Yessoufou, Blok and Omta
Dynamics of entrepreneurship at the Base of the Pyramid: From emergence of
entrepreneurial action to opportunity exploitation in the case of vegetable farmers in
Benin
Ahoudou Waliou Yessoufoua*, Vincent Bloka, b , and Onno S.W.F. Omtaa
aManagement
bTechnology,
Studies, Social Sciences Group,Wageningen University, Wageningen; The Netherlands;
Innovation and Philosophy Group , Social Sciences Group,Wageningen University, Wageningen,
The Netherlands
* Corresponding author. Email: waliou.yessoufou@wur.nl
ABSTRACT
The assumption that
entrepreneurship is a critical factor in expanding employment,
creating wealth and reducing poverty at the Base of the Pyramid (BoP) in developing
countries has led to the development of many initiatives to strengthen the entrepreneurial
activities of poor people. Despite the fact that entrepreneurship is seen as a strategy in
combating poverty, however, the entrepreneurial dynamics
at BoP settings are still
unclear. Based on focus group discussions and interviews we conducted with people
engaging in vegetable farm businesses in Benin, we inductively analyse
the
entrepreneurial process at the BoP. We learn that the process trigger can be exogenous
factors such as challenging situations and disruptive events. Based on this, we elaborate
on the characteristics of the process and on the dimensions that influence, how
opportunities are developed and exploited.
We provide a process-based view of
entrepreneurship at the BoP, suggesting the need for consistency between individual,
behavioural strategies and contextual elements.
KEY WORDS: entrepreneurship, developing countries, Base of the Pyramid (BoP),
entrepreneurial dynamics, poverty alleviation, challenging situations, disruptive events
1. Introduction
Persistent poverty continues to be a challenge in Sub-Saharan Africa. Rural poverty rates
remain high and persistent (51%), and the absolute number of the poor has been increasing
since 1993 (Word-Bank, 2008). Consequently, poverty reduction is a priority in many countries
in Sub-Sahara Africa. To facilitate economic growth and reduce poverty, it is increasingly
recognized that multi-dimensional perspectives should be taken. These perspectives include
market-based approaches to generate social as well as economic value for the poor (Miller et
al., 2012).
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Entrepreneurship has been suggested as a potential path to move up in the
socioeconomic ladder (Ahlstrom, 2010, Alvarez et al., 2015, Baumol and Strom, 2007, Bruton
et al., 2008, Bruton et al., 2013b). The general idea of entrepreneurship as solution to poverty
(Bruton et al., 2013b) is that poverty can be reduced by using the market economy to engage
the Base of the pyramid (BoP) - low-income people - in economic activities (Collier, 2008,
Easterly, 2007). This view is based on the fact that some entrepreneurs at the BoP level, the
so-called productive, growth oriented (Nichter and Goldmark, 2009, Mano et al., 2012, Grimm
et al., 2012, Amin and Islam, 2015, Li and Rama, 2015)
or transformative entrepreneurs
(Bruton et al., 2015, Sridharan et al., 2014, Tobias et al., 2013) were able not only to create
economic value for themselves, but also to provide economic and social value for the
community at large, raising millions of people out of extreme poverty.
However, many poorer individuals, and especially those in rural areas in developing
countries or underprivileged minority groups (Bourguignon and Verdier, 2000) may find the
prospect of social mobility infeasible owing to significant barriers to pursuing their desires
(Corak, 2013; Fujiwara-Greve and Greve, 2000). Substantial streams of literature exist on
microenterprises in developing countries and reveal a host of factors that constrain the
entrepreneurial endeavour of smallholders. These factors include but are not limited to, lack
of financial capital
and cash reserves, deficient managerial skills, inadequate advisory
services, deficiencies in technology, insufficient support services, ineffective property rights
, lack of access to credit and difficult access to markets (See, DeBerry-Spence and Elliot
(2012), Ton (2008)). Factors also include formal institutional voids (Khavul and Bruton, 2013,
Mair and Marti, 2009, Mair et al., 2012), uncertain institutional environment (Beugré and
Offodile, 2001, Dia, 1996), and a relative market failure due to the lack of market-based
institutions and facilitating rules. These constraints make their entrepreneurial efforts
extremely challenging.
Many end up discouraged and wondering if their fate has been dictated by a lack of
real opportunity (Corak, 2013), genetic heritability (Benjamin et al., 2012) or ‘birth and fortun’
(Smith, 2010). However, the growing dissemination of knowledge throughout the world
alongside the successful experiences of other entrepreneurs in developing countries (Bruton
et al., 2013b, Tobias et al., 2013) foment ‘animal spirits – a spontaneous urge to action rather
than inaction. Becoming an entrepreneur is potentially a way to pursue such animal spirits.
Relatively chronic poverty causes societal turmoil that ultimately may lead individuals to do
whatever they can to move up in the socioeconomic ladder, particularly those individuals from
poorer households (Bruton et al., 2013b, Sachs, 2006)
Yet, the stages of the process by which endogenous entrepreneurs create value and
innovative solutions and the dimensions affecting the way the process unfolds are still
assumed rather than theoretically and empirically examined. In other words, the
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entrepreneurial process at the BoP is still unclear and this has not received much attention.
Along these lines, recent research found that there is a paucity of empirical research and lack
of conceptual clarity on theoretical models and empirical evidence to guide our understanding
of local entrepreneurship at the BoP in developing countries. In line of these gaps, several
entrepreneurship scholars (Kiss et al., 2012, Webb et al., 2013) and academics in other fields
in business and economic development (Bruton et al., 2013a, McGahan, 2012, Webb et al.,
2009, Yang, 2011) called for in-depth studies of the entrepreneurship process at the BoP.
