What becomes of entrepreneurs from disadvantaged backgrounds when they get rejected?
This question led Dr. Ouafaa Hmaddi to begin her research for her dissertation five years ago. Now she continues to expand on that research as an assistant professor at City College’s Colin Powell School for Civic and Global Leadership.
Hmaddi’s work initially focused on entrepreneurs in Morocco, where she ran a three-month field experiment followed up with data collection for a year after concluding the randomized control trial. The experiment showed that rejected founders were significantly more likely than accepted ones to exit entrepreneurship and not return.
The results also indicated that rejected applicants did not simply pivot to new ideas or reapplied for funding at the next opportunity, they exited entrepreneurship and did not return.
Studying research from social psychology, Hmaddi already knew that research in this area has long established that our attributions, or how we explain failure or rejection to ourselves, determine how we adapt to discouraging outcomes.
Dr. Ouafaa Hmaddi
These findings combined with her previous research on venture creation and performance within impoverished communities in the U.S. led Dr. Hmaddi to ask how she could help disadvantaged entrepreneurs act on and persist in their ideas.
“The biggest consequence of this finding is the spill over to the product market. This is an important consideration because rejected ideas are often those that represent the experiences and needs of the disadvantaged entrepreneurs themselves,” said Hmaddi.“By discouraging or rejecting ventures that aim to address these needs, we are missing out on valuable insights and perspectives that could lead to innovative solutions.”
Hmaddi gives the example that a Black woman is more likely to create products that would help other Black women.
While Hmaddi continues to conduct research in Morocco, as a member of the Interdisciplinary Network for Technology and Entrepreneurship Research in Africa, she is also focused on researching marginalized and underrepresented minority entrepreneurs in the United States.
With her colleague, Dr. Alex Lewis, from the University of Texas at San Antonio, they are co-founding the Inclusive Entrepreneurship Lab for Field Experiments where they are conducting multiple experimental studies to understand how structural disadvantages in barriers to entrepreneurship affect attitudes and dispositions. They also want to identify the qualities of entrepreneurial systems that trigger elements of distrust and discouragement in marginalized groups and design interventions that alter the system to improve attitudes and disposition to rejection.
For instance, a recent audit study they conducted on LinkedIn to explore the relationship between race and the acquisition of social capital by entrepreneurs showed that Black entrepreneurs are less likely to be accepted into the network of professional business mentors in comparison to White entrepreneurs.
In another study, they explore the effects of framing entrepreneurship within the emancipatory legacy and how entrepreneurship can be utilized as a means of uplifting marginalized people. This involves recognizing the role of entrepreneurship in providing economic autonomy, empowerment and opportunities for individuals who have historically faced barriers to social and economic gain.
“The majority of research attends to capital constraints. Our research conceptually holds capital constant to instead examine how variance in habitus influences entrepreneurial action. In other words, we examine the question: provided that capital is available, how do systems influence whether and how the capital is used by groups historically excluded from economic activity?” said Hmaddi in describing their vision of the lab.
Hmaddi calls her research a “foundational stone” for her and her colleagues to drive a research agenda that shifts scholarly dialogue towards a more comprehensive understanding of inclusion and that generates policy solutions that unlock entrepreneurship’s uplifting potential.
Malina Seenarine is a recent graduate of Baruch College where she studied journalism and minored in theater. In addition to writing for The RICC, she’s a contributor for Baruch’s award-winning Dollars & Sense Magazine and wrote for the arts and news section of Baruch’s student-run newspaper, The Ticker. She’s also written for FSR magazine.