Transitional entrepreneurship: unleashing entrepreneurial potential across numerous challenging contexts

Citation

Javadian, G., Nair, A., Ahlstrom, D., Moghaddam, K., Chen, L.-W. and Lee, Y. (2023), "Transitional entrepreneurship: unleashing entrepreneurial potential across numerous challenging contexts", New England Journal of Entrepreneurship, Vol. 26 No. 2, pp. 78-87. https://doi.org/10.1108/NEJE-12-2023-103

Introduction

We are pleased to publish the special issue of the New England Journal of Entrepreneurship on transitional entrepreneurship. Transitional entrepreneurship refers to the practices of entrepreneurs from communities facing adversity who navigate substantial life transitions as they launch and manage new ventures in response to various changes and challenges in their environment. Entrepreneurship is not only a critical driver of economic growth and social development (Ahlstrom et al., 2019; McCloskey, 2010) but can also represent a life-changing transition for most, if not all, of the entrepreneurs themselves. Transitional entrepreneurship entails strategic pivots or transformations that enable entrepreneurs to adapt and thrive in evolving circumstances. In this regard, transitional entrepreneurship research focuses on entrepreneurs from veterans, minorities, immigrants, refugees, women, historically marginalized groups and economically distressed communities. The major goal of this special issue is to draw attention to the endeavors of entrepreneurs from these communities and to pull together some of the disparate research on the important topic of transitional entrepreneurship.

Recent research has demonstrated that transitional entrepreneurs generate substantial economic activity and wealth. For example, in 2017, more than 11.6m firms were owned by women in the United States of America (USA) and generated an impressive US$1.7tn in revenue while employing nearly 9m people; of these businesses, 5.4m are owned by women of color, had 2.1m employees and generated a no less impressive US$361bn (National Association of Women Business Owners, 2023). In 2018, military veterans owned 1.9m businesses that generated nearly US$1tn in revenue and had approximately 5.2m employees (US Small Business Administration, 2022). According to the US Department of Commerce, in 2018, there were 9.7m minority-owned firms with US$1.78tn in revenue, which created 9.4m jobs (Minority Business Development Agency, 2022), all of which played a role in creating substantial regional economic growth (Tomizawa et al., 2020).

Given the scope of transitional entrepreneurs' impact on the economy and their communities, it is befitting that more scholarly attention be paid to various types of transitional entrepreneurship (Smith et al., 2016). Scholars have studied entrepreneurship among each of these transitional groups, with some groups receiving more attention than others (Nair and Chen, 2021; Si et al., 2020). For example, there is a substantial research stream on ethnic, immigrant or diaspora entrepreneurship that focuses on firms owned by immigrants. Such entrepreneurs identify innovative opportunities due to their backgrounds and tap into their social networks in home and host countries (Ahlstrom et al., 2004; Duan et al., 2021; Moghaddam et al., 2018) to serve the diaspora, enclaves or border markets in their host or home countries (Chen, 2021; Moghaddam, 2015). In some instances, such entrepreneurs may be involved in “unsafe and dangerous activities … to ensure prosperity for themselves, family and whole society” (Ramadani et al., 2014, p. 317). Likewise, research on entrepreneurship among women has been vibrant, encompassing multiple settings, research streams and theoretical perspectives (Lee et al., 2023). A search for the keywords “women” and “entrepreneurship” in peer-reviewed journals using the ABI database found 110 papers published in 2023 alone. Given the range of activities and research on these fairly novel forms of entrepreneurship, transitional entrepreneurship pulls together, under one umbrella, entrepreneurship research, teaching and outreach activities that have been largely occurring in “silos.” Doing so allows scholars to find commonalities and differences across these groups and explore the intersectionality, i.e. entrepreneurs who belong to multiple transitional groups, such as female veterans or women immigrant entrepreneurs.