Taken together, these issues suggest that, despite the relevance of extant theories on
entrepreneurship, scholars lack a process theory of how an entrepreneurial action emerges
and evolves in poverty settings. The objective of this paper is to explore how the poor become
entrepreneurial.
The empirical investigation grounded in understanding this phenomenon is based on
in-depth case study of farmers involve in vegetables production in Benin - one of the least
developed countries in Sub-Saharan Africa – with the goal of developing a process model of
entrepreneurship at the BoP. In doing so, we aim at pursuing two related objectives. First, by
contrasting the emerging insights from our empirical study with mainstream entrepreneurship
perspectives, we model the stages of business entrepreneurship of smallholders in a setting
of extreme poverty and formal institutional voids. To this end, a set of propositions is
developed to guide our analysis. Second, we identify variables that drive and moderate the
shift from one stage to the next.
This article is structured as follows. First, the theoretical background is developed.
Second, the methodology used to gather data and the research setting are presented. Third,
the empirical results and the subsequent theoretical analysis are discussed. Finally, we outline
the main conclusions and implications for research and practice.
2. Theoretical background
In this section, we review the literature on entrepreneurial process triggers. It is proposed that
the key to initiating the process of entrepreneurship is multidimensional, and lies within
individual members of society, processes and contexts (Karatas-Ozkan et al., 2014). Next,
we examine research looking at the entrepreneurial processes.
2.1. Entrepreneurial process trigger
A number of models have been developed that propose entrepreneurship as a process of
emergence (Steyaert, 2007) or a process of becoming (Bruyat, 1993), through a number of
sequential stages. The focus of these models has been the initial or pre-venture stages (Shane
and Venkataraman, 2000) and the post start-up activities (Bruyat, 1993, Scott and Bruce,
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1987) . At the first stage of such emergence, the process is influenced by a number of factors.
Two types of triggers are commonly used to explain this stage: (1) the individual-level and (2)
the context conducive to entrepreneurial behaviour.
On the one hand, individuals are heterogeneous in both their beliefs and desires, and
these differences help explain why some decide to become entrepreneurs and why others
prefer managerial tasks or other related roles. The decision to pursue an entrepreneurial
career is influenced by a number of psychological and non-psychological factors (Amit et al.,
2001). Non-Psychological characteristics are education or prior knowledge, career
experience, age and social position, income, unemployment and the family situation but also
opportunity cost for an alternate use of time
(Venkataraman, 1997). The psychological
framework generally focuses on human attributes such as need of achievement (McClelland,
1961), cognition,
intention or willingness to bear risk (Brockhaus and Horwitz, 1986,
McMullen, 2011), individual’s alertness to entrepreneurial opportunities, self-efficacy (Chen et
al., 1998), internal locus of control, and tolerance for ambiguity (Begley and Boyd, 1987).
Based on this, it can be argued that the key to initiating the process of entrepreneurship lies
within individual attributes, and non-psychological factors that lead some people and not
others to engage in entrepreneurship process.
On the other hand, the situational perspective on entrepreneurial behaviour suggests
that environmental or situational factors may trigger individuals to set up a business,
independently of individual-level factors. This exogenous dynamic includes factors such as
job displacement, previous work experience, availability of business opportunities and various
resources (Barney, 1991), and governmental or stakeholder influences.
While the individual-level perspective focuses on intentional, motivational factors or
evolutions in individuals’ perceptions, the situational perspective emphasizes the importance
of exogenous dynamics as a trigger of the entrepreneurial process. Consequently, past
research and theorizing suggests that individuals will engage in entrepreneurial action under
the influence of these two main variables in isolation or in combination. What is less known,
however, is why do some individuals at BoP level make decisions to engage in entrepreneurial
businesses instead of limiting they engagement to traditional farming or becoming employed?
To be clear, scholars have noted that the entrepreneurial process, including the factors behind
individuals’ choices to become entrepreneurs at the BoP, is still unclear and calls for in-depth
studies of this process (Bruton et al., 2012, Kiss et al., 2012, McGahan, 2012, Webb et al.,
2013, Webb et al., 2009). In the next section, we briefly describe the other stages of the
process of the entrepreneurship phenomenon according to different perspectives.
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2.2. Theoretical perspectives of and entrepreneurial process
A number of theoretical perspectives have been used in process-based studies of
entrepreneurship (Steyaert, 2007). As interest in entrepreneurship as a domain of research
has intensified, new theoretical perspectives that recently emerged to explain the processes
that underlie entrepreneurial action and are broadly referred to as the “emerging theoretical
perspectives” (Eisenhardt, 1989), contrast with the more traditional model. The traditional
model of entrepreneurship draws largely on economic thinking to describe how individuals or
firms take entrepreneurial actions by searching for areas where the demand for a product or
service exceeds supply (Casson, 1982) to discover an entrepreneurial opportunity, and
evaluate whether it is worth exploiting (Shane and Venkataraman, 2000). The entrepreneurs’
goals are to find the most productive use of resources. This view also suggests that
opportunities arise out of the entrepreneur’s alertness to information asymmetries (Dutta and
Crossan, 2005, Shane, 2003). Alertness refers to a motivated propensity of entrepreneurs to
formulate an image of the future by seeking out opportunities that have been previously
overlooked (Kirzner, 1985). The relationship between alertness and opportunity identification
is considered a function of both the knowledge possessed by the entrepreneur and how this
knowledge is processed (Gaglio and Katz, 2001).
Subsequently, the process remains
basically goal-oriented and largely determined by competencies related to alertness,
recognition and exploitation of opportunities, followed by business growth (Venkataraman,
1997).
Alternative emerging theoretical perspectives have extended the debate from
opportunity as an objective reality, existing before the entrepreneurial process starts and
awaiting discovery by an alert individual, to a phenomenon of creation. This creationist view
argues that what turns out to be the opportunity cannot be known in advance or anticipated.
