Entrepreneurship flourishes in areas with terrorism

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By Communications Staff
Tuesday, February 8, 2011
A new Richard Ivey School of Business study shows new, small enterprises are resilient under extreme adversity in developing countries.

Small business is widely understood to be the backbone of a country’s economy and enterprise has an extraordinary power to emancipate people from poverty. In developing countries, small family business accounts for more than 95 per cent of the workforce.
 
The study shows the spirit of entrepreneurism has been discovered to flourish even among intense levels of terrorism and, in fact, small businesses may have added prospects of success under those dangerous conditions.
 
The study entitled Another Dollar, Another Day: Enterprise Resilience under Terrorism in Developing Countries – lead-authored by Ivey faculty member Oana Branzei – describes how terrorism conditions may create psychological incentives for entrepreneurs to be more resilient to hardship and to yield more favorable economic payoffs.
 
“The urban poor in developing countries continually emerge as entrepreneurs in the aftermath of terrorism,” says Branzei. “Enterprise activities at different conditions and levels of terrorism suggest how taking both into account can increase the odds of success for international development in post conflict settings.”
 
Branzei based her work on data collected for urban slums where 31.6 per cent of the world’s urban populations live and where civil unrest, ethnic clashes and terrorist events are most prevalent.
 
Specifically, the survey data from the six largest cities in Bangladesh was used because terrorism statistics had been accurately maintained between 2001 and 2005, including date, type of attack and number of injuries.
 
The data incorporated factors such as the level of formality of the business, the stage of the area’s terrorism (outbreak, escalation, reduction) and demographics such as age, family size, and education. Interestingly, the findings indicated that younger people and women in particular had greater enterprise resilience than others, and thus were more prepared to be successful with their enterprises.
 
“Women entrepreneurs may be more resilient than men following sudden terrorism outbreaks,” Branzei says. “When necessity pushes them into entrepreneurial roles, women are opportunity-oriented, resourceful and highly motivated.”
 
 The study also believes that women are more attuned to social change and quicker to adjust their roles in response to social changes.
 
These findings give professor Branzei reason to hope that international programs may benefit from greater efforts to understand how and when interventions can promote stable and sustainable peace by fostering entrepreneurship – even under extreme adversity.
 
Another Day, Another Dollar: Enterprise Resilience under Terrorism in Developing Countries was published in the 41st edition of the Journal of International Business Studies (2010). The full text is available for viewing online.

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