Entrepreneurial aspirations and poverty reduction: the role of institutional context

Integrating insights from institutional theory and a subjectivist view of entrepreneurial action, we developed a conceptual model of poverty reduction in the context of institutional rigidities and institutional contradictions through their influence on aspirations. Based on the ‘subjective’ stream of entrepreneurship, our model portrays institutional rigidities and contradictions moderating the influence of aspirations on entrepreneurial action by affecting the subjective value that potential entrepreneurs place on their resources. Because the value of resources is subjective in our exposition, our model suggests specific institutional configurations where a change in aspirations among the poor may provide them with unique insights to exploit entrepreneurial opportunities visible only to them. Our ‘poor-as-owners’ model can be contrasted with interventionist approaches to poverty reduction, which are aimed at creating win-win entrepreneurial models between the poor and the non-poor. Several policy implications can be derived from our paper that may be more effective in achieving regional development and reducing regional disparities that arise from a higher incidence of poverty.