Entrepreneurship and inequality in emerging economies

Introduction

Entrepreneurship may contribute to improving economic growth and development by reducing inequality and exclusion (Apetrei et al., 2019; Auguste, 2021). In many emerging economies, entrepreneurship and SMEs have been shown to contribute to socio-economic development through job creation, economic growth and more equal income distribution (Bruton et al., 2021; Urban, 2020). The potential positive relationship between economic inequality and entrepreneurship is likely because the same socio-economic dynamics that increase a country’s levels of economic inequality may also result in increased entrepreneurial activity (Jung et al., 2018; Lecuna, 2019; Xie et al., 2022).

A critical analysis of the literature highlights that while research on the relationship between inequality and entrepreneurship is growing, findings are generally mixed.  Studies are emerging which show that high levels of wealth inequality prohibit fewer wealthy individuals from engaging in entrepreneurial activity, while it allows the wealthy to garner the necessary resources to invest in entrepreneurial activities (Michie, 2018; Sakar et al., 2018).

Furthermore, the association between inequality, entrepreneurship and the rate of economic growth remains a controversial topic with inconsistencies in the results reported in many empirical and theoretical studies. For instance, despite various factors investigated, such as infrastructure development and urbanisation, which are hypothesised to effect inequality, researchers find no evidence of causality from any of the variables toward the inequality or vice-versa (Bruton et al., 2021; Xavier-Oliveira et al., 2015).

Consequently, it is important that research considers the variety of ‘possible intended and unintended consequences of supporting the reduction of inequality’ (Michie, 2018). Additionally, it is important that policy delivers the intended outcome of reducing inequality while increasing entrepreneurial activity that does not require or create even more inequality (Auguste, 2021; Urban, 2020).

List of topic areas

• The complex causal relationship between entrepreneurship and inequality in emerging economies.
• The impact of entrepreneurship on inequality (and vice-versa) at the macro, regional and micro levels in emerging economies.
• Contextualising inequality in terms of income, wealth, consumption, and opportunity trends in emerging economies.
• An interdisciplinary understanding of inequality in each country context of how entrepreneurship can be fostered.
• The heterogeneity among emerging economies contexts in terms of inequality and entrepreneurship.
• Entrepreneurship and the impact on gender equality and social mobility.
  Mechanisms through which entrepreneurship can impact inequality.
• Economic inequality and its effects on the decision making of entrepreneurs in emerging economies.
• Various forms of entrepreneurship (high-growth, replicative, social entrepreneurship, technopreneurs) and how they lead to different entrepreneurship-inequality outcomes.

References and readings:

Apetrei, A., Sánchez-García, J.L. and Sapena, J. (2019) 'The controversial link between entrepreneurial activity and inequality', International Entrepreneurship and Management Journal, 15(3): 485-502. 

Auguste, D. (2021). The Impact of Economic Inequality on Entrepreneurship: Does a Society's Stage of Development Make a Difference? Sociological Perspectives, 64(2): 176-195. https://doi.org/10.1177/0731121420946778

Bruton, G. & Sutter, C. & Lenz, A.K. (2021). Economic inequality - Is entrepreneurship the cause or the solution? A review and research agenda for emerging economies. Journal of Business Venturing, 36. 106095. 10.1016/j.jbusvent.2021.106095.

Duncan-Horner, E.M., Farrelly, M.A. and Rogers, B.C. (2022).  Understanding the social entrepreneur: a new intentions model for advancing equity, social justice, and sustainability.  Journal of Entrepreneurship in Emerging Economies, 14(3), 361-391. https://doi.org/10.1108/JEEE-10-2020-0359

Gupta, N. and Matthau, M. (2022). Examining the enablers of sustainable entrepreneurship - an interpretive structural modelling technique. Journal of Entrepreneurship in Emerging Economies, 14(5), 701-726. https://doi.org/10.1108/JEEE-10-2021-0416

Jung, H., Seo, I. and Jung, K. (2018). Mediating role of entrepreneurship in explaining the association between income inequality and regional economic performance. Economic Development Quarterly, 32(2): 135-145.

Lecuna, A. (2019). Income inequality and entrepreneurship. Economic Research-Ekonomska Istraživanja, doi: 10.1080/1331677X.2019.1663545.

Michie, J. (2018). Entrepreneurship, investment, and inequality. International Review of Applied Economics, 32(3): 281-282.

Sarkar, S., Rufi?n, C. and Haughton, J. (2018). Inequality and entrepreneurial thresholds. Journal of Business Venturing, 33(3): 278-295.

Urban, B. (2020). Wealth inequality and entrepreneurial activity in South Africa. International Journal of Sustainable Economy, 12(2): 117-139.

Xavier-Oliveira, E., Laplume, A. O. and Pathak, S. (2015). What motivates entrepreneurial entry under economic inequality? The role of human and financial capital. Human Relations, 68(7): 183-1207.

Xie, X., Li, L. and Zhou, G. (2022). Economic inequality and entrepreneurship: Micro-evidence from China. Strategic Entrepreneurship Journal, https://doi.org/10.1002/sej.1441