Consumption Constraints and Entrepreneurial Intentions in Subsistence Marketplaces. (September 2015) - Venugopal, Srinivas
More than a billion entrepreneurs worldwide live in subsistence contexts and run microenterprises to meet life's basic consumption needs. In this article, the authors investigate how two types of consumption constraints in poverty, chronic and periodic constraints, combine to influence entrepreneurial intention. Chronic and periodic constraints are concomitant in subsistence marketplaces and represent consumption-side constraints. A field experiment shows that chronic constraints amplify entrepreneurial intention, but this effect is contingent on the level of periodic constraints. When experiencing low periodic constraints, people with high chronic constraints have greater entrepreneurial intentions than do those with low chronic constraints. When experiencing more periodic constraints, however, the authors do not find this difference. Another field experiment shows the effectiveness of marketplace literacy education in alleviating the adverse impact of periodic constraints through enhancing entrepreneurial self-efficacy. The authors present specific policy recommendations for government, social enterprise, and business relating to enhancing entrepreneurship among the poor in the face of such constraints.