Subsistence Entrepreneurship,Value Creation,and Community Exchange Systems

Abstract

We study subsistence entrepreneurship, defined as entrepreneurial actions undertaken by individuals living in poverty. Subsistence entrepreneurs are important elements of the global economy. By virtue of being poor themselves and co-locating in the same community as their customers living in poverty, subsistence entrepreneurs create value for their customers more effectively than outside entities. We suggest that this marketing exchange (micro-level phenomenon) leads to the building of a community-level exchange system that is unique and inimitable (meso-level phenomenon). Viewing through the theoretical lens of social capital, we develop insights gleaned from qualitative interviews with subsistence entrepreneurs. Community marketing systems that arise out of micro-level interactions between subsistence entrepreneurs and their customers form the glue holding the so-called “informal economy” together in subsistence economies.

Keywords

entrepreneurship subsistence social capital community exchange system macromarketing

Introduction

In his recent book addressing macro issues pertaining to economic development and globalization, Samli (2009) passionately argues for a viewpoint grounded in a “bottom-up” approach to wealth creation. Samli’s central thesis is that entrepreneurial spirit must be unleashed in emerging markets for the betterment of societies, and hence macro-level institutional structures designed to foster micro-level, bottom-up entrepreneurship are critical for setting the stage for a more inclusive global economy. In this article, we explicate Samli’s idea and present a study of subsistence entrepreneurship, which we define as entrepreneurial actions, undertaken in the informal sector of the economy, by individuals living in poverty in bottom of the pyramid (BOP) or subsistence marketplaces to create value for their consumers. Subsistence entrepreneurs face a double jeopardy: they operate with negligible resources, and operate in contexts marked by debilitating formal institutional voids, uncertain institutional environments, and the relative lack of market-based institutions and facilitating rules, thereby making their entrepreneurial efforts extremely challenging.

Why is subsistence entrepreneurship (SE) different from other types of entrepreneurship that operate in the informal sector? At a fundamental level, SE is undertaken by actors who are completely embedded in, and transact within the informal markets in which they operate. As such, they are different from entrepreneurial actions undertaken by outside-in entities with the objective of creating economic and/or social value for the poor (for example, corporations or entrepreneurs who are not embedded in these markets). Our view of value mirrors Woodruff’s (1997) multi-layered conceptualization wherein value stems from customer perceptions, preferences, and evaluations of products/services, and enables the achievement of customer’s goals. These outside-in business strategies are exemplified in the literature on BOP (Prahalad 2006). Moreover, although outside entities do compete in these informal markets, they operate within the ambit of the formal economy. In other words, they possess and fully utilize their access to resources and institutional support (Webb et al. 2009). Also, in some cases, these subsistence entrepreneurs may be the only players able to reach these subsistence consumers (see Hawken 2007) and hence they play a vital role in the informal sector.

Three salient features stand out about SE. Prahalad (2006) notes that as many as half of all subsistence consumers globally may be entrepreneurs themselves indicating that paucity of job opportunities lead these consumers to stake out their prospects on their own. As such, more so than most entrepreneurs, subsistence entrepreneurs use their families as resource buffers in sustaining their entrepreneurial activities (Viswanathan, Rosa, and Ruth 2010). Second, subsistence entrepreneurs live in densely networked social communities (Viswanathan, Gajendiran, and Venkatesan 2008) giving rise to constant face-to-face meetings and social exchanges. Third, by virtue of their social embedding inside the subsistence communities and by living in poverty themselves, the lives of subsistence entrepreneurs are intertwined quite heavily with those of their customers leading to the development of intense interpersonal relationships and affective commitments. In the absence of economic and institutional mechanisms, subsistence entrepreneurs rely exclusively on these social commitments to sustain and stabilize their businesses (Viswanathan, Rosa, and Ruth 2010). Hence studying these subsistence enterprises can legitimately contribute to a better understanding of the creation and maintenance of their proximate community-level social and economic linkages. In addition, although macromarketing scholarship offers substantial theoretical guidance to Western firms marketing to poor consumers in developing countries (e.g. Laczniak and Santos 2011; Slater 1968), it can be augmented with fresh perspectives as to how exchange systems are created, especially by shifting the emphasis from outside-in marketing to embedded marketing in the case of informal sectors.

Subsistence entrepreneurship (SE) is an important phenomenon for macromarketing scholars to consider. From a pragmatic viewpoint, subsistence marketplaces are large components of the global economy (Viswanathan et al. 2012) and hence an understanding of subsistence entrepreneurship would enable better design of institutions and societal systems. From a theoretical standpoint, subsistence entrepreneurs create economic value not only for themselves to subsist, but also provide economic and social value for the proximate community at large. Such social exchanges help construct meso-level community exchange systems, which, in turn, contribute to developing and maintaining the so-called “informal economy.” Hence research on subsistence entrepreneurship reflects the classic macromarketing objectives of trying to understand the workings of a consumption system (Layton 2007) and its impact on society (Hunt 1981).

The remainder of the article is organized as follows. First, we develop a theoretical framework for explaining SE. In doing so, we draw upon relevant literature and integrate these theoretical perspectives with a close examination of a set of in-depth, qualitative interviews we conducted in South India. We then draw implications of our research for marketing and entrepreneurship theory in a broad-ranging discussion.

Subsistence Entrepreneurship: Developing a Theoretical Framework

Entrepreneurship

Entrepreneurship is defined as the pursuit of unexploited or underexploited business opportunities (Acs 2006). Conventional entrepreneurship research has centered on wealth creation (Hittet al. 2011) and the pursuit of competitive advantage (Zahra and George 2002). Research has suggested that the entrepreneurial process moves along these stages: entrepreneurial alertness, opportunity recognition, opportunity exploitation, and growth decisions (see Webb et al. 2009, p. 494). Entrepreneurs are posited to either employ deliberate search to discover opportunities that arise out of competitive imperfections (Kirzner 1973, p. 10), or to possess market-specific knowledge and hence make serendipitous discoveries (Shane 2000).

However, the above-mentioned discussion presents two problems for the study of subsistence entrepreneurship. First, the exclusive focus on wealth creation and competitive advantage reflects an entrepreneurial perspective of individuals with sufficient resources and having an active choice to start a new enterprise (Acs 2006). In contrast, in subsistence settings, entrepreneurship is fundamentally about survival (Viswanathan, Rosa, and Ruth 2010). Entrepreneurs often lack practice in deploying cognitive skills to discern, evaluate and exploit growth-oriented opportunities (Viswanathan 2007). They engage in entrepreneurship out of necessity (Reynolds et al. 2005) and focus the business on a possessed skill or resource with little regard to whether their business options really represented competitive differentiation in the marketplace. As a result, the entrepreneurial process could unfold very differently in subsistence marketplaces, and could lead to very different consequences. This is not to argue that subsistence entrepreneurs completely lack cognitive strengths or skills, but to highlight the very limited growth- and market-orientations with which they typically enter the entrepreneurial process.