Rather, they are part of society and embodied in the creative view that emphasises processes
of enactment, interpretation and creativity (Gartner and Carter, 2003). A range of
perspectives on the creationist view can be distinguished; from those on complexity and chaos
theory, to the interpretative and phenomenological, social constructivist. This view posits that
opportunities do not exist independently but are formed through the interaction of an
entrepreneur or entrepreneurial team with the context (Steyaert, 2007). According to the
advocates of this perspective and with their interpretative (Lavoie, 2015, Bjerke, 2007),
phenomenological perspective (Spinosa et al., 2008), social constructionist view (Fletcher,
2006), actor network theory (Latour, 2005), pragmatist approach (Sarasvathy, 2001) or
bricolage view (Baker and Nelson, 2005), entrepreneurial opportunities are not fully developed
at the beginning of the entrepreneurial process. Besides the fact that entrepreneurial
opportunities are subjective, socially constructed, and created by an entrepreneur through a
process of enactment, Sarasvathy (2001) assumes that the entrepreneurial process is initiated
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with an examination of the means available to an entrepreneur. In resource penurious
environments, Baker and Nelson (2005)
posit that entrepreneurs avoid challenges by
applying combinations of available resources and using physical, institutional, or human
resources in novel ways.
One of the key contributions of this emerging perspective on the entrepreneurial
process is the focus on entrepreneurship as a rooted phenomenon that can only be
understood with reference to context and contengency (Mason and Harvey, 2012) and the
meanings associated with the comtext (Anderson et al., 2012). Recent studies have
contributed to emphasize this (Nayak and Maclean, 2012, Popp and Holt, 2012, Colli et al.,
2012, McGaughey, 2012, Dimov, 2011). However, the above-mentioned discussion presents
two problems for the study of entrepreneurship at the Base of the Pyramid. First, both
mainstream entrepreneurship and emerging perspectives reflect an entrepreneurial actions
arise independently of the socio-economic conditions in which they are formed. In contrast,
entrepreneurs at the BoP often lack resources and capabilities in deploying cognitive skills to
discern and evaluate tangible resources to exploit objective opportunities (Viswanathan and
Rosa, 2007). Similarly, creating opportunities also needs resources and capabilities. Second,
both discovery and creative perspectives have focused on entrepreneurial activities in formal
and informal institutional environments in developed countries. In contrast, BoP settings
exemplify an informal economy, and the meanings of this informality differ dramatically from
the definition of the concept in developed countries (Webb et al., 2015).
Given such issues as discussed above, the entrepreneurial process could unfold
differently in the BoP context and could lead to different outcomes. Thus, it is vital to push the
frontiers of entrepreneurship research in the BoP context. Although interest in doing so is now
growing (Webb et al., 2009), the study of entrepreneurial action has received very limited
attention (Zoogah et al., 2015) and the question of how entrepreneurs emerge and grow is
unexplored.
3. Research methods
We adopt an inductive case study design by asking, what is going on here? Many scholars in
the field of management studies argue that when the current theory is lacking or suboptimal,
a new theory must be generated (Alvesson and Willmott, 2012, Gioia and Chittipeddi, 1991,
Ketokivi and Choi, 2014), and new organizational research topics often benefit from a
qualitative foundation (Steyaert, 1997). Thus, we followed Eisenhardt (1989) and Yin (2003),
who recommend a case approach because it offers the prospect of producing results that are
less likely to be deemed idiosyncratic to one context and allows for richer theoretical
inferences. Grounded theory (GT) method was used to collect and analyse the data. This
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method was used because it allows one to focus on the context, intentions, actions and
interpretations of key players of the phenomenon under investigation (O'Reilly and Marx,
2012), and to remain theoretically flexible which allows for the detection of novel ideas useful
for building new theory. We relied on the original work of Glaser and Strauss (1967) as
principal guide.
The selection of cases for
research should be driven by the aim of better
understanding the phenomena of interest (Buchanan, 2012). The economy of the majority of
countries in SSA is based on agricultural sector that employ more than 60% of the workforce
(Zoogah et al., 2015). This study focuses on vegetable producers in Benin (Figure 1). Benin
is a West African country with a population of approximately 10 million people (World-Bank,
2014). Despite a relative increase in its economic growth rates over the last decade, from
2.7% in 2009 to 5.4% in 2012, poverty is still widespread. Approximately 75% of the Beninese
population live on less than 2 dollars a day (World-Bank, 2010). Agriculture is the most
important economic sector, with approximately 70% of the country’s workforce gaining their
revenue from agriculture, and contributing up to 80% to export revenues (World-Bank, 2014,
SCRP-Benin, 2011). With the current development of high value products such as fruits and
vegetables that increase substantially the revenue level of producers, agriculture provides a
particularly interesting context in which to study the development of entrepreneurship at the
base of the pyramid in Sub-Saharan Africa.
As advocated by Glaser (2002) data collection starts most often in a concentration site
where the area of interest increases in concentration. Considering that the purpose of the
study is to understand the bottom up process of entrepreneurial action in informal poverty
settings, we were interested in finding cases that could represent an initial concentration site
where a large number of individuals are involved in vegetables production. The desire to find
an initial concentration site using the proportion of vegetable farmers resulted in choosing the
department of Mono where about 57% of production comes from (Figure 1). Later on, we
extended the data collection to the three other departments of southern Benin.
