Frontiers of Entrepreneurship Research
1996 Edition
SUMMARIES

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ENTREPRENEURSHIP AND THE HOMELESS: CAN MICROENTERPRISES LEAD TO SELF-SUFFICIENCY?


Jeffrey C. Shuman
Edward Wondoloski
Anthony F. Buono

Department of Management
Bentley College
175 Forest Street
Waltham, MA 02154

Telephone
617-891-2112

Fax
617-891-2896

Principal Topics

The paper presents an in-depth case study of a partnership between Bentley College (BC), a suburban business college, and Project Place (PP), an urban human-services agency. Emphasis is placed on the partnership's Social Entrepreneurial Ventures (SEV) undertaking, which attempts to ameliorate the plight of homeless individuals through an integrative job-skills and job-creation program, involving flexible manufacturing, franchise development, peer lending and microenterprise networking. The discussion focuses on the use of entrepreneurial methods and activities as a way of creating marketable skills and meaningful employment for the homeless.

Method

The analysis is based on an in-depth field study of the BC-PP Partnership. Research on this venture is based on a multi-method, longitudinal design, emphasizing open-ended interviews with partnership members and program participants, a content analysis of organizational documents and archival records, and participant observation in the venture.

Major Findings

The BC-PP Partnership works to empower individuals through a supportive stepping process through which each client must demonstrate commitment and responsibility before moving on to the next phase of the program. The goal of the SEV project is to enable clients who have a strong desire to break out of the cycle of homelessness to harness their entrepreneurial dreams and make them a reality. SEV's four-phase process, involving flexible manufacturing, franchise development, peer lending, and microenterprise networking, appears to be an effective way to enhance job opportunities for homeless individuals.

Flexible manufacturing is a job readiness program, with a significant educational component focused on counseling, the development of work-related attitudes and abilities, and skills training. Clients, acting as independent contractors, must demonstrate their capability (e.g., responsibility, commitment, reliability, determination) to take on a job by engaging in paid (on a piece-work basis) in-house work activities in a flexible manufacturing area which is located in PP's basement. They are responsible for setting their work schedules, designing the assembly process, maintaining quality and inventory controls, and meeting production deadlines. These responsibilities get clients acclimated to the process of work once again, while still allowing time for them to adapt to their new circumstances. The next stage is job placement outside PP’s facility, acclimating clients to a typical work environment.

Once clients have demonstrated responsibility and commitment in Flexible Manufacturing, they move into the franchising project. As part of its strategy, PP decided to develop its own business opportunities through franchising so clients could be provided with a sufficiently lucrative and marketable work experience while providing them with the appropriate structure, control, and support needed to confront the other issues in their lives. While Project Place would act as the initial franchisee, once the potential for growing the franchised business exceeded PP's interest, clients would be "encouraged" to become entrepreneurs in their own right, with PP serving as an incubator and supporter for the budding entrepreneur.

The idea of peer lending is to assist clients in the development of their own micro-businesses by providing access to financial and managerial resources. The process envisioned by the BC-PP Partnership is as follows: (1) each participant joins a business loan group of 5 to 10 small business owners; (2) members apply directly to their group for loans and the group reviews the applications and decides which one(s) it will approve; and (3) all group members must be current on their loan payments before any group member can apply for another loan. These business loan groups meet on a regular basis to discuss and enhance the business skills and acumen of their members, to exchange business ideas and share customer contacts, and to provide a support network to reduce the isolation typically experienced by these individuals.

Project Place envisioned that these microenterprises would be linked together in a support network, focusing on job creation and retention through the establishment of flexible manufacturing and service networks that bring together groups of very small firms to collaboratively manufacture items and provide services for custom or niche markets.

Implications

The BC-PP microenterprise development partnership shows promise as a model for how social service agencies and educational institutions can work together to combat the problem of poverty and homelessness in our society. The Partnership underscores that with the appropriate financial, technical and emotional support, entrepreneurial activities can lead to self-employment as a way to achieve economic self-sufficiency for homeless individuals.

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