Entrepreneurship in Socioeconomic and Political Instability

Track: 10. SMEs, Entrepreneurship, and Born Global Session Format: Interactive

ENTREPRENEURSHIP IN SOCIOECONOMIC AND POLITICAL INSTABILITY

ABSTRACT

Within the academic territory of Economic Sociology, this study explores the existence of Schumpeterian (innovative) entrepreneurs in socioeconomic and politically unstable regions of the Earth at the beginning of the 21st century. Entrepreneurship literature within Economic Sociology opens the door for this kind of exploratory ethnographic field research that may lead us to a better comprehension of the phenomenon of entrepreneurship and development in different societies. A visit to one of the most underdeveloped and politically unstable countries of the world – Haiti – in the end of 2007 served as a very straightforward method of locating key informants and exploring possible answers to the research question. Evidences show that not only is it possible to find Schumpeterian entrepreneurs under such extreme circumstances but also innovative business practices that could be employed even in materially developed and developing societies.

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INTRODUCTION

During October 2008, in the United States, a national financial problem rooted in a large amount of uncollectible debts, contaminated the international financial system to such a magnitude that the developed market-oriented societies themselves were unexpectedly put in jeopardy. To discuss the causes and seek a set of synchronized solutions, leaders of the largest countries in the world gathered in Washington under the “Group of Twenty” on the weekend of November 15th and 16th. On November 16, 2008, these leaders issued a document called the “Statement from G-20 Summit” with a number of actions those countries should implement in the following months to block the threat of a world financial collapse. The second paragraph of this document makes use of a word not seen very often in the general press until the late 20th and early 21st century:

“Our work will be guided by a shared belief that market principles, open trade and investment regimes, and effectively regulated financial markets foster the dynamism, innovation, and entrepreneurship that are essential for economic growth, employment, and poverty reduction.”

As this extract reveals, entrepreneurship is becoming not only an economic issue but also a social and global political matter, apparently affecting employment and poverty in large portions of the human settlements on Earth. Market-oriented principles and practices are consolidating in different degrees throughout the world and entrepreneurship seems to be increasing in importance in a large range of societies at the beginning of the 21st century.

This study was conducted under the theoretical prism of Economic Sociology, the sociological perspective of economic issues. Economic Sociology is a fundamental start to understanding how entrepreneurship is gaining stature in the contemporary world and was considered the main theoretical foundation of this study since its inception. As Swedberg highlights (2000:11),

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“people who are not economists would expect economic literature to be full of analyses of entrepreneurship”, but in reality, economic literature has relatively little to say about it. According to Dobbin (2004:3): “Since about 1980, both sociologists and economists have been challenging this division of intellectual labor, in which economists explain economic behavior using deductive models and sociologists explain all other kinds of social behavior using inductive methods.”

The reason is that it is not easy to fit the entrepreneur into the current or classic economic theories. That does not mean that economic sociologists should ignore economists or be against them as is happening in some present studies in the field (Swedberg, 2003). Joseph Schumpeter argued that economic sociology should be situated precisely at the junction between economics and sociology, and for this reason, it should bring knowledge from both sciences to investigate common problems (Swedberg, 2003). Therefore, it considers fundamental relationships and the development of trust among competitors, providers, consumers and other stakeholders as an important part of the decision making process. That is why researchers within this area must approach society with a certain degree of methodological holism, which is considered unacceptable by some economists. Economic sociology argues that we cannot consider an economic phenomenon disconnected from the social perspective of it (Steiner, 2006). Organizations are socially constructed (Granovetter, 1995) and therefore embed moral, religious, social, historical, political, cultural (Zukin & Dimaggio, 1990) and legal perspectives (Swedberg, 2003). This perspective from Economic Sociology is the most appropriate to this study because it takes into account the impact of individual people that are constantly interacting to build a collective reality of a present economic phenomenon, the phenomenon of entrepreneurship.

The objective of this study is very straightforward: to explore the existence of classic Schumpeterian entrepreneurs in socioeconomic and politically unstable regions of the Earth at the beginning of the 21st century. The expectation is to contribute to the discussion about the

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role that such entrepreneurs may play in the development of their regions through the creation of employment and socioeconomic wealth that contribute to political stability.