Second, most scholarly work on entrepreneurship has focused on activities in a “formal” economy, i.e. economic settings that contain capital and labor markets, extensive physical infrastructure, mechanisms of contracts and regulatory enforcement, and property rights (Webb et al. 2009). In contrast, subsistence marketplaces exemplify an “informal” economy, characterized by uncertain institutional contexts and “institutional voids,” that is, the lack of the above market-based institutions and resources (Mair and Marti 2006). A significant proportion of global economic activity takes place in the informal sector: approximately 17 percent of gross domestic product (GDP) in developed countries and approximately 40 to 60 percent in developing countries (Schneider 2002). Given such practical importance, it is vital to push the frontiers of entrepreneurship research in informal economies. Although interest in doing so is now growing (Webb et al. 2009), the study of entrepreneurial action in poverty contexts, a special case of entrepreneurship in an informal economy, has received very limited attention. We now turn to this specific setting.

Entrepreneurship in contexts of poverty

Entrepreneurship in poverty contexts can be considered along a continuum. At one level, entities that are not poor in themselves, i.e. outside-in entities, can enter and engage in entrepreneurial action in these contexts to create economic and/or social value (Prahalad 2006) as exemplified by two research streams: bottom of the pyramid (BOP) (Prahalad 2006), and social entrepreneurship (Mair and Marti 2006). Celebrated examples in the social entrepreneurship domain in the Indian context include LijjatPapad, where local women entrepreneurs have cooperatively run a business of a crispy snack since the 1970s (Datta and Gailey 2012), and SEWA Hansiba, where, in 2006, poor women artisans were encouraged to come together in constructing their own design-based textile fashion label (Khaire 2014). At the other end of the continuum is entrepreneurial action by individuals who are an essential part of the impoverished context. They are living in poverty themselves, and in the local economy. Both the BOP and social entrepreneurship streams negotiate and address the conceptual issues inherent in informal economy contexts, and both streams emphasize an entrepreneurial approach. The BOP approach advises corporations to deploy their substantial resources, using an entrepreneurial mindset, to profitably engage the vast market represented by the millions of economically poor people around the world (Prahalad 2006). The social entrepreneurship approach tends to focus on the entrepreneurial process itself as a catalyst for social progress. It is “a process involving the innovative use and combination of resources to pursue opportunities to catalyze social change and/or address social needs” (Mair and Marti 2006, p. 3).

The above two research agendas have done much to advance the theory and practice of entrepreneurship conducted in poverty contexts. However, their contribution can be qualified along two dimensions: (1) they rely on conceptualizations of resources and opportunities as operative within the ambit of the formal economy (e.g. venture capital) that are “transported to” and “for the benefit of” subsistence-level marketplaces and (2) they rely on a conceptualization of business creation as an activity done by sensing an opportunity (commercial or social) rather than out of necessity. Despite significant advances highlighting the role of entrepreneurship in poverty contexts, two issues have not received much attention. First, how do the internal entities that are embedded within the poverty contexts, namely the poor, engage in entrepreneurship? Second, how do these subsistence entrepreneurs respond to unmet consumer needs (a micromarketing role), and help in the creation of markets (macromarketing role)? Specifically, subsistence entrepreneurship can help highlight the “specialized roles and market structures” that might be operating within the poverty marketplace, how these systems function, and how they interplay with local subsystems of the market (Layton 2009). In other words, how inside entities, mired with resource constraints, create newer markets by operating within the ambit of an informal economy, is a question worthy of research attention.

Subsistence entrepreneurship in community context

At a macro-market level, operating in an informal economy characterized by institutional voids (Mair and Marti 2009) plagues the enterprises of subsistence entrepreneurs. When these market-level voids are coupled with the harsh individual life circumstances, the survival of subsistence enterprises is fraught with uncertainty (Mehta and Shah 2002). In this environment of a “double whammy” of both macro and micro constraints, the relationships that individual entrepreneurs maintain with their proximate community are crucial (Viswanathan et al. 2012).

By virtue of being embedded within the community and being poor themselves, subsistence entrepreneurs are able to build relationships with other poor consumers in their proximate community. These relationships help entrepreneurs alleviate some of their individual deficiencies and learn about navigating the marketplace effectively (Viswanathan et al. 2012). In other words, there appears to be a symbiotic relationship in which shared adversity between the entrepreneur and the customers who share similar life circumstances fosters empathizing and understanding (Viswanathan et al. 2012). When such empathetic dispositions are coupled with frequent market-based interactions and communal proximity, strong social ties are formed enabling the formation of social capital that aids in creating value.

Social capital (SC) and subsistence entrepreneurship (SE)

Social capital refers to “the capacity of individuals to command scarce resources by virtue of their membership in networks or broader social structure” (Portes 1995 p. 12). Social capital (SC) has been particularly useful in the study of poverty contexts (see Narayan and Pritchett 1999). Social capital enables subsistence entrepreneurs to create unique value to their consumers. More importantly, social capital becomes a critical resource to overcome individual-level and larger environmental constraints and to manage uncertainties. As such, social capital is key to understanding the micro-level entrepreneurial process in subsistence marketplaces (Viswanathan et.al. 2012) and the subsequent conversion of entrepreneurial behaviors into developing a meso-level community exchange system.

We next describe our methodology of fieldwork and subsequently detail our findings. Interpreting our findings with the conceptual backdrop of social capital theory, we then demonstrate how subsistence entrepreneurs help to create community-level exchange systems.

Field Study

Our field research was conducted in Chennai, South India. We conducted eight in-depth interviews of subsistence entrepreneurs and three in-depth interviews of local entrepreneurs who form part of the financial ecosystem on which those SEs depended (Table 1).

Table 1.

Informant Background Information.

