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Le Conseil canadien des petites et moyennes entreprises et de l’entrepreneuriat (CCPME) est une organisation nationale mutuelle qui se propose de promouvoir le développement des petites et moyennes entreprises et de l’entrepreneuriat par la recherche, l’éducation et la formation, le réseautage, et la dissémination de l’information savante et décisionnelle. L’organisation a été fondée en 1979 en tant que filiale du Conseil international des petites et moyennes entreprises. Son nom a été changé en CCPME/CCSBE en 1991. Parmi ses membres on trouve des universitaires, des éducateurs, des représentants d’organisations de soutien aux petites entreprises, des chercheurs, des fonctionnaires, des étudiants de l’entrepreneuriat, et des stratèges. Pour information complémentaire sur le CCPME/CCSBE, veuillez consulter le secrétariat à l’adresse suivante: CCSBE Secretariat c/o Acadia Centre for Small Business & Entrepreneurship Acadia University PO Box 142 Wolfville, Nova Scotia B4P 2R6 Tel: 902-585-1776 Fax: 902-585-1057 Couriel: [email protected] Site Web: http://www.ccsbe.org/

JOURNAL OF SMALL BUSINESS & ENTREPRENEURSHIP

Le Conseil canadien des petites et moyennes entreprises et de l’entrepreneuriat/Canadian Council for Small Business & Entrepreneurship

Le Conseil international des petites et moyennes entreprises

ICSB Secretariat School of Business and Public Management George Washington University, 2115 G. Street, NW Suite 403 Washington, DC 20052, USA Tel: 1-202-994-0704 Fax: 1-202-994-4930 Couriel: [email protected] Site Web: http://www.icsb.org/

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À l’origine fondé aux États-Unis en 1956, le CIPME compte à présent plus de 2000 membres dans plus de 60 pays. Ses filiales couvrent la planète. Pour renseignements complémentaires sur le CIPME et ses filiales, veuillez contacter le secrétariat à l’adresse suivante:

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Le CIPME stimule la recherche dans de nouveaux domaines par l’intermédiaire de conférences, d’échanges éducatifs, d’activités de conseil, et de réseautage mondial. Comme le Conseil soutient le travail d’autres organisations plutôt qu’il ne le reproduit, son but est d’étendre le réseau d’échange d’information en encourageant le développement de filiales nationales et associées.

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Le CIPME sert de groupe d’encadrement, avec pour rôle l’intégration des activités de divers professionnels et organisations en étroit rapport avec les petites et moyennes entreprises. Le Conseil crée et distribue l’information nouvelle concernant la gestion de ces entreprises et le développement de l’entrepreneuriat, et le travail de ses membres fournit au milieu des petites entreprises des idées provenant du gouvernement, de l’éducation et du commerce.

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JOURNAL OF SMALL BUSINESS & ENTREPRENEURSHIP VOL. 22 NO. 1

The Journal of the Canadian Council for Small Business and Entrepreneurship/Conseil canadien de la PME et de l’entrepreneuriat Special Issue: Exploring Entrepreneurship Beyond the Boundaries INSIDE The Ethics of Exploring Entrepreneurship Beyond the Boundaries Gerard McElwee The Hidden Enterprise of Bootlegging Cigarettes Out of Greece: Two Schemes of Illegal Entrepreneurship Georgios A. Antonopoulos and Jay Mitra Story-branding by Empire Entrepreneurs: Nike, Child Labour, and Pakistan’s Soccer Ball Industry David M. Boje and Farzad R. Khan Growers and Facilitators: Probing the Role of Entrepreneurs in the Development of the Cannabis Cultivation Industry Martin Bouchard and Claude B. Dion Value-adding and Value-extracting Entrepreneurship at the Margins Kirk Firth and Gerard McElwee Beyond Legitimate Entrepreneurship: The Prevalence of Off-the-Books Entrepreneurs in Ukraine Colin C. Williams Extracting Value from Their Environment: Some Observations on Pimping and Prostitution as Entrepreneurship Robert Smith and Maria L. Christou Published by the Faculty of Business Administration, University of Regina Publié par la faculté d’administration de l’Université de Régina

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The Journal of Small Business and Entrepreneurship is covered by the following abstracting and indexing services: Journal of Economic Literature (on-line and CD), EconLit, Cabells Directory, ProQuest, and CBCA Business. The articles can also be found on EBSCO Publishing bibliographic and research databases.

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The Ethics of Exploring Entrepreneurship Beyond the Boundaries Gerard McElwee, University of Lincoln, Lincoln, United Kingdom Much of the mainstream academic literature in the entrepreneurship literature does not explore those areas of enterprising activity which lie outside of the “conventional”—those topic areas of “business life cycle,” “entrepreneurial motivation,” “networking,” and so forth. There are however, some interesting exceptions as the authors in this special issue demonstrate as they explore the “other,” the “non-conventional” and entrepreneurial Outsiders. Significantly, other academic discipline areas, notably within the social sciences: Sociology, Criminology and Economics have a history of engaging with marginal entrepreneurs or what Smith (2007) has named entrepreneurship at the margins. However, these marginal entrepreneurs have not been studied as entrepreneurs and of course herein lays an interesting paradox. If we study marginal entrepreneurs as entrepreneurs we give them legitimacy. Writing about such actors does not necessarily create legitimacy to their acts or consequences of their acts. What it does is develop nuanced understandings of alternative forms of entrepreneurship. Indeed Mark Casson as long ago as 1982 wrote of criminality, war and revolution as alternative entrepreneurships. Legitimacy, as we will see, is a culturally assigned activity. Thus what is legitimate for some is not for others. Frith and McElwee in this issue suggest that it is not for them to comment on what is ethical or moral and nor is it their task to make value judgements about the entrepreneur for as Weber says No ethics in the world can dodge the fact that in numerous instances the attainment of “good” ends is bound to the fact that one must be willing to pay the prices of using morally dubious means or at least dangerous ones—and facing the possibility or even the probability of evil ramifications. From no ethics in the world can it be concluded when and to what extent the ethically good purpose “justifies” the ethically dangerous means and ramifications. (Gerth et al., 1958: 121) Thus we let the reader decide if the marginalized social actors featured in this special edition are entrepreneurs or not. Clearly, all entrepreneurs have competing ideals and as Giddens, following Weber suggests, there is no such thing as universal ethics or of course a monopoly on truth. The consequences of an entrepreneur’s actions may or may not concern the entrepreneur herself. Indeed in some of the examples described in this issue the actions of the entrepreneur and the consequences of her actions are very different to the original or stated intentions of the entrepreneur, McElwee (2008). This is what Weber (1968) calls the “paradox of consequences” and elsewhere, Swedberg and Agevall (2005) the “double ethic” whereby some communities have an “in group” morality for their own members and an “out group” ethic for members of other communities.

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The papers in the issue, to a greater or lesser extent, deal with a group of relatively ambiguous concepts such as morality, value judgements and legitimacy. A problem with the concept of legitimacy is that it assumes that there is evidence to support the view that there is a common value system or widespread legitimacy. As we will see in this collection there are a good number of forces which combine, either formally or informally to facilitate the development of a modern economy and society. I would like to thank all of the contributors and anonymous reviewers for their work in compiling this special issue and to Bob Anderson for the opportunity and support. It is not an easy task to broker such “Special Editions” and therefore Bob Anderson’s enlightened encouragement has proven to be more than welcome. I hope the reader enjoys reading this issue as much as I have enjoyed compiling it. Further Reading Casson, M.C. 1982. The Entrepreneur: An Economic Theory. Oxford: Robertson. Gerth, H.H. and C. Wright Mills. 1958. From Max Weber: Essays in Sociology. Oxford: Oxford University Press. Giddens, A. 1982. Capitalism and Modern Social Theory: An Analysis of the Writings of Marx, Durkheim and Max Weber. Cambridge: Cambridge University Press. McElwee, G. 2008. “In Search of Montsalvatch: Making Sense of Interviewing,” Tamara Journal 7, no. 2: 134–48. Smith, R. 2007. “Editorial,” International Journal of Entrepreneurship and Innovation 8, no. 4: 245–50. Swedberg, R. and O. Agevall. 2005. The Max Weber Dictionary: Key Words and Central Concepts. Stanford: Stanford University Press. Weber, M. 1968. Economy and Society: An Outline of Interpretive Sociology. New York: n.p.

Gerard McElwee University of Lincoln, UK

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The Hidden Enterprise of Bootlegging Cigarettes Out of Greece: Two Schemes of Illegal Entrepreneurship Georgios A. Antonopoulos, University of Teesside, Middlesbrough, United Kingdom Jay Mitra, University of Essex, Southend, United Kingdom ABSTRACT. Cigarette smuggling in all its forms prevents the Greek state from collecting large amounts of taxes. The phenomenon has been largely neglected by the academic community and this is even more the case when it comes to bootlegging. This article is a presentation of the available evidence on two schemes of bootlegging cigarettes out of Greece. It explores the different entrepreneurial inputs of cigarette bootleggers, and the practices that resemble “normal” entrepreneurial activities, through two case studies. These inputs and practices shed some light on the environment in which unproductive economic activity takes place, offering researchers and policy makers insights into their manifestation. RÉSUMÉ. La contrebande de cigarettes sous toutes ses formes prive le gouvernement grec de vastes revenus. Ce phénomène n'a pas été d'un grand intérêt pour la communauté universitaire, et c'est encore davantage le cas quand il s'agit de vente illicite. Cet article présente les données disponibles concernant deux schémas de contrebande de cigarettes à partir de la Grèce ; il explore en deux études de cas les différents intrants entrepreneuriaux des contrebandiers, ainsi que les pratiques qui ressemblent à des activités entrepreneuriales “normales”. Ces intrants et pratiques jettent de la lumière sur le milieu dans lequel une activité économique non productive prend place, offrant ainsi aux chercheurs et aux stratèges un aperçu de leur manifestation.

Introduction Cigarette smuggling is a form of smuggling that deprives the Greek state OF large amounts of taxes. According to data obtained from the Hellenic Coast Guard (2005), the evaded taxes from cigarettes seized by the Hellenic Coast Guard from 1998 to 2004 amounts to 107,948,634.42 € (US$ 139,377,991.87/ £ 73,504,975.728) (Hellenic Coast Guard, 2005). Greece is a very interesting case study when it comes to cigarette smuggling for a variety of reasons, apart of course from the fact that research on the topic in the country is in an embryonic state. This is due to Greece having a large smoking population, a significant black market economy and low “tax consciousness,” neighbouring countries with large informal economies such as Albania, FYROM and Bulgaria (see Stanchev, 2005), and high (cigarette) smuggling rates (Tobacco Journal International, 2000). For Joossens (1999) and von Lampe (2005), bootlegging is one of the ways of smuggling cigarettes, and refers to instances when an amount of cigarettes that exceeds customs regulations is bought. According to Joossens (1999), bootlegging usually involves thousands of cigarettes, the cigarettes are duty paid, the investment is relatively small, and bootlegging is organised by individuals and gangs and it is caused by price differentials among neighbouring countries. In addition, as Joossens et al. (1992) suggest, bootlegging accounts for a relatively small share of the total cigarette-smuggling business. Numerous

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bootlegging schemes have been identified in Europe such as at the German-Polish and German-Czech borders, across the English Channel (von Lampe, 2005), at the AustrianHungarian borders and at the Greek-Bulgarian borders (Joossens, 1999). Cigarette smuggling in general is not a widely researched phenomenon and this is even more the case when it comes to bootlegging. According to von Lampe (2005) “there are no systematic analyses available on the modus operandi and structure of bootlegging, neither for Germany, nor for the UK, nor for any other EU member state” (von Lampe, 2005: 14). In addition, although there have been some efforts to estimate the effect of crime in general on entrepreneurship (see, for example, Ortega Alvarez, 2002), bootlegging has not been viewed through the prism of entrepreneurship theory. This article is a presentation of the available evidence on two schemes of bootlegging cigarettes out of Greece; therefore, Greece in this article is treated a source country for contraband cigarettes. In common with many other activities in the “hidden economy,” cigarette bootlegging represents illegal entrepreneurship, which is concerned with what Baumol (2002) refers to as the domain of the rent-seeking entrepreneurs. These entrepreneurs seek and gain entrepreneurial “rent” from the same system of enterprise that legal, entrepreneurs do. Their ability to identify opportunities, make novel combinations of different resources, use information asymmetry to derive economic outcomes, and network with “weak” and “strong” ties, is similar to their mainstream counterparts. The critical difference is perhaps in the outcomes of their operations and the conscious attempt to work outside the legal framework or the “citizen consensus” afforded to all in society. Wealth creation is possible with both groups of entrepreneurs but the “citizenship consensus” offers potential opportunities for all whereas the “hidden economy” activities are best served when those outside it are its natural “victims.” Moreover, despite its potentially innovative function it is questionable whether the acquisition of monopoly profits contributes to the economy. In fact, as Baumol (2002) argues, it can constitute an effective impediment to economic production or productivity. Each act of rent-seeking can reinforce the unproductive function as firms engaged in such practice redirect their activities down a negative spiral for the sake of self-defence. Investigating and studying the entrepreneurial behaviour of hidden-economy entrepreneurs is, therefore, particularly important in order to distinguish between forms of social acceptance and legitimacy on the one hand, and of economic and social exploitation on the other. Putting rent-seeking activities such as bootlegging under the microscope helps us to understand that entrepreneurship is not synonymous with productivity and growth (Schumpeter, 1911). What matters, therefore, is the appropriate consideration of specific entrepreneurial inputs and practices which lead entrepreneurs to operate at either opposite ends of the entrepreneurial spectrum (that is between the heroic acts of entrepreneurial genius at one end and criminal monopolization of profits) or realising the innovative space that lies somewhere in between (see Figure 1 below). In the 18th century, Adam Smith argued that competition helps to resolve the problem of extremes, and Schumpeter (1911) stated that entrepreneurship can embrace these extremes anyway. Implicit in both their arguments is the need for legitimization of the “hidden economy” system of entrepreneurship that underscores much of the thinking that guides policy development today (Williams, 2006). This article explores the different entrepreneurial inputs of cigarette bootleggers and the practices that resemble “normal” entrepreneurial activities, through two case studies. These inputs and practices shed some light on the environment in which unproductive economic activity takes place, offering researchers and policymakers insights into their manifestation.