As scholarly endeavor continued to focus on transitional groups of traditional entrepreneurs in the USA (among veterans, women, immigrants, minorities or native Americans), scholars also examined marginalized groups across the world who were using entrepreneurship as means by which to transform their lives. Such groups include incarcerated populations in Europe (Patzelt et al., 2014), Asian expatriate entrepreneurs who settled in Australia and East Africa (Collins and Low, 2010; Sowell, 1996), Latin American refugees in Mexico (Santamaria-Velasco et al., 2021), and more isolated enclaves of Central Asia and the former Soviet Union (Ahlstrom and Bruton, 2010; Javadian and Singh, 2012).

Special issue: transitional entrepreneurship

To place a spotlight on the previous works and extend the work further, we launched a special issue on transitional entrepreneurship. For this special issue of the New England Journal of Entrepreneurship, we selected five papers that researched issues faced by entrepreneurs from marginalized groups and, more importantly, how entrepreneurship helps transform their communities and lives. In the following paragraphs, we provide summaries of the papers included in this special issue and then highlight a few of the critical themes that have emerged in papers submitted to this special issue.

While entrepreneurship is considered a promising tool to combat socio-economic problems such as poverty and inequality, scholars found that entrepreneurs from marginalized groups often lack access to resources, capabilities, and ecosystems to address them. A comprehensive review of the literature, titled “Decoding underperformance of entrepreneurship at the bottom of the pyramid: A literature review of the field,” allows Chang and Xu (2023) to highlight the constraints of entrepreneurship among those at the bottom of the pyramid (BOP). The authors acknowledge that entrepreneurship is a key engine of poverty reduction and economic growth but identify critical factors that limit the contribution of entrepreneurs from economically distressed communities to economic and social development. Examining three decades of research, the authors identify four clusters of factors that lead to entrepreneurial underperformance at the BOP: individual-level factors that restrain entrepreneurial activities within the BOP context, gender inequality at the BOP hindering female entrepreneurship, insufficient institutional support holding back entrepreneurial activities in the BOP and inherent problems with business development initiatives that harm the poor due to conflicts between market logic and social logic. The authors offer the following recommendations based on their review: the need for further recognizing heterogeneity among BOP contexts, emphasizing the role of entrepreneurial capabilities in the BOP context and exploring the interplay of various forms of entrepreneurship within the BOP context.

Due to adversities, oppressed or marginalized entrepreneurs need to seize slivers of opportunities that sometimes emerge during institutional change. In their study, titled “Jump to platform faster? Gender, institutional change, and pre-entrant entrepreneurial attempt,” Xu et al. (2023) use institutional theory to examine the joint effects of cultural values and social institutional changes on women's entrepreneurial activities. Specifically, the authors seek to understand how changes in urban social institutional environments influence the impact of national cultural values on women's pre-entrant entrepreneurial attempts. Testing their assumptions among women's live-streaming activities in China, they found that even though women are slower than men in engaging in live-streaming activity, they are more likely to pursue their aspirations through signaling opportunities once they perceive changes in urban social institutional environments.

Sometimes it does take a village to address the underperformance of marginalized entrepreneurs. The study by Lucas and Mitra (2023), titled “Entrepreneurial support organization (ESO) narratives and transitional entrepreneurship in Detroit,” offers insights on how institutional actors such as entrepreneurial support organizations (ESOs) help shape opportunities and challenges for transitional entrepreneurs in a city. The authors use a multi-case study approach to examine the impact of narratives used by ESOs in growing entrepreneurial ecosystems for transitional entrepreneurs' identities and actions. Using the Midwestern USA city of Detroit as the context of their study, Lucas and Mitra help us understand how ESO narratives construct transitional entrepreneurs' social identities, orient them to the ecosystem and help them envision a collective future. It is important to note that the study examined ESOs as they operate together as an interconnected entrepreneurial ecosystem rather than as standalone entities. In doing so, the study builds insights on how institutional networks constituting entrepreneurial ecosystems shape possibilities for transitional entrepreneurs.

