State of Literature on Small to Medium-Size Enterprises and Entrepreneurship in Low-Income Communities

Posted: 4 Nov 2009

See all articles by Zoltan J. Acs

Zoltan J. Acs

Schar School of Policy and Government

Date Written: 2006

Abstract

A framework for organizing the literature on the roleof entrepreneurship in low-income communities is developed. A two-by-two matrixis introduced in order to clarify the roles played by supply of inputs anddemand for products in both poor and affluent communities. According to themodel, poor communities do not possess the same functioning markets that richcommunities do. The following section considers what is needed to createfunctioning markets where none exist. Current research suggests that institutional infrastructure, need-basedgovernment support, and a positive business environment are integral to thecreation of new markets. At this point, a discussion of the factors thatmotivate individuals to become entrepreneurs is presented, followed by evidencefrom a series of studies that have examined self-employment in both rich andpoor communities. Studies of the Appalachian Region, for example, reveal thatbusiness retention does not necessarily translate into robust growth andvitality.It is then argued that social entrepreneurship, with itsemphasis on utility maximizing as opposed to profit maximizing, might play animportant role in community building, where government has failed. The studyconcludes with an examination of entrepreneurship policy as a tool forimpacting poor communities. (SAA)

Keywords: Community development, Social entrepreneurship, Startup rates, Public policies, Job creation, Low income groups, Economic development, Economic growth, Poverty, Economically depressed areas, Market growth

Suggested Citation

Acs, Zoltan J., State of Literature on Small to Medium-Size Enterprises and Entrepreneurship in Low-Income Communities (2006). University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship, Available at SSRN: https://ssrn.com/abstract=1497870

Zoltan J. Acs (Contact Author)

Schar School of Policy and Government ( email )

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HOME PAGE: http://home.ubalt.edu/zacs

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