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

Author

Listed:
  • Michael H. Morris

    (University of Notre Dame)

  • Sohrab Soleimanof

    (Louisiana State University)

  • Marcello Calle

    (Universidad del Azuay)

  • Reginald Tucker

    (University of Oklahoma)

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.

Suggested Citation

  • Michael H. Morris & Sohrab Soleimanof & Marcello Calle & Reginald Tucker, 2025. "From poverty trap to commodity trap: entrepreneurship and well-being among the poor," Small Business Economics, Springer, vol. 65(2), pages 1159-1181, August.
    • Handle: RePEc:kap:sbusec:v:65:y:2025:i:2:d:10.1007_s11187-025-01045-y
    DOI: 10.1007/s11187-025-01045-y
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    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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