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Yessoufou, Blok and Omta
Atlantique
Mono
Ouémé
Littoral
Figure 1. Southern Benin with the study locations
To accommodate the exploratory nature of the study, we combined focus group
discussions (N=5) and in-depth interviews ( N=36) with vegetable producers. Three focus
group discussions (FGDs) in groups of 5 to 8 included younger producers aged 15-35 and the
two other FGDs included older producers aged 36-50+ years. Limiting the number to a
maximum of eight participants per FGD, we ascertained the availability of time to express
opinion and discuss relevant items per participant (Krueger and Casey, 2000).
First, through FGDs, we explored more general patterns and factors influenced by
opinions (Morgan and Spanish, 1984, Krueger and Casey, 2000). We relied on the list of
producers available at the level of the Ministry of Agriculture (CARDER) to select the
participants. We invited a moderator from the local staff of CARDER. The moderator led the
discussion, established an atmosphere of trust, and promoted free discussions. We witnessed
how sensitivities to agreements versus disagreements as well as dominant views and differing
opinions provided insights into the overall topics. The FGDs for theoretical collection of data
were semi-structured and based only on a general subject or issue such as: What motivates
individuals to engage in vegetable farm business (agropreneurship) and why do they do it?
How do these agropreneurs operate in practice?
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Focus group discussions (about one and a half hour each) were recorded and transcribed.
We examined, coded, categorized, and synthesized the transcripts per focus group
discussion.
Second, through in-depth interviews, we complemented and strengthened the data
collected through FGDs for understanding discrepancies among informants and gaining
additional perspectives and issues (Miles et al., 2013). We interviewed 36 vegetable
producers: 15 during the first round of data collection in the concentration site (Mono) and 21
during the second, using a face-to-face semi-structured interview technique. Building on this
initial data from FGDs and interviews in the concentration site, the research expanded to
additional locations and communities during the second round, where additional respondents
were identified. Accordingly, categories and concepts were continuously refined as a result of
insights captured during a series of interviews. These techniques were used because they
offer sufficient flexibility to approach different participants differently while still investigating the
same topic (Noor, 2008).
Interviews were open-ended with four consistent interview questions asked of each
participant to start the conversation:
1. How interested are you in becoming a vegetables producer?
2. What are the reasons for starting fresh vegetables production?
3. What are the difficulties you face and how do they affect your entrepreneurial activities?
4. Were there any personal characteristics or situations that facilitate your activities or make
them more difficult?
These questions provided the core building blocks of the interview. Additional questions
emerged from the specific participant conversations, as well as from insights captured in
previous FGDs and interviews, using the constant comparison analysis technique. During the
course of interviews, respondents often mentioned processes, regular actions or interactions
as an example to illustrate a point. When available, these processes and actions data were
collected throughout the observation. As this iterative process guided the sampling, the
selection of respondents for in-depth interviews became focused on factors that enable
entrepreneurial actions, the strategies developed to cope with challenges and the reasons
behind such a behaviour. In general, we reached data saturation after 30 interviews.
The data analysis of interviews consisted of four phases. First, we began the analysis by
transcribing interviews to capture their overall experiences and perspectives. Second,
interview transcripts were analysed to develop first-order concepts. Third, we organized our
first-order concepts into more abstract second-order themes, and identified connections
amongst these themes to build aggregate theoretical dimensions. Finally, using the data
structure and summaries, we identified connections between our concepts, themes, and
categories to develop a conceptual model of the entrepreneurship process in the BoP context.
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4. Results and discussion
In this section the results of the five focus group discussions are first presented. Next, we
describe the evidence we derived from interviews and what can be inferred from the activities
of entrepreneurs. Figure 2 depicts the aggregate dimensions, the second order themes and
the first-order concepts that are found to be salient for entrepreneurial process at the BoP.
These we will describe in more details in the sections 4.1 to 4.6. Finally, we summarised the
process of entrepreneurship by examining the literature and the empirical findings.
Although the participants’ opinions of the focus group discussions largely overlap, the
final summary distinguished two categories of producers. In the analysis we therefore
combined the results of three FGDs on the one hand and the findings of two other FGDs on
the other hand.
Figure 2. Features of Agopreneurship: First-order codes, second order themes and aggregate
dimensions based on FGDs and interviews
4.1.
Overcoming Challenges
A wide range of participants are engaged in the vegetable production businesses, because
something challenging was occurring to them which triggered the process, and so our first
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category was “overcoming challenges”. The participants of the FGDs often referred to two
types of challenges: (1) Challenging situations and (2) disruptive events. Regarding
challenging situations, participants in three FGDs emphasized that the concrete situations and
problems they were facing have pushed them to find interpretations and give meanings to
such challenges. The willingness to cope with difficult situations was portrayed as leading to
the decision to engage in action.
Many challenging situations they emphasized involved low-income, difficulty in getting
wage employment or in fulfilling basic needs. Participants reported feeling being at risk in their
livelihood. While our participants range from illiterate farmers to well-educated ones with little
access to formal employment, the one thing that unites them is first the need to survive. They
did feel that they had to look for income-generating opportunities (that can meet their
immediate and long term needs) to escape from the current situation, since the poverty is
generalized in the community and therefore close relatives are facing the same situations. In
an attempt to find a solution to the difficult situation, the vegetable businesses were
established. For example, here is a story that one of our participants told us about how he got
involved in vegetable farming.
I started farming for myself on a small portion of land after working for six months as an employee of
another farmer here in this village. Before starting to grow these vegetables, it was hard for me and my
wife and a 3-year old boy to have a regular two hot meals per day with the revenue I got from fishing
and farm land. Although it was very challenging at the beginning, after the first harvest, my economic
situation changed. ( ... ), I thank God, because nowadays, I am extending my farm, I have a small car
and my children are going to private school where the quality of education is high.