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Heroic Entrepreneur ship

Legitimate Entrepreneur ship

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Legitimisation Process Figure 1. The Entrepreneurship Spectrum

Methodology This article is the product of interviews with “actors” of the cigarette bootlegging business. Specifically: • An interview with an individual who as a student in the former Yugoslavia in the 1980s and early 1990s was smuggling cigarettes out of Greece into former Yugoslavia (Bootlegging scheme one). This interview was conducted in the city of Patras in Greece in September 2006. • Interviews that were conducted in a town in the northeast of England in May 2006 with two runners transporting cigarettes from Greece into the UK (Bootlegging scheme two). Here we adopt the term “runner” from von Lampe (2005) and will later explain what it means. In all interviews the participants were asked to provide information about the social organization of the particular bootlegging schemes. Bootlegging Scheme One The first bootlegging scheme involves a Greek student at the University of Belgrade, who was smuggling cigarettes bought from the duty-free shop on the Greek-Yugoslavian border from 1986 to 1991. He used to buy DM (Deutsch Mark) 1,000 in merchandise (hard packs of Marlboro and Camel), and he was transporting them in his and his friends’ luggage on the bus. He used to sell the cigarettes in cafés and bars in Belgrade, where the elite of what was then Yugoslavia used to hang about. Despite the fact that cigarettes in Yugoslavia were much cheaper than in Greece, bootlegging was possible because: a) there was no hard pack for Marlboro in Yugoslavia and the possession of such a pack was a sign of prestige and status, and b) the quality of the Yugoslavian tobacco was much poorer than the Greek tobacco. The student used to transport cigarettes in January, after Easter and in September when he was returning from Greece after the holidays. From every load of DM 1,000 he used to have a profit of DM 2,000. In order to circumvent the strict Customs search on the Greek-Yugoslav border, the bootlegger had established a contact with a customs officer, who did not, however, receive any money in order to “turn a blind eye,” and was, as the interviewee suggested “my customs officer” (emphasis by the interviewee). This story highlights the lifestyle circumstances that allow for an indulgence in opportunity gratification at the individual level. The reliance of the student on weak ties with the customs officer, and the capitalisation of opportunities based on both greed and social enhancement, is typical of small-scale entrepreneurship that satisfies a limited market place. Small quantities of goods are exchanged in a market which could ill afford status or quality. There being no market for legitimate business activity, bootlegging offers restricted opportunity for economic gain.

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Bootlegging Scheme Two The second bootlegging scheme involves the manager of a café that is a meeting place for students in a northern English town, who gives money to a number of students who frequent his café for bringing him specific brands of cigarettes (that are consumed in Britain), especially at periods when students return home (Christmas, Easter and summer). Each student “imports” 16 cartons (3,200 cigarettes) to Britain, and receives about £30 (US$ 55/ 44€) as an “importation fee.” The cigarettes are brought into Britain by air and occasionally through the Channel Tunnel, and distributed to customers in a chain of bars and clubs in the town. There are basically two different sets of “actors” in bootlegging scheme two: • The Pusher, who has “recruited” the runners, and who has the responsibility of introducing the contraband cigarettes into the market through a network of acquaintances and customers. The pusher has, therefore, a “managerial” position in the whole business. He could be characterised as a “line manager” for the other actors of the business. • Runners: the runners are individuals who transport smaller quantities of EU duty-paid cigarettes for cigarette-smuggling networks (House of Commons, 2005, cited in von Lampe, 2005: 15). They usually transport cigarettes in their cars and/or luggage. In our case they are the two individuals interviewed (see Figure 2). Runners one, two and three conduct regular business with the pusher, whereas runners four and five conduct business only occasionally. The reason why this is the case is not known. All runners are personally linked to each other, either as couples (runners one amd two, and four and five), housemates (two and three) or friends. Runners two and three were recruited (as runners) through being employed in the legitimate business managed by the pusher, whereas runners one, four and five, who were regular customers of the lawful business, started bootlegging cigarettes for the pusher after runners two and three introduced them to the pusher. Runner two was the first to be recruited for the bootlegging scheme and the person having the closest relationship with the pusher since runner

Figure 2. Bootlegging scheme two (note that the typographical error was embedded in the original copy of the figure and could not be corrected).

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three stopped working for the legitimate business (but not the illegal business) a few months later. Essentially, the pusher exhibits some of his entrepreneurial qualities by investing in runner two only, and thus having indirect access to the rest of the runners (one, three, four and five) (see Morselli, 2003). The second bootlegging scheme is more complex than the first presented in this article, because it involves a larger number of individuals/“actors.” Contraband cigarettes in this bootlegging scheme are introduced to a network of customers (known to the pusher) in the café and a bar chain in the town. The selling of cigarettes is conducted in special areas within the café, the bars or the clubs. Bootlegging scheme two represents a “higher order” of entrepreneurship characterised by a stronger organisation enabling opportunity identification and realisation, stated and explicit networks of operation, the use of both “strong” and “weak” ties, complexity of activities, cross-investment opportunities, and defined customer groups across dispersed borders. Discussion—Conclusion—Recommendations Initially, it should be mentioned that the data obtained and presented in this article refer to two successful schemes since the bootlegger in the first case was never apprehended, nor has the second scheme been intercepted so far. We therefore consider this article to be important because it is based on typical bootleggers, the successful illegal entrepreneurs, and not on “captive populations” (Gigengack and van Gelder, 2000: 11). Further to that there are a number of issues, interesting both in terms of criminological and entrepreneurship research, that need to be discussed. Firstly, in relation to “structures” involved in cigarette smuggling, the Greek media very often attribute any form of smuggling, including cigarette smuggling, and/or “organised” criminal activities to Mafias and Cartels. This is not surprising since these are terms which are highly sensational, attractive and beneficial (to the public, the police and the politicians) (von Lample, 2001). The implication of this representation, however, is huge. The public are fed up with the idea that cigarette smuggling (among other illegal markets) is conducted by hierarchical, rigid and powerful organizations, which is of course false. In a similar vein, governmental organizations and agencies have been suggesting that “because of the high profit potential, organized crime has become heavily involved in bootlegging” (Advisory Commission on Intergovernmental Relations, 1977: 1). As it is shown in this article, cigarette smuggling in the form of bootlegging can be quite (dis)organized and this is why Joossens et al. (2000) characterize it as a “low-tech type of cigarette smuggling.” The cases presented in this article support the enterprise paradigm, putting emphasis on a process of exchange between the bootlegger and the customers, and on “how participants are organizing their crime-trade and adapt to and survive in illegal markets” (von Lampe, 2002: 193). According to this paradigm, what we loosely term “organised crime” and illegal markets are a jigsaw of flexible “entities” that establish themselves when opportunities for profit appear (see Block and Chambliss, 1981; Hobbs, 1988; van Duyne, 1993, 1997; Zaitch, 2002). These entities are adaptive to the new social, political, and—most importantly— economic environments, and see themselves as “service providers” (Ruggiero, 1997: 27). Second, “criminogenic asymmetries” (Passas, 1999) such as the huge price disparities that exist between Greece and neighbouring countries are not always the reason for the bootlegging of cigarettes. Indeed, in our general research on cigarette smuggling we came across Greeks travelling to Bulgaria, and specifically Petritsi and Sandanski, to buy cigarettes among other commodities (see, for instance, Terzenidis, 2004). The reason for this is the huge price disparities that exist between Greece and Bulgaria. In particular, in 2002

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a pack of Marlboro was sold 45% cheaper in Bulgaria than in Greece (Mackay and Eriksen, 2002: 102–09). We have also come across a beach bar owner in a Greek island bringing cigars from Cuba and selling them to interested customers at a much higher price, and airplane crew smuggling quantities of cigarettes from countries of the Arab peninsula in order to sell them to ground staff of the airline they were employed by. Price differences are indeed an important factor of bootlegging but surely there are other factors too: prestige for the smoker of bootlegged cigarettes or the bad quality of the tobacco used by the local manufacturers, as was shown in bootlegging scheme one. We did not come across any bootlegging into Greece from Turkey, Romania, Serbia, FYROM in the Greek media, and we have collected absolutely no anecdotal accounts of such a case despite the huge differences in cigarette prices, which are in some cases (for example Romania and Serbia) even bigger than the difference between Greece and Bulgaria (see Mackay and Eriksen, 2002: 102–09). There is something more than simply price differential that favours the smuggling of cigarettes from the context in which cigarettes are sold cheaper to the one in which cigarettes are more expensive. The assertion made by the Advisory Commission on Intergovernmental Relations (1977: 3) and indeed other state-related organisations, as well as the tobacco industry (see Joossens and Raw, 1995) that “cigarette bootlegging will continue unabated and will increase if tax differentials increase further,” is too simplistic. Third, bootlegging of cigarettes does not only occur among neighbouring countries or countries that are relatively close geographically. As was shown in bootlegging scheme two, bootlegging can also occur among countries that are geographically distant (Greece–United Kingdom). The presence of a bootlegging scheme operating with such geographic scope in our opinion strengthens the position of the network and/or “criminally exploitable ties” (von Lampe, 2003a) in the study of “organised crime” and illegal trades. Fourth, corruption is not an essential feature of bootlegging out of Greece since the transportation of quantities that exceed those suggested by regulations are not always known to law enforcement and other relevant state agencies. In addition, the quantities are relatively small, and the circle of distribution is small and closed, which reduces the possibility of public authorities getting to know of this activity. Fifth, similar to the research on cigarette smuggling in Germany conducted by von Lampe (2003b), and which has greatly inspired the current article, the “actors” of the bootlegging schemes presented were not involved in other criminal activities or illegal markets. Sixth, legal businesses, the cafés and bars in Belgrade in bootlegging scheme one and the café, bars and clubs in the northern English town in bootlegging scheme two, play an important and functional role in the social organizations of the bootlegging business in four ways: • by simply acting as an outlet in which contraband cigarettes are sold (bootlegging schemes one and two); • by acting as a venue in which legal entrepreneur-customer relationships are transformed into illegal entrepreneur-customer relationships (bootlegging scheme two); • by acting as a venue in which legal business relationships between the employers and the employees are transformed in illegal business relationships (bootlegging scheme two) (see von Lampe and Johansen, 2004);

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by acting as a venue facilitating the illegal entrepreneurial relationship between the bootlegger and his customers (bootlegging scheme one). Based on this study we recommend further research on the reasons conducive to the bootlegging of cigarettes other than the price disparities among different contexts. In addition, explanations are needed as to why bootlegging occurs among specific jurisdictions and not others. Finally, we recommend further research on the social organization of bootlegging schemes in Greece and out of Greece as well as further investigation into the personal and social characteristics of the participants in bootlegging schemes. Central to the proposed research and/or policy agenda is the need to identify norms and patterns of criminal entrepreneurship that both resemble and are differentiated from their legal counterparts. As this article shows, not all forms of bootlegging follow practices which have stereotypical associations such as “mafia control” or price differentials. In their “commonness” can be found much of the explanation for their possible legitimization and the prospect for a productive turnaround. Furthermore, the processes of individual effort, opportunity identification, networking, and the use of weak and strong ties, we find possible resolutions to the problem of operating at the extreme or outside the line of the “citizenship consensus.” For the researcher the social-psychological and economic explanations of deviation from the “norm” are crucial for the dispassionate study of entrepreneurship in all its forms. For the policymaker, understanding the normative processes of the hidden economy, their link with the environment and institutions that underpin mainstream economic activity, and the potential of particular manifestation in specific environments, offers real prospects for their legitimization and return to productive economic endeavour. Contact Information For further information on this article contact: Georgios Antonopoulos,School of Social Sciences & Law, University of Teesside, Middlesbrough, TS1 3BA, United Kingdom Tel.: +44 (0)1642 342392 (office) E-mail: [email protected] or Jay Mitra, School of Entrepreneurship and Business, University of Essex, Southend Campus, 10 Elmer Approach, Southend-on-Sea, Essex SS1 1LW, United Kingdom Tel.: +44 (0)1702 328390 (office) E-mail: [email protected]

References Advisory Commission on Intergovernmental Relations. 1977. Cigarette Bootlegging: A State and Federal Responsibility. Washington, DC: Advisory Commission on Intergovernmental Relations Baumol, W.J. 2002. The Free-Market Innovation Machine: Analyzing the Growth Miracle of Capitalism. Princeton, Princeton University Press Block, A.A. and W.J. Chambliss. 1981. Organising Crime. New York: Elsevier. Gigengack, R. and P. van Gelder. 2000. “Contemporary Street Ethnography: Different Experiences, Perspectives and Methods,” Focaal 36: 7–14. Hellenic Coast Guard. 2005. “Cigarette Smuggling” (unpublished statistics). Hobbs, D. 1988. Doing the Business: Entrepreneurship, the Working Class, and Detectives in the East End of London. Oxford: Oxford University Press.

