No, Not All Poor People Are Entrepreneurs

There is a troubling trend among social enterprises to romanticize the poor as entrepreneurs. Call it the entrepreneur myth. While it's an attractive one, this kind of doublespeak not only masks the reality of the social constraints and challenges the poor face -- it also hampers our ability to innovate high-impact poverty interventions.

The unifying trait of the poor is not entrepreneurial spirit. It is the absence of wealth and opportunity. Some people are entrepreneurial -- poor or otherwise -- but most people are not. Our obsession with the poor as entrepreneurs has less to do with a poverty alleviation model that works than it does with a Western idealization of entrepreneurialism. We celebrate the entrepreneur as a vicarious escape from the cubicle confines of a steady paycheck. But what the poor desire isn't the risk and excitement of entrepreneurship --it's the economic security of stable employment.

The goal of social enterprises that aim to reduce poverty must be results- oriented and method-agnostic. They should be based on strategies that meet target demographics' needs -- whether those persons exhibit entrepreneurial potential or not. While market solutions to poverty are indeed an important component of sustainable poverty reduction, there's a marked difference between enabling entrepreneurs who create jobs, and the falsehood that everyone is an entrepreneur.

Referring to all impoverished persons as entrepreneurs masks the serious vulnerabilities of the demographics we serve -- and all but ignores the complex socioeconomic problems that require social enterprises in the first place. Market failure is a part of poverty, but there are many other factors that make escaping poverty difficult in the first place.

Aneel Karnani, associate professor of strategy at the University of Michigan's Ross School of Business exposes the entrepreneur myth best when he writes that such a view falsely assumes that "people in dire straits are well-informed and rational economic actors." This perspective, he writes, "denies the fact that poor people often act against their own self-interest."

The economic irrationality Karnani refers to isn't an argument of cultural ineptitude. Instead, it's a reasoned assessment of the constraints in which the poor live. Social maladies like inadequate health care, poor nutrition and lack of education not only limit opportunity -- they fundamentally alter an individual's decision calculus.

Social entrepreneurship is about addressing important social issues in innovative, high-impact ways. The promise of social enterprise is to develop interventions grounded in fact and built for scalability. Do social entrepreneurs want to help lift people out of poverty? If so, we have to make sure our interventions are designed to engage people as they are -- rather than what we wish they were -- so we can help them become what they want to be.

Photo Credit: EvinDC