For this participant, the vegetable farm business (agropreneurship) is a path that can
help him to escape grinding poverty and daily struggle to survive. Moreover, this business is
seen as a means to improve food security for families, to be able to afford to send children to
school and to be relatively stable in the income generation. In another account, one participant
told us about how his experience challenges him in getting wage employment after graduation.
It was very difficult for my parents to maintain our [relatively] large family. We were in financial crisis
and a very vulnerable situation, I had a degree but no job, no money and no position. The only thing I
had is the burden and responsibility as the eldest son of my father. Since my parents have spent a lot
of money on my education, I have now the responsibility for succession for taking care of my sibling
and also my parents. Since two years (after being engaged in vegetable production), [....], the poverty
situation for me and my family is changing. We are eating better foods. There are more chances for
my children to go further in their education, because I hope to expand my farm and build some things
bigger. This will also create jobs in our community.
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In contrast the participants of the two other FGDs often referred to disruptive events
as the starting point of their entrepreneurial journey. They reported being involved in situations
where they became aware of negative changes in their traditional business activities. They
have experienced an unpredictability in the generating of income from fishing that represent
their traditional activity. As they mentioned, fishing was one of the most important incomegenerating activities of the community settled between the sea and the lake of Mono since the
seventeenth century. The passing of knowledge and skills from one generation to another
within the community had led to specialization in this specific economic activity of fishing. This
system of exchange works until the activity was threatened by exhaustion of fish stocks due
to overfishing and pollution, and natural phenomena such as erosion, siltation and floods with
many consequences. First, the livelihoods and income generation of fishing community
members have been impaired. Generating substantial revenue from this traditional activity
becomes uncertain because the volume of fish caught becomes also uncertain. Second,
anticipating, predicting or understanding the production system is more difficult since the
ecosystem has been disrupted. These uncertainties in understanding the system and the
volume of production contribute to pushing individuals to engage in vegetable production that
they assume to be more under their control. The following quote captures the general idea of
pressure under which actors are by relying on traditional economic activities that seem not to
work anymore.
We found that the fishing activity we get from our parents becomes more problematic and we don’t
know what to do to solve the problem of productivity that becomes lower and lower every day. ( ...)
Sometimes, we can spend hours on the river without any success. On the other hand, the day you are
a lucky man, you can get just a basket [equivalent to 5 to 6 Kg]. ( ...) Therefore, you must be on the
river every day with the hope to get a minimum for the next day.
In general, the focus group participants perceived that challenging situations and disruptive
events spurred the emergence of entrepreneurship in vegetables production. It is on this point
that the entrepreneurial project of farmers finds its origin within the community: the belief that
the difficult situation of a precarious livelihood and the disruptive events that occurred in the
traditional activity can be overcome by setting up vegetable farm businesses. Without these
situations or events, entrepreneurial action would not be manifested within a part of the
community. Therefore, and as we show in Figure 2, we identify the challenging situations, and
external disruptive events as initiating forces in the entrepreneurship process. This leads to
our first proposition.
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Proposition 1. Entrepreneurial process at the Base of the Pyramid emerges primarily from external factors
such as challenging circumstances and disruptive events.
4.2.
Entrepreneurial opportunity development
Without any prior motivation, the agropreneurial process is triggered as the result of external
events or circumstances. The individual does not actively seek to become an agropreneur.
The trigger therefore happens as a direct result of a change or disruption considered as
significant by the individual. The individual jumps head first into action without being really
prepared. The agropreneurship suddenly appears as the best solution.
Since the majority of farmers jump into the vegetable business, they were not prepared for
such endeavours. The later interviews reveal that respondents tend to learn by doing, which
creates a gradual change in their orientation and attitude. They have achieved this by relying
on perceived successful agorpreneurs because a formal system to provide such knowledge
does not exist. For respondents, the learning phase is fundamental for their financial
sustainability and business performance. Many agropreneurs appeared to believe that their
know-how is an important step to avoid failure. They tended to see this practice of learning
as critical for their own success. Hence we make the following proposition.
Proposition 2. The entrepreneurial opportunity exploitation results from opportunities developed by
learning
In the concrete situation described above, entrepreneurial action emerged through the
willingness of individuals to overcome the challenges. Our findings call into question the
implicit assumption in intentions (Ajzen, 1991), human motivations, entrepreneurial
opportunity, and cognition as the only factors that influence the entrepreneurial process (e.g.,
Shane et al,, 2003) and the existence of a market, information about the market and
information processing ability as boundary conditions of entrepreneurial action in opportunity
discovery theory (Casson, 1982, Shane, 2000). Although vegetable producers are well
positioned to engage in the process because motivated by livelihood, there are new factors
that emerge. Specifically, challenging situations and disruptive events appear as a
determinant exogenous dynamic trigger of the entrepreneurial process.
Consequently, they
shift without an intention to start a business or a particular information gathering process. In
addition, our results also call into question the rationality of the entrepreneurial actor in the
ways human behaviour is preceded by the individual’s thought, or goals.
In the situation
described above, entrepreneurial action emerged through the creation of vegetable farms as
a new business: a process which is in contrast with the utilitarian ends–means schema of
mainstream entrepreneurship models of a systematic implementation of a rationally thoughtout plan where the outcome is given, the selection between means to achieve the outcome by
starting with the ends, analysing expected return, doing competitive analysis and controlling
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the future. The case of agropreneurs tells a different story, one where the resources are
scarce, the poverty is chronic, the stream of ongoing action is interrupted or disrupted by new
events that reoriented behaviours. The emergence of vegetable businesses in our study is
more problem-focused coping. This fits in closely with the creative action implicit in the
pragmatism perspective (Joas, 1996), and rejects the Cartesian distinction between thought
and action that lies at the core of the means–ends schema still prevailing in mainstream
entrepreneurship studies.