Informant	Enterprise Type	Gender	Age	Education
Ambujam⁁	Small snack shop	Female	46	No formal education
Balakumar*∼	Financier	Male	25	Bachelor of Science
Chamundeswari⁁	Cleaning powder and perfume sales	Female	34	5th grade
Janaki⁁	Milk delivery	Female	34	6th grade
Janakiraman*	Vegetable wholesaler	Male	40	7th grade
Kumaran*	Display board maker	Male	32	11th grade
Lakshmi*	Petty shop owner	Female	44	9th grade
Manickam*	Vegetable transportation	Male	40s	No formal education
Nagaraj⁁	Small retailer	Male	32	10th grade
Pallavi**	Tailoring and Saree sales	Female	32	6th grade
Pankajam*	Diwali fund operator	Female	42	8th grade
Poongudi⁁	Small eatery	Female	36	3 rd grade
Poovizhi⁁	Worship items seller	Female	32	2nd grade
Ramkumar*	Scrap dealer	Male	23	9th grade
Rukmini*	Chit fund operator	Female	50	5th grade
Selvam*∼	Financier	Male	32	10th grade
Seth*∼	Pawn Broker	Male	20s	5th grade
Tamilarasi*	Self help group member	Female	36	Bachelor of Commerce
Valli⁁	Small vessel sales	Female	40s	5th grade

* denotes primary data collected for article in 2010-11.

⁁ denotes primary interviews conducted as part of the extended research program spanning a decade.

∼ denotes local (not subsistence) entrepreneurs who are part of the financial ecosystem for subsistence entrepreneurs.

The research site is ideally suited to study entrepreneurship in impoverished living contexts and an informal economy setting. India has a sizable proportion of the world’s poor, and millions of them are micro-entrepreneurs (Khanna 2007). India also has an informal economy sector accounting for nearly 60% of its GDP and employing over 90% of its labor force (Sinha 2010). Further, the city of Chennai is the fourth largest in the country, and due to substantial in-migration over decades, has many poor consumers and entrepreneurs interacting in distinct marketplace ecosystems. All authors are from Chennai, alleviating language problems and allowing for nuanced insight into cultural issues. A total of 11in-depth interviews of subsistence entrepreneurs were administered by one of the authors with the help a research associate (please see Table 1). Interviews were conducted in the local language (Tamil), at homes, shops or a community center. Interviews were transcribed and translated to English and analyzed in accordance with guidelines for constructing grounded theory (Goulding 2002). Repeated readings of the interviews were used to draw interpretations (Corbin and Strauss 2008). All authors developed individual interpretations, which were then debated, negotiated, and reconciled.

An illustrative example of a subsistence entrepreneur

We describe one entrepreneur, Pankajam, in detail and also offer Table 2 that summarizes our findings across a set of entrepreneurs. We chose this approach in order to begin with concrete details of these unfamiliar circumstances from which to then flesh out insights about SE.

Table 2.

Illustrative Quotes from Subsistence Entrepreneurs.

Quotes	Category
Uncertainties in Life Circumstances
Rukmini: I have approached someone who is an outsider… but they are dragging it out and say today, later they say tomorrow (delaying and postponing it whenever I meet them to seek finance). We have fixed the date for our daughter’s marriage; it is on the 26th of this month…I would be relaxed only when I know I will have sufficient money. I am worrying a lot about it. Whether they would provide me or not?	Uncertainty in access to finance
Poovizhi: Yes, We had sometimes like that. There was no business for two or three days. We could not do anything to the children; we could not prepare food to provide them. Sometimes, I would think like that and feel sad. Because, we could not do the business when the City Corporation people arrived (to evict). Due to that problem (drive to evict encroachment on roadsides), they would take away all materials while we are doing good business. It would be very difficult for us in these times. It would be very tough to manage if they take away all the items. We have to adjust to all the difficulties, and profit and loss in the business.	Uncertainty due to institutional interference
Pallavi: ….as I told you that I have been doing this business for the past four years. Two years ago, a lady bought sarees and absconded. She took three sarees and told me that she would come back after showing it to family members (but never returned).	Uncertainty due to lack of legal recourse
Entrepreneurial Action as a Response to Uncertainty
Valli: If I didn't start the business, it would be very difficult for me to survive. I couldn't do anything in life.…How much would they give, if I go for a housemaid job?	Entrepreneurial action as a response to uncertainty
Rukmini: On one occasion, my situation became a little worse; my (family) income decreased. I had borrowed from a person against interest. She always intimidated me and sometimes she made forcible demands, in such a context, I decided that I can conduct a chit [financial scheme], as I could get the second month’s collection and settle my debts.	Entrepreneurial action as a response to uncertainty
Ambujam: I did only the agricultural jobs at my native. Then, once we shifted from there to here, I was thinking what to do? How to live? As I was illiterate I could not do any job at companies. I preferred to do a business on my own instead of bowing to someone and expecting wages. So, I use to make this vadai, bajji, etc. [snack items] and sell these items.	Entrepreneurial Action as a Response to uncertainty
Structural Social Capital
Pankajam: Every day I could meet the people who have been living in the same area and though they could not pay me as assured, they may return their due on one day or the other day. Whenever they meet us, they would keep in their mind that “Oh, we have to repay money to this sister” and have a sincere thought about their commitment on pending amount. If they are from outside areas, I could not trace and meet them often if they escaped with amount I could not have money to rotate. So, I use to finance to those who are living within this area.	Access
Nagaraj: Since they prefer that particular brand I used to buy and keep it in stock. I would arrange it immediately. Suppose, I noticed in the morning that it is not available in my shop, I would rush immediately and make arrangements to keep the parcel ready within the evening. Since the rate is given (competitive), customers too feel that “okay, they are keeping everything or arranging it within the evening”.	Timing
Pallavi: They have only given two days back, since they wanted immediately I have given it to them.	Timing
Rukmini: Like that someone would have referred you and stated that you were well known to them and recommend you to admit in my scheme. I would enroll in similar pattern.	Referrals
Pallavi: It would improve. If they don't come, are we getting a new customer? Suppose there is a person who says that she [Pallavi] stitches well, someone might stay in their house (for rent). If they (house owner) say that she would stitch well and ask them to give the order to this particular tailor two to three customers would accept it and give. So, I get such customers more.	Referrals
Pallavi: Now, the women who are living here and going to housemaid job, they bring orders from there (from the employer's house) and give me, isn't it?	Referrals
Rukmini: I would tell her as follows: “Be serious enough, you should pay at the earliest. Is the bidder who participated in the auction expecting money only to meet their emergency needs? Is it fair on your part to delay this crucial payment? You should try to settle it at the earliest”	Shared life circumstances and common life goals
Valli: Because, women would buy the materials without the knowledge of male. There could be a confusion within them suddenly. Even the men pay Rs.50/- in the absence of women. It should not be a problem within them. It is ok, if we collect the money when both men and women are in the house. The women would have bought the item without the knowledge of men.…How can I collect the money from the men. It would become a dispute between them. He would ask her, how can she buy? I gave Rs.50/- to the chit women he would say to her. The next day the women would come and ask me why I received the money? So, I won't collect the money. I would collect the money from the ladies.	Community level expectations, norms and obligations
Rukmini: Yes, they would pay, they would pay. As it is the money of more than four members. It is not only our own money; it belongs to other members too. The amount is collected through joining of few members as a team. So they would pay without fail. They may delay it for a day or two and then pay it.	Community level expectations, norms and obligations
Ambujam: You see, we started the business and ran it for three months in the particular place. Then, we went to our native place (short trip). Since she observed our business, she decided to start the same business when we were not here and continued it even after we returned and resumed the business. Then my husband asked them, how they could start the same business nearer to our shop? He shouted at them if there would any sales if they sell near us. So, they stopped. Now, we are the only shop continuing in that particular place.	Community level expectations, norms and obligations
Relational Social Capital
Valli: All trust. Someone trusted me and gave me. Now we trust them.	Trust
Poongudi: We would give if they are the trusted persons, known person and living in our locality. We could give and collect it back	Trust
Balakumar: If he is a good person, we can definitely give (loan). If we trust him (that he wouldn’t cheat us) and believe in him, we can give even a hundred thousand rupees without getting any collateral. But, he should impress us to trust him.	Trust
Chamundeswari: Yes. Sir, they would give credit. Suppose we tell them that we don’t have money or we have only this much amount. Even if we need more items that are worth Rs.50/- in addition to the bill amount, they would trust us and ask us to take it and pay it on the next day or during our next visit.	Trust
Poovizhi: I would visit here only. Because, are they giving us when we don't have money. If we go to other shop as we have money today, he wouldn’t give us tomorrow when we don't have money, would he? Would they question us or not? We used to buy from this same shop, so they give.	Commitment
Poovizhi: Yes, a person used to visit us and give, I would buy from him. If we buy from everyone, they would yell at us that we haven't paid back or something. It is a problem. They won't trust us to give.	Commitment

