Time to rethink the image of indigenous entrepreneurship

A new study challenges long-held beliefs about how indigenous entrepreneurship works. Researchers analyzed 19 530 businesses owned and operated by Indigenous Australians – the most comprehensive survey of its kind to date.

The conclusion is clear: the reality is far more varied and complex than previous research and policy has often assumed.

In the past, indigenous businesses have often been described as socially driven, collectively owned or deeply rooted in traditional culture. But according to the study’s extensive data, this only applies to a small proportion of companies.

In fact, for-profit companies make up a very large share of the sector, and the most common form of enterprise is the individual small business without employees. Many work in industries with low barriers to entry, such as construction, services and support activities. The researchers argue that the breadth of the sector has been greatly underestimated.

Five types of businesses

Through the analysis, the study identifies five different categories of companies, which differ in terms of objectives, activities and conditions. These include:

• companies that are driven by social benefit and are often collectively organized,
• companies that grow through government procurement programs,
• companies selling cultural and traditionally based products,
• and a large group of small entrepreneurs operating under normal market conditions.

The researchers argue that it is not possible to speak of ‘indigenous entrepreneurship’ as a single phenomenon.

Context shapes businesses – not the other way around

Rather than indigenous businesses being driven by specific cultural values, the study shows that business strategies are very much a response to the surrounding context. Some key factors include: geography and local labor markets, demand for culture- and tradition-based products, government procurement systems that favor indigenous-run businesses, and access to commonly owned resources.

The researchers behind the study urge both academia and policy makers to abandon the narrow frameworks that have long defined indigenous entrepreneurship. Instead, the focus should be on the actual variation in how businesses are started, run and developed. They also emphasize that it is precisely this complexity that needs to be understood in order to create better support and more accurate policies.

More about the article and the authors
The article Rethinking Indigenous Entrepreneurship is published in the scientific journal Entrepreneurship Theory and Practice. The authors are Zannie Langford and Richard Martin, both at the University of Queensland, Australia.