Ethnic Business Failure: A Scarcity Mind-set Perspective

Abstract

We integrate insights from the psychological concept of ‘scarcity mindset’ and mixed embeddedness to theorise ethnic venture failure. We explore the sentiments and choices of UK-based ethnic entrepreneurs to theorise the ‘cause-of-death' of their unsuccessful ventures. The scarcity mind-set lens we develop suggests the constraints of ‘having too little’ can induce four organising tensions – spatial spawning, ethnic embeddedness, dispositional optimism, and service nepotism – which operate in combination or serially to precipitate ethnic venture failure. We contribute to research on conflicting demands in entrepreneurship by finding that a paucity of resources stymies the conversion of contradictory yet mutually constituting demands into productive outcomes. In this way, we illuminate contextualised entrepreneurial organising demands that require reconciliation to capture value. In advocating the purposeful pursuit of paradoxes as a means of addressing failure, our study analyses stories of unsuccessful ventures in ways that explicitly acknowledge enduring inequalities within markets and society at-large