Finally, the opportunity identification or recognition reflects an entrepreneur’s ability to
detect when the demand for a product or service exceeds supply (Casson, 1982) and evaluate
whether it is worth to exploit it (Shane and Venkataraman, 2000). The agropreneurs seem not
to exhibit this ability, instead, the commitment to the entrepreneurial action is driven by
challenging situations and/or disruptive events, and the entrepreneurial opportunity
development is orientation-based learning. This appears as a distinctive feature of how
entrepreneurship emerges in poverty settings: a cognitive-based response behaviour that
includes an effort to alleviate stressful circumstances by defining the problem, generating
alternative solutions and determining the benefits of such solutions.
4.3.
Personal motivations
An agropreneur who starts, organizes, manages, and assumes responsibility for a vegetable
farm business, offers an additional personal challenge that many individuals within the
community prefer to staying in fishing activities or being an employee working for someone
else. Some people accept the risks that go with owning a vegetable farm business, but also
benefit directly from the potential success of the business. They tend to increase the business
over time. By investigating what it is about certain people that drives them to take on the risk,
the uncertainty and the independent structure of vegetable business ownership, the
characteristic that appeared recurrently in the respondents’ statements is the question of
needs fulfilment, and an increase in generated income. In an attempt to guarantee or improve
their livelihood and income, a vegetable farm business was established. This is often the top
motivational factor mentioned for initiating a vegetable farm business. The interviews showed
differences between individuals’ motivations, especially as regards the intensity of the
expressed motivation. Some declared a strong motivation whereas others perceived it mainly
as one self-employment opportunity among others. It becomes clear that while the
commitment to entrepreneurial action is driven by challenging situations or disruptive events,
the entrepreneur’s motivation strengthens the sub-process of opportunity creation.
In business entrepreneurship generally, the decision to identify and exploit an
opportunity is tied mainly to the impulse of the individual’s motivations and the expected profit
(Eckhardt and Shane, 2003, Shane and Venkataraman, 2000). In agropreneurship, on the
14th Rural Entrepreneurship Conference, Lincoln Business School, 15-17th June 2016
Yessoufou, Blok and Omta
contrary, the decision to act precedes motivations and a rigorous cost-benefit analysis. Next,
the personal motivations become salient by strengthening the opportunity development.
Hence we introduce the following proposition.
Proposition 3. Oppotunity development is fostered by agropreneurs’ motivations of self-fulfilment, income
generation and wealth creation.
4.4.
Economic value prioritised
When informants describe the reasons why they have engaged in the new business of
vegetables, some had reported that the challenging events and chronic poverty situations
push them to go beyond an immediate time frame toward a greater return through thriving
business activities. This group of farmers seems to give priority to solutions which involved
efforts to effect radical change from survival to sustainable business activities in response to
important and chronic problems. These actions involved actors in a more difficult action and
taking responsibility even when faced with limited information, resources and skills needed to
achieve a business development. According to participants, moving away from old and
traditional businesses and finding other activities that could generate income in a sustainable
way appear as one of the best options and agropreneurship offers this opportunity. Many
agropreneurs believe that it is crucial to reduce the reliance on meager and aleatory revenue
derived from fishing activity by launching new business activities of which they may know to
some extent the outcomes. They prefer to establish a more governable business activity with
a more or less predictable outcome by growing vegetables.
We learn from our participants’ accounts that farmers acknowledge the problem of the
exhaustion of fish stocks and the causes of this, but that the government is unwilling to solve
the problem. The approach they found is to shift to something new in order to come to terms
with challenges of income generation. The uncertainty of the old business to generate income
was a strong enough motive to push them toward vegetables entrepreneurial activities.
Moreover, there is also an emphasis on the need to reduce this uncertainty of income
generated by engaging in agropreneurship in which they can control the input supply more
easily. The following quote exemplifies this:
(...)It’s true that I perceived the necessity to shift to agriculture businesses, but what I do not want is to
fall in the same tenuousness situation in the next. That's why I prefer to grow vegetables instead of
maize or cassava [extensive farming system]. So that, ( ... ), I can control the water supply and grow
a year round instead of waiting for the wet season before continuing my business activities.
Apparently, vegetable-farmers are able to acquire a level of self-perceived control of
their life by structuring uncertainty through an entrepreneurial activity with growth potential
since they are contrasting vegetable production as providing high value products and as being
14th Rural Entrepreneurship Conference, Lincoln Business School, 15-17th June 2016
Yessoufou, Blok and Omta
more under their control compared to traditional extensive farming in which they rely more on
the wet seasons. Another reported example of the structuring uncertainty of income included
the following:
(..)] From my experience in vegetable production, I do not envy any more those who are working in
public administration (....), I can also save a lot of money after covering my actual needs and use them
during my old age [when I will not be capable to farm](..... ). I can say that there is a future in this
business.
In contrast, we also found evidence of low levels of willingness to structure uncertainty
reportedly decreasing actors’ motivation to respond to challenging events and situations. In
these instances, participants told us of individuals feeling a general sense that someone else
(government authority, local authorities, or a family member) had the responsibility to help in
reducing the challenges they are facing. They tend to be more emotional-focused in coping
with challenging situations:
Although the government has the power and means to help us to solve the problems of low productivity
we are facing in fishing activities, there are no ‘’visible’’ actions for many years..... our local leaders
pretending not to be concerned with the problem.
This finding struck us as a phenomenon similar to fatalism and resignation that are
often the norm in an extremely poor context where responsibility to act is inhibited by repeated
failures experienced by people, decreasing the likelihood of any particular member taking
action. Our findings suggest that to the extent that smallholder entrepreneurs at the poverty
settings can overcome the fatalism or resignation surrounding them, they will be motivated to
respond effectively to challenging situations and events. This leads to our fourth proposition.