As the research developed and a specific region was picked as a representative fieldwork, the environmental issue causing both socioeconomic and political instability came out as addressable by the study. That was how the study ended up a bit wider, not only covering the role of entrepreneurs in the socioeconomic development of underdeveloped regions but also in its environmental development. As we will see further, as the creativeness of human beings turns unbounded through the spread of information and communication technologies, ideas emerge and increasingly flow around the planet.

ENTREPRENEURSHIP AND DEVELOPMENT

There is no academic literature available today directly addressing the issues of entrepreneurship and socioeconomic and political instability. Because of that, the literature concerning both entrepreneurship and economic development will serve as the entrance door to the analyzed issue. Max Weber (1930) is one of the first scholars to combine economics with culture, identifying the interconnection between human values and economic development. By studying business cycles and development, Joseph Schumpeter (2006) concluded that one of the most important driving forces disrupting and changing the economy is innovation (technological progress). Countries that had adopted market-oriented economic models had experienced a kind of economic evolution not explained by neoclassic economists and their limited static analysis, incapable of incorporating and analyzing the phenomenon of development. According to Schumpeter, innovations, as well as new combinations of old products or processes, are responsible for the dynamism and the evolution of these economic models, allowing the change of economic power from hand to hand in society and affecting the economy regionally, nationally or even globally.

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Schumpeter called the people who bring most of these innovations into reality entrepreneurs: people motivated by better profit opportunities but also guided by passionate leadership and social recognition. The entrepreneur studied here is the classic Schumpeterian entrepreneur, a certain type of person that develops occasionally or continuously a specific type of attitude proportionally found in few people within a society. Therefore, the entrepreneur is not just a successful businessman or businesswoman, he or she is also an innovative leader in search of success, not necessarily motivated by the hedonistic fruits of his work. To be in accordance with Schumpeter, eventual entrepreneurs found in the field should have spotted a business opportunity through one of Schumpeter’s five classic cases: The introduction of a new good; the introduction of a new method of production; the opening of a new market; the conquest of a new source of supply or the carrying out of the new organization of any industry. Founders of restaurants, shops, barbershops and small businesses that do not comply with Schumpeter’s entrepreneur role in the local economic system were not going to be considered entrepreneurs to this study, except in the cases where those businesses initiatives originated a subsequent innovative one.

Early anthropological scientific research from Malinowski (1984) and Thurnwald (1932) revealed how isolated human groups developed their specific way of trading products and services, but did not pay special attention to this specific actor in society. The 1960’s will bring the first continuously dedicated scientific effort to explore the specificities of the entrepreneurship phenomenon in materialistically underdeveloped and developing societies with researchers from different theoretical traditions within the Social Sciences enduring new paths in the search for specific situations in which entrepreneurs emerge out of the expected whitemale-urbanized-adult from developed regions. In 1961, for example, Douglas Rimmer discuss about the applicability of Schumpeter’s theory of economic development to underdeveloped countries, concluding that “the characteristic features of his theory, such as his emphasizing of the importance of qualitative change, of the distinctive character and rareness of innovatory ability, and of the essentially disharmonious nature of economic progress, are very relevant to

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the study of the economic development of the underdeveloped countries” (Rimmer, 1961:448). In a pioneer study entitled Empresário Industrial e Desenvolvimento Econômico no Brasil, Cardoso (1964) highlighted the limited role Brazilian Schumpeterian entrepreneurs had in a market then heavily controlled by the State. Under such political environment, business people were compelled to invest time and economic resources in obscure relations with different levels of government and special political arrangements, leaving the classic role of Schumpeterian entrepreneurs to isolated specific cases. As Schumpeter himself observed (Sschumpeter, 2006), “a well-developed financial system is a prerequisite for widespread entrepreneurship” and as financial systems are the backbones of market-oriented societies, it is difficult to see entrepreneurs in action within societies that do not adopt at least part of market-oriented practices. Some years after, the anthropologist Fredrik Barth (1978) spend a year in a rural area of Darfur, Sudan, founding out that the phenomenon of entrepreneurship occurred in this geographically isolated village very much in the same way that it happened in industrialized modern societies: some individuals were able to connect different “spheres” (as he called) of life and, therefore, were able to accumulate material and social wealth by serving as a bridge between those “spheres”, certainly reminding us of Burt’s “structural holes” (1992) in social networking research.

