Effects of household characteristics on low-income family businesses: evidence from India

What the paper says

Purpose What are the effects of household characteristics on returns for entrepreneurs in low-income settings? Referred to as subsistence consumer–merchants or consumer–entrepreneurs in the marketing literature and necessity entrepreneurs in the entrepreneurship literature, such entrepreneurs run family businesses to survive and make ends meet. This paper aims to investigate how various household-level factors (education), individual-level factors (education and gender) and the type of enterprise (retail vs manufacturing) impact returns from low-income family businesses compared to high-income family businesses. Design/methodology/approach Using panel data from the India Human Development Surveys (IHDS), the study uses a fixed-effects regression approach to analyze household-level and individual-level factors on business performance and enterprise failure. Findings Education, particularly at the household level, has a positive impact on enterprise income and reduces the likelihood of enterprise failure, with stronger effects observed for lower-income entrepreneurs. Gender disparities persist, with male-led enterprises generating higher income overall but women-led enterprises in low-income settings showing lower failure rates. Family involvement enhances entrepreneurial outcomes but presents unique risks for lower-income entrepreneurs. No significant differences were found between retail and manufacturing enterprises in terms of income or failure rates. Originality/value The research bridges the disciplines of entrepreneurship and marketing by highlighting the interplay of household characteristics in driving necessity entrepreneurship in low-income settings. This paper underscores the dual roles of family and education in shaping entrepreneurial success and failure, offering nuanced and novel insights for theory and practice in emerging economies.