In sum, we propose the following.
Proposition 4. Perceived economic value moderates the opportunity development. The better the
entrepreneur is at articulating his perceived economic benefits, the easier will be the formulation of an
entrepreneurial project or the development of entrepreneurial opportunities.
4.5.
Personal attributes
The findings regarding the reported importance of benefit perceived by agropreneurs,
particularly the need to structure uncertainty, made us curious about why actors specifically
reported the need to structure uncertainty. As noted above, there were several other actors
facing a challenging situation and also engaging in the new vegetable business but who did
not respond to structuring uncertainty to a large extent. So, we asked a number of questions
about what makes some actors feel more need to structure uncertainty in order to engage in
entrepreneurial action, while others resign? We probed our participants for information about
how they construed the situation. Several factors were reported as heightening actors’
14th Rural Entrepreneurship Conference, Lincoln Business School, 15-17th June 2016
Yessoufou, Blok and Omta
perceptions in structuring uncertainty. A path emerged in this first stage of our model (figure
2) that was reported as bolstering the need to structure uncertainty: human agency. By agency
we refer to the capacity of persons to transform existing states of affairs, the ability to respond
to events outside of one’s immediate sphere of influence to produce a desired effect (Onyx
and Bullen, 2000). A belief reported by informants that change is possible based on their own
initiative, acquiring a semblance of control of their business activities, everyday circumstances
and decisions in matters relating to the environment they live in, is a potential psychological
marker.
Proposition 5. Human agency moderates the relationship between opportunity development and
opportunity exploitation. The stronger the ability of an entrepreneur to respond to the challenging
situations or events in developing entrepreneurial opportunities, the more likely and easier the exploitation
of entrepreneurial opportunities.
4.6.
Strategic Behaviour
If the commitment to entrepreneurial action and opportunity development drive the first steps
of the entrepreneurial process, the shift to opportunity exploitation is also accomplished
through the ability of the agropreneur to mobilise production and transaction resources. In
order to realize their potential, agropreneurs rely on their capabilities to connect with the
surrounding context.
They created networks involving multiple actors such as family
members, friends and local vegetable producers who play a role at the beginning of the
entrepreneurship process. Engagement of friends and family members helped the potential
agropreneur to get access to a minimum of support. This support includes financial resources
and production inputs such as land, equipment and seeds. The workforce is mainly provided
by family members as the agropreneurs at the beginning lack financial resources to rent
labour.
The social embeddedness of vegetable farmers is also crucial for the agropreneurs at
production and transaction levels. It could be noted that potential agropreneurs were not able
to use their previous business models in vegetable production business. According to farmers,
vegetables production is an intensive system due to the high use of external inputs (fertilizer,
pesticide, improved varieties) and the production is labour-intensive. When an individual
engages in vegetable production business, they had to learn and collaborate with other more
experienced producers. The informants also indicate how collaboration facilitates transaction
between agropreneurs and buyers by relying on a referral pattern. For instance, in order to
reach important and trustworthy buyers, an agropreneur needs to refer to other producers
within the community. Peers also provide referral opportunities because an agropreneur may
be referred to potential buyers for the quality and the safety of his products. This referral
pattern is also critical to accumulate and leverage financial and non-financial resources
14th Rural Entrepreneurship Conference, Lincoln Business School, 15-17th June 2016
Yessoufou, Blok and Omta
needed by an agropreneur within and outside the community. As a result, networking ability
means the ability of identifying potential resources providers. Hence we introduce the following
proposition.
Proposition 6. The ability of the entrepreneur to network moderates the move from opportunity
development to opportunity exploitation. The stronger the ability to identify and create supportive
networks, the more likely the exploitation of entrepreneurial opportunities
Figure 3. Process model of entrepreneurial action
4.7.
Entrepreneurial process
Based on our empirical findings, we propose a model (Figure 3), which frames the main
stages of the entrepreneurial process at the base of the pyramid and individual variables at
the intervening stages of the process. Table1 summarizes the process of entrepreneurship
as identified in the entrepreneurship literature, the focus group discussions and interviews
with agropreneurs.
Table 1. Integrated conceptual framework of entrepreneurship process based on the two main
sources of entrepreneurship literature and the empirical results
Literature
Focus Group Discussions and
Causation process of
entrepreneurship
Effectuation of entrepreneurship
Interviews
(Sarasvathy 2001, 2008)
(Sarasvathy , 2001;
14th Rural Entrepreneurship Conference, Lincoln Business School, 15-17th June 2016
Yessoufou, Blok and Omta
Shane and
Venkataraman, 2000 )
Process trigger
Individual’s motivations and the
expected profit.
The willingness to accept an
The willingness to overcome
affordable loss during the
challenges situations and
experimental process of
disruptive events.
opportunity development.
Entrepreneurial
opportunity
Identifying and exploiting
identifying and exploiting
Entrepreneurs in challenging
opportunities in existing
opportunities in new markets
situations, ignore the
markets .
with high levels of uncertainty.
opportunity to engage in
entrepreneurial learning
process.
Process sequences
- Identification an opportunity
defining the problem,
anything.
a commercial offering.
generating alternative
opportunities.
- The establishment of goals to
exploit identified
opportunities.
catalysts
Reasons behind such
- Overcoming challenges by
product or service to arrive at
- Evaluation of objective
Process enablers and
- Develops multiple variations of a
before developing
Entrepreneur’s competencies
- Experiments with different ways to
sell and deliver a product or
service.
- Responds to unplanned
opportunities as they arise.
Community (customers, suppliers,
solutions
- Determining benefits of such
solutions.
- Involving in entrepreneurial
learning process.