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Joosens, L. 1999. Smuggling and Cross-Border Shopping of Tobacco Products in the European Union: A Report for the Health Education Authority. London: Health Education Authority. Joossens, L., F.J. Chaloupka, D. Merriman and A. Yurekli. 2000. “Issues in the Smuggling of Tobacco Products.” Pp. 393–406 in P. Jha and F. Chaloupka (eds.), Tobacco Control in Developing Countries. New York: Oxford University Press. Joossens, L., C. Naett and C. Howie. 1992. Taxes on Tobacco Products: A Health Issue. Brussels: European Bureau for Action on Smoking Prevention. Joossens, L. and M. Raw. 1995. “Smuggling and Cross-Border Shopping of Tobacco in Europe,” British Medical Journal 310 (May): 1393–97. Mackay, J. andM. Eriksen. 2002. The Tobacco Atlas. Geneva: WHO. Morselli, C. 2003. “Career Opportunities and Network-Based Privileges in the Cosa Nostra,” Crime, Law & Social Change 39: 383–418 Ortega Alvarez, D.E. 2002. Crime and Entrepreneurship. Available online at: http://www.ucm.es/info/icae/seminario/seminario0203/15oct.pdf Passas, N. 1999. “Globalisation, Criminogenic Asymmetries, and Economic Crime,” European Journal of Law Reform 1, no. 4: 399–423 Ruggiero, V. 1997. “Criminals and Service Providers: Cross-national Service Economies,” Crime, Law and Social Change 28, no. 1: 27–38 Schumpeter, J.A. 1911. The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest and the Business Cycle. Cambridge: Harvard University Press. Stanchev, K. 2005. “Economic Perspectives on Organised Crime.” Pp. 25–33 in E. Athanassopoulou (ed.), Fighting Organised Crime in Southeast Europe. Abingdon: Routledge. Terzenidis, K. 2004. “Mazikes Ekdromes sti Bulgaria,” Makedonia tis Kyriakis (April 18): 62, Tobacco Journal International. 2002. “Albanian Tobacco: A Dying Industry,” Tobacco Journal International (October 8). van Duyne, P.C. 1993. “Organised Crime and Business Crime—Enterprises in the Netherlands,” Crime, Law, and Social Change 19: 103–42. ——. 1997. “Organised Crime, Corruption, and Power,” Crime, Law, and Social Change 26: 201–38. von Lampe, K. 2001. “Not a Process of Enlightenment: The Conceptual History of Organised Crime in Germany and the United States,” Forum on Crime and Society 1, no. 2: 99–116. ——. 2002. “Organised Crim Research in Perspective.” Pp. 189–98 in P. van Duyne, K. von Lampe and N. Passas (eds.), Upperworld and Underworld in Cross-Border Crime. Nijmegen: Wolf Legal Publishers. ——. 2003a. “Criminally Exploitable Ties: A Network Approach to Organised Crime.” Pp. 9–22 in E. Viano, J. Magallenes and L. Bridel (eds.), Transnational Organised Crime: Myth, Power and Profit. Durham, NC: Carolina Academic Press. ——. 2003b. “Organising the Nicotine Racket: Patterns of Cooperation in the Cigarette Black Market in Germany.” Pp. 41–66 in P.C. van Duyne, K. von Lampe and J.L. Newell (eds.), Criminal Finances and Organising Crime in Europe. Nijmegen: Wolf Legal Publishers. ——. 2005. Provisional Situational Report on Trafficking in Contraband Cigarettes. Sixth Framework Programme (n.p.). von Lampe, K. and P.O. Johansen. 2004. “Criminal Networks and Trust: On the Importance of Expectations of Loyal Behaviour in Criminal Relations.” Pp. 102–13 in S. Nevala and K. Aromaa (eds.), Organised Crime, Trafficking, Drugs: Selected Papers Presented at the Annual Conference of the European Society of Criminology, Helsinki 2003. Helsinki: HEUNI. Williams, C. 2006. The Hidden Enterprise Culture: Entrepreneurship in the Underground Economy. Cheltenham: Edward Elgar. Zaitch, D. 2002. Trafficking Cocaine: Colombian Drug Entrepreneurs in the Netherlands. The Hague: Kluwer Law International.

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Story-Branding by Empire Entrepreneurs: Nike, Child Labour, and Pakistan’s Soccer Ball Industry David M. Boje, College of Business, New Mexico State University, Las Cruces, New Mexico Farzad R. Khan, Suleman Dawood School of Business, Lahore University of Management Sciences, Lahore, Pakistan ABSTRACT. Our study identifies and calls for an answerability-ethic of storytelling where entrepreneurs are held responsible and accountable for the harmful ways in which they story the Third World. We study a Corporate Social Responsibility (CSR) initiative involving Nike in the Third World. Our study draws upon interviews and textual study of the Sialkot Child Labour Elimination Project that was signed in Atlanta, Georgia in February 1997. We find that Nike’s CSR stories not only brand products but they also brand Third World labour. Our study’s main contribution is to show that entrepreneurs’ branding through storytelling their “benign” CSR initiatives in the Third World, an activity we term “story-branding,” has an imperial face requiring the use of power to turn workers voiceless (make them into subalterns). RÉSUMÉ. Notre étude identifie et préconise une éthique de responsabilité en matière de contes, dans laquelle les entrepreneurs deviennent responsables de la façon nocive dont ils peignent le Tiers-Monde. Elle porte sur une initiative de responsabilité sociale d’entreprise (RSE) concernant Nike dans le Tiers-Monde. Cet article est basé sur des entrevues et sur une étude textuelle du Projet Sialkot pour l’élimination de la main-d’oeuvre enfantine, signé à Atlanta (Georgia) en février 1997. Nous constatons que chez Nike les contes de RSE imposent la marque non seulement sur les produits, mais encore sur la main-d’oeuvre du Tiers-Monde. Notre contribution principale est de montrer que les entrepreneurs qui par l’entremise de leurs contes mettent leur marque sur leurs initiatives “bienveillantes” de RSE au Tiers-Monde—une activité que nous appelons “marquage par contes”— présentent un visage impérialiste, et doivent donc user de force pour faire taire les travailleurs et les subordonner à leur pouvoir.

Introduction Storytelling is a primary way entrepreneurs maintain the currency of their reputation. While marketing and corporate reputation literatures recognize that Corporate Social Responsibility (CSR) is a vital component of a company’s brand strategy (Chun, 2005), the role of story is not being addressed by them. Entrepreneurs strengthen their brands through telling stories about their CSR initiatives. Such CSR stories improve the image of entrepreneurs with consumers, help them gain legitimacy for their labour practices, and assist them in attracting other resources required for their continued success (Lounsbury and Glynn, 2001; Zott and Huy, 2007). However, this literature on entrepreneurship and branding is limited in that it ignores the effects of entrepreneurs and their legitimating story work on the poor and powerless in the Third World where many entrepreneurs base their supply chains and where they situate their CSR initiatives. We address this limitation by connecting entrepreneurship and branding literature to postcolonialism, a field that looks at the effects of colonization on societies and cultures, particularly in the Third World (Westwood, 2006). We bring the great postcolonial theorist Edward Said’s (1978, 1993, 1994) concern about the plight of the Third World to the centre of entrepreneurship studies and direct it to what is most marginalized in branding Journal of Small Business and Entrepreneurship 22, no. 1 (2009): pp. 9–24

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and entrepreneurship studies: Third World worker voices. Creating space for these voices leads us to a more critical reading of the literature on entrepreneurs and branding. Through this reading, we articulate a new term called ‘story-branding’ that helps surface the imperial face of the branding process. Story-branding, our paper’s main contribution, is defined as entrepreneurs strengthening their brands by putting into play a characterization of events relating to a CSR initiative in the Third World that ends up branding one set of actors (entrepreneurs and their organizations) as heroes who rescue other characters. The focus of this form of story telling is on the entrepreneur as hero in an adventurous story saga. Just as with imperialism and its heroic “civilizing” mission (Ahmad, 2000; Blaut, 1993), the consequences of that adventure for people in the Third World are simply left out of the narrative. In terms of the study we present, Nike, the heroic entrepreneur, rescues Third World families from child labour in Pakistan’s soccer ball industry. The remedy Nike, other global brands, and various agencies, implemented to remove child labour did not include the voices of the children, or their parents, who, in our study, had an entirely different characterization of their work experience. Neither in Nike’s story-branding was any mention made of the harmful effects that ensued from its heroic rescue mission. What our analysis of the imperial face of branding suggests is a disturbing dark side to this entrepreneurial activity which is overlooked in previous studies that otherwise treat the phenomenon as heroic or romantic adventure storytelling. Through our study of story-branding regarding a CSR initiative in the Third World, we find that the literature on entrepreneurship and branding fails to notice that in CSR storytelling done to brand products, Third World labour is being branded as well. In the classical definition of branding, it is being burned, like prisoners or cattle, with identifying marks (e.g., grateful for CSR when opposite is the case) that are injurious to it and which facilitate its exploitation. Branding has thus an imperial face of imposing identifying marks to permit injury and disgrace for the people in the Third World who make the products of First World entrepreneurs. A related contribution is to identify an additional ethical dimension in entrepreneurship revealed by story-branding: the ethical inquiry into corporate ‘answerability’ for the stories of Third World workers being branded in story characterizations. Entrepreneurs need to be held answerable for the consequences of the highly compelling stories they tell, if indeed, as we argue, such branding-stories do contribute to late capitalism’s ongoing imperial project that otherwise is crushing to a worker’s dignity in the Third World. Our article is organized as follows. First, we explore postcolonialism and its concern with the inhabitants of the Third World made voiceless. Second, we briefly lay out our methods for our case study of the CSR initiative “The Sialkot Child Labour Elimination Project” involving Nike and other global soccer ball brands. We then present our case study where we do our best to open spaces for subaltern voices, women soccer ball stitchers, regarding this initiative. After this, we reflect upon Nike’s imperial face and discuss how these subalternized voices problematize our understandings on branding through CSR initiatives situated in the Third World. This leads to ethics, and we argue that there needs to be storytelling answerability. Entrepreneurs need to be held answerable for the stories they tell, for they brand not just products but also people. We conclude with our paper’s contributions and future research directions opened up by our inquiry that treats entrepreneurship’s branding activities through postcolonial sensitivities.

