Telfer Research Seminar Series - Shaker Zahra

***M.Sc. Students, these seminars can count towards the six mandatory Telfer Research Seminars Series required for your program (MGT 6191/ MGT 6991 / MHS 6991) (4 seminars for MSc Project-based students).***

Shaker Zahra, PhD

Entrepreneurship is often heralded as a pathway out of poverty. However, many necessity-driven micro-entrepreneurs in developing countries struggle to make the risky investments needed to preserve and grow their businesses. Drawing on the behavioral theory of the firm and the literature on poverty, we examine the factors that influence risk-taking behavior among women micro-entrepreneurs in Pakistan. Using a dataset of borrowing records of 203,153 women micro-entrepreneurs from a microfinance institution between 2018 and 2023, we investigate how these micro-entrepreneurs’ performance relative to their social and historical aspirations affects their borrowing decisions, and how this relationship is moderated by their poverty status. We find that women micro-entrepreneurs are more responsive to social than historical aspirations. Further, the relationship between performance relative to aspirations and risk-taking behavior is moderated by poverty status, with women just below the poverty threshold being less sensitive to performance feedback than those above the poverty threshold. Our study contributes to the literature on behavioral theory of the firm, necessity-driven entrepreneurship, and entrepreneurial decision-making by offering a more nuanced understanding of how poverty and performance feedback shape risk-taking behavior in resource-constrained environments. The results also highlight the need to address the cognitive, motivational and social barriers faced by micro-entrepreneurs living in poverty.