Research Question
How do impoverished micro-entrepreneurs attain, manage, and mobilise meagre resources in order exploit economic opportunities?
It is currently my intention to conduct this study in Kenya, with one rural and one urban study location, though that is a decision that remains to be finalised.
Importance and Key Contribution
As pointed out by Bruton, et al. (2012), the informal economy exists among a rarefied group of management research topics whose vast importance is entirely incommensurate with the scholarly attention that has so far been paid to it. Schneider (2005) estimated that informal sector firms account for $70 billion, $531 billion, and $353 billion of African, Asian, and Latin American GDPs respectively.
My contribution will be an inductive, in-depth study of the entrepreneurial process in such settings, which will focus on how meagre financial resources and (possibly) abundant social resources are attained, managed, and mobilised by micro-entrepreneurs in order to exploit economic opportunities.
I will conduct the study by ethnography over the course of eight-ten months, with the aim of capturing some of the complexity that has been missed by prior cross-sectional work in this area (e.g. Gras and Nason, 2015; Barrios and Blocker, 2015; Honig, 1998). I have identified one exemplar work, namely Collins et al. (2009), for the study of financial resources and one (Kodithuwakku and Rosa, 2002) for the study of social resources. I intend to synthesise the ideas and findings put forward by these texts.
Theoretical Base
As I am conducting this study inductively, I cannot say a priori which theories and concepts will be drawn upon in my analysis. However, my expectation is that my analysis will be underpinned by the resource-based view of the firm (which in my case will be microenterprises of 0-5 employees). It is also my expectation that I will examine the management of financial resources from an institutional perspective and that Granovetter’s (1973) strong/weak ties will play a part in my analysis of social capital. Other concepts such as bricolage, opportunity/necessity entrepreneurship, family capital, and normative/affective/continuance commitment have been shown to be instructive in extant research, and I may draw on some or all of them also.
Implications
It is my hope that my work will be instructive to NGOs and microfinance institutions, in a similar way to the work that was carried out by Collins, et al. (2009). This research showed that the management of financial resources was more, not less, complex when income was low, and helped to shape the redesign of microfinance programmes. Barrios and Blocker (2015) talk of re-orienting entrepreneurship initiatives around community-based policies rather than around individual entrepreneurs. This something that I also aspire to support, and is the principle reason that I have put such a strong focus on the management of social resources in my study.
References
Bruton, G., Duane Ireland, R., and Ketchen Jr., D. (2012). Toward a Research Agenda on the Informal Economy. Academy of Management Perspectives, 26(3), 1-11.
Schneider, J. (2005). Getting beyond the training vs. work experience debate: The role of labor markets, social capital, cultural capital, and community resources in long-term poverty. Journal of Women, Politics and Policy, 27, 41-53.
Gras, D. and Nason, R. (2015). Bric by bric: The role of the family household in sustaining a venture in impoverished Indian slums. Journal of Business Venturing, 30(4), 546-563.
Barrios, A. and Blocker, C. (2015). The Contextual Value of Social Capital for Subsistence Entrepreneur Mobility. Journal of Public Policy & Marketing, 34(2), 272-286.
Honig, B. (1998). What determines success? Examining the human, financial, and social capital of Jamaican microentrepreneurs. Journal of Business Venturing, 13(5), 371-394.
Collins, D., Morduch, J., Ruthven, O., and Rutherford, S. (2009). Portfolios of the Poor: How the World’s Poor Live on $2 a Day. Princeton: Princeton University Press.
Kodithuwakku, S.S. and Rosa, P. (2002). The entrepreneurial process and economic success in a constrained environment. Journal of Business Venturing, 17(5), 431-465.
Granovetter, M.S. (1973). The Strength of Weak Ties. American Journal of Sociology, 78(6), 1360-1380.
