More recently, many entrepreneurs interested in poverty alleviation and groups for the purpose of starting a business, are the development solution to a lack
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Business, Entrepreneurship and Innovation Toward Poverty Reduction
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Entrepreneurial
Opportunities and
Poverty Alleviation
Sharon A. Alvarez
Jay B. Barney
Entrepreneurial activity does not always lead to economic growth. While improvements have been made to human capital, property rights protection, and access to financial capital in abject poverty contexts with the assumption that they will increase entrepreneurial activity, the results have been mixed. More recently, many entrepreneurs interested in poverty alleviation are crossing borders to engage in initiatives aimed at reducing poverty interna- tionally. These efforts have also had mixed results. This paper posits that one reason is that entrepreneurial opportunities and their wealth creation potential vary, and the impact of exploiting these opportunities on economic growth in poverty contexts can also vary. This paper identifies self-employment opportunities, often exploited in abject poverty, that do not lead to sustainable growth solutions. Alternatively, discovery and creation opportunities while difficult to exploit in poverty contexts hold the greatest potential for significant economic impact.Entrepreneurial Opportunities and Economic Growth
Alleviating abject poverty is a difficult problem. Despite three decades of develop- ment efforts by agencies and governments, abject poverty still dominates many parts of the globe (Stiglitz, 2002). While total expenditures designed to eradicate abject poverty over this time period vary, reliable sources put this expense at approximately $2.3 trillion by the West (Easterly, 2006). And still, the abject poor - defined as those that survive on less than the equivalent of $2 per day (London & Hart, 2004) - remain with us.These poor number approximately 2.6 billion people around the world (Prahalad & Hart, 2002;WorldBank, 2011).
1 Beyond philanthropy, development efforts have focused on building the human (Cohen & Soto, 2007; Lucas, 1988; Romer, 1990), institutional (DeSoto, 1989; World Bank, 2011), and financial (Yunus, 1999) underpinnings of economic growth. ThesePlease send correspondence to: Sharon A. Alvarez, tel.: 303-871-3919; e-mail: Sharon.Alvarez@du.edu and
to Jay B. Barney at jay.barney@business.utah.edu.1. The 1990 World Bank Report deÞnes global poverty as the absolute poverty line of income of $2 a day or
less and extreme poverty is set at $1 a day or less. At the 1995 United Nations World Summit on Social
Development, the Copenhagen Declaration described poverty as Òa condition characterized by severedeprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter,
education and information.Ó PTE