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Postcolonialism and the Subaltern Postcolonialism has advanced many insightful concepts to make sense of Europe’s post1492 engagement with (some would say onslaught against) the Third World. One such concept that has generated much theoretical mileage is the term “Subaltern.” The word subaltern, though coined by Gramsci, was popularized by a group of Indian historians in the 1980s (Prasad, 2003). This group came to be known as the “Subaltern Studies Collective’ with Ranajit Guha being perhaps its most notable member (Chakrabarty, 2002). Subalterns meant all those weak and marginalized elements (i.e., the poor masses) ignored in the mainstream narrative of history that focuses on elites and their motives and actions to explain historical events. The collective sought to rewrite Indian history from the perspective of these groups, to write a people’s history of India. The research that ensued contested several claims of mainstream Indian history. In contrast to the then prevailing view of Indians being united in a common cause against the British, the Subaltern Studies research pointed out that there were severe class-based conflicts between the leadership elements of Indian nationalism and their grassroots who often had a different vision of India than their leaders (e.g., one that preserves their local, rural culture as opposed to a high-modern industrialized vision of India held by such Indian nationalist leaders as Nehru [Chakrabarty, 2002; Roy, 1999]; for a concise history on the Subaltern Studies collective, see Chakrabarty, 2002 and Ludden, 2001a; for an outstanding example of subaltern research looking at workplace and organizational dynamics, see Chakrabarty, 1983). In the 1990s the term subaltern came to take on a more specific meaning as it came to be appropriated by postcolonial studies (Prasad, 2003). From being used as a term to refer to the subordinated masses in general, it began to be used to depict specifically those classes or individuals within them who are spoken about but never heard (Ludden, 2001a, 2001b; Prasad, 2003) in contrast to other subordinated groups (e.g., tribals in India) that do not even make it to the realm of public discussion (Roy, 1999). Sensitivity to subalterns should alert us to their possibilities in other domains characterized by massive imbalances of power. CSR initiatives in the Third World could well be such domains where the multi-billion-dollar global transnational corporation is engaged with penniless workers. They become subalterns or peripheral centres of the CSR initiative: they are central to the initiative but in terms of having their voice heard and their interests fairly represented and realized, they become ignored. This seems to have happened in our study of a CSR initiative undertaken by Nike and other brands to eradicate child labour from soccer ball production. Before we present our study, we would like to make a brief note on methods. Methods The majority of the world’s soccer balls have, for decades, been produced in Sialkot, Pakistan, with leading international brands (e.g. Nike and Adidas) sourcing almost exclusively from Sialkot (Khan, Munir and Wilmott, 2007). Estimates of the number of stitchers employed in Sialkot’s soccer ball manufacturing cluster varied from a low of just over 30,000 (International Monitoring Association for Child Labour [IMAC] 2003) to a high of 65,000 (Awan, 1996: 5). The great majority of children helped their parents at home, who were in turn paid for the number of soccer balls rather than hours worked—an ILO estimate placing the number of children at approximately 15,000 (Husselbee, 2001: 133; ILO 1999). Most of these balls were stitched in homes (mostly in the 1,600 odd villages surrounding Sialkot). Balls reached these homes through an elaborate chain of subcontractors.

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In this study, we chose a qualitative storytelling inquiry research design. This was in keeping with standard research practice of storytelling studies (Boje, 1991, 1995, 2001; Czarniawska, 2004; Gabriel, 2000). The focus of the study was to ascertain the stories of the most subjugated segment of Pakistani society, involved in the soccer ball industry: women soccer ball stitchers. Main sources of data were interviews and documents. Between November 2000 and October 2003, the second author (hereafter SA) made three extended field trips to Sialkot, Pakistan. Interviews were conducted with Pakistani soccer ball factory owners, staff of NGOs working on the project to eliminate child labour, male and female soccer ball stitchers as well as children affected by the project. Each interview was semi-structured and lasted on average about 80 minutes. The longest was about three hours. A total of 110 respondents participated in the interviews, with 50 of them being women stitchers. At the close of each interview, stitchers were asked questions about exercising agency (voice) and any constraints experienced in doing so. NGO personnel were asked about the visible absence of stitchers’ voices in the design and implementation of the project. Apart from interviews, several other sources of information were used, including newspaper stories, internal organizational documents (emails, faxes, memos, letters, project evaluation reports, meeting minutes), US Department of Labor (DOL) hearings, legal archives, public fact-finding reports, internet documents, and surveys published by the child labour project organizations. In total, this comprised 10,000 text pages. It was supplemented by video documentaries about Sialkot child labour issues, and a quantitative database of an NGO with basic demographic information on 2,000 stitching families. The aim of our data analysis was to contrast the perspectives of Nike, other global soccer brands, and their trade associations with the accounts told by members of stitching families. The intertextuality of documents and interviews allowed for corroboration of threads (or themes) across storied accounts among multiple sources. This was done in an iterative fashion, comparing what stitchers were saying against the other accounts. Next we examine the basic findings of the study as they relate to branding and entrepreneurship. Nike’s CSR and Sialkot Child Labour Nike is a recognized entrepreneurial organization, and Phil Knight, the founder, is known as an entrepreneur who changed the sports apparel industry. As the mass media brought child labour in soccer ball making to the attention of the world, the heroic entrepreneur story was in jeopardy. Nike’s branding of itself as heroic adventurer needed a facelift. Nike, and its apologists, therefore branded its CSR initiative as a form of Third World mother and child emancipation. This served to return the romantically heroic entrepreneurial face to Nike and Phil Knight. We will review, briefly, how the controversy emerged, and then trace the responses of various parties involved. The Child Labour Crisis On April 6, 1995, CBS aired at prime time a short documentary on the soccer ball industry in Sialkot, “Children at work” (CBS transcripts, 1995). The CBS story forcefully brought to the fore the unsettling irony of poor children at work so rich American kids could play. The CBS story was picked up by the other mass media both in the US and abroad. The result was an international media firestorm, doling out a blitz of moral penalties to the global soccer ball industry for being found in bed with child labour. Our next point is controversial. We believe that, from the villagers’ point of view, (and studies conducted within Pakistan), the stories being framed about widespread child

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labour exploitation were grossly exaggerated. Specifically, in 1995, the Human Rights Commission of Pakistan published a comprehensive report challenging the veracity of allegations being made about the soccer ball industry. Such reports agreed that wages were exploitative, but refuted the main charges leveled by the media: the prevalence of bonded child labour, workplace beatings of children, children working predominately in unsafe workshops for long hours, and differential wages for children and adults. Children were actually working part-time, earning the same rates as adults, in the comfort of their homes with their families who were all jointly stitching the soccer balls.1 The problem, from a narrative perspective, is that once a story (even one with inaccurate or exaggerated claims) is treated as gospel, it is very difficult to reverse the effect of a media firestorm. The media did not consult the village workers, letting them voice their side of the story, nor did the media wait for more rigorous and systematic study before demanding change. Momentum builds legitimacy to just go with the more popularized version of the story (without counterstory consideration). A snowball effect ensued. For example, on June 28, 1996, with official endorsement of the US Department of Labor and prominent politicians (e.g., Joseph P. Kennedy II), a campaign was launched to bring an immediate end to child labour in Sialkot’s soccer ball industry. The campaign came to be known as the “Foul Ball Campaign” coordinated by the International Labor Rights Fund (ILRF) (a Washington-based labour advocacy group) in cooperation with a network of labour, consumer, religious, sports, and child advocacy groups (US Department of Labor, 2003). Nike Responds? Nike’s initial response to the crisis is difficult to trace given contradictory statements issued by it on this matter, at various points in time. For example, from a written deposition to the US Department of Labor hearings held on June 28, 1996, Nike seems to have begun sourcing production of soccer balls in Sialkot in 1995 (US Department of Labor, 1996). The deposition states that after they began soccer ball production in Sialkot (i.e., perhaps in the Fall of 1995), Nike “implemented more steps to protect worker rights than companies that have operated in the country for decades” (cited in ibid.). The deposition goes on to state that at Nike’s insistence its supplier (Saga Sports) began to ensure childfree production by establishing stitching centres that could be easily monitored, unlike homes in disparate villages, to ensure that no children were involved in the production. The story given by Phil Knight, the founder of Nike, gives a different version. Knight, speaking to the National Press Club on April 12, 1998, said: In 1994 Jack Beecraft of our Singapore office flew into Sialkot, Pakistan to check out the first ever Nike soccer ball order. What he found was conditions that were not acceptable. What he found was the conditions that did not meet Nike’s code of conduct, and were not controllable, because essentially for 50 years the Pakistan soccer ball industry had been made up of a process in which the ball uppers were sent out into a cottage industry into—with very little controls on who the upper were sewn by, and they in fact, were sewn by children, old _________________________ 1. The validity of the Human Rights Commission of Pakistan’s report was corroborated by evidence on Sialkot’s soccer industry published prior to the crisis (e.g., Weiss, 1991) as well as later by numerous studies and surveys done by other independent organizations such as international NGOs (e.g., Save the Children and ILO), international trade unions and their Pakistani affiliates (e.g., International Confederation of Free Trade Unions and All Pakistan Federation of Labour) and local organizations (e.g., Raasta Development Consultants).

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people, blind people, under all kinds of bad conditions. Basically seeing this he said that is not acceptable under the way we do business, and he and Mr. Sufi got together in Beverton, Oregon three months later to hack out a different way of making soccer balls in Pakistan. (Cited in Federal Document Clearing House, 1998) Phil Knight’s version would tend to indicate that the response began as early as 1994. However, on another occasion, at roughly the same time he gave the above speech, Phil Knight seems to have shown little concern over work-age issues. In the documentary film The Big One, the following conversation occurred between Michael Moore, the filmmaker, and Phil Knight: Moore: “Twelve-year-olds working in factories? That’s okay with you?” Knight: “They’re not 12-year-olds. The minimum age is 14.” Moore: “How about 14, then? Doesn’t that bother you?” Knight: “No.” (Cited in Miller, 1998) Traces of the attitude displayed in the above interview can be found as far back as 1996 in Nike, suggesting that Knight was not making a once-off statement but articulating a long-held attitude in Nike. For example, when confronted in 1996 with evidence that children were involved in the making of Nike soccer balls, Nike spokeswoman, Donna Gibbs, defended the company, saying, “it’s an ages old practice [and] the process of change is going to take time. Too often, well-intentioned human rights groups can cause dramatic negative effects if they scare companies into stopping production and the kids are thrown out on the street” (cited in Schanberg, 1996: 42). In that same interview, she had acknowledged that her company had not implemented, till that point, its stated goal of child labour free soccer ball production. Given that Nike did not contest this account of their corporate behaviour by Schanberg, this seems to suggest that such views were indeed articulated and the quotes were not taken out of context. Also, in other places Gibbs expressed Nike’s gradual approach to the child labour issue by stating that the problem is a large one—in her words, “Child labour is really an epidemic in Pakistan” (Denby, 1997)—which by implication would mean that a substantial expense of time would be needed to address it, reflecting a position that was already expressed explicitly in Schanberg’s interview. We tend to get three different stories from these Nike sources, suggesting that if we were to find additional accounts of Nike’s own response to the child labour crisis, we would perhaps also find more different stories of Nike’s response to this crisis. Based on the texts, at hand, dating Nike’s response seems to result in a range of anywhere from 1994, predating the media crisis, to around fall 1995, a few months after its outbreak. Also, as can be seen, accounts differ on the urgency felt by Nike in tackling this matter, with Phil Knight’s and Department of Labor versions indicating that when the company became aware, it changed course immediately, while the Gibbs version indicates that the course reversal was a gradual one. All the accounts do agree, however, on one count. None of them contain any evidence to suggest that Nike provided any material assistance to its supplier, Saga Sports, as the latter went through the costly process of building child-free stitching centres with health dispensaries and other such worker facilities.

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The Sialkot Child Labour Project Nike moved through its industry associations (e.g., World Federation of Sporting Goods Industry [WFSGI]) to stave off consumer pressure by enacting an industry-wide solution to the child labour problem. On February 14, 1997 at the SuperShow (one of the two annual international trade fairs of the sporting goods industry) in Atlanta, Georgia, the global soccer ball industry unveiled at a press conference its “final solution” to the child labour crisis that had been plaguing it for almost two years. The industry announced “The Atlanta Agreement,” which stated that a project, the Sialkot Child Labour Elimination Project, would be jointly established by the Sialkot Chamber of Commerce and Industry (SCCI), the United Nations Children’s Fund (UNICEF), and the International Labour Organization (ILO) to phase out children from Pakistan’s soccer ball industry in the next 18 months. The US Department of Labor would be its main donor. At that press conference, Nike’s industry association representatives claimed the high moral ground, stating that this CSR initiative reflected industry’s own unswerving commitment to ethical business practices. Stephen Rubin, WFSGI President, in his speech, made the following remarks: The soccer community has asked for reassurance that child labour has no place in producing the soccer balls used in neighbourhood sandlots or national stadiums. This new partnership is an unprecedented response to that concern. For the first time ever—in any industry, in any part of the world—local manufacturers, global brands and internationally respected children’s organizations have agreed to work together to address child labour in a responsible manner. (Cited in PR Newswire, 1997) The Sialkot Child Labour Elimination Project announced at that press conference began to be implemented in October 1997 (ILO, 1997). Child labour was to be phased out by shifting the stitching of balls, the activity in which children were involved, to monitor-able stitching centres (ibid.). The stitching centres are factories or workshops that, unlike village homes, could be more readily accessed by ILO monitors in order to verify that no children were involved in stitching soccer balls. The project also incorporated a social protection program. Its purpose was to take care of the displaced child stitchers and their affected families by creating alternative income opportunities, largely through microcredit schemes and vocational training (e.g., tailoring) (Crawford, 2001). Education of children was to be provided either by enrolling them in government schools or setting up one- to three-room education centres where they would be educated up to Grade 5 on a few-hours-a-day basis (Save the Children, 2000; ILO-IPEC, 1999; Bunyad Literacy Community Council, 1998). Two years later, Nike and the soccer ball industry announced mission accomplished when US President Bill Clinton gave it the following ringing endorsement: Let me cite just one example of the success being achieved, the work being done to eliminate child labor from the soccer ball industry in Pakistan. Two years ago, thousands of children under the age of 14 worked for 50 companies stitching soccer balls full-time. The industry, the ILO and UNICEF joined together to remove children from the production of soccer balls and give them a chance to go to school, and to monitor the results.