Pankajam is a 50 year old, 8th grade educated, homemaker-entrepreneur, who resides with her husband, two daughters, and a son in a low-income community in Chennai. Her husband is a plumber whose income varies based on his finding work. Her son has a job with steady and modest pay and her two daughters are in college. Pankajam’s current household income is Rs.10,000 per month (about $161 in January 2014 where 1 Rupee = 0.016 U.S. dollar). Pankajam and her family have been living in the same community for about three decades.

Over the last 7-8 years, Pankajam has been operating two distinct financial schemes within her community, which cater to consumer needs for small-scale savings and short-term borrowing. Her business is not formally registered, has no additional employees, and has no office. Her clientele are friends, family, and neighbors residing within her community. Her primary goal of starting the enterprise was to make optimal use of her spare time in a way that helps smooth her unpredictable household income, and in the process caters to the needs of others in the community facing similar financial needs. Thus, it arose as a way to deal with financial uncertainty, both for herself and for the community around her. The income she makes from the enterprise is insufficient to run a household, but it holds value for her and her clientele. It assists them in saving towards predictable future expenses as well as borrowing from the savings pool to overcome income-expense shocks.

The idea for the venture germinated with Pankajam testing a similar scheme with a small group of family and kin. Following favorable feedback, the venture evolved and expanded gradually, consonant, at every step, with the needs and feedback of the clientele it was serving. Pankajam had no formal training or guidance in operating the business and learned the ropes on the job. Currently, her two schemes have 100 members and 10 members respectively and both continue to thrive. Over the last 7-8 years her clientele has grown from just 20 family members to over 100 members, including neighbors and others in the community. The monthly savings amount has increased from Rs.20 to Rs.100. Her annual income from the venture increased gradually from a negligible amount in the early years to Rs.10,000 presently. Pankajam is content with the current state of her enterprise and has no aspirations of increasing her customer base beyond her local community or diversifying.

Pankajam operates two financial schemes called Diwali (Festival of Lights) Fund and Lottery Chit. The Diwali fund scheme with 100 members has duration of 12 months with each member depositing a savings amount of Rs.100 every month to Pankajam. The savings are towards known consumption expenditures during the festival of Diwali, which is celebrated with much fervor by people in this culture. The savings mature during the festival of Diwali and each member is returned an amount of Rs.1400. During these 12 months, the members of the scheme can avail of short-term loans from the pool of savings (i.e. be savers and borrowers simultaneously). The loans require no collateral, and for every Rs.1000 borrowed, a fixed interest of Rs.50 per month is collected at the beginning of every month till principal is repaid. The loans are administered by Pankajam, involve no paper work, and are accessible immediately. The amount of loan and repayment duration is determined through a process of interaction between Pankajam and the member availing the loan.

The lottery chit scheme operated by Pankajam has a group of 10 members. The duration of the scheme is 10 months, after which group is dissolved and a new group is formed. The group members contribute Rs.200 every month towards the lottery chit. At the end of every month, a lottery draw is conducted with the names of all the group members. The person whose name is drawn receives Rs.1940 (the entire collection for the month with a service charge of Rs.60 deducted). Once a member’s name is selected, their name is eliminated from the lottery draws conducted in future. However, they continue to contribute Rs.200 every month for the entire duration of the scheme. The goal of the scheme is to make available a bulk amount of Rs.1940 to one member every month, which could be used by them for meeting crucial needs. Pankajam claims that this scheme works because her clients are “never not in need of money.”

A number of aspects of Pankajam’s enterprise are abstracted below, supplemented with insights from other entrepreneurs (illustrative quotes in Table 2 and illustrative propositions in Table 3 and Propositions #s indicated in the text as P1, P2, and so forth).

Table 3.

Illustrative Propositions.

P1: Subsistence entrepreneurship arises out of uncertainties in basic life circumstances. P2: Learning about being subsistence entrepreneurs versus consumers is mutually reinforcing. P3: Subsistence entrepreneurs choose pathways for survival rather than new opportunities. P4: Structural, cognitive, and relational social capital are each positively associated with building and sustaining subsistence enterprises. P5: Structural social capital is positively related to

embarking on subsistence entrepreneurship

sustaining subsistence entrepreneurship

P6: Cognitive social capital is positively related to

envisioning successful enterprises

understanding and satisfying subsistence consumer needs.