From the 1970’s on, some studies will continue to assess the phenomenon, mostly without a clear theoretical approach prevailing over the others. Without a congruent agenda, the issue of economic development is largely discussed by economists without taking into consideration the social network aspect of it while economic development is carefully handled by sociologists, due perhaps to the intensification of ideological stress caused by the “cold war” in this period (Swedberg, 2003). Cardoso himself, for example, had to move to Chile in 1964, after a rightwing military coup d’état in Brazil.

Although a real debate was never really established to address the combined issues of entrepreneurship with socioeconomic and political instability, some studies brought the most

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significant contributions to its understanding in terms of academic impact (Akeredolu-Ale, 1973; Akeredolu-Ale, 1975; Arthur, 2005; Chaffee Jr, 1976; Dana, 1995; Garlick, 1971; Jalloh, 1999; Juhn, 1971; Landa, 1991; Lipset, 2000; Marris, 1972; Oyhus, 2003; Schurman, 1996; Spring & McDade, 1998; Stokke, 1994; Yuan & Low, 1990). Important to say, none of these studies were able to simultaneously investigate the emergence of Schumpeterian entrepreneurs in socioeconomic and politically unstable regions of the Earth from the theoretical approach of economic sociology. In the other hand, researchers within the area of economic sociology urge that more exploratory field studies are conducted (Kogut, 2007), including works that assess clues behind the reproduction of inequality, the dynamics of informal market (Zelizer, 2007) and in unregulated contexts (Martinelli, 2004).

At the time of the writing of this study (2009), the academic production of “international” or “global” business issues was still used with the meaning of non-North American, non-European or beyond formal political borders. As those formal political borders became more and more permeable to ideas, goods and services, it is in fact all the other human social actions and sciences that actually become gradually more international, disqualifying and promoting at the same time the use of the word to represent an observable fact. In the other hand, confirming the need of more understanding about the conjunction of these fields, the Journal of Small Business Economics was about to publish in 2010 a special issue fully dedicated to the subject of “Entrepreneurship, Developing Countries and Development Economics”.

Research Question

For the purpose of this study, any region of the world where political instability and socioeconomic barriers to entrepreneurs were present could be used as the research field. Unfortunately, too many of those places come to one’s mind during the exercise of finding such a place to research and this is exactly what makes this study appropriate and relevant, scientifically and socially. The poorest regions of Mexico, Nigeria, South Africa or India come

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to one’s mind as well as some entire countries of Central America, Africa, Middle East and Asia. In different degrees, market-oriented principles are increasingly present in all of these regions and countries, but socioeconomic development is almost absent and political situation is often unstable. For this reason, the main question driving this study is: Are there Schumpeterian entrepreneurs emerging in the socioeconomic underdeveloped and politically unstable regions of the world in the beginning of the 21st century? If they exist, what is the role that socioeconomic obstacles play in the development of entrepreneurship in such regions?

RESEARCH METHOD

Scientific studies can assume different natures depending on specific research objectives. Thus, studies can be of exploratory nature, descriptive nature or causal nature. Exploratory studies usually have the objective of obtaining a new general comprehension of a phenomenon, allowing researchers to become more familiarized with it. For this reason, this study does not raise specific hypotheses for testing, instead, it sets research questions responsible for guiding the whole methodology.

Specific work has been done in the last decades regarding methodological issues surrounding the specificity of researching entrepreneurship. In 1987, a survey conducted over 227 studies demonstrated that entrepreneurship research needed more in-depth field studies, with greater application of theory from related fields (Hornaday & Churchill, 1987). Their suggestions included the responsible and balanced use of objective data and subjective data according to the objectives of the research. Objective and subjective measures are more suitable in specific situations and researches must first focus their attention on the trade-offs involved when selecting ways of measuring the phenomena (Smith, Gannon, & Sapienza, 1989). Such tradeoffs were taken into consideration when the methodological procedures of this study were designed. Stewart (1991) suggests the use of anthropological research methods such as ethnography, grounded theory, and field research to help developing theory. Also, substantial

