Constellations in the Galaxy: Ethnic Enclave Membership and Venture Behavior Among Necessity Entrepreneurs in a South African Township Informal Economy

Necessity entrepreneurship is often highly intertwined with contexts of poverty and the informal economy. Extant literature on necessity entrepreneurship and informality. focuses on the role of individuals (i.e., the necessity entrepreneurs). We provide a complementary community-based perspective by scrutinizing ethnicity as a source of variation within a geographic community. Leveraging the ethnic enclave construct from sociology and using geospatial data of necessity enterprises from the Delft township in Cape Town, South Africa, we demonstrate that (a) foreign entrepreneurs differ in behavior from domestic entrepreneurs and (b) that foreign entrepreneur behavior further varies depending on whether they are located inside or outside their ethnic enclave. We theorize on the tradeoffs that foreigners face when deciding whether to operate in an enclave – on the one hand, enclaves reduce rigidity to transact (i.e., provide more flexibility), but on the other hand, the enclave brings scrutiny from the government and wary domestic entrepreneurs. Our study provides new insights and a compelling direction for future research to unpack significant variation at the intersection of community and necessity entrepreneurship.     «

Necessity entrepreneurship is often highly intertwined with contexts of poverty and the informal economy. Extant literature on necessity entrepreneurship and informality. focuses on the role of individuals (i.e., the necessity entrepreneurs). We provide a complementary community-based perspective by scrutinizing ethnicity as a source of variation within a geographic community. Leveraging the ethnic enclave construct from sociology and using geospatial data of necessity enterprises from the Delft...     »