P7: Relational social capital is positively related to

sustaining subsistence entrepreneurship

succeeding in subsistence entrepreneurship

P8: External entities that partner with subsistence entrepreneurs are more likely to succeed in subsistence marketplaces than those that do not.

Findings: Subsistence Entrepreneurship, Social Capital, and a Community Exchange System

Starting the subsistence enterprise as response to uncertainties (individual and community)

As is evident from the narrative, our first insight is confirmation of views in the literature that the subsistence enterprise is essentially a response to the life uncertainties faced by the entrepreneur (P1). Pankajam’s motivation to start an enterprise essentially came from finding a way to deal with her financial uncertainty. However, her business is also a response to the uncertainties faced by members of her community. Quick access to micro-loans without collateral is crucial for low-income consumers who not only have low levels of income but also high variability in their income. A financial mechanism that helps smooth cash flow holds great value for low-income consumers striving to manage their household cash flows in the process of meeting crucial needs. Hence the nuance to our finding is that community-level existential uncertainty is included within the scope of thinking of the entrepreneur that starts a subsistence enterprise. Table 2 provides quotes from a number of SEs reiterating this. Indeed, it is this expanded domain of uncertainty resolution that allows subsistence enterprises to sow the initial seeds of social capital formation in the community.

The learning process that allows the entrepreneur to sense the community’s needs and uncertainties starts at an intra-individual level, as a result of one’s role as an entrepreneur being blurred with her role as a consumer (P2). For instance, Pankajam often uses the resources of the business for her personal consumption in times of need. In another sense, these two roles reinforce each other as Pankajam learns about being an entrepreneur from being a consumer and vice versa (Viswanathan et al. 2009; Viswanathan et al. 2010). As such, this sets the learning process in motion that enables the subsistence entrepreneur to effectively sense the needs of the community. A number of examples illustrate this symbiotic relationship from entrepreneurs using excess stock for family to entrepreneurial pursuits arising out of dissatisfaction as customers (Table 2).

“Yes, I have, if you ask me how it is? Suppose I need money. Suppose I have cash on hand - a sum of Rs.50,000 at my house now I needed money to meet my personal needs. I may utilize it for my emergency need without giving it to others. First I would fulfill my own needs and then when I get money adjust it for rotating among the members and lend it to those who seek finance. It is useful for me in such a way as I have cash always suppose I receive a guest unexpectedly and I need money for the expenses. Suppose I need a thousand rupees for my expenses or meeting the Doctor or for the family expenses even though my husband don’t attend any job and we have no money in our family account. I would utilize the fund amount to meet my own needs at the moment we need and then return it when my husband attends any job and earns money. So, we have lot of benefit from this fund”

Learning and solving community needs fosters reciprocal support and investment from the community, and builds a tighter-knit community. The tight knit community enables a collaborative process of further sensing and responding to the needs of those in the social group. As Pankajam puts it,

“Then, they asked me why I did I do this within our family members alone and persuaded me why not I make it as Fund like DEEPAWALI FUND (Festival Fund) to cover others too. I agreed and started the collection of sum of Rs.100 from each member on every month. Everyone including known people and neighbors joined in this. Suppose they give a sum of Rs.100 on every month it would reach Rs.1200 at the end of the 12th month. Meanwhile, I used that amount to lend among them and charge interest. So, I would return them Rs.1400 as matured amount at the end during the DEEPAWALI time as, they may be given such bulk amount, they could use it to buy dresses or settle their debt. We used to conduct the fund and did so.”

It is also the case that one’s life uncertainties constrain the entrepreneurial action’s strategic intent and content. Rather than actively seeking opportunities, subsistence entrepreneurs embark on a course of action that they feel will give them a source of living (P3).

Interviewer:

What are all you think that you should know to launch this business?

Pankajam:

I didn’t start this after knowing anything (I knew nothing while I launched this business. I launched it very casually.…

Building and sustaining the subsistence enterprise (SE) by accumulating and leveraging social capital (SC)

Pankajam’s narrative illustrates the nuances of social capital, introduced earlier; we position it here as conceptual explanation of both value creation by the entrepreneur and the construction of the community exchange system (quotes from other entrepreneurs further elaborate in Table 2).

The first issue evident from Pankajam’s story is the tripartite dimensionality of social capital hypothesized in the organizational literature comprised of structural, cognitive, and relational dimensions (P4; Tsai and Ghoshal 1998). Structural SC reflects the specific configuration of ties within the community, which affects access to network resources. Cognitive SC reflects a common understanding of collective goals (Nahapiet and Ghoshal 1998), and is embodied in shared social norms, language, narratives and circumstances, and obligations towards the community. The relational dimension of SC refers to the assets rooted in the social relationships (Tsai and Ghoshal 1998), such as trust and commitment (Morgan and Hunt 1994).

Building the enterprise using structural social capital

Pankajam lives in the community in which she functions as an entrepreneur. Physical proximity is positively related to greater interpersonal communications (Ganesan, Malter, and Rindfleisch 2005). By virtue of being in the same community, Pankajam and her customers can engage in frequent face-to-face communications. These are likely to utilize nonverbal cues, convey more nuanced understanding (Daft and Lengel 1986), and as such nullify any literacy disadvantage. They form the fabric of a “direct” form of market exchange with customers (Viswanathan et al. 2012). Pankajam’s life and work in the community spawns, over time, a specific configuration of strong ties, the structural dimension of social capital. The benefits that accrue out of social ties are posited in the literature to occur in three forms: access to valuable information, timing of that information, and referrals that reflect reputational endorsement (Burt 1992). In the subsistence context, information benefits occur to subsistence entrepreneurs in all these three forms.

First, collecting information is easy in the subsistence environment, given that the economic investment to gather such data from within one’s own community is negligible. Therefore, entrepreneurs have ready access to information gathering and sharing at all times. For Pankajam, existing ties provided the starting point to enroll customers. She starts out using long-term ties by enquiring with her relatives and then expands out from there.

“Yes. The people who are known to me would first enquire with my relatives and decide to enroll themselves through their reference and also pay their dues through them paying such amount to such and such person, etc.”