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differences were observed between methodological procedures used in the U.S. and Europe for researching entrepreneurship at that time by comparing published academic articles in both sides of the Atlantic Ocean: in the United States, researchers tended to use surveys and questionnaires much more frequently than researchers in Europe, where a diverse range of methodologies were represented, including more qualitative approaches (Huse & Landstrom, 1997). This was confirmed by Steyaert (1997) who claimed that a number of European Ph.D. research was undertaking qualitative and ethnographic approach through the use of extensive interviewing and observation to the study of entrepreneurship. Visibly, most of the newest ways of approaching the entrepreneurship phenomenon have emerged from social sciences, through a wide variety of research methods, justifying the use of a theoretical framework as the one provided by economic sociology.

In this study, a group of qualitative research methods were chosen due to its potential to better answer the research question. The chosen methods include the acquirement of both objective and subjective information (Smith et al., 1989) via different procedures and inductive inference methods (Creswell, 2003). The following methods were used in this study: Unobtrusive method of documental and audiovisual material collection officially and unofficially produced by organizations and people possibly in contact with Schumpeterian entrepreneurs in the selected region, through the research of web pages, web logs (blogs) and discussion forums; and exchange of electronic mails, telephone calls, personal visits and other personal interactions (semi-structured and structured personal or written interviews) with people in any place in the world holding relevant information about organizations and people possibly in contact with Schumpeterian entrepreneurs of the selected region.

The research was originally designed in four steps, consisting of: a revision of the region’s history, academic literature within the theoretical framework and entrepreneurship phenomenon in similar circumstances; pre-arranging meetings with people in the selected region that could allow tracing Schumpeterian entrepreneurs and set future interactions with them; one or more

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field trips to the selected region to understand local reality towards entrepreneurship and visit previously contacted people, organizations and possible Schumpeterian entrepreneurs; and developing post-visit electronic relations with people met in the region and developing new possible contacts after better understanding the country’s socioeconomic and political dynamics.

FIELD WORK AND ANALYSIS

By 2004, Haiti regularly appeared in the news as the poorest country of the Americas. After conducting preliminary research on the country, its history and current political instability, the destination was determined to be valid for the purpose of this research study. Initial examinations showed that approximately 80% of its approximately nine million inhabitants lived under the poverty line. The 2009 Failed States Index prepared by the magazine Foreign Policy placed the country among the top 15 failed States in the world since its first edition in 2005. Most Haitians depend on small-scale subsistence farming and remain vulnerable to frequent natural disasters such as hurricanes and tropical storms, exacerbated by the country's widespread deforestation and consequent semi-desertification (Dolisca, 2007). According to the “quality of life” index prepared by The Economist Intelligence Unit, Haiti’s capital, Port-auPrince, ranked as the 16th worst city to live in the world in 2006. Haiti’s United Nations HDI – Human Development Index – was ranked 154th in the world in 2004.

Historical and political background

The Island of Hispaniola, where today’s Haiti and Dominican Republic lie, was called Quisqueya, Bohio and Ayiti by the Tainos, its previous inhabitants by the time the Spaniards arrived in 1492. Haiti occupies approximately a third of the Island of Hispaniola and its history is linked to the arrival of French adventurers, pirates and buccaneers to the neighboring Island of the Tortue in 1630. In the following decades, forestry and especially sugar-related industries started to increase rapidly, becoming the main economic activities of the colony. The boom in

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the importation of slaves from Africa along the 18th century shows that about 20,000 slaves lived in Saint-Domingue in 1701. In 1753, this number surpassed 165,000 and in 1791, there were more than 600,000 slaves sustaining the whole process behind Saint-Domingue’s sugarcane production. At this time, almost half of all sugar produced in the world was produced in the French colony of Saint-Domingue, one of the wealthiest in the Caribbean.

Abruptly, however, the French Revolution of 1789 would change every aspect of this society. Together with the new ideals of liberté and egalité, the ruling structures of new French governments started to fail and the “Pearl of the Antillean” entered into a new phase of its history. From 1791 to 1796, three civil commissions failed in their attempt to maintain order; a number of decrees gave and then subsequently revoked rights to slaves; a civil war exploded in 1799 and the French troops sent by Napoleon were not able to overcome both the revolutionary armies led by Toussaint l'Ouverture and yellow fever at the same time. General Jean-Jacques Dessalines assumed control over the colony in December 1803, proclaiming the colony’s independence from France on January 1, 1804. Briefly, this was how Saint-Domingue became Haiti.

