Innovation and entrepreneurship in a context of poverty: a multilevel approach

The issue of poverty is generating growing interest in entrepreneurship research. Entrepreneurship is seen as a way to alleviate poverty, particularly in developing countries. Developed countries also face problems of poverty and consider entrepreneurship as a way to address this issue. However, little is known about innovation and entrepreneurship in the context of poverty. What conditions lead poor entrepreneurs to innovate? The present study attempts to answer this question using a multilevel approach (individual, organizational, and environmental characteristics). The theoretically derived model is tested using a dataset of 3373 entrepreneurs living in poverty in a developed country, France. Our results show that human capital, opportunity motivation, and financial resources favor innovation. However, individuals with necessity motivation and previous experience in the same industry are less likely to innovate. In addition, being in a less competitive environment, public financial aid and privileged relationships with suppliers are linked to a higher probability of innovation by poor entrepreneurs. The implications of these results are useful for designing appropriate programs to stimulate innovation and support poor entrepreneurs.