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From poverty trap to commodity trap: entrepreneurship and well-being among the poor

Year: 2025

Type: article

Abstract: Building on disadvantage theory and the capabilities framework, the research explores how two critical aspects of the poverty experience, experienced scarcity, and a limited opportunity horizon, can result in the creation of ventures that struggle to achieve marketplace success, which in turn detracts from the entrepreneur’s perceived well-being. These business struggles are traced to a commodity trap, where the business is not well differentiated in the marketplace, suffers from low volumes and margins, has little bargaining power, and is labor-intensive and capacity-constrained. A set of hypotheses regarding these relationships are tested using data from a sample of entrepreneurs from poverty backgrounds within Ecuador. The results provide support for the hypothesized relationships. Disadvantages from poverty translate into disadvantages within a business, and failure to overcome these disadvantages results in a lower sense of well-being on the part of the entrepreneur. Implications are drawn for theory and practice.

Source: Small Business Economics

DOI: 10.1007/s11187-025-01045-y

Authors: Michael H. Morris, Sohrab Soleimanof, Marcello Calle, Reginald Tucker

Institutions: University of Notre Dame, Louisiana State University, Universidad del Azuay, University of Oklahoma

Language: English

Topic: Innovation and Socioeconomic Development

Subfield: Business and International Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: No poverty, Decent work and economic growth, Reduced inequalities

Open Access status: hybrid

Estimated APC paid: $3,090