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Today, the work has been taken up by women in 80 poor villages in Pakistan, giving them new employment and their families new stabilities. Meanwhile, the children have started to go to school, so that they [when] come of age, they will be able to do better jobs raising the standard of living of their families, their villages and their nation. I thank all who were involved in this endeavour and ask others to follow their lead. (Clinton, 1999) Clinton’s speech sums up the CSR storytelling spun by Nike and its industry associations. Child labour was identified by the media and industry took action to remove it. Others should “follow their lead.” In sum, Nike Corporation (and the Atlanta Program organizations) came off as caring and responsible entrepreneurs providing schooling to Third World children and jobs for their mothers. Nike’s CSR initiative was to spin the controversy, branding themselves as mother and child emancipators. This rescued the romanticized and heroic entrepreneurial face of Nike’s branding from the media firestorm. Next, we reanalyze the sides of the story presented, from a postcolonial perspective. We turn next to our analysis of the implementation of the Sialkot Child Labour Elimination Project. Telling the Postcolonial Side of Nike Story-branding In Nike’s CSR story-branding, the focus was on doing something beneficial for the mothers, fathers, and children stitching soccer balls in their homes. A postcolonial question needs to be asked: what became of them? We contend the families are the subalterns of the storytelling. President Clinton mentions them in passing, but no voice is given them in his or the other accounts reviewed thus far. Reviewers and readers may be wondering about our intent here. We are not arguing that child labour is a good thing, nor are we making the case that the Pakistan soccer ball industry must do away with stitching centres and go back to the old way of production, village families stitching soccer balls in the privacy of their homes. Rather, we are making the case that corporations, agencies, and anti-child labour activists and exposé journalists did not adequately investigate or provide a forum for villager families to tell their side of the story. Therefore, we next attempt to reclaim the voices of the families by talking to them, and to NGO personnel who were on the ground doing the work of the Atlanta Program. What we learn from their reflexivity is that the story-branding and the Atlanta Program had destructive consequences for the stitching families. The authors’ move is to claim an “answerability ethic” (Bakhtin, 1990, 1991). There is a question of being answerable for the story told, for how it brands (characterizes) workers, leaves them voiceless in program design, and fails to examine how corporate (and apologist) storytelling has dire consequences for the voiceless workers. Corporations and their apologists, as well as the media, are in a powerful position, being able to tell and disseminate highly compelling stories that bring with them demands for action (interventions into lives of the Other, i.e., the poor and powerless in the Third World). The project turned out to be largely a top-down affair. Most of NGO personnel interviewed were of the opinion that there was effectively no participation of the local stitching communities in the project. To illustrate this point, an NGO worker stated: Not consult them in design, just in implementation… Guess involvement highly restricted to just your choice whether you want to go to the

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doctor or you would like the doctor to come to you. That is the extent of their participation. Some [NGOs] do not even ask them these questions but just give them directives. Internal minutes of Project coordination committee (PCC) meetings referred to stitchers as “targets,” things to be acted upon, never as persons who should be directly participating in the PCC deliberations, which were, after all, what everyone says they were concerned about. In the internal records reviewed, when stakeholders were mentioned, the “stitchers” were conspicuously absent from all their lists. An internal project communication strategy draft, for example, lists the following stakeholders to whom information about the project should be constantly communicated: “Firstly the media, both national and international, who in turn, serve the public. Secondly, the various interested NGOs, such as human rights groups, employers’ organizations, trade unions, etcetera” (Husselbee, 1997). Not only in internal documents were stitchers absent, but also often in public documents. For example, in Save the Children’s public report, stitchers were noticeably absent from a listing of relevant project stakeholders: “The findings have been shared with all the stakeholders including international brands, trade unions, the media, human rights groups, NGOs, and government agencies” (2000: 13). Given that stitchers, in the mental frameworks of the policymakers, were either inanimate “targets” or simply absent referents, the conclusion of Save the Children’s project evaluation report concerning stitcher participation need not unduly surprise us: “In Sialkot, a number of stakeholders did not play strong roles within the partnership. These are: the community (including working children and their families), Trade Unions and Government” (Crawford, 2001: 12–13). There is a major answerability issue here: stitchers had been kept largely clueless about all that was taking place in their name. When the second author would ask them to describe the project, the stitchers answered with blank stares. Their alienation from the project sometimes took on surreal proportions. For example, parents and children sitting in a project-established Non-Formal Education Centre (NFE) (1–3 room affairs where children were imparted basic education up to Grade 5 on a part-time basis) did not know that the centre was established as part of the child labour project, much to the embarrassment of the NGO field worker that had helped to establish the NFE and had impressed upon the second author prior to arrival at the NFE how much work his NGO had done in imparting to stitcher families information about the project. Similarly, the stitchers belonging to a microcredit community organization could not for the life of them provide any information about the project, especially its origin and scope. While the project was imposed from above, it did produce the results that Western consumer sentiment had bayed for. The project had by 2003 been successful in phasing out children from 95% of all soccer ball production (IMAC, 2003). It had effectively made the industry child labour-free and in that process won international acclaim (Clinton, 1999). But the victory ball came at the expense of the stitching families, particularly women. Project Consequences on the Stitchers To assess the impact of the project on women stitchers, it is important to first depict their socio-economic condition, which is intricately tied to their profession: soccer ball stitching. This profession is at the lowest rung of the soccer ball production supply chain ladder in terms of wages. Even if two parents were stitching soccer balls, satisfying basic needs is an ever elusive prospect. As a Save the Children report, based on a survey of 100

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villages, stated, “Both adults and children pointed out that most adults were working as hard as they could but still could not make ends meet” (1997: 2). Women stitchers thus live an impoverished existence even though the balls they stitch generate riches for their Sialkot manufacturers and their international brands. To this economic plight is added the burden of the sheer disdain with which stitching work is looked upon by village culture. Surveys from various reports attest to this fact. For example, a Punjab Rural Support Programme report states as one of its findings that “stitching is considered an inferior source of income” (Punjab Rural Support Programme, 2002: 5). But again, how is this cryptic statement digested in the existence of those who endure it? The women stitchers that were interviewed felt visibly ashamed at being soccer ball stitchers. This was apparent in groups that contained more affluent women who in the group setting would boast that no members of their family stitched soccer balls. The lot of women stitchers, and stitching families in general, is quite impressively captured in the following words of a widow of a leading Sialkot soccer ball baron, who after conducting a door-to-door survey of 403 stitchers comprising one-third of her stitching workforce, the majority of whom were women (56.4%), said in a speech to her family firm’s international buyer: The stitching families frequently took advance payment from the contractor as they received no social security cover, no provident fund, no pension fund provision, no bonus payment, no profit sharing… The income from football stitching was simply too little to cater for any medical emergency. With great difficulty could they maintain all their children in school and pay for books and uniforms. Almost all had debts. I was informed that help with educational expenditure and medical care was the most pressing need, followed by others such as: repair work to their homes damaged during the rainy season, dowry for the girls when they get married, toilets, a pump, fans, electricity meter. (Khawaja, 2002: 2) The world of women stitchers is, thus, one of necessity and desperation. Not surprisingly, the burning issue for women stitchers is a living-wage. Surveys conducted on stitchers, both men and women, from 1997 onwards attest to this statement. Important workplace issues, such as living-wage, were kept off the agenda. The only focus was to get children out of the industry. As a remedy, a trickle-down approach was deployed using microcredit, school enrolment drives and informal education centres. The problem, however, is that such solutions ended up missing the vast majority of the women stitchers and their families (Crawford, 2001). Moreover, it seems that none of these social protection programs could be made sustainable; the education centres have begun to be wound up, so their impact, while beneficial for the few families who came into their safety nets, are transient at best for the rest of the women stitching population. With the income generation and education programs having largely missed the bulk of stitching families that were affected by the project, the lot of the women stitchers seems not to have improved in any substantive way by all the project work carried out in their name to benefit them. Most importantly, the project, by establishing monitorable stitching centres, in which the International Labour Organization (ILO) could check to see whether children were stitching, actually worsened their plight. One has to ask if the Atlanta Project is answerable for the current situation. The new monitorable centre regime exposed women stitchers to verbal abuse. Working at home

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gave them privacy and provided them with the convenience of not exposing themselves as soccer ball stitchers, thereby avoiding the slurs and the derogatory comments of their fellow villagers. Now having to commute to work, it was difficult for them to hide that they belonged to the lowly soccer ball-stitcher class. One woman stitcher, nostalgic about home-based stitching, sighed, “Before you could earn with respect at home.” Respect is important for women and the visible daily commute to centres opened up their self-respect to scathing verbal assaults by villagers, particularly men. One woman stitcher, despite her precarious economic situation, left working in centres because she could no longer tolerate such abuse. She recollects her centre stitching experience as follows: If we go to factories, people say nasty things about us. [They say] Putting red lipstick, going out, what do you have in mind. [We] do it [stitching] out of necessity. Common feeling [in villages] is that if one cannot do anything [one is useless] then stitch. No respect in village. Home-based stitching thus saved women from verbal abuse. At times, it also provided them protection from physical and sexual abuse. One former Save the Children officer, a Sialkot village resident himself, points out that sexual harassment, including rape, was as an important factor that made women overwhelmingly refuse work at centres, even at the pain of severe economic deprivation: [A] big stitching centre of [organization name concealed] that provided pick and drop facilities. We told women why not go there. But women were being exploited there, sexually. [The centre] had all male staff. Had middle woman would act as middle person. [She would] get girls to agree and then [the girls] taken to head office. This information went back to villages. Women not want to work. They reacted by stopping to come. The women stitchers who made the hard migration to stitching centres, whether in their own villages or in remote locations, form at best maybe 20% of the pre-project women stitching workforce. The remainder refused to make such a migration out of a variety of predispositions, the three most prominent being self-respect, obligations at the home, or due to permission not being given by their men folk to commute to work. Regardless, their stance has come at a vicious material cost to them. A woman stitcher at her home angrily said: Wages are poor. We have children. Work hard to earn bread. We get money on times [from subcontractor] sometimes. Ten years [I have been] stitching. If I protest, there are 1000 people willing to stitch. [Subcontractor will] say fine. You do not want to work, [I will] give it to others. Another woman stitcher described the drastic drop in orders coming to the village in the following way: “Before we used to get 2 balls, now get 1 ball. If before we get 1 ball, now make half.” Though wage rates initially increased for male stitchers at centres, they were not enough to compensate for the loss of income suffered by women and children now unable to stitch. Overall, household incomes fell in absolute terms. All this happened while the project received international accolades for its humanitarian concerns and the US presidential seal of approval. The women stitchers would have truly wondered if they indeed were the ones being described by Bill Clinton in his ringing endorsement. This is branding’s imperial face.

