An understanding of low-income entrepreneurial processes and the use of technology
February 5, 2024 - Megan Borders
An assistant professor at the UNM Anderson School of Management has been researching and identifying the processes that economically disadvantaged entrepreneurs employ and their use of technology to better understand how they manage and grow their businesses. This study is part of a larger collection of research that is centered around poverty and economic development.
Xaver Neumeyer is focusing his research on the topic to understand how these entrepreneurs work and their impact on their communities. He has found that as they learn and open new businesses, they contribute significantly to their communities by creating job opportunities and offering essential services to fellow business owners and neighbors.
"In today's dynamic business environment, entrepreneurs find themselves in a unique position with the amount of technological resources to help grow their business," said Neumeyer. "This leverage may include enhanced operational efficiencies, customer reach, business planning and strategy development or prototype development and testing."
Low-Income Entrepreneurial Processes
In his 2023 research article, "The Technologization of Entrepreneurial Processes: A Poverty Perspective," published in IEEE Transactions on Engineering Management, Neumeyer leveraged interviews from disadvantaged entrepreneurs in a rural town outside Lisbon, Portugal, collected by his co-author Dr. Susana Santos. They learned that this group of entrepreneurs typically create businesses based on their own personal labor, such as handyman work, delivery services, dog sitting, cleaning or landscaping services.
From these interviews, Neumeyer and his co-author identified four categories of how low-income entrepreneurs use technology in their ventures. Category One involves assessing and planning how to acquire resources for the business. For example, an entrepreneur may buy a bike from a neighbor to help with a delivery service. Category Two entails understanding the capabilities and scope of technology within the business. In this step, the previous entrepreneur may consider how long that bike will last and begin researching and saving to purchase a car. In Category Three the business owner will begin to assess their ability to innovate and improve by seeking training or creatively using their available tools and equipment in different ways. Lastly, Category Four emphasizes community building to establish a customer base and foster growth within the community.
The interviews revealed overall that business owners with little funding improvise solutions based on their personal connections and resources. Essentially, finding new combinations that can produce a different, more favorable result. If they need to expand their technology, such as buying a new vehicle for deliveries, it is typically done through borrowing or trading with a family member or close friend in their community.
Entrepreneurs today can use technology in many ways from creating businesses to understanding industry trends to growing their businesses and even managing business challenges. For example, online platforms such as Kickstarter and LinkedIn can help with crowdfunding and networking. Social media and e-commerce sites as well as customer relationship management software can all help create efficiencies within the business that directly help grow businesses. Artificial intelligence tools can help a business owner track market shifts and identify any operational challenges, among many other benefits.
Neumeyer highlighted that "while the use of new digital tools brings numerous advantages for entrepreneurs and small-business owners, they can also have concealed expenses and obligations. Understanding the benefits and challenges for each technology is important, but a business owner must also learn about any potential hidden fees and company dependencies that may arise in the future."
Ways to Overcome Technology Adoption Hurdles
Adopting new technology in today's world is imperative to growing a business. Access to a computer and the internet to create websites and social media accounts directly affects a company's ability to thrive and create longevity in the market. However, disadvantaged entrepreneurs struggle with not just access to computers and the internet but also training to learn how to use modern digital technology.
Neumeyer shares that there are ways to overcome these challenges. He suggests looking to local libraries and community centers. They are community hubs that can offer ongoing hands-on training workshops on how to use computers and software and help set up email and social media accounts.
"Ultimately, using technology successfully as an entrepreneur is a balance between combining the long-term goals of the business with the capabilities of new digital technologies," he said. "It is important that the entrepreneur controls the technology instead of the other way around."
Xaver Neumeyer is an assistant professor of finance and innovation at The University of New Mexico Anderson School of Management. His research focuses on entrepreneurship, technology management, and innovation and how each of these areas affects those in poverty.