In the following 200 years, except by some few relatively stable periods, Haiti would know an atypical amount of heads of State until François Duvalier “Papa Doc” was elected in 1956, instituting a violent dictatorship followed by his son until 1986. Another transition period took place from 1986 to 1991, until father Jean-Bertrand Aristide obtained 67% of the ballot in January 1990. In 1991, Aristide was forced by the army to leave the country, and a three year embargo (1991 - 1994) succeeds. In 1994, after 3 years in exile, Jean-Bertrand Aristide returned and international sanctions were lifted in the following day.

Since then, the political stability of Haiti has basically depended on UN Missions: UNMIH (1993-1996, MINUHA in French), UNSMIH (1996-1997, MITNUH in French) and UNTMIH (1997-2000, MIPONUH in French). In February 1996, René Garcia Préval was chosen

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president and in November 2000, Jean-Bertrand Aristide was elected president for the second time. In February 2004, an armed rebellion led to the forced resignation and exile of President Jean-Bertrand Aristide and an interim government took office to organize new elections under the auspices of the United Nations Stabilization Mission in Haiti (MINUSTAH). Continued violence and technical delays prompted repeated postponements, but Haiti finally did inaugurate a democratically elected president and parliament in May of 2006. The UN has virtually ruled the country since 2004, with about 8,000 peacekeepers from the MINUSTAH maintaining civil order and stability.

The Socioeconomic Underdevelopment of Haiti

Together with the maintenance of the UN missions, the United States Haitian Hemispheric Opportunity through Partnership Encouragement (HOPE) Act made part of an American political effort for Haitian development. The act offered Haiti duty-free, quota-free access to U.S. markets for nine years. The HOPE Act II, passed in October 2008, has further improved the export environment for the apparel sector by extending preferences to 2018. The apparel sector accounts for two-thirds of Haitian exports and nearly one-tenth of present GDP.

Unfortunately, the problem regarding the Haitian socioeconomic environment is too complex to be alleviated by a duty-free agreement with the largest economy in the world. The substantial amount of foreign aid Haiti receives from all over the world not only pack its streets with cars from international organizations and sustains a whole parallel “industry of the charity”, but it also creates “unnecessary mobilizations, institutional confusing reforms, undesired market imbalances and even some roads to nowhere” among other peculiarities (Schwartz, 2008).

Most of the previously discussed historical and political episodes contributed to peaks of generalized or localized brutality in urban and rural areas of the country, standardizing violence as something frequent in Haitian society and locking the country in its own economic stasis for

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nearly a century and a half (Kumar, 1998). From 1995 to 2005, the country showed the 8th lowest economic growth in the world, with an average of 1% annual growth in real GDP in the period (The Economist, 2008). Inflation also ranked as the 8th highest in the world in the period between 2001 and 2006, with an average annual rate of 20% (The Economist, 2006). Haiti is still the 6th ranked country in number of asylum applications to industrialized countries, with approximately 10.8 thousand applications per year (The Economist, 2008), and its latest statistics peg Haiti to the poorest countries in Africa.

In terms of business development specifically, Haiti has been mostly a market-oriented society since its independency. However, informality accounted in 2001 for almost 70% of all businesses in the country according to the Haitian CLED - Center for Free Enterprise and Democracy and ILD - Institute for Liberty and Democracy (CLED/ILD, 2001). The same study estimates the country contained 213,000 informal businesses, possessing US$ 270 million in machinery and equipment. Several factors can explain the phenomenon of informality, but the literature tends to blame the costs of doing business in the formal way as the main cause (Portes & Haller, 2005). High taxes, complicated regulations, bureaucratic hurdles and corruption seem to be the most important factors that drive an activity to go underground. In the case of Haiti specifically, the main causes behind informality were (CLED/ILD Report, 2001): the lack of limited liability business form for small business; the complexity of the tax code; the complexity of laws; the lack of integration between institutions and processes of business registration (24 government agencies, 114 days of paperwork costing approximately US$ 12 thousand); and the expensive renewal process for business licenses (costing 5.8% of annual gross income). The country ranked 150th in the world Bank “Paying Taxes” report (2008) in number of tax payments and ranked 30th out of the 31 countries listed in the Latin American & Caribbean “Ease of Doing Business” regional report (world Bank, 2008). In the case of Haiti, however, it is suspected that the main cause behind such a high level of informality resides in the lack of trust the population has in the government (Lamaute-Brisson, 2002). In that sense, avoiding formalization can be seen as a way to protect businesses from a failed State that is