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Discussion Our case study shows that while Nike and other global concerns branded themselves through their story-branding as socially responsible actors, they were simultaneously branding Third World workers (i.e., soccer ball stitchers, particularly women) in a manner that was distorting their reality and denigrating their concerns (e.g., of a living-wage) as superfluous and irrelevant, not even fit for mentioning. This is what we call the imperial face of branding. Like branding cattle, the poor soccer ball stitching families were branded with identification markers hurtful and injurious to them, but serviceable to their “masters.” They were branded as recipients of a “civilizing mission” with women going to work and children going to school. They were branded as being rescued from the scourge of child labour. This branding was required so that Nike could parade its brand as a responsible corporate citizen celebrating freedom for women and children. That the brand was the proverbial emperor not wearing any clothes has gone without commentary during the past decade, for the voices that could shatter this ongoing illusion had been placed at the margins and subalternalized. This seemingly imperial face of branding requires subalternization (women-stitcher voicelessness) to perpetuate the image-management strategy. It requires a high imbalance of resources between the limited voices of workers and the well-funded voices of corporate entrepreneurs. The stitchers also lack access to legal/political, cultural and economic resources; and, to our knowledge, no attempt was made by NGOs, for example, to attenuate this situation. The “foreigners” could fly into Sialkot but representatives of the stitchers could not readily travel to the ILO offices in Geneva to convey their concerns and grievances. Communications regarding the design and implementation of the project were conducted in English and little or no effort was made to inform the stitchers of the international controversy and the nature of the response being prepared. Lacking any kind of capital, symbolic or material, the largely illiterate stitchers were handicapped in gaining access to, let alone becoming involved in, agenda-setting processes and negotiations over their fate. Readers may be interested in recent developments in Sialkot’s soccer industry. On November 20, 2006, Nike announced it ended production with Saga Sports, its Pakistani soccer ball supplier.2 Two child workers were found to be making soccer balls: “Nike discovered widespread unauthorized outsourcing of its products from Saga facilities, resulting in the production of Nike soccer balls inside homes in the Sialkot area” (ibid.). On May 24, 2007, Nike announced it had resumed production in Pakistan.3 The new subcontractor factory, Silver Star Group, made an agreement to not use any part-time workers (or home-based producers) in its soccer ball manufacture. We point out that, once again, the village families (workers) did not have a voice in working out the arrangements. There is another more invisible form of power at work. The post-1492 encounter of Europe with the Third World, over half a millennium into its running, has established certain scripts and certain ways of relating to the Third World that are taken for granted in the dominant Western culture as normal (Blaut, 1993). One such script is that it is normal _________________________ 2. See Nike Press release dated November 20, 2006: http://www.nike.com/nikebiz/news/pressrelease.jhtml?year=2006&month=11&letter= [Retrieved on August 9, 2007]. 3. Nike Press Release dated May 24, 2007: http://www.nike.com/nikebiz/news/pressrelease.jhtml?year=2007&month=05&letter=h [Retrieved on August 9, 2007].

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for Third World matters to be decided in Western centres (Said, 1978, 1993). The Ottoman Empire was severed in meetings in Paris. The Sialkot village family economy was ripped apart in decisions taken in Geneva, Zurich, London, Atlanta, and Munich, to name a few of the cities where the blueprint of the project was articulated. The agreement that ushered in the project was called the “Atlanta Agreement,” not the “Sialkot Agreement,” even though the agreement was primarily about Sialkot’s poor soccer ball stitchers. Imagine how odd it would look if an equally intrusive project that would disrupt something so private as the household division of labour in a major North American or European city was called the “Sialkot Agreement,” where all the key decisions were made by individuals neither from Europe nor North America. That the Atlanta Agreement does not sound odd to us only testifies to the hold the culture of imperialism has over our common sense. As long as that imperial common sense holds, so too will subalternization of Third World voices. Decisions will continue to be made as a matter of routine and normalcy, far away from the reach of “natives.” The imperial face of branding will continue to be enacted without having to worry about overcoming insurgent voices from below. They simply will not make it to the gate. This link of imperialism and entrepreneurship has, to our knowledge, not been made or explored in any explicit fashion in the literature that discusses entrepreneurship and branding. Our analysis leads us to propose that branding CSR stories that subalternize Third World voices are crucially dependent on imperial motifs. Without the imperial history that socialized us into a Eurocentric perspective with Old and New Europe (North America) as the key decision-making centre for the rest of the world (Blaut, 1993), we find it difficult to imagine that the “Atlanta Agreement” pronouncing on Sialkot could have been conceived with so little awkwardness and so little participation from the people of Sialkot. Without the cultural residue of imperialism, it would appear as nonsensical as our hypothetical Sialkot Agreement. While we suffer distress on account of the CSR subalternizing stories told by Nike and others propping themselves on the culture of empire, we are horrified when we contemplate that doing so helps reproduce and circulate the culture of empire. To the extent that Nike’s stories embody imperial attitudes (e.g., treating as unremarkable the absence of “natives” from decision-making arenas which are kept far from the Third World), they contribute towards what we call, slightly paraphrasing Hannah Arendt, “the banality of empire.” Such attitudes find a new lease being circulated and presented not just by government discourse but by the powerful image machineries of Nike and other global brands. The constant repetition and ubiquitous presence of these stories churned out by corporate image machines make imperial attitudes found in them so commonplace and banal that they are taken for granted. In this fashion, we feel that the Third World branding in CSR stories may well be contributing to making the Third World vulnerable to Western aggression by normalizing and making self-evident the “right” of the West to intervene and speak for the Third World—a right that is rarely questioned in respectable circles of policy and debate. If Atlanta can decide on Sialkot, can not Washington decide on Iraq? The question is not “if” we can intervene but “when.” Moreover, such storytelling is flawed when the voices of the workers are ignored. We propose a more productive direction for concerns of ethics regarding Nike and its practices (production and branding). Our study identifies an additional dimension in entrepreneurship revealed through story-branding: the ethical inquiry into corporate answerability for the stories of Third World workers being branded. Entrepreneurs need to be held

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answerable for the highly compelling stories they tell, if indeed as we argue, such branding-stories do contribute to the imperial project through branding the people in the Third World to make them voiceless and permit their exploitation. Our study prompts that key moment of reflexivity: “I am the only one who can act, and if I don’t act, no one will act. I am therefore complicit with what will happen next to the Other.” In short, when Nike and the members of the Atlanta Program are the ones who can act, and if they don’t act, to ascertain the voice of the villagers in their own view of work, then those organizations are complicit in what has happened to the Other. We therefore charge that the Atlanta Agreement changed the labour practices, but not in ways that have benefited village labour. The Atlanta Agreement is therefore accountable, and responsible, for the consequences of its manner of storying-for-the-Other while the Other remained voiceless, and there needs to a redress. Conclusion Our paper brings into conversation two hitherto unconnected literatures: postcolonialism and branding in entrepreneurship studies. We examined from a postcolonial subaltern perspective a particular case of a CSR initiative in the Third World undertaken by Nike as part of its branding efforts. Doing so, we feel we have made the following contributions. First, we have expanded the margins of our knowledge on entrepreneurship and branding by making it more inclusive. We have opened it to the stories of Third World voices, in ways that will make the literature more emancipatory than the current situation. We hope this research effort will reduce the parochialism found in entrepreneurship studies that has largely ignored the Third World, especially the poor situated there. Incorporating Third World voices has given us some new insights into entrepreneurship and branding. Story-branding helps us realize that entrepreneurship studies seem to be situated in a branding tunnel fixated on branding products and entrepreneurs, forgetting the world outside the tunnel. The CSR initiatives, undertaken as part of a branding strategy by corporate entrepreneurial concerns, do not just help brand products, they end up branding a whole lot more (e.g., Third World workers). Examining story-branding reveals another face to branding activity other than the face of freedom (i.e., positive associations of helping Third World workers) commonly given to it. We begin to see a darker and more menacing aspect to entrepreneurial branding, forged through stories about benign and constructive CSR initiatives in the Third World, when we refract them through the stories of voiceless Third World workers (the subalterns). From the subalterns, we see that CSR stories brand Third World labour, give them identifying marks that distort their realities and deceive Western consumer sentiment by branding Third World workers as happy and thankful for CSR’s civilizing mission. Sweatshops thus appear as workshops and the entrepreneur is seen as a liberator and not a jailer of Third World labour. A hegemonic order is created and the exploitation of the Third World continues. We bring to surface this imperial face of corporate entrepreneurial branding hitherto neglected and undertheorized in the literature. Reflecting on branding’s imperial face leads to other contributions in the paper. We see that this imperial face is dependent on subalternizing Third World workers whose voices can contest its representations. This subalternization requires power not just material (asymmetrical distribution of resources) but also cultural. And the cultural power it seems to draw upon is the culture of imperialism. The culture provides the scripts by which it is normal to ignore the “natives” and to make decisions about them in the West. We feel that this connection and the relationship between imperialism’s attitudes and branding in terms

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of how each depends upon and reproduces the other has not been articulated in an explicit fashion. This connection is an exciting one for it leads to another contribution of our paper which is to identify an additional dimension in entrepreneurship story-branding: the ethical inquiry into corporate answerability for the stories of Third World workers being branded. To the extent that entrepreneurs brand the Other (Third World workers) in their for-the-Other stories in a manner that the Other remains voiceless while her realities are distorted, her priorities are ignored, and her dignity is injured, these entrepreneurs are accountable and responsible for these consequences produced by their storying. And there needs to be a redress. In terms of future directions, the crucial question for story-telling answerability is: how can voiceless workers gain voice? How can the subaltern speak? The real heroines are the working women in the apparel, footwear, and sports equipment factories. Can No Sweat and Blackspot provide real alternatives to branding where Third World workers have narrative control and are not passive commodities fabricated for enhancing brand equity? Can the imperial face of branding be replaced by a new one based on solidarity and compassion? These are the questions to explore to bring about a new face to entrepreneurship and branding. A face that does not hide the horrors of a young woman worker in the Third World, but reveals a face in which all of us can see our most decent impulses. Acknowledgements Canadian International Development Agency (CIDA) and the Social Sciences and Humanities Research Council of Canada (SSHRC) funded research for this study. We gratefully acknowledge the helpful comments of this journal’s editors and reviewers.

Contact Information For further information on this article, contact: David M. Boje, Endowed Bank of America Professor, College of Business, New Mexico State University-Grants, Grants, New Mexico, USA. Tel.: 505-532-1693/Fax: 505-646-1372 E-mail: [email protected]

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Growers and Facilitators: Probing the Role of Entrepreneurs in the Development of the Cannabis Cultivation Industry Martin Bouchard, School of Criminology, Simon Fraser University, British Columbia Claude B. Dion, University of Montreal, Montreal, Quebec ABSTRACT. Hydroponics is one the fastest rising sectors in the horticultural industry. It is, however, a contested one. The problem with the industry is that the products sold by hydroponics entrepreneurs are not only being used to grow tomatoes or cucumbers, but also potentially illegal produce, such as cannabis. In this paper, we explore the extent to which cannabis and hydroponics entrepreneurs have a symbiotic relationship. We first take a comparative look at the size and the development of the cannabis cultivation and the hydroponic retail industries over a 30-year period (1977–2006). Findings show that both industries followed a similar growth curve which started in the early 1990s, and slowed down in early 2000. A second set of findings shows that the mutual relationship between both industries does not necessarily translate into deviant management practices for the hydroponics entrepreneurs. RÉSUMÉ. La culture hydroponique est l’un des secteurs les plus dynamiques de l’industrie horticole, mais c’est aussi un secteur contesté. Le problème est que les produits vendus par les entrepreneurs hydroponiques sont utilisés pour cultiver non seulement des tomates et des concombres, mais aussi des substances qui peuvent s’avérer illégales, telles que le cannabis. Cet article examine dans quelle mesure les entrepreneurs en cannabis et en culture hydroponique opèrent en symbiose. Nous jetons d’abord un regard comparatif sur l’ampleur et le développement des industries de la culture du cannabis et des marchés hydroponiques de détail sur une période de trente ans (1977–2006). Les résultats montrent que dans les deux cas une courbe de croissance similaire a commencé au début des années 1990, pour diminuer en même temps au début des années 2000. Un second ensemble de résultats révèle que la relation mutuelle des deux industries ne se traduit pas nécessairement en procédures de gestion déviantes pour ce qui est des entrepreneurs hydroponiques.

