Revitalizing Entrepreneurship to Benefit Low-Income Communities
In this article, Iain Cairns explores the negative impact of individualized entrepreneurship on low-income communities and individuals. Alongside co-authors Alan Southern and Geoff Whittam, Cairns seeks to further explain this harm and offer potential solutions in his article, “Collective entrepreneurship in low-income communities: The importance of collective ownership, collective processes and collective goods,” found in the International Small Business Journal: Researching Entrepreneurship.
Entrepreneurship as it is popularly conceptualized, as involving commercial ventures driven by exceptional individuals, does not serve low-income communities. Because entrepreneurial outcomes depend on resources – e.g. human, social and financial capital – the value generated by entrepreneurship across the social scale merely reflects the existing distribution of wealth. Typical ‘business friendly’ policies to support entrepreneurship, like tax breaks, make things worse, by deepening inequalities. In our research we show how only by recognizing that successful entrepreneurship is collective can we begin to devise a successful strategy to unlock the potential of entrepreneurship to revitalize low-income communities.
While entrepreneurship scholarship increasingly illustrates the limits of an individualized approach in commercial businesses, this thinking has not yet filtered through to how we strategize entrepreneurship in low income-areas. To begin to consider this, in our research we drew on the concept of collective entrepreneurship, focusing on three key dimensions which are normally considered in isolation: the role of collective goods (like basic infrastructure, state support, local cultural traditions and pre-existing social networks), processes (e.g. decision-making practices involving both staff and broader communities) and ownership (collectively owned business structures, like co-ops or community-owned enterprises). A case study involving a partnership between two social enterprises serving low-income communities informed our investigation.
Our findings suggest that collective action in each dimension can benefit low-income communities, yet deficiencies in one area might adversely affect the others. So, for example, local traditions of solidarity and cultural struggle favored collective processes of business decision-making and ownership, which, in turn, promised longer term commitment to the community. But class prejudice (e.g. amongst state officials) and enterprise support infrastructure, favored more commercial enterprise, providing barriers to collective or citizen-led new ventures.
Our findings suggest that a better strategy to drive improvements in low-income areas through entrepreneurship would reflect the interplay of the different dimensions of collective entrepreneurship. The crux of a new approach we envisage would involve leveraging collective goods to develop collective ownership and manage the whole process through collective decision-making. For example, entrepreneurship agencies could take a proactive approach to identify 1) community organizations capable of spawning new businesses and 2) existing enterprises rooted in communities by collective ownership structures which are capable of innovating and growing further. Local authority procurement policy could be tailored to prioritize such enterprises and ensure their activities are governed by community engagement processes. And subsidy would support the formation of human and social capital, through, for example, wealth redistribution policies, better supported skills development and the creation of community hubs, linked to libraries, community, health or sports centers.
Modern entrepreneurship studies emphasize that successful entrepreneurship relies not solely on individual effort but on privileged access to social, human, and financial capital. Recognizing entrepreneurship’s collective nature entails determining which entrepreneurial forms merit collective resource allocation. In this way, we should all play a role in choosing the entrepreneurship models deserving of collective support over others.
