Stumbling Blocks To Entrepreneurship In Low- And Moderate-Income Communities

There is growing and widespread interest among policy makers at all levels of government to promote entrepreneurial-friendly environments and entrepreneurship in terms of both self-employment and business ownership. The interest is motivated by a substantial body of research indicating that entrepreneurs spur the diffusion and implementation of innovative ideas, thereby creating new products, services, and markets. In addition, and perhaps more importantly, entrepreneurs contribute, whether through self-employment or the establishment of small businesses, to job formation and economic growth and development. Moreover, some consider self-employment a route out of poverty or off the unemployment rolls, especially for people encountering discrimination in the labor market. Self-employment can also be a way to increase one’s earnings. All these factors play a role in governmental efforts to foster entrepreneurship, in terms of both self-employment and business ownership, particularly in lowand moderate-income communities. Although evidence demonstrating the importance of entrepreneurship for increasing social welfare might be strong, the most important determinants of entrepreneurship are uncertain, and, therefore, so are policies that best support entrepreneurial activity. This uncertainty is twofold: it is not known fully why some individuals become entrepreneurs, while others become wage or salary workers; and factors most responsible for enabling or preventing a would-be entrepreneur from becoming self-employed or establishing a business are unclear. Researchers have studied both of these issues have been studied, but, so far, have failed to reach a consensus that provides a true roadmap to meaningful policy actions. The purpose of this paper is to explore several aspects of the various recent efforts made to understand better what works best at promoting entrepreneurship