challenges? What is it like working as a woman business owner in Montenegro? Does your family support your career? Do you believe you have the necessary skills to make your business thrive? Do you think you manage your business differently than a man would? Do you have a mentor? Or are you a member of any network that offers you support? What would you like to see happen in Montenegro?

36

Husband sold/mortaged everything they owned No No Husband did, she hasn't N/A


Challenges facing women entrepreneurs in Montenegro

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