Second, as transactions are fluid, and price, amount, and payment methods are bargained face-to-face (Viswanathan 2007), entrepreneurs strive to offer quick responses. Meeting customer demands as quickly as they can, they in turn expect reciprocity from their customers, enhancing the timing value of information. The almost instantaneous feedback is of paramount importance in creating customer value. Third, strong bonds also provide referral opportunities to other customers within the same community. Word of mouth is a critical component of securing additional business. Pankajam says,

“First I must know whether you are a trusted person. Take the case of a house. Do you have your own house? It is ok, if you are living here permanently. How can I give you if you are living here temporarily? How can I trust you? If you ask me Rs.10,000, I cannot give, because I would analyze these things. Otherwise, I may provide you subject to anyone you know here giving guarantee, or else I would find the people very close you. Suppose someone known to you and also to me introduces you to me. I would hold him responsible in case of any default or repayment dues from you in course of time. He should pay if you fail to repay me.”

Thus, it is evident that structural SC built up using pre-existing ties offers important business benefits. More importantly, structural ties provide the confidence and the impetus to SEs to start the enterprise (P5). Without these ties, the SE effort would be a non-starter.

In summary, the embedded lives of subsistence entrepreneurs generate large numbers of social ties. The enterprise itself is then built through access and referrals among the ties. Market value is created through speedy and effective transactions while incorporating critical feedback.

Creating enterprise identity through cognitive social capital

The cognitive dimension of SC, shared life circumstances and common life goals, forms the platform for deepening the identity of the enterprise. Because SEs and their clients both live in poverty and share the experience of adversity, the level of empathy is inordinately high (Viswanathan et al. 2009). A quote from Pankajam illustrates.

“However, they are also struggling for their life. Each family may save at least Rs.2 or Rs.3 in a day and pay me once they saved a hundred rupees in a month. Sometimes they may give me fifty rupees in a week and say that this is what they could save in that week and assure me that they would pay the balance Rs.50 on next week and request me to adjust it against their dues. Few of them may say that they would pay their dues on installments. I would accept such offer from such people who are struggling for their day to day life as they also have children and they need to maintain them.”

Both exchange partners perceive themselves to be part of a larger community canvas, and hence share expectations, norms, and obligations to help each other in times of need. These shared constructs lead to shared life theories, interpretations and meaning. Living in the same community, a common language is also a given. Shared language provides a common conceptual apparatus for providing and evaluating the likely benefits of shared ties (Nahapiet and Ghoshal 1998). Cognitive SC makes it easier for exchange partners to meet beyond formal exchange settings, and such informal meetings further refresh and strengthen social ties. As such, the cognitive dimension forms the bedrock for strengthening the structural dimension, i.e. social ties, which leads to higher levels of information sharing in the shortest possible time and minimal investment.

Further, through cognitive SC, subsistence entrepreneurs are better able to understand the motivations of their customers.

“Usually they would seek money after explaining their family situations such as ‘today I should pay the fee of my children. It is to be paid on or before 30th of this month. Please pay me at any cost; I am very much in need of money.’ Few may seek money to buy and arrange the household articles as part of (dowry) gift to their married daughter. Few may say that the family members of bridegroom would visit my family. I should offer them new dresses. I need money to manage these kinds of expenses. They may come under such circumstances to borrow the money. I also used to provide them (after realizing their reasonable needs).”

“We could understand their situation while we visit them and observe their situation they may be sitting at their house and weeping (say that) he (her husband) is jobless for so many days or not feeling well, afflicted by jaundice, hence he didn’t go for work for two weeks; he didn’t attend any job; nothing is available even to manage our food. How can I repay in this circumstance? When they say so (I would think that) ok, the woman at home may have some cash in her hand only when the man in her family attends any job and give his earning to his wife since the condition of her husband is like that and he didn’t attend any job we should apply our mind and think of it as they are jobless in this context if we disturb them further, they would feel agony, we too would feel sad. So, I would not harass them. So I would return back once I asked them.”

Further, because consumer needs in deprivation are not limited to how the offering performs vis-à-vis expectations but include larger life needs, the value created is of broader scope. Cognitive SC spawns a range of entrepreneurial behaviors: envisioning an enterprise, designing survival-relevant offerings, and reflecting community level expectations, norms and obligations (Table 2). This last observation is critical, as the existence of shared norms is held to be a defining feature of the notion of a community (Varman and Costa 2008). Cognitive SC therefore aids subsistence entrepreneurs in crafting an enterprise identity that reflects the broader identity of the community. The implication is that market behavior, uninformed and unconstrained by the morality, emotions, and expressivity of such shared norms (Varman and Costa 2008) will not be able to tap into the collective identity of the community.

In summary, shared life circumstances including shared language, shared narratives, and adherence to shared norms enable subsistence entrepreneurs to satisfy needs in a manner that is usually not possible for outside-in entities and hence create value (P6).

Sustaining the enterprise through relational social capital

Relational social capital is the stock of trust and commitment contained in relationships (Morgan and Hunt 1994). If strong ties between people who have shared cognitions are considered assets, it is in fact because of the relational dimension. The uniquely interdependent and frequent interactions between subsistence entrepreneurs and their customers foster trust. In turn, trust leads to commitment toward each other (Morgan and Hunt 1994) and facilitates enduring relationships. The role of different types of commitment in subsistence marketplaces has been detailed in Viswanathanet al. (2010). The interplay between commitment and trust is reflected in a quote from Pankajam.

“I would provide money over and again to those repay me promptly on the committed date, when they are in need or when they may request me in future. So, they can be sure and being with confident that, they can seek any amount from me to meet their particular expenses, etc. Something could be purchased for their children. Because of such faith they repay me promptly. I too would provide money over and again as sincerely as they pay me promptly and based on their acts I gain confidence in them that they would be prompt in returning money or not. Based on that, I may decide whether I could provide them whenever they come to me.”

Trust becomes the mechanism by which entrepreneurs and their customers become open and willing to share information, co-operate, and invest in each other; the emphasis is on the long-term relationship rather than the short-term transaction (Viswanathan et al. 2012). Essentially trust facilitates exchange and substitutes for formal contracts. Pankajam says,

“Nothing like that. I never gave anything like that (receipts) and they too never asked me (in writing). So far, I didn’t give them anything similar to a card or note book (to make entries of payment). They trust me and give their money. I too run this based on the faith.”

“Whereas in our case, the people stands for we trust in people. We trust everyone and lend when they are coming to us for their emergency need, we would not insist them to sign or else. We would not insist anything like that. They are requesting us. Since they are one among the members in our team requesting money to meet their emergency needs, I would provide them without any hesitation. I would give whatever the amount available with me at that time.”