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regularly illegitimated by successive administrations that change the rules of the economy continuously. In 2006, the country also ranked number 1 in the world in the corruption perception index, an index based on how much corruption is perceived by business people, academics and risk analysts among politicians and public officials (The Economist, 2008). As a complex social construction norm of reciprocity (Granovetter, 2007), corruption and the extraordinary level of its occurrence in Haiti show that “what looks like corruption are the survival skills of people who are living in uncertain times, and who have learned to be suspicious of universalistic ideologies (Scheppele, 1999).

In 2009, at the time of the writing of this paper, latest news obtained in web logs and regional newspapers stated that Haitians continue to cross into the Dominican Republic and sail to neighboring countries despite of the relatively safe atmosphere enjoyed since 2007.

The Field work

In 2007, the internet did not return precise information about any organization or person in the country. Due to the lack of basic telecommunication infrastructure, that was no proper way of contacting universities, embassies or newspapers via electronic mail or telephone and only few people were found in the pre-screening step: four from private companies and two from NGO’s operating inside the country. Only one out these six declared to know in person entrepreneurs in accordance to the classic Schumpeterian definition. They were all found through constant queries on internet tools such as LinkedIn, Technorati, Delicious and Google.

After exchanging electronic mail messages and telephone calls with them and seeing that newspapers, universities and other social hubs were hardly accessible via any telecommunication devices, the task of looking for the entrepreneurs was transferred to the fieldwork itself, through the process of personally visiting local social hubs where entrepreneurs could have passed or dealt with. The plan was to visit Haiti for about ten days and locate

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researched people by referrals. In the first days, the “social hubs” would be visited and explored in search for Schumpeterian entrepreneurs. If those entrepreneurs existed, the plan was to visit them in the last few days of the trip or to contact them afterwards to recognize their innovation and double check the information previously provided by the key informants.

In December 2007, the trip finally took place after the suspension of the state of siege in Haiti, in place until August 2007. The best description of the sensation of arriving in Port-au-Prince by airplane in current times is the one from Kumar (1998): “When viewed from an airplane during a flight into the country, the Haitian landscape resembles an entity that has waited so long for deliverance that it has started to crumble. The denuded hillsides [due to erosion] and cactus-ridden sand flats [due to deforestation] – all a contradiction in a lush Caribbean climate – are a stark reminder of lost possibilities. The mouths of river estuaries can be clearly seen vomiting the country’s topsoil into its bays. One is reminded of an old woman bleeding to death from all pores. As the plane comes in low, the smoke from an occasional wood fire can be seen rising into the sky, destroying whatever little is left of the country’s forest cover and its future.”

On the road from the airport to Pétion-ville where the hotel was located, apparent disorder reigned, with foul-wheel drives of international governmental and non-governmental organizations packing the dusty roads and causing traffic jams together with bicycles, motorcycles, adapted trucks, animals and people walking and selling things everywhere.

The second unexpected problem when executing the third step of the research design was the complete inexistence of safety and infrastructure at that time in the country. Due to the constant occurrence of kidnappings in the previous months, it was not recommended to leave the hotel without professional armed protection. Besides, constant shortage of electricity and the scarce and unreliable telephone and internet connection did not allow much progress in contacting

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people and organizations. Despite of that, it was possible to meet and interview two members of NGOs – Non Government Organizations, two members of the WHO – world Health Organization and the Brazilian Ambassador to Haiti himself. They provided rich information regarding business life in the country and its main business hubs.