The final two papers illustrate how transitional entrepreneurs contribute to their communities and manage through the challenges of difficult and distressed economies. Khosravi et al. (2023) in their paper, titled “Ideology and ethics of transitional entrepreneurs: Legitimacy, soft law, and overcoming a distressed economy,” discuss how transitional entrepreneurs help fill formal institutional voids through their contributions to the development of informal business norms. The authors conduct a thematic analysis using interviews with Iranian entrepreneurs and economists to illustrate how transitional entrepreneurs navigate a distressed economy to build a culture (and attract support from government and allied organizations such as banks) that encourages and legitimizes innovation and new venture creation, given the importance of ideas and informal institutions in encouraging entrepreneurship at all levels (cf. Ahlstrom, 2010; McCloskey, 2010, 2015). Khosravi et al. argue that transitional entrepreneurs rely on their values, professional ethics, ideologies and assistance from allied organizations that share the same commercial values to initiate institutional reform. The authors discuss how transitional entrepreneurs' illustration of ethical behavior and innovation can create new soft laws that lead to wider institutional change. The authors note that in distressed economies, transitional entrepreneurs not only find ways to survive, but they can also contribute to institutional reform by promoting positive and ethical commercial practices and working with allied organizations to do the same.

In their conceptual paper, “The entrepreneurial cognitive adjustment mechanism: Transitional entrepreneurship as a solution to mitigate illegal migration,” Arteaga-Fonseca et al. (2023) discuss how individuals in Central America can overcome economic uncertainty in their home country using an entrepreneurial cognitive adjustment mechanism. Specifically, the authors discuss how entrepreneurial cognitive adjustment mechanisms, which consist of reflective action in sensemaking, cognitive frameworks in pattern recognition and coping in positive affect, reshape personalities and increase entrepreneurial abilities. In turn, they argue that entrepreneurial intentions reshape the personality characteristics of individuals in terms of high agreeableness and openness to experiences, as well as low neuroticism. Doing so facilitates the transitional process, starting from entrepreneurial intention to reshaping individuals' personalities, which further opens individuals' minds to entrepreneurial opportunities.

Emergent themes

Below, we summarize some of the themes we identified among the papers we reviewed for the special issue and connect them to the broader literature in entrepreneurship.

Challenges of transitional entrepreneurs

According to a survey of small business owners, 57% of Black business owners expressed concern about credit availability and 40% of Black business owners do not think they will ever have equal access to capital (Bank of America, 2022). In this regard, “adversity”, “liability” and “stigma” are some of the words commonly used by researchers to describe the experience of transitional entrepreneurs. Whether it is a veteran suffering from post-traumatic stress disorders (PTSD) or an entrepreneur facing social stigma due to their gender, station or prior incarceration, transitional entrepreneurs face significant adversities in launching and running their businesses. See, as examples, Khosravi et al.’s (2023) discussion of entrepreneurs in challenging and isolated environments without supportive institutions and Sun's (2023) description of entrepreneurs navigating difficult circumstances in a refugee camp.

That is, many transitional entrepreneurs face adversities because of who they are and where they stand in the socio-economic and institutional hierarchies. Some transitional entrepreneurs, from economically distressed communities, may not have had access to formal education and, therefore, may lack knowledge resources, while others (like veterans) may have had access to knowledge resources but lack the social networks in the business community as they transition from military to civilian life. In addition to the access to knowledge and social capital, transitional entrepreneurs also lack access to markets, financial capital and the local entrepreneurship ecosystems (e.g., government agencies, incubators, accelerators or universities).

Some of these adversities may be deeply entrenched in the institutional context, both formal and informal rules and their backers, in which their ventures are launched. However, more concerningly, these adversities do not remain external but can be internalized to the firm, its routines and human resources. Thus, transitional entrepreneurs are likely to experience lower self-efficacy, self-esteem and experience a scarcity mind-set (Morris, 2020) that can negatively impact their entrepreneurial journey. These adversities create unique challenges for each transitional group in accessing resources and markets. The unique and shared nature of (external and internal) adversities faced by each group of transitional entrepreneurs, their intensity and duration of such adversities and the mechanisms and challenges to overcome them are persistent themes in transitional entrepreneurship research. We expect to see continued research around these issues going forward.