Every interaction becomes a valuable deposit in the social capital bank, and over time, the history of repeated fruitful interactions begets more trust and renewed commitment, thereby leading to enhanced levels of social capital. The stability of the social structure ensures that the SC is efficacious at all times. Essentially, relational SC emphasizes the primary purpose of SE to survive at a basic human level and to help “similar” others. In other words, the value creation is sustained through mutual trust and committed bi-directional relationships (P7).

In sum, by abstracting from the insights of our respondents, we have described the functioning of the subsistence entrepreneur as a component of the local community exchange system (Meade and Nason 1991, p. 73). Further, we have demonstrated social capital as the theoretical mechanism that serves as the organizing principle in subsistence entrepreneurship. It serves as the common antecedent of creating the enterprise as well as functioning effectively, thus enabling the sustenance of the enterprise. Social capital also explains the emergence of the community exchange system from the coalescing of individual enterprise behaviors.

Meso-level capital

The insights derived up to this point broadly illuminate relationships between market-based constructs, such as value creation, and the different dimensions of social capital (see Figure 1).

Figure 1.

Conceptual framework of subsistence entrepreneurship.

These dimensions reside at the individual level and constitute resources available to individuals, even though they are created in interactions with others. As such, we have thus far used them as the explanatory mechanism to answer the first of our research questions: how the subsistence entrepreneurial process creates unique customer value. This question is evidently within the scope of operation of an individual entrepreneur. However, in order to answer our second research question, how entrepreneurial activity becomes amplified into a community-level exchange system, we have to consider how the different dimensions of “individual” social capital coalesce into a meso-level capital at the community level. We contend that this meso-level capital undergirds the community exchange system.

Structural SC embodies the resources accruing from a specific configuration of mostly strong ties that an individual subsistence entrepreneur comes to possess. Across many entrepreneurs in the community, the nature and extent of structural SC will vary, in part depending on their degrees of sociability. Pankajam’s social structure will contain different numbers, intensities, and nodes of ties than another entrepreneur’s. Thus, when viewed from the level of the community, these numerous individually held ties come together in a “network” of ties, reflecting the diversity and pattern of individual ties. This unique and discontinuous “compilation” of cumulative capital is what affects the marketplace outcomes of a community rather than a simple sum of all individual social ties (Kozlowski and Klein 2000). On the other hand, cognitive SC held at the individual level smoothly transfers over to the meso-community level, as its basis is the “sharing” of common experiences, values, attitudes, and cognitions. As common life circumstances lead to the formation of cognitive SC, its contribution to the meso-level capital is its own shared essence (a consensus model) across the community rather than a discontinuously compiled version. Finally, relational SC (trust) is affected by as well as affects macro-level institutional arrangements (Rousseau et al. 1998), such as the informal economy.

Fundamentally, individual trustors and trustees trade on their marketplace reputations, but “it is the social context that makes reputational effects possible” (Rousseau et.al. 1998, p. 397). Institutions promote or constrain individual trust relations (Fukuyama 1995), and in the case of subsistence marketplaces, the lack of formal institutions allows trust to flourish as the alternative marketplace lever; consequently trusting individual relations are promoted. Conversely, a broader form of trust comes to exist at the meso level of community as a function of how individual members relate to one another. Thus the individual relational SC contributes to the meso level capital in the form of continuously reinforced versions of itself. It is a convergent model where individual trusting relationships get repeated to the point that the referent of trust can be shifted to the community level.

The above arguments frame the formation of meso-level community capital. In other words, through social interaction and exchange between individuals, the individual-level resource of social capital becomes amplified and “emerges” as community capital at the meso-level (Kozlowski and Klein 2000). This community capital forms the bedrock of the local marketing system, which has as its institutional structure a network of subsistence entrepreneurs relating to their clients and customers and to one another through varying degrees of trust, cooperation, and competition. It is pertinent to note that, drawing from our data, we have theorized the aggregation of the three dimensions of social capital as occurring through distinct “emergence processes” (Kozlowski and Klein 2000) as explained above.

We now turn to the consequences of community capital. Fundamentally, its effects on the community can be both positive and negative. Its positive effects are encapsulated in all of the arguments presented up to this point; it helps create marketplace value and resolve uncertainty for the community. Its negative effects, however, are subtler. Just as community capital confers reputational effects, poor word of mouth can easily lead to desertion of exchange relationships. Where relationships endure, just as they embody positive trust, they also create the potential for exchange partners to take advantage of each other. Strong ties of the closely bonded variety hinder the ability to work across gender or social hierarchies. They can also limit opportunities and thwart rewards as social connections rather than individual merit take precedence. Further, the community’s social capital tends to only benefit those within the “radius of trust” (Fukuyama 1995). This highly localized community capital is not appropriable to other communities and consequently sets limits to growth and expansion of subsistence entrepreneurship efforts. If external growth efforts are undertaken, consumers within the community may not take kindly to these because of jealousy concerns or that the entrepreneur is deserting them for greener pastures. Such initiatives may be perceived as betrayal, and public humiliation and even excommunication of the entrepreneurs may be potential recourses. These observations echo the view in the social capital literature that it can cut both ways (Portes 1998; Woolcock and Narayan 2000).

Discussion

Summary

In presenting a study of subsistence entrepreneurship, the paper has made three key elaborations: (1) the unique nature of the subsistence entrepreneurial process and value creation within it; (2) its foundations in social capital; and (3) its instrumentality in amplifying micro-level social capital into meso-level community capital. Taken together, these elaborations describe the functioning of one component of the local community exchange system, the subsistence entrepreneur. As such, this research endeavor encapsulates Hunt’s (1981) mandate of a macromarketing agenda – the study of marketing systems, their impact on society and vice-versa. It also reflects the second of Meade and Nason’s (1991) three core content areas of macromarketing as seen from a systems perspective – the functioning of exchange system components. Finally, this research echoes Fisk’s (1981) view of marketing as a “provisioning technology” to be used for the betterment of humanity, perhaps for the first time casting impoverished entrepreneurs as the marketing protagonists. Our grounded inquiry into the nature and process of subsistence entrepreneurship uncovers several implications of theoretical significance and practical relevance.

The market power of social capital becomes evident in analyzing a common sight all across the world’s subsistence marketplaces – numerous micro businesses set up virtually next to each other and selling identical products indistinguishable from one another. Whereas economic theories would suggest that such cases would lead to easy imitability by others and consequently, diminished survival prospects, a social capital explanation would reveal that the strength of local relationships serves as the differentiator, trumping all other considerations. As such, even with identical products, relationships can beget better prices, rebates, or generous credit, which are powerful buying motivators; and with every further transaction, the relational capital continues to develop. Further, we deviate from prior investigations of entrepreneurship in poverty contexts that focus on economic efficiency (La Porta and Shleifer 2008) and instead focus on the endogenous creation of markets. Although our focus has been restricted to subsistence entrepreneurship, our approach of endogenous determination of goals allows for the immediate applicability to other types of entrepreneurship.