More than fifty possible cases were appointed by different sources of information. Twenty two were found within the contacts of the Brazilian Ambassador to Haiti. He had been living in Port-au-Prince for approximately two years at the time of the meeting and because of that he had met with hundreds of the most different types of people in the country. After confirming that Schumpeterian entrepreneurs apparently existed in the country in both rural and urban areas, he took a couple of boxes of approximately 30cm x 30cm x 30cm each (13 x 13 x 13 inches), full of business cards regarding the meetings he had during the time he served the Brazilian diplomacy in Haiti, and we started to look one by one. I reckon he had more than a thousand business cards in those boxes and together we selected and photocopied twenty two of them as potential Schumpeterian entrepreneurs. Nine more cases would be found through the largest microfinance bank operating in Haiti, contacted by suggestion of one of the NGO members visited in the country. Together with similar ones, this bank was responsible for financing small non-necessarily-innovative projects aiming economic development of poorest classes. In 2008, one of the largest local newspapers, Le Nouvelliste, started its online edition. Soon, one of their main economic journalists became a key informant in the research, responsible for providing twenty one new possible cases of Schumpeterian entrepreneurs acting in Haiti in the beginning of the 21st century.

The fifty two cases were analyzed and despite of the amplitude of their ideas, only five cases were selected to further analysis, according to their “degree of innovativeness” and “degree of correspondence” with the five classic Schumpeterian definition of entrepreneurship. Innovation is relative by definition, because what may be seen as innovative in one place may not be seen as innovative somewhere else and what may be seen as innovative in one specific moment may

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not be seen as innovative in another one. Therefore, no rational model was utilized to calculate such “degrees” and the five selected organizations were identified as founded by entrepreneurs in the Schumpeterian classic definition of the term.

The five cases

The case of organization Alfa

The organization Alfa was established in 2001 by entrepreneur Alfa in response to his frustration as an insurance agent and the lack of insurance products adapted to the Haitian market. Focusing on different customer segments from its competitors, who target the top 2% of Haiti’s population, Alfa’s innovative approach comes from intimate knowledge of their customer based on detailed market research and direct interface rather than working through brokers. Their staff design products to meet the customers’ precise needs, which are then distributed through Alfa’s network of strategic partners, including a major bank, a microloan organization and a bank focused on micro-entrepreneurs. The company’s portfolio includes health, automobile, commercial, life and homeowner insurance products, as well as microinsurance and funeral insurance aimed at people earning less than $4 a day. It is important to mention the extreme importance of funerals within the Haitian culture, a segment that was not covered by any company before Alfa. By 2009, organization Alfa was the 4th largest insurance company in Haiti.

The case of organization Beta

Entrepreneur Beta started organization Beta also in 2001 to provide customized software, database solutions and create and implement information systems. The products developed by organization Beta are customized for the client taking into consideration their exact needs and the Haitian context. For example, they developed a banking text messaging system that alerts

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customers when a remittance transfer from abroad has been made into their account. Haiti is a large receptor of money transfers and many people receive international transfers from Haitians living abroad. Haitians living in the United States and Canada today, for example, number about 2 million.

In another example of Beta’s innovativeness, the US Government’s CDC - Center for Disease Control GAP - Global Aids Program in its Haitian Office won an award for its system of monitoring and evaluating HIV in Haiti. The backbone of this system was built by organization Beta. According to the CDC, products of lesser quality are being touted as leading edge but in terms of functionality Beta’s solution is better than the others and various governments in Francophone Africa became interested in purchasing the system.

The case of organization Gamma

Entrepreneur Gamma had a pharmacy growing substantially due to her first innovative approach of selling medicines on bags around her small town (she created a kind of pharmacy “on wheels”). Soon, after having access to a microloan in the year 2000, Gamma invested in a second line of products that she identified as important to her customers: she would sell voodoo traditional medicines in the same manner she did well with regular medicines, in a “professionalized” way. In 2005, she already had a physically attractive pharmacy with both medicines carefully organized on shelves behind a counter and a mini market within. Organization Gamma then started to sell treated water – something scarce in Haiti – and currently has the ambitious plan to start offering laboratory services at accessible prices to supply local population demand to identify common local diseases faster.