Challenges of theorization and methodology

Because the literature on transitional entrepreneurship is quite recent, much of the research tends to be more focused on the phenomenon. That is, scholars are more focused on accumulating evidence on the unique and shared challenges faced by transitional entrepreneurs than on the theoretical framing. However, for research on transitional entrepreneurship to have a lasting impact and develop into a coherent body of knowledge, scholars need to ground their studies in sound theoretical frameworks.

Several existing theories can help frame research questions that are of interest to scholars in transitional entrepreneurship. Prior works on gender (Bird and Brush, 2002), race (Markus, 2008), socio-cognitive theory, stigma (Simmons et al., 2014), social class (Loignon and Woehr, 2018), resilience (Hartmann et al., 2022), social exchange (Cropanzano and Mitchell, 2005) and diasporas (Sowell, 1996; Weidenbaum and Hughes, 1996) offer useful theoretical lenses for scholars to build their research. More broadly, transitional entrepreneurship research transcends the individual, social, political and economic and thus can adopt pluralistic theoretical framings. Adopting a multi-disciplinary theoretic lens can offer novel insights for theory and practice. We expect theoretical grounding and contributions to become more salient as research in transitional entrepreneurship grows.

Unlike the broader management and strategy literature, in research focused on emerging areas of transitional entrepreneurship, for example, entrepreneurship among groups facing unique stigmas, scholars have to often adopt qualitative approaches that involve ethnographic studies, interviews and autopraxeography (Albert and Michaud, 2023; Moghaddam et al., 2017a). Thus, scholars in this area may face more challenges in publishing qualitative studies than variance studies, i.e. empirical papers based on statistical analyses of large data sets (Van de Ven, 2007).

Future research directions

Despite the challenges facing transitional entrepreneurs (and scholars studying transitional entrepreneurship), we believe it is important to stay resilient. Transitional entrepreneurs have the potential to contribute to economic growth, vitality and important institutional reform in their communities (Khosravi et al., 2023). As they are often found at the margins of society, they possess unique insights for opportunities and challenges in their communities and may also be well positioned to address them (Moghaddam et al., 2017b). Given the scope of transitional entrepreneurship, there are many empirical and theoretical questions that scholars can examine with respect to each community: veterans, immigrants and refugees, women and minorities, individuals from economically distressed communities and other historically marginalized groups.

Veteran entrepreneurs

While there are more than 2.5m military veteran-owned businesses in the USA, they are understudied in the entrepreneurship field (Nair and Chen, 2021). As military personnel are accustomed to situations with life-threatening risks, it is expected that they will be prepared to readily take on the risks associated with starting new ventures. However, the military environment significantly differs from the entrepreneurial environments. While the military environment entails working within a hierarchical structure with clear instructions and procedures, the entrepreneurship process is full of uncertainty and surprises. Such similarities and differences between the military and entrepreneurship environments make the study of veteran entrepreneurs interesting (Cater and Young, 2020). More research is needed in this domain to understand how military experience helps and/or hurts new venture creation process and how transitions to entrepreneurial careers impact veterans' lives.

Immigrant and refugee entrepreneurs

While some immigrants may have resources to start business and exploit opportunities in their new countries, most immigrants and refugees are forced into necessity entrepreneurship because they lack the qualifications or skills (e.g. language) to enter the job market (Chrysostome, 2010). Besides the language and resource disadvantages, immigrants and refugees do not have sufficient cultural knowledge of the new country and are expected to suffer from the liabilities of foreignness (Sowell, 1996; Zaheer, 1995). However, immigrant entrepreneurs are also likely to have opportunities because of their networks in diasporas in the host country that makes it possible for them to get support from their ethnic groups (Moghaddam et al., 2018; Simarasl et al., 2021). In addition to motives, some studies have focused on the impact of culture on opportunity recognition (Moghaddam et al., 2017b), and other studies have examined business startup processes such as startup financing (Moghaddam et al., 2017a) and cross-border activities (Drori et al., 2009). There are still many important questions that need further exploration. For instance, how do transitional entrepreneurs identify opportunities and what are the key factors affecting their opportunity identification process (Smith et al., 2019). How do transnational entrepreneurs make key decisions about their businesses, such as the location choice (Simarasl et al., 2021)? Would transitional entrepreneurs benefit from cofounding their businesses with non-transitional entrepreneurs? For example, should immigrant entrepreneurs seek out native entrepreneurs as cofounders to better overcome their adversaries (Moghaddam et al., 2023)? Can transitional entrepreneurs carry some of their savvy and make-do attitudes into established firms and enhance new venture creation in those firms and even non-governmental organizations (Prabhu and Jain, 2015; Wang et al., 2008)?