Macro-level Implications

Understanding subsistence entrepreneurship (SE) has macro-level implications as well, beyond the capability to explain meso-level phenomena such as community capital. It paves the way for understanding the overall health of an informal economy, a sizable proportion of any developing country (Schneider 2002). In short, the SE process, underpinned as it is by social capital, is instrumental in creating the informality in the informal economy. An economy is, after all, a repetitive pattern of exchange of value mediated by a market process. In an informal economy, exchange is executed through a system of tacit and flexible rules, directly among individuals rather than social aggregates, and informed by social rather than contractual expectations. This informality occurs and survives because it is put in practice by the mutually understood norms arising from shared life circumstances (cognitive SC), the networks that build owing to interdependent life (structural SC), and the trust that mediates the subsistence entrepreneurial process (relational SC).

Implications for Policy

This research contains some useful insights for market policymakers as well. The findings suggest that the market realities experienced by subsistence entrepreneurs should be the locus of entrepreneurship development initiatives such as recommended by Samli (2009). Standing apart from these realities and developing entrepreneurship policies would not effectively control either the marketing structure or marketing flows inherent in the subsistence marketplace system (Meade and Nason 1991). The findings also suggest that impoverished actors have unique organizational capacity based on social ties, which the state’s business policy could invest in to maximize effectiveness. Whereas microcredit programs have demonstrated the power of savings groups, well-conceptualized microenterprise fostering programs can demonstrate the power of entrepreneurial networks. These suggested policy directions are also consistent with the recommendations of scholars of human development and empowerment (Chambers et al. 2000). Our research holds important implications for specific policy measures such as “slum relocation,” which are pervasive in major cities of developing countries (Viratkapan and Perera 2006). Given the importance of social capital in starting and sustaining subsistence enterprises, preservation of social capital is a key consideration for planners. A disruption in this intricately constructed and maintained web of social capital will not only have adverse impact on subsistence entrepreneurs, but also on subsistence consumers who are served by subsistence entrepreneurs. Therefore, any relocation planning should involve active participation of SEs in order to preserve the locally evolved ‘provisioning system’ for the benefit of entrepreneurs and consumers alike.

Implications for Managers and Micro-Marketers

Increasingly, market-based provisioning of essential goods and services to the poor has come to be seen as the next frontier for marketing organizations (Prahalad 2006). However, businesses have tasted limited success in this endeavor. For managers and micro-marketers, the importance of working with, and learning from, subsistence entrepreneurs is paramount. Our focus on SE brings to fore the pre-existing entrepreneurial energies in subsistence marketplaces and elaborates on the assets these entrepreneurs possess. They possess types of social capital that are critical in gaining access, understanding needs, designing solutions, and sustaining enterprises. Partnering with such entrepreneurs in the true sense of the word would greatly enable learning about subsistence marketplaces and earning and keeping trust with subsistence communities. Specifically, partnering with SE will enable marketing firms to a) learn about customer needs, b) co-create customized solutions and c) gain access and trust. Our exposition on SE also underscores their limitations, stemming from barriers such as literacy and resource constraints. Therefore, marketing organizations partnering with SE will benefit more by harnessing their potential, while ameliorating their limitations.

Whereas we have explained subsistence entrepreneurship as an early step in this nascent research area, as alluded earlier, different types and levels of entrepreneurs can operate in subsistence communities. Some may present a heightened ability to work with external entities and to connect informal with formal sectors, an area for future research. Broadly speaking, subsistence communities should not be viewed as consisting of passive producers and consumers but as surviving and sometimes thriving entrepreneurs as well. Social entrepreneurship by non-subsistence actors does not suffice. The embedded enterprises of subsistence entrepreneurs should be seen as a necessary part of the puzzle. Further, such a view should be guided by a foundational belief that very real structural, cognitive, and relational social capital assets foster capabilities to be equal partners in designing and implementing solutions. Too often, cursory relationships with subsistence entrepreneurs are represented as a bottom-up approach. We suggest that deeper understanding of the types of social capital that subsistence entrepreneurs possess and how they use such capital to envision, start, sustain and succeed with small enterprises is critical for external entities to understand and form meaningful partnerships. Such in-depth understanding would also form the basis for designing and implementing successful marketing strategies in subsistence marketplaces.

Conclusion

Ultimately, subsistence entrepreneurship is about basic survival and making ends meet. Despite unrelentingly harsh circumstances, individuals engage in entrepreneurial actions as means to resolve their life uncertainties and wrest control of their lives. Hence, at a fundamental level, these subsistence entrepreneurial efforts represent a triumph of the indomitable human spirit, and as such deserve scholarly scrutiny on their own merit. However, from a marketing perspective what makes the phenomenon more interesting is that subsistence entrepreneurs serve those consumer segments in society seeking to do the same as them – survive and make ends meet. By offering products and services for an impoverished customer segment with significant market restrictions, the efforts of subsistence entrepreneurs are both economically sustaining and socially inclusive. In a larger sense, the vibrant, thriving subsistence marketplaces in many developing countries emerge because of these unique entrepreneurial efforts. Hence, the study of subsistence entrepreneurship is vitally important and merits serious examination by scholars.

The theory of the influence of social capital developed in this study is derived from a single subsistence setting. Although the core ideas may readily apply to all subsistence contexts, the relative importance of the social capital dimensions may vary across subsistence contexts. For example, in a community marked by multiple generations living together, the relative importance of relational capital is likely to be higher and impact entrepreneurial actions strongly. On the other hand, in a transitory subsistence community wherein migrant workers have gathered together recently, the impact of cognitive social capital may have a much stronger impact on entrepreneurial actions. In rural settings, which are more space-bound than urban areas and with deeper social connections and hierarchies, the social capital effect is likely to be amplified. Future research should examine the relative importance of the various social capital dimensions on subsistence entrepreneurship. Future research should also examine the contingent nature of the relationships between the various social capital dimensions, and their interactive effects on entrepreneurship. A related area for future research would be to conduct longitudinal analyses of subsistence entrepreneurial actions. This could enable us to examine the evolution of subsistence entrepreneurship over time, and yield important prescriptions for public policy.

Footnotes

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

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