The case of organization Delta

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Sale of used clothing or clothing donated by international organizations is common practice in Haiti. Entrepreneur Delta was able to transform this market in the country, through the use of a new commercial approach. He started to clean, reform, classify and repackage used clothes, bed sheets, and house wear and rebrand them, positioning his used garments as something nice, modern and sustainable. Although Delta’s main appeal in Haiti is the value for money proposal of its products, the sustainable approach turns his business model interesting even for developed economies in the beginning of the 21st century. So, within the niche of used clothes, entrepreneur Delta was able to develop and conquer a complete new market, utilizing usual distribution channels to hand out premium used clothes.

The case of organization Epsilon

Organization Epsilon was started by an imaginative entrepreneur who spotted an opportunity to explore vast areas of deforested land and supply the demand for cheap furniture in Haiti at the same time. Entrepreneur Epsilon investigated the different species of bamboo from around the world until he found out which species grew better in Haitian eroded soil. He then started a factory to produce cheap furniture made of bamboo and his products were soon perceived as high quality fair design products. The products started to sell all around the country and in 2009, organization Epsilon was analyzing the possibility to start exporting their furniture to other countries in the Caribbean.

CONCLUSIONS

Evidences from this study show that Schumpeterian entrepreneurs are found even in problematic societies of the world at the beginning of the 21st century, always when local political systems allow market-oriented practices to happen. This exploratory work proved that there is room for innovation in entrepreneurial ventures in a materially undeveloped and politically complicated region, despite of the high level of socioeconomic obstacles. Schumpeter

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himself (2006) limited the existence of entrepreneurs to market-oriented societies in the beginning of the 20th century and therefore this study’s result could be even perceived as predictable by economic sociology researchers as the process of recognizing opportunities within any market-oriented region occurs in the same way like Rimmer observed long ago (1961). However, due to the still limited number of studies considering the Schumpeterian definition of entrepreneurship, this study’s findings can be seen as a validation of Schumpeter’s theory of economic development at least for the specific case when underdevelopment and political instability are present in a particular region at the same time.

We can also conclude that innovative organizations considerably innovative worldwide can emerge even in such a socioeconomic and politically unstable country. It is not wrong to suspect that countries in delicate political situations and even under civil war can be sources of innovative organizations developing innovative products and services valuable worldwide. The large level of socioeconomic and environmental obstacles these entrepreneurs face may have make them to create innovative solutions that could be seen as valuable in the whole world at the beginning of the 21st century. Probably this phenomenon has happened in the past and many good innovative ideas did not reach large audiences due to the level of isolation of many communities. However, as telecommunications allow ideas and money to flow around the world and transportation systems allow products and “people” to move worldwide, ideas should start to be considered as borderless, being potentially applicable in different social contexts.

Accidentally, when Haiti was selected to represent the research problem, the environmental issue emerged as one of the most critical problems in the country. This situation opened room to entrepreneurs to address this specific problem in their own ways as exemplified in the cases of organizations Delta and Epsilon. Regardless of the level of development of a region, entrepreneurs, if correctly rewarded by society, may help to find creative ways to reduce environmental devastation worldwide. The social and financial rewards that stimulate entrepreneurs to embark in an entrepreneurial venture may be the same that will promote the

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development of human sustainable development within market-oriented societies. Therefore, some innovative practices may be better identified in countries or regions where those environmental barriers are emerging more aggressively.

Although microloan appears as a valid option of stimulating entrepreneurship underdeveloped regions, evidences showed they were more effective in promoting self-employment than entrepreneurship. It was difficult to find a single case were microloan generated innovative business practices with high growth potential although this could have happened due to the limited number of cases assessed. Remittances from family members living outside the affected region can also be seen as microloans but identifying how and when these loans may generate innovative organizations, products and services is still difficult. Future studies may be able to address better ways through which microloan and family remittances stimulates selfemployment and innovativeness.

In terms of theoretical advancement, an important conclusion of this work is that obstacles must be seen of relative importance in the process of entrepreneurship. What may be seen as insuperable obstacles by some people may represent normal ones to others or even motivational obstacles to some. The implication of this finding is that, differently from what common sense may lead us to think, not always powerful obstacles denotes negative events to entrepreneurship. There are people in one of the poorest countries in the world proving that without any socioeconomic or political support it is possible to start innovative organizations in a global perspective. Ideally, future research must be done to address the specificity of the role of obstacles in the process of starting an entrepreneurial venture in underdeveloped and developing regions of the world.

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