Anand is a farmer from Odisha in India. He has been farming for generations. Anand and his family try to make a living by farming a piece of land that could be enough for them. He has to manage the changes in prices on the agriculture markets and his income depends on the evolution of stock prices. He has to decide what kind of products he needs to farm, improve the efficacy of the seeds he uses, and decide on the commercialization of his products. In this sense, he is a necessity-driven entrepreneur, which the Global Entrepreneurship Monitor (GEM) defines as those entrepreneurs that are pushed into entrepreneurship because all other options for work are absent or unsatisfactory.
Krishna Mishra is an entrepreneur from India, too. He founded eKutir Agriculture. eKutir is a for-profit social enterprise that designs economically sustainable solutions anchored on entrepreneurship of farm products and providing technology-enabled ecosystems for low-income markets. Based on the terminology of GEM, Krishna can be considered an opportunity-based entrepreneur.
Opportunity entrepreneurship reflects entrepreneurial efforts to take advantage of a business opportunity. Krishna’s company provides technical and market solutions to farmers like Anand. With Krishna’s solution, Anand and other farmers who don’t know how to get access to the new developments to improve their farming efforts, can use new apps and be part of an ecosystem that allows them to generate better outcomes from their farms.
On one side, necessity-driven entrepreneurship is quite common in developing countries, and is used to get access to a more comfortable life. Most international institutions are pushing for entrepreneurship as a tool to allow reduction of poverty in most developing countries. On the other side, technology offers plenty of new opportunities to propose new business solutions. eKutir is one of these cases. Developed countries are using technology-driven solutions to favor the creation of new start-up business. However, developing countries can easily benefit from opportunity-driven entrepreneurship by using technology-driven solutions to satisfy the specific needs of their citizens.
Necessity-driven and opportunity-driven entrepreneurs differ in many of their characteristics. Their socio-economic characteristics are different. Also, motivations to get involved in entrepreneurial activity arise from diverse sources. Moreover, the life cycle and the determinants of success of the entrepreneurial venture in both cases cannot be compared. All this has important consequences for policy making, as measures to stimulate necessity-driven entrepreneurship do not necessarily benefit opportunity-driven entrepreneurs, and vice-versa.
Although Anand and Krishna are both from India, they are good examples of the differences between necessity and opportunity-driven entrepreneurs. Anand is a farmer and Krishna is a college-educated political scientist. By being involved in an entrepreneurial venture, Anand sought to get himself out of poverty. By being involved in an entrepreneurial venture, Krishna benefits from a new business opportunity and finds a chance to engage in a social venture.
The debate about what triggers entrepreneurship is on the agenda of academics and politicians, and the necessity/opportunity dichotomy is one of the dimensions of this debate. This is a relevant debate because entrepreneurship becomes one of the main contributors to the wealth of nations in the current global economic environment. Both developed and developing countries are pushing for a sound evolution toward all forms of entrepreneurship in their economies.
Policymaking requires different approaches to stimulate necessity and opportunity-based entrepreneurship. However, both choices are available for entrepreneurs of developing and developed countries. Furthermore, entry barriers for technology-driven solutions are lower than ever and can benefit all societal levels. Wouldn’t it make sense to think of business opportunities using technology-driven solutions, for instance, mobile devices, to leverage necessity-driven entrepreneurial ventures, such as farming?
Francesc Miralles is academic dean at La Salle Campus Barcelona (Ramon Llull University). He obtained a PhD from UPC (Barcelona) and an MBA from ESADE. Currently, he is lecturing in subjects related to Innovation Strategy, IS Strategy, Innovation Management and Entrepreneurship, Strategic Management, and Research Methods. He recently visited the Ramon V. del Rosario College of Business of De La Salle University to strengthen collaborative efforts between the two La Salle schools. The views expressed above are the author’s and do not necessarily reflect the official position of DLSU, its faculty, and its administrators.