Personal attributes, benefits
related to alertness, to
and other organizations) :
perceived and strategic
information asymmetries.
engagement as a catalyst for
behavior through
emergence and growth:
networking as a process
negotiates with other parties .
enablers.
Entrepreneurs as decision
Entrepreneurs as decision makers
Entrepreneurs as decision
sequences and
makers dealing with
dealing with unpredictable
makers dealing with
relationships
measurable or predictable
phenomena will gather
challenging situations or
future will do systematic
information through
events , will find key
information gathering and
experimental and iterative
responses behavior to
analysis within certain
learning techniques aimed at
address challenges .
bounds.
discovering the future.
Boundary conditions
Entrepreneurial opportunities are
Entrepreneurial opportunities are
Entrepreneurs confront situations
objective and identifiable a
subjective, socially
of significant resource
priori. The environment is
constructed, and created
scarcity. Necessary
static and linear.
through a process of
Resources are gathered
enactment.
and strengthened, and
The future is predictable.
The environment is dynamic,
nonlinear, and the future is
unpredictable.
next, opportunities are
developed.
Entrepreneurial actions are
socially embedded and
governed by informal rules
In general, Table1 shows that the results of the empirical study brought new insights into
how entrepreneurs and their firms emerge and grow at the BoP in developing countries. For
instance, while the literature highlights individuals’ motivations and the expected profit or the
willingness to accept an affordable loss as process trigger, the empirical results of this study
highlight the willingness of potential entrepreneurs to overcome challenging situations and
14th Rural Entrepreneurship Conference, Lincoln Business School, 15-17th June 2016
Yessoufou, Blok and Omta
disruptive events. Regarding the factors that facilitate the process, in contrast to the literature,
the study shows that personal attributes, perceived benefits and networking function as
process enablers.
5. Conclusion and implications
This study offers an exploration of the complexity of an entrepreneurial process in poverty
settings at the base of the pyramid. Based on our empirical findings and on a comparison and
contrast with the existing theories, we provided the trigger path and a three-stage model of
the entrepreneurship process at the BoP. Beyond the description of the specific characteristics
of each stage, the roles of the process enablers are depicted as affecting the way the process
unfolds. Moreover, a set of propositions has been developed positing the basis for future
empirical investigations. The contributions of our article to the ongoing debate on
entrepreneurship in developing and emerging economies are fourfold.
First, in answering the call for a deeper look into the dynamics by which people in
poverty settings develop their business model, we provided a comprehensive framework, as
a further step in the process of boundary-setting and awareness-raising meant to stimulate
future research.
Second, our study opens up the realm and reach of the entrepreneurship process at
the BoP and unpacks each phase of the process and intervening dimensions, highlighting
which characteristics are most relevant in determining the shift from one phase to the other.
The six categories discovered by us were overcoming challenges, personal motivations,
economic value prioritised, personal attributes, strategic behaviour and entrepreneurial
opportunity development. Although we certainly do not claim these are the only six dimensions
of the process, they provide a reasonable starting point for future work on the topic. Our
empirical findings help break new theoretical ground for the emergence of entrepreneurial
action. One interesting theoretical puzzle that emerges is that motivations and the opportunity
identification ability are not sufficient to explain entrepreneurship at the base of the pyramid.
Challenging situations and disruptive events are the principal triggers of entrepreneurial
action. Another interesting theoretical puzzle that emerges from the dynamics of the process
concerns personal attributes; human agency is viewed as a potential psychological response
for structuring uncertainty. This point may also help explain why entrepreneurship with growth
potential or the so-called “transformative entrepreneurs” (Bruton et al., 2015) are so rare at
the BoP level. Indeed, human agency appears to be rare in poverty settings as evidenced by
the growing literature on economic development, highlighting how fatalism and resignation are
often the norm (Wood et al., 2015).
14th Rural Entrepreneurship Conference, Lincoln Business School, 15-17th June 2016
Yessoufou, Blok and Omta
Finally, our research contributes to the conversation about the role of strategic
behaviour in the process of entrepreneurship. The role of resources and capabilities as drivers
of entrepreneurship effectiveness is a keystone in resource-based theories (Barney, 2001).
Indeed, the extent to which entrepreneurs mobilize and combine resources can influence the
effectiveness of businesses. Sadly, there is a shortfall of not only management capabilities
but also human, financial, and technological resources at the BoP (Zoogah et al., 2015). Our
findings show that agropreneurs develop social embeddedness to cope with this shortfall by
identifying and developing their networks.
From a practical point of view, our study provides insights into the determining factors that
influence the choice of agropreneurship, which can help the majority of people in developing
countries how to encourage farmers to move from production oriented agriculture to
entrepreneurial agriculture. Moreover, explanations as to the sequence of factors that may
influence their entrepreneurial action can help individuals better apprehend the situations they
will be faced with, and thus be better prepared.
6. The limitation of the study and perspectives for future research
As with other qualitative research our study has nonetheless suffered from the usual limitations
associated with case study research, which trades statistical significance for richness,
accuracy and insight into observed processes (Langley, 1999). Our insights into the dynamics
of entrepreneurship at the BoP raise the question of generalizability, of the extent to which our
findings apply to other industries or sectors. It is hard to exclude the possibility that specific
characteristics of our research setting might have affected the evolution of the observed
process. Since our goal was to elaborate a theory on the entrepreneurship process in poverty
settings, more research is needed in order to confirm whether the ideas we have introduced
hold when subjected to quantitative inquiry, and whether they are generalizable to other
sectors and settings. We cannot infer from our reports the actual causal process unfolding
without a variance in our dependent variables. Therefore, building on the theoretical model we
developed in this article, future research might test empirically each one of the relationships
highlighted in the study, with the aim of generalizing our results.
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14th Rural Entrepreneurship Conference, Lincoln Business School, 15-17th June 2016