International development agencies and non-governmental organisations often seek to advance community development by fostering entrepreneurship. The premise is that poor people can enhance their household incomes by establishing small businesses or by adding value to natural resources.
Such programmes commonly include training and the provision of loans to enable micro-entrepreneurs to get started. But these interventions aren’t straightforward and often fail to achieve their objectives.
Prior research has pointed to the fundamental economic challenges of entrepreneurship in the context of poverty. Cultural and institutional factors also play a role. Researchers have argued, for instance, that cultural norms of collectivism shape how entrepreneurs define themselves. They are likely to prioritise their roles as mentors or community safety net. This constrains their ability to innovate and grow their businesses.
We wanted to explore an entrepreneurship-focused intervention in more detail. Specifically, why do some people seem more inclined than others to adopt these new behaviours?
In a recent paper we set out our findings based on a study we conducted with 25 participants in northern Kenya. We built on our combined interests in entrepreneurship in resource-constrained environments, identity theory, and community development. We found that programme participants responded to the intervention in very different ways, and that religion helped explain these differences.
Our findings have implications for interventions promoting entrepreneurship as a means to reduce poverty. First, such interventions can create profound identity tensions for participants and so their proponents need to take into account local cultures much more than is commonly the case. Second, entrepreneurship-focused interventions can change participants’ behaviours in ways that potentially disadvantage the poorest community members, leading to greater inequality at the community level.
On the ground
The development intervention we examined was aimed at fostering entrepreneurship in extremely poor pastoralist communities. The programme built on a small government cash transfer and put recipients into savings groups of up to 30 people. Participants were encouraged to start small businesses in these group discussions. They also received training in life skills and basic financial and business skills, such as the concept of profit and how to buy and sell goods.
We found that over the five-year period of our study, an increasing number of pastoralists began engaging in businesses involving the sale of livestock, beadwork, sugar, tea leaves, washing powder and other necessities. But we discovered that these new business-oriented behaviours created profound tensions for the participants, and participants responded in different ways.
The source of these tensions was in how individuals defined themselves within the local culture.
The collectivist culture in these communities involved norms such as nkanyit (loosely translated, respect), which meant that people should share their belongings with others. But the training and the credit repayment requirements associated with the intervention made this problematic.
To make profits and repay loans, the programme participants had to deny other community members’ requests for handouts or loans. This contravened local norms and expectations. It also created the fear that community members might curse the entrepreneur or her or his family.
One participant explained:
Business is different from what we were doing; business is not to give credits and also not to just give things to people… but people can curse you {if you say no}.
Yet participants responded to these tensions in different ways. Some (about one-third of our research participants) gave in to the existing expectations and the need to avoid curses. As a result, they gave handouts to community members and often this led to their business languishing or collapsing. One participant noted:
When I have food {business goods} in the house, I can’t tell people that I don’t have anything, and they know that I do. I just give some to avoid {curses}.“
Others, however, continued with the new business activities despite the threat of curses. We discovered that a key factor explaining this was religion.
Christians believed that their faith would protect them from curses. For some this occurred from the beginning. Others, fearful of curses early on, came to believe that curses would not apply in the context of the businesses that they wanted to keep running.
For instance, one participant argued:
Don’t give to people because of the fear of curses, just say no and pray for protection from the curses because God is great.
Implications
We highlight the importance of people’s social identities – specifically religious identities – in explaining why some participants are more likely to adopt capitalist behaviours (such as borrowing money to invest in business, or charging consumers interest on loans) than others.
Organisations delivering entrepreneurship interventions and education in contexts of extreme poverty need to be aware of what identities they are encouraging participants to construct, either directly or indirectly through training and mentorship, and even through the questions that they ask participants.
They need to be careful about creating tensions between existing cultural norms and the new concepts and behaviours they are introducing.
More broadly, there may also be unintended negative consequences at the community level. Among the research participants in our study that adopted the entrepreneur role, this was linked to a diminished willingness to support poor community members. So, even if participants in the programme benefit through higher incomes, their entrepreneurial behaviours reduce traditional habits of giving to the needy. This could increase hardships for the very poor and create greater inequalities.
This article is co-authored by Jody Delichte, and it is based on her PhD research at the University of Cape Town Graduate School of Business. Jody currently works as an international development and culture consultant. We are grateful to Jeremy Upane for his translation support in the field.
The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.
By Ralph Hamann, Professor, University of Cape Town And
Erin Powell, Associate Professor of Entrepreneurship, North Carolina State University And
Ted Baker, Professor and George F. Farris Chair in Entrepreneurship, Rutgers Business School, Rutgers University
