Entrepreneurship and deprived urban areas: understanding activity and the hidden enterprise culture

Abstract

The aim of the chapter is to evaluate how entrepreneurial activity is influenced by the individual and area characteristics through a focus on deprived residential urban areas. Although barriers commonly associated with entrepreneurship are not exclusively faced by entrepreneurs in deprived areas, they are likely to be more acute than in relatively affluent areas. We demonstrate the importance of understanding the socio-spatial contingency of entrepreneurship, meaning that entrepreneurial activity is influenced by the social and spatial context in which it occurs. Often entrepreneurial activity in deprived urban areas will be small in scale, with individuals entering trades with low entry barriers and with finite and highly localised demand. This presents a challenge for policymakers as supporting these businesses may simply result in other existing businesses which are not supported failing, resulting in no net gain for the area. In addition, despite the numerous barriers to entrepreneurship present in deprived areas, they do not lack entrepreneurial activity per se. Instead, the chapter shows that a ‘hidden enterprise culture’ exists, with entrepreneurs in deprived areas more likely to engage in entrepreneurship in the informal economy, which we define as activities that are legitimate in all respects besides the fact that they are unregistered by, or hidden from, the state for tax or benefits purposes. The chapter concludes by providing a number of policy implications for fostering entrepreneurship in deprived urban areas.