Introduction Hydroponics is one the fastest rising sectors in the horticultural industry. It is, however, a contested one. The main controversy does not revolve around the entrepreneurs involved or the nature of the products they sell. It is, after all, a widespread mode of agriculture used by farmers to grow flowers and vegetables, as well as a perfectly legitimate hobby for a significant proportion of home gardeners. The problem with hydroponics entrepreneurs is that the products they sell are not only being used to grow tomatoes or cucumbers, but also potentially illegal produce, such as cannabis. Cannabis is a plant and, in many ways, the techniques required for its cultivation are similar to those used for growing other plants or vegetables. Hydroponics is an intensive form of agriculture that brings essential nutrients directly into contact with the growing plant in a water solution (Roberto, 2005). Hydroponics has many advantages over soilbased techniques, including higher yields per plant, the potential for top-quality produce and the possibility of growing year-round in a controlled environment. Cannabis growers in industrialized countries recognized these advantages, and adopted hydroponics in

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increasing numbers in recent years. Recent research in the province of Quebec, Canada, showed that close to 30% (or about 15,000) of cannabis growers used hydroponics and that, as a group, they accounted for more than 50% of cannabis production in the province (which represents more than 150 metric tons per year; see Bouchard, 2007a). Cannabis growers are clients of hydroponics shops, but the importance of their business for these stores is unknown. The nature of the link between cannabis entrepreneurs and hydroponics entrepreneurs is also subject to debate. For law enforcement representatives, the cannabis and the hydroponics industries are one and the same (Review Panel, 2002). Alternatively, hydroponics industry representatives insist on the legitimacy of their businesses, making special efforts to distinguish themselves from the cannabis industry (Hassall and Associates, 2001; National Competition Policy Review, 2002; Paul, 2003). But even legitimate hydroponics industry representatives acknowledge that certain store owners maintain ties to the cannabis industry: “Hydroponics retailers are shop fronts to the (cannabis) industry, and they need to change their language and some of their business practices if they want to attract genuine home gardeners” (Paul, 2003). The matter is complicated because both the cannabis and the hydroponics entrepreneurs benefit from one another. An argument can be made that the swift and widespread development of the cannabis cultivation industry would have been difficult, if not impossible, without the presence of hydroponics shops. These shops act as legal facilitators for cannabis entrepreneurs, providing them with an easy access to the necessary equipment and supplies, but also with advice on how to use them. The term “facilitator” is used in the criminological literature to describe a participant (legitimate or not) who provides specific operational services to entrepreneurs of the irregular economy (Morselli and Giguere, 2006). The difference with the current study is that hydroponics entrepreneurs and their employees are not necessarily knowingly assisting cannabis growers. As for legitimate hydroponics entrepreneurs, the cannabis clientele represent a business opportunity to be (legitimately) exploited. It is therefore in the economic interest of both types of enterprises that the other is alive, and well. The Current Study The extent to which cannabis and hydroponics entrepreneurs have a symbiotic relationship (Aldrich, 1990) can be tested empirically. How important is the cannabis industry to hydroponics entrepreneurs? In this paper, we explore the issue in two different ways. First, we take a comparative look at the development of the cannabis cultivation and the hydroponics retail industries. The setting is a mature cannabis industry situated in the province of Quebec, Canada. The data gathered for the purpose of this study allow us to follow the number of hydroponics retailers from 1969 to 2006. In order to differentiate between more general garden centres and true “facilitators,” we limit our examination to specialist stores whose major activity is the sale of hydroponics equipment and supplies (National Competition Policy Legislation Review, 2002). Illegality renders data on the size of the cannabis industry much more difficult to obtain. Official crime data for cannabis cultivation offenses are used as a proxy for the development of that particular industry. If the link between cannabis growers and facilitators is as close as it appears to be, it is possible that a proportion of hydroponics entrepreneurs are involved, or were involved, in illegal activities. Such entrepreneurs could use hydroponics shops to legally sell their expertise and exploit their contacts in the cannabis industry, thereby profiting from their unique position to reach an important clientele. For example, cases of hydroponics shop employees involved in cannabis cultivation ventures have been recently publicized in

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Canada (Mitchell, 2002; Le Quotidien, 2002). The case in Quebec involved a store employee who was involved in a classic “buy and bust” case, typical of low level policing of illegal drug markets. He supplied cannabis cuttings (baby plants) and equipment for $ 10,000 CAN to an undercover police agent (Le Quotidien, 2002). Determining the extent to which some hydroponics entrepreneurs are also illegitimate entrepreneurs is a delicate, complicated issue, and it is not part of our objectives. Instead, we are interested in exploring whether hydroponics entrepreneurs’ natural connection with an illegal industry has an impact on the way they manage their business. Important ethnographic studies such as Adler’s (1993) and Bourgois’s (1995) showed that talented illegal entrepreneurs do not necessarily make successful legitimate businessmen. In short, they tend to struggle with the formal requirements of legal enterprises. The current study is interested in whether hydroponics entrepreneurs are generally good managers of their business. Though it is limited, available information suggests that many may not be. For example, a recent decrease in the number of specialist hydroponics stores in Australia (from 400 to 200 in less than five years) has been attributed by representatives of the hydroponics industry to bad retail management practices and a change in cannabis-related legislation (Paul, 2003). Our dataset allows us to explore the issue from two angles. We will first be concerned with the failure rates of hydroponics shops, an indication of entrepreneurs’ capacity to sustain their business. Second, we will examine hydroponics entrepreneurs’ compliance with a formal requirement of legal businesses in Quebec—producing an annual declaration of activity to the government. Findings on both issues will be compared with similar information obtained from flower shop retailers, a comparable industry that is not as directly linked to an illegal market. Methodology Official Crime Data Official crime data is gathered from every police agency in Canada by the Canadian Centre for Justice Statistics and published annually by Statistics Canada (2007). In this study, we used the number of cannabis cultivation cases officially recorded by police agencies in the province of Quebec, Canada for 1977–2005 (earliest and most recent years available). A “case” is defined as the number of times police agencies discovered a cannabis cultivation site for a given year. Therefore, such data do not represent an official count of the number of persons arrested for cannabis cultivation. More than one offender may be arrested per cultivation case, and some cases involve no arrests at all. Past research has shown that 95% of hydroponics cannabis cultivation cases lead to at least one arrest (mean = 1.3 offenders per case), but only 14% of outdoor cultivation cases (Bouchard, 2007b). Official crime data is useful to uncover longer trends, but a major limitation is that it does not distinguish between cultivation cases involving hydroponics, and cases in which cannabis entrepreneurs used other techniques. Another limitation of official crime data for the purpose of the present study is that it may or may not reflect actual trends in terms of the number of individuals, entrepreneurs or employees active in cannabis cultivation. Research has shown, however, that such data is a very good proxy for analyzing drug crime trends in most cases (Warner and Coomer, 2003), but it should be triangulated with alternative indicators, when possible. Here, we use capture-recapture estimates of the number of active hydroponics cannabis growers for 1998–2002, as well as data on the number of hydroponics shops as alternative indicators upon which we can evaluate official crime data.

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Hydroponics Shop Data The data on the number and general characteristics of specialized hydroponics shops were taken from Quebec’s Enterprise Register database now available online on the Registraire des enterprises du Québec’s (REQ) website (available from: http://www.req.gouv.qc.ca/ default_eng.htm). The REQ is a government organization that maintains a public register to record identification data on enterprises operating in Quebec. Every profit-based business in Quebec is legally obligated to register with the REQ, with the exception of individuals operating a sole proprietorship business and using a business name that includes their first and last names. The REQ database replaced the former Central enterprise database (FCE), after the law governing registration (Act Respecting the Legal Publicity of Sole Proprietorships, Partnerships and Legal Persons [RSQ c. P-45]) was modified and came into effect January 1, 1994. The complementary FCE database is still available and has also been used to create the time series of hydroponics shops in Quebec. Our sample contains information on 160 enterprises that were active between July 1969 and June 30, 2006. A keyword search was needed to retrieve all enterprises that declared one of their main activities was the specialized sale of hydroponics equipment and supplies. The word “hydroponics” yielded 62 valid entries in the REQ database. Stores with no mention of “hydroponics” (of its French version “hydroponique”) in their business name or in their declared domain of activity were missing from this search. Another 77 new enterprises were found on the Yellow Pages website (http://www.yellowpages.ca/) under the category of “hydroponics equipment and supplies.” We retrieved their information from the register by using their name. Finally, 21 other enterprises were found on the complementary FCE database using the keyword “hydroponics.” Overall, it is possible that the sample underestimates the number of hydroponics stores by a small margin, but there is no reason to believe that it qualitatively modifies any of our findings. Stores that would not be included in the sample include: a) Stores that were active as hydroponics shops but that did not declare as such, and b) stores that were not active in 2006 or in Montreal. We manually checked all annual yellow page books for Montreal between 1970 and 2006 and discovered very few enterprises that were not already included in the sample. Business Characteristics Only a few business characteristics are publicly available in the REQ database: business location, start and end date of activity, number of employees, legal form (incorporated company/sole proprietor/partnerships), and the presence of a notice of default in the record. The last three variables are missing for most of the enterprises retrieved from the FCE database (N = 21). The descriptive data indicates that the industry is widely represented in every region in Quebec, and not particularly concentrated in Montreal. The city represents more than 25% of the Quebec population and 21.9% of hydroponics shops were located in Montreal. Most of the shops are very small: 29% of owners declared having no employee, 59% had between 1 and 5 employees, and 12% had six or more. At least 10 out of 17 of these larger enterprises (6+ employees) appeared to be general garden centres, rather than specialist shops. They were preserved in the analysis because they officially presented their enterprises as hydroponics equipment suppliers. Finally, more than 70% of enterprises were owned by an incorporated company, as opposed to being identified to a sole proprietor (24%) or a partnership (6%).

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Compliance Rate Enterprises registered with the REQ must update their registration information every year by producing an annual declaration of activity. An enterprise that fails to produce the declaration is liable for a fine ranging from $200 to $2,000, which may double in the event of a repeat offence. Failure to produce an annual declaration generates a “notice of default” in an enterprise’s record. A compliance rate for the industry was calculated by recording the instances in which an enterprise received a notice of default and then complied by producing a late declaration. Enterprises that received a notice of default because they were already inactive were thus excluded from the analysis. Survival Time The survival time of each individual shop could be calculated by using the start and end date specified in the REQ database. A start and end date (if any) was systematically recorded for each enterprise, but not necessarily under the same heading. In a typical first registration for a company or a partnership, entrepreneurs will start by registering a date for the start of the company, and then a few days or weeks later, a business name. In the cases where entrepreneurs already have a registered company, they will update their record with a new name and a new start date (for that name). As for sole proprietors, they typically register a start date for their business name, and not for a company. The business name more realistically identified the point of entry and thus we preferred it when it was found in the file (N = 121). The date for the start of the company was chosen for files not updated with a different business name (N = 39). A total of 67 enterprises exited the industry during the period under study. Very few of them notify the REQ and update their status once they become inactive. When the REQ does not receive an enterprise’s annual declaration of activity for two consecutive years, the enterprise is struck off ex-officio and an end date is recorded. Using this date would overestimate the survival of individual enterprises. In these cases, we used the date for which the enterprise received their last notice of default as the closing date. Rather than a precise count of the number of days an enterprise was opened for business, the survival time of individual enterprises should be considered as a slight overestimation of the actual figure. The survival time was used to calculate failure rates that could be compared to our flower shop sample. The Flower Shop Sample One of the objectives of the current study is to compare compliance and survival time of hydroponics shops with a comparable industry: flower shop retailers. Because the number of flower shops is too large (more than 1200 in Quebec, Réseau de Développement de l’Industrie Florale [RIDF] 2006), we retrieved from the REQ database only the flower shops which had the key words “flower + boutique” in their business name. One advantage of the sampling procedure is that it led to an acceptable sample size (N = 127) which covered a time period similar (1972–2006) to the one found in the hydroponics shop industry. The hydroponics and flower shop samples differ slightly on the general business characteristics available in the REQ files. The proportion of sole proprietors is larger (46 % vs. 24%) and the proportion of incorporated companies smaller (39% vs. 70%) in the florist sample. Not unexpectedly, this leads to a higher proportion of flower shops with no employees (41% vs. 29%), and a smaller proportion of larger 6+ enterprises (3% vs. 12%). A comparable proportion of hydroponics (22%) and flower shops (19%) were located in Montreal.

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Results Figure 1 compares the evolution in the number of hydroponics shops and in the number of cannabis cultivation offences recorded by police agencies between 1977 and 2005 in Quebec, Canada. Starting with the cannabis curve, it suggests that a major change occurred in the cannabis cultivation industry in recent years. The change also took place in a very short period of time. Police data prior to 1990 included very few cultivation offences (about 100 recorded offences per year). Subsequent to 1990, recorded offences increased almost without interruption to close to 3000 in less than 15 years—the most rapid growth occurring between 1993 and 1997. As would be expected from the symbiotic relationship hypothesis, the curve for hydroponics shops is very similar. Between 1993 and 2003, both the number of cannabis cultivation offences and the number of hydroponics shops have been increasing at a very fast pace. Both curves also show signs of stabilizing in recent years. Figure 1, however, shows that the hydroponics industry existed for quite a while before cannabis growers took notice and adopted the technique in large numbers. As early as 1986, more than 20 hydroponics shops were dispersed around the province. Meanwhile, the number of cannabis cultivation cases had reached its lowest point in the series. The initial rise in the number of hydroponics shops from 1977 to 1988 was followed by a decline from 1989 to 1993, before the industry took off in 1994. Interestingly, the revival of the hydroponics industry seems to correspond to the emergence of hydroponics in the cannabis industry. Bouchard (2007b) showed that hydroponics appeared in arrest data in significant proportions only in the mid-1990s. In fact, as late as 1997, only a little over 100 arrests for hydroponics cannabis cultivation cases were made by police agencies in Quebec.

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Figure 1. The number of cannabis cultivation offences and the number of hydroponics shops in Quebec, Canada, 1977–2005.

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18 Nb of hydroponics businesses

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Figure 2. The number of entries and exits in the hydroponics shops industry, Quebec, 1969–2006.

