Collective entrepreneurship: serving the community

Entrepreneurship may mostly be seen as an individual pursuit but Dr Iain Cairns argues that collective entrepreneurship is the way forward and suggests some policy implications as a result.

Entrepreneurship as we usually conceive it, involving commercial ventures driven by exceptional individuals, does not serve low-income communities. Because entrepreneurial outcomes depend on resources - e.g. human, social and financial capital - the value generated by entrepreneurship across the social scale merely reflects the existing distribution of wealth. Typical ‘business friendly’ policies to support entrepreneurship, like tax breaks, make things worse, by deepening inequalities. In our research we show how only by recognising that successful entrepreneurship is collective can we begin to devise a successful strategy to unlock the potential of entrepreneurship to revitalise low-income communities. In so doing we show the need for entrepreneurship to build on collective goods, processes and ownership. 

Eminent professor of psychiatry Roderic Gorney once wrote that ‘Cooperation is the law of life … the most deeply rooted theme running through the success of man’. Yet modern business success is often attributed to a few exceptional individuals like Gates, Bezos, or Musk, who are seen as driving economic growth through their unique skills and vision. While contemporary entrepreneurship studies increasingly understand the limits of an individualised approach in large scale and commercial businesses, this thinking has not yet filtered through to how we strategize entrepreneurship in low income-areas. If it did, we suggest that this would have profound implications for policy agendas. 

In low-income communities highly individualised business abounds. These typically provide only low incomes and precarious employment with start-ups only displacing other insecure small-scale operations. A lack of capital locally means a lack of access to the finance required to set up anything other than a low-skills venture and a lack of effective demand means limited stimulation for local supply. What is more, when, against the odds, low-income entrepreneurs do succeed they typically relocate, meaning that any advantage that would come from their increased spending power is lost to the community. The individualised approach to entrepreneurship in low-income areas, then, offers little hope of local rejuvenation.

In our research we wanted to understand how a collective approach to entrepreneurship might offer greater promise. We drew on the concept of collective entrepreneurship, which focuses on three key dimensions which are normally considered in isolation: the role of collective goods (like basic infrastructure, state support, local cultural traditions and pre-existing social networks), processes (e.g. decision-making practices involving both staff and broader communities) and ownership (collectively owned business structures, like co-ops or community-owned enterprises). A case study involving a partnership between two social enterprises serving low-income communities informed our investigation.

Our findings suggest that collective action in each dimension can benefit low-income communities, yet deficiencies in one area might adversely affect the others. So, for example, local traditions of solidarity and cultural struggle favoured collective processes of business decision-making and ownership, which, in turn, promised longer term commitment to the community. But class prejudice (e.g. amongst state officials) and enterprise support infrastructure, favoured more commercial enterprise, providing barriers to collective or citizen-led new ventures.

Our findings, then, suggest that a better strategy to drive improvements in low-income areas through entrepreneurship would reflect the interplay of the different dimensions of collective entrepreneurship. The crux of a new approach would be leveraging collective goods to develop collective ownership and manage the whole process through collective decision-making processes.

What might the policy implications of our research look like? We can suggest something like the following. Entrepreneurship agencies could take a proactive approach to identify community organisations capable of spawning new businesses and existing community-owned enterprises capable of innovating and growing further. Local authority procurement policy could be tailored to prioritise such enterprises and ensure their activities are governed by community engagement processes. And subsidy would support the formation of human and social capital, through, for example, wealth redistribution policies, better supported skills development and the creation of community hubs, linked to libraries, community, health or sports centres.

Modern entrepreneurship studies emphasise that successful entrepreneurship relies not solely on individual effort but on privileged access to social, human and financial capital. Recognising entrepreneurship’s collective nature entails determining which entrepreneurial forms merit collective resource allocation. In this way, we all have a role to play in choosing the entrepreneurship models deserving of collective support over others.

About Iain Cairns

Dr Iain Cairns is a Lecturer in the Hunter Centre for Entrepreneurship. His research focuses on democratic businesses (e.g. cooperative and community enterprises) and the structures required to support their establishment and development.