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The Liability of Poorness: Why the Playing Field is Not Level for Poverty Entrepreneurs

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  • Michael H. Morris

Abstract

Entrepreneurship is increasingly emphasized as a pathway out of poverty. However, the complex, multi‐faceted nature of the poverty experience has important implications for the ability to launch and sustain viable businesses. All entrepreneurs must overcome the liabilities of newness and smallness, as reflected in a lack of legitimacy with stakeholders, inadequate resources and capabilities, an unclear identity, misunderstood roles and unclear role definitions, few established routines and procedures, and little bargaining power. However, poverty entrepreneurs face an additional barrier, which we term the liability of poorness. Four underlying dimensions of the liability of poorness are identified: literacy shortcomings, a scarcity mindset, significant non‐business distractions, and the lack of financial slack or a safety net. The manner in which each of these interacting elements exacerbate the entrepreneur's ability to address the liabilities of newness and smallness is explored. It is argued that, as the liability of poorness becomes greater, the vulnerability and fragility of the poverty entrepreneur's venture are apt to increase. Under such circumstances, significant external shocks and unexpected occurrences, such as the economic shutdown resulting from the COVID‐19 pandemic, typically have a more devastating impact on the ventures of the poor. Policies are needed to level the playing field.

Suggested Citation

  • Michael H. Morris, 2020. "The Liability of Poorness: Why the Playing Field is Not Level for Poverty Entrepreneurs," Poverty & Public Policy, John Wiley & Sons, vol. 12(3), pages 304-315, September.
  • Handle: RePEc:wly:povpop:v:12:y:2020:i:3:p:304-315
    DOI: 10.1002/pop4.283
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    References listed on IDEAS

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    Cited by:

    1. Leif Brändle & Helen Signer & Andreas Kuckertz, 2023. "Socioeconomic status and entrepreneurial networking responses to the COVID-19 crisis," Journal of Business Economics, Springer, vol. 93(1), pages 111-147, January.
    2. Michael H. Morris & Sohrab Soleimanof & Reginald Tucker, 2023. "Drivers of fragility in the ventures of poverty entrepreneurs," Small Business Economics, Springer, vol. 61(1), pages 305-323, June.
    3. Primo, Marcos André Mendes & Paiva, Ely Laureano, 2024. "Tech hub entrepreneurial training to low-income communities: Evidence from Brazil," Technological Forecasting and Social Change, Elsevier, vol. 203(C).

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