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Necessity entrepreneurship

O’Donnell, Philip, Leger, Margot orcid logoORCID: 0000-0003-4125-9193, O'Gorman, Colm orcid logoORCID: 0000-0003-4732-7433 and Clinton, Eric orcid logoORCID: 0000-0002-3888-8194 (2023) Necessity entrepreneurship. Academy of Management Annals, 18 (1). pp. 44-81. ISSN 1941-6520

Abstract
Over the past two decades, necessity entrepreneurs—those who engage in entrepreneurship because of a belief that decent or desirable livelihood alternatives do not exist for them—have become increasingly visible in the entrepreneurship literature. During this time, however, necessity entrepreneurship—both the phenomenon and the theoretical construct—has acquired something of a bad name. As a phenomenon, necessity entrepreneurship is widely associated with capital constraints, marginal profits, and limited economic impact. As a theoretical construct, it is often seen as a crude and pejorative classification device. In this article, we take stock of this emerging body of research, providing an integrative account of extant research and a focused analysis of the main areas of discord within this literature. We set out specific pathways aimed at remediating incongruity between, on the one hand, how necessity entrepreneurship is defined and conceptualized and, on the other, how it manifests across the diverse array of real-world contexts that feature in this literature. We use these reflections to foreground an agenda for future research which is sensitized to the main concerns and critiques that have surfaced in this literature in recent years and to key shifts in the conceptual approach to which they have given rise. Entrepreneurship has been an ever-present feature of human society at least since the time of the first agricultural revolution, when the dominant form of social organization began to shift from small, nomadic bands of hunter–gatherers to larger and more complex societies characterized by increasing specialization and division of labor (Baumol, 1996; Carlen, 2016). Economic historians have documented how, in the roughly 10,000 years since, the enduring prosperity of nations and civilizations has flowed in large part from the cultivation of a spirit of enterprise, where entrepreneurs are incentivized by the certainty that transformational ideas and technologies will be embraced and rewarded (Landes, 1999). Accordingly, entrepreneurs are heralded as cultural icons in much of the modern world, where they are at the visible forefront of humanity’s efforts to address many of our so-called grand challenges, such as the transition to sustainable energy, the strengthening of democracy, and universal access to food, education, health care, and other basic services. Much less prominent across both academic and popular discourse is the fact that, throughout history and into the present day, entrepreneurship has been, and still is, oriented broadly toward the much more mundane objective of economic self-reliance. Even in developed nations like France, Japan, and Spain—and even before the COVID-19 pandemic precipitated widespread labor market upheaval—upwards of one-fifth of those entering self-employment were doing so primarily because they did not believe that better alternatives for work were available to them (Bosma & Kelley, 2019). In developing countries, where social safety nets are less comprehensive and where the pace of urbanization has drastically outstripped that of job creation in recent years, it is common for this number to be significantly larger (Margolis, 2014; Poschke, 2013). Entrepreneurship of this kind is often referred to as “necessity entrepreneurship” (NE), which we formally define as market-based trading activities that are performed outside the scope of salaried employment and that are undertaken primarily because of a lack of decent or desirable livelihood alternatives. Over the past 20 years or so, scholarly interest in NE has begun to catch up somewhat with the prevalence of the phenomenon itself. Arguably, though, the theoretical construct of NE is as contentious as it is popular; alongside an ever-growing accumulation of empirical insights, critiques routinely surface which challenge the construct’s descriptive and analytical value. In some cases, these critiques are used to foreground subsequent efforts at theoretical advancement (e.g., Dencker, Bacq, Gruber, & Haas, 2021); in others, they represent conclusions in and of themselves, leaving open the question of whether the construct of NE has impaired, rather than advanced, our efforts to understand the phenomenon that it is intended to represent (Sarkar, Rufín, & Haughton, 2018; Williams & Williams, 2012). Indeed, given the immense diversity in the “where,” “how,” and even the “why” of NE, some scholars have questioned whether it is appropriate or helpful to conceptualize it as a singular, universal practice at all, suggesting that, in our efforts to do so, one of two outcomes is inevitable: either we are left with a construct that is overstretched and lacking any real representational substance (Puente, González-Espitia, & Cevilla, 2019; Williams & Gurtoo, 2013), or we conceal much of this diversity beneath stylized or stereotyped representations of necessity entrepreneurs (e.g., informal microentrepreneurs in the developing world), which serves to render other groups invisible (e.g., parents whose domestic responsibilities preclude them from taking on jobs that are commensurate with their skills and experience) (Foley, Baird, Cooper, & Williamson, 2018). That the propagation of these concerns has failed to curb the momentum that this literature has generated could be viewed either as an encouraging sign or a troubling one. On the one hand, it might indicate that these concerns are being progressively edged out by a gradual accumulation of affirmative findings; on the other hand, it might give us reason to be cautious when drawing inferences from the continuous stream of affirmative findings that is emerging. In this article, we review the findings that underpin each of these possibilities with a view to determining if (and how) the inherent tensions in this literature might be reconciled. Our review contributes to the achievement of this end goal in three main ways. First, we provide a comprehensive and integrative review of extant research on NE. In doing so, we connect the tensions that have come to the fore in this literature to the duality between the empirical and the conceptual merits of NE, or between NE as a form of economic action and NE as a theoretical construct. Second, we reflect on how these tensions, and the key conceptual developments to which they have given rise, shape future prospects for this field of research. Third, we outline a set of general and specific avenues for future research which reflect not only the areas of this literature that remain systematically underdeveloped but also the areas in which NE research is well positioned to deliver insights that are of broader relevance to the field of entrepreneurship and beyond. The remainder of this article proceeds as follows. In the next section, we foreground our review with a short overview of the conceptual roots of the NE construct, its status in contemporary entrepreneurship literature, and its place in the global labor economy. We then detail our review methodology. Following that is our integrative review of the literature, from which we proceed to a broader discussion of the problems—and solutions—that exist in how we conceptualize NE. In this section, we build toward what we believe to be the most promising avenues of future inquiry based on the observations that we made in the course of our review.
Metadata
Item Type:Article (Published)
Refereed:Yes
Subjects:UNSPECIFIED
DCU Faculties and Centres:DCU Faculties and Schools > DCU Business School
Research Initiatives and Centres > National Centre for Family Business
Publisher:Academy of Management
Official URL:https://doi.org/10.5465/annals.2021.0176
Copyright Information:© 2023 Academy of Management.
Funders:Part-funded by the AXA Research Fund within the scope of its Towards Inclusive and Sustainable Economic Growth funding initiative.
ID Code:28889
Deposited On:08 Aug 2023 15:31 by Thomas Murtagh . Last Modified 26 Feb 2024 10:17
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