Women and minority entrepreneurs

A wide range of questions have been examined in the context of women and minority entrepreneurship, including motives, success factors, access to capital and their risk-taking tendencies (Javadian et al., 2018). It would be interesting to examine how entrepreneurship influences the quality of life of women and minorities (e.g. well-being or work-life balance). Therefore, more research is needed on the effect of entrepreneurship on the various economic and social statuses of women and racial minority groups.

Entrepreneurs from economically distressed communities

Individuals from economically distressed communities lack not only financial capital but also social and human capital. Such resource scarcity puts them at a disadvantage in the regular job market; hence, entrepreneurship serves as a viable career choice (Sutter et al., 2019). Therefore, we would bring attention to entrepreneurship in and by members of economically distressed communities and call for examining entrepreneurship in such communities and how it could be a pathway out of poverty and spur economic development.

Entrepreneurship policy

Perhaps more than almost any other stream of research within management, we find that transitional entrepreneurship scholars have the potential to make a significant impact on policy. Research on transitional entrepreneurship can influence policies and help create institutions to ensure that transitional entrepreneurs are able to successfully launch their ventures. Transitional entrepreneurship research can help address the following policy issues: How can communities create ecosystems to support transitional entrepreneurs? And relatedly, how can outreach or training programs help transitional entrepreneurs overcome adversities? Other key questions include how ecosystem elements (e.g. banks, angel investors and universities) ensure that transitional entrepreneurs get access to resources. For example, how can universities develop internship programs to help transitional entrepreneurs who have fledgling enterprises? How successful have been the programs that are designed to assist transitional entrepreneurs?

Performance

Future research could address the overlap between entrepreneurship and innovation under both challenging transitional and low-resource conditions, which have typically been studied separately (Lee et al., 2021; Sun, 2023). Moreover, scholars could address the types of entrepreneurship and innovation that create growth (Ahlstrom et al., 2019) and particularly inclusive growth (George et al., 2012). This is sometimes couched in terms of job creation (Christensen and Van Bever, 2014), but success factors are not limited to jobs. Factors contributing to the sustained success of a region or locality can be explored within the context of entrepreneurial ecosystem development. These factors encompass attitudes toward entrepreneurship and the realized intentions to establish on-going business concerns, even in demanding settings such as refugee camps (Morris, 2022; Sun, 2023). Transitional entrepreneurs, who often show such can-do, bricolage behavior, have much to teach researchers about how they can make their businesses work under very challenging conditions and, in the process, often bring positive changes to their communities (Bruton et al., 2015; Kwong et al., 2018).

Conclusion

In this special issue of the New England Journal of Entrepreneurship on transitional entrepreneurship, we attempted to bring together scholars who are working on entrepreneurship research among underrepresented communities, from diasporas to minorities and the poor. Perhaps, most importantly, the concept of transitional entrepreneurship has helped to identify the work of veterans, immigrants and refugees, women and minorities, individuals from economically distressed communities and other historically marginalized groups. As defined, transitional entrepreneurs come from communities facing adversity and that they undergo significant life transitions while launching and managing new ventures to address various challenges and changes in their environment. Marking their importance, we hope this special issue fuels the advancement of the literature on transitional entrepreneurs, as they are found in numerous economic realms around the world.