Wednesday
February 11
2009

Moses Lee

Are the Poor Really Entrepreneurial?

Last month, Aneel Karnani wrote in the Stanford Social Innovation Review an article entitled, “Romanticizing the Poor.” In it, he states, ” …romanticized views of BoP people as value-conscious consumers and resilient entrepreneurs are not only false, but also harmful.” In the article, Karnani spends a lot of time debunking the view that people in dire straits are well-informed and rational economic actors. In the end, he exhorts governments and policy makers to get more involved in the fight against poverty.

Personally, I think a lot of what Karnani says in the article is true. Particularly on the topic of entrepreneurship, (which is what I’d like to focus on in this entry). It’s just wrong to assume that the majority of those living at the BoP are entrepreneurial. Recently, I spoke to a friend who is working on a BoP project that seeks to help the poor start microenterprises. The project selects a handful of people from a poor community and puts them through an entrepreneurship training program. I asked her what was one of the biggest challenges of the project. She responded, “That we’re trying to train a lot of people to be entrepreneurial who are simply not.”

Indeed, this seems to be a big issue at the BoP. But it’s a big issue everywhere. A few examples:

  • When I was in business school, I remember taking a new venture creation class and on the first day, the professor, himself an entrepreneur, told us that just because we were taking the class did not mean that we were entrepreneurs. “Entrepreneurs”, he said, “are a rare breed, even amongst business school students at an elite institution like this.”
  • The other day, I was talking to an MBA student about market-based solutions to poverty alleviation and we got on the subject of starting a new venture in the developing world. The MBA confessed to me that, though he liked the idea of starting a venture at the BoP, he did not consider himself to be very entrepreneurial. “I know all the business terms, the models, and frameworks. But I don’t consider myself a risk taker and I’m not really one to start my own venture.”

Yes, it’s just as difficult to find an entrepreneur in the developed world as it is in the developing world.

But there’s a big difference between the developing and developed world when it comes to entrepreneurship. The developed world has educational systems, institutions, and structures in place that cultivate entrepreneurs. This environment allows the minority who are “real” entrepreneurs to mobilize resources to start new ventures and create value in society. If only this environment were available for the entrepreneurs who live at the BoP. And yes, there are entrepreneurs who live at the BoP.

This leads me to my point: I think that one of the best things that we from the developed world can do for the poor is to help cultivate an entrepreneurial environment for them. One such group that is trying to do this is TechnoServe. It’s mission is to help “entrepreneurial men and women in poor areas of the developing world to build businesses that create income, opportunity, and economic growth for their families, their communities, and their countries.” TechnoServe does this by providing training, among many other supportive activities, for entrepreneurs at the BoP. What Technoserve is doing is great; however, it can’t do it alone. Other players need to get involved, including government.

I think more resources should be spent towards building this entrepreneurial environment in poor communities. Some people will create new ventures. The majority will not. And that’s okay. Why? Because it’s a realistic expectation, not only for those at the BoP, but also for us from the developed world. Returning back to my business school example above, I honestly don’t think that anyone who took the entrepreneurship class with me actually started his or her own business. Was it a failure? No. And neither would a BoP entrepreneurial training program that yielded no immediate new ventures be a failure. We just need to set appropriate expectations.

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Investing
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