The recent expansion in both the legitimate and illegitimate industries deserves a more detailed examination. Between 1993 and 2003, the number of hydroponics shops rose from 15 to 90, at a pace of close to seven new shops annually. A similar trend was exposed in a recent report from South Australia, which indicated that the number of hydroponics shops went from 10 in 1992, to more than 90 in 2000 (Review Panel, 2002). The significance of the growth is further illustrated when we examine entry and exit patterns (Figure 2). From 1997 to 2003, a total of 93 shops entered the industry. Apparently, this wave of entries was supported by a high volume of customers: only 31 businesses exited during the same period. We are not aware of any sudden enthusiasm by home gardeners for growing vegetables hydroponically that would justify the entry of 62 new shops in seven years. In fact, trends do not appear to match, as far as commercial hydroponics production of vegetables and flowers is concerned. Carrier (1999) reported that the Quebec industry peaked between 1988 and 1991, and that it was in a consolidation phase at the end of 1990s. The most plausible hypothesis for these additional shops was that the majority of their clients were cannabis growers. The evolution in the number of hydroponics shops and Bouchard’s (2007b) estimates of the number of hydroponics growers in Quebec between 1998 and 2002 were combined into Figure 3 in order to further illustrate this possibility. Estimates were only available for five years, but were sufficient enough to provide some observations. The five-year period appeared to be one of transition in the hydroponics cannabis industry, illustrating the end of a rapid growth period and the transition to a stabilization phase. Bouchard’s (2007b) study was inconclusive as to whether the important jump from 8,100 to 13,900 growers between 1998 and 1999 should be treated as realistic or as a measurement artefact. Examining the evolution in the number of hydroponics shops made this jump more plausible: it occurred in the middle of the steepest increase in the number of hydroponics shops in Quebec (1997–2000). Figure 3 also adds to the interpretation of the stabilization phase apparent in both industries in recent years. For three consecutive years, from 2004 to the first half of 2006,

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Figure 3. The number of hydroponics shops (1969–2006) and estimated number of hydroponic cannabis growers (1998–2002, from Bouchard, 2007b) in Quebec.

the number of hydroponics shops was stable in Quebec. In the last three years, 22 firms entered and 19 exited the industry (Figure 2). The stabilization phase also paralleled a similar trend observed in the hydroponics cannabis industry in 2001–2002 when the population of growers stopped increasing and stabilized at 15,000 growers. If we extrapolate (using Figure 1), and predict that the population of cannabis growers remained stable thereafter,1 we could expect the competition to intensify in the hydroponics industry, leading to more exits. The increasing exit to entry ratios found between 2003 and 2006 were consistent with these expectations (Figure 2). More than a quarter of all exits in the history of the industry occurred in 2003 and 2004 only. In 2004, for the first time in twelve years, there were more shops exiting (11) than entering (8) the industry. The intensification of competition is particularly noticeable in large city like Montreal, where more than 37% of the city’s industry exits occurred in 2003 and 2004. Failure Rates The 1990s were a good time to start a hydroponics shop. Based on the number of cannabis growers in Quebec, the demand for hydroponics was increasing rapidly, especially in the second half of the decade. If cannabis cultivation followed a classic diffusion curve, the steepest increase in growers should have occurred between 1996 and 1999. Using the symbiotic relationship hypothesis, we would expect the failure rates of hydroponics shops to be at their lowest during that time period. To find out if the failure rates of hydroponics shops differed along the curve, we divided the 1994–2003 period in three, distinguishing between shops that were part of the first wave of entries (1994–96), those that were in the rapid growth period (1997–2000), and those that entered in the last growth wave when the number of cannabis growers apparently stabilized (2001–03). The other two periods correspond to the beginnings of _________________________ 1. An indication of the intensification of competition in the cannabis cultivation industry is a decreasing wholesale price trend reported by various police reports (GRC, 2002) and confirmed by local growers interviewed by the first author for a different study.

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the industry (1969–79), and its first growth cycle (1980–93). For each period, we calculated the failure rates of hydroponics shops after one to six years in activity. Findings are shown in Figure 4. Overall, the failure rates resembled what is usually observed in industries with similar growth patterns (Utterback, 1994). The hydroponics shops that first entered the industry showed the most durability. Only one out of the eight enterprises that entered before the 1980s lasted less than five years, and four of them were still in operation in 2006. The most important finding, based on Figure 4, was that shops entering the industry in the middle of its fast expansion phase (1997–2000) were more durable than others. These stores could expect double the lifetime of shops that entered in the periods immediately preceding or following the fast expansion phase. Many of the shops that entered the industry in the first growth wave (1994–96) could not sustain themselves until the hydroponics cannabis industry gained its momentum, in 1996–97. Shops that entered the industry in the latter period (2001–03) were vulnerable as a result of an increasingly competitive industry. Are these failure rates particularly high, or low? We compared hydroponics shops’ general failure rates to those found in a sample of florists (N = 127). As Figure 5 shows, early exit rates for both industries were almost undistinguishable. About 22% of hydroponics and 27% of flower shops did not survive two years. However, after that point, the curves divide in two. Close to 37% of flower shops had failed before getting to three years of business activity, whereas the proportion remained at 25% for hydroponics shops. More than 50% of flower shops left the market before reaching five years. This proportion was only reached after 10 years in the hydroponics shop industry. Our flower shop sample could not be used to compare general trends in the industry. However, we knew from a recent report that flower and hydroponics shops were not evolving in the same market context: the number of flower shops decreased in the last 15 years, from 1,400 in 1991 to 1,200 in 2005 (RIDF, 2006). During the same period, the number of hydroponics shops increased from 16 to 91 (Figure 1). The different market

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Figure 5. General failure rates of hydroponics shops and a sample of flower shops in Quebec, 1969–2003.

context could thus explain the durability of hydroponics shops, or the slightly larger size, on average, of hydroponics shops compared to florists. However, the important result for this paper was that failure rates did not appear to be abnormally low. The median survival time of four years found for hydroponics shops (or less than 2.5 years for shops that already exited the industry) was much higher than it was, for example, for “commercial prostitution” establishments in Montreal in the 1980s (massage studios, escort services, strip clubs, etc.), which lasted an average of 6 to 18 months (Leguerrier, 1989). Complying with the Rules Managing a legal enterprise involves responsibilities and formal rules that strictly illegal entrepreneurs may not be accustomed to. One of these formal rules is the registration and annual production of a declaration of activity to the Registre des Entreprises du Quebec (REQ). When businesses fail to produce a declaration, they are cited with a notice of default by the REQ. Failure to produce a declaration two years in a row leads to an automatic revocation of their rights to operate their business. We examined the extent to which owners of hydroponics shops were complying with this formal rule. We identified enterprises that received a notice of default and that subsequently produced a late annual declaration of activity (excluded were the enterprises receiving a notice of default because there were already inactive). Only enterprises that started in 2003 or earlier were used in the analysis (N = 119). Findings indicated that 32.8% of hydroponics shops had a notice of default in their record. In order to determine if this was a good or bad score, we examined the compliance rate in our sample of flower shops. Results showed that flower shops were just as likely to be reminded of their obligations: 28.4% of florists in our sample failed to produce their annual declaration within the prescribed deadline. The difference in compliance rates between flower and hydroponics shops was too small to be interpreted as differential management practices, and could be explained by the higher failure rate found in the flower shop sample (Figure 4).

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Finally, we examined whether non-compliant enterprises were different from other enterprises. Our data was limited to a comparison of three variables: business size based on number of employees (0, 1-5, 6+), location (Montreal/others), and legal form (incorporated company/sole proprietor/partnership). We found that no variable significantly predicted storeowners’ non compliance with their obligations. A logistic regression analysis (not shown) also confirmed this finding.2 To summarize, non compliance did not appear to be a particular trait that could be attributed to a broadly defined type of enterprise, or to an industry. Discussion and Conclusions The hydroponics industry is a fast-growing sector of the horticultural industry. For example, the current paper shows that the number of specialized stores selling hydroponicsrelated products increased sevenfold in a matter of ten years (1993–2003) in Quebec, reaching 93 stores in 2006. What has caused the industry to develop so rapidly is, however, subject to controversy. The most plausible hypothesis, the one explored in this paper, is that much of this growth could be attributed to the development of the cannabis cultivation industry. This paper aims to answer the following research question: how important is the business of cannabis clients for legitimate hydroponics shops? Analyzing links between illegal and legal enterprises is a delicate issue, reserved for police rather than empirical investigations. In this paper, we take advantage of two macrolevel data series to compare the evolution of the cannabis and hydroponics industries. First, we find that cannabis and hydroponics data agree on the general trend: as police services discovered an increasing number of cultivation sites in the 1990s, a similar trend was developing in the hydroponics shop industry. Analyzing hydroponics shops’ data helps us specify the timing of adoption of hydroponics in the cannabis cultivation industry. The findings indicate that the number of hydroponics shops increased very rapidly in the latter part of 1990s, a finding that is consistent with previous research on the size of the hydroponics cannabis industry in Quebec. Second, we shed light on how potentially important is the business of the cannabis growers for hydroponics entrepreneurs. The greatest increase in the number of hydroponics cannabis growers was followed by the most rapid wave of entries in the facilitator industry (1997–2000). In addition, shops that entered in that particular period proved to be more durable than shops that entered in the period immediately before, or immediately after. Finally, increased industry competition and stabilization in the number of hydroponics shops in 2004 occurred soon after the number of cannabis growers stabilized in 2001–02. This link between the cannabis and facilitator industries does not translate into particularly “deviant” management practices on the part of legal entrepreneurs. First, survival rates of hydroponics shops compare favourably to those we find in the flower shop industry or to rates that we would expect from industries closely connected to illegal activities (Leguerrier, 1989). Second, compliance rates in producing an annual declaration of activity are similar in both industries. Overall, we find no evidence of irregular business practices in the hydroponics industry with the data available for the purpose of this study. _________________________ 2. Findings for flower and hydroponics shops go in opposite directions, further reinforcing the random character of non compliance behaviour in this sample. Non compliance is more likely for small, Montreal-based, and sole proprietor hydroponics shops. Conversely, flower shops’ non compliance is more likely for incorporated companies. Size or location do not appear to be important factors. Again, none of these differences were found to be statistically significant.

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The close connection between the hydroponics and cannabis industries does not mean that hydroponics entrepreneurs are guilty of anything other than, perhaps, turning a blind eye to the illegal activities of their clients. Willingly or not, however, hydroponics entrepreneurs acted as important facilitators to the development and establishment of an illegal industry. Industrialized countries could not be the setting for the development of a largescale illegal drug production industry unless local cannabis entrepreneurs were able to obtain easy access to: 1) The equipment and supplies necessary to grow cannabis in indoor settings, which reduces their vulnerability to detection (Bouchard, 2007b); 2) Advice on how to use the equipment, and how to solve problems when they arise—for example, bugs, fungus, odour control (Weisheit, 1992). Hydroponics shops could, and have, provided both to cannabis growers in Quebec. Entrepreneurship is about seeking and exploiting new business opportunities, and the 1990s were a good time to start a hydroponics shop in Quebec. Future research should try to disentangle the role of legitimate home gardeners in the growth of the hydroponics retail industry. Data on the size and activity level of associations of hydroponics home gardeners should be collected, and compared to the development of the industry. Surveying hydroponics entrepreneurs, their background, and their reasons for entering the industry would also be a good place to start investigating important questions, such as what the hydroponics industry would look like without the cannabis clientele. Acknowledgements The authors wish to thank Therese Brown, Maïa Leduc, Daniel Morency, and Dr. Rob Smith for their helpful comments and their assistance at various stages of this research.

Contact Information Martin Bouchard, School of Criminology, Simon Fraser University, 8888 University Drive, Burnaby, BC, Canada V5A 1S6 Phone: 778-782-8135/Fax: 778-782-4140 [email protected]

References Adler, P.A. 1993. Wheeling and Dealing: An Ethnography of an Upper-level Drug Dealing and Smuggling Community, 2nd ed. New York, Columbia University Press. Aldrich, H. 1990. “Using an Ecological Perspective to Study Organizational Founding Rates,” Entrepreneurship Theory and Practice (Spring): 7–24. Australian Bureau of Criminal Intelligence. 2000. Australian Illicit Drug Report 1998–99. Canberra, Australia, Australian Bureau of Criminal Intelligence. Available from: http://www.crimecommission.gov.au/html/pg_aidr1998_99.html Bouchard, M. 2007a. “A Capture-Recapture Derived Method to Estimate Cannabis Production in Industrialized Countries.” Paper presented at the First Annual Conference of the International Society for the Study of Drug Policy, Oslo, March 2007. ——. 2007b. “A Capture-Recapture Model to Estimate the Size of Criminal Populations and the Risks of Detection in a Cannabis Cultivation Industry,” Journal of Quantitative Criminology 23: 221–41. Bourgois, P. 1995. In Search of Respect: Selling Crack in El Barrio. Cambridge, Cambridge University Press. Carrier, A. 1999. “Status of the Greenhouse Industry in Quebec, Canada,” Acta Horticulturae 481: 743–48. Available from: http://www.actahort.org/books/481/481_91.htm Gendarmerie Royale du Canada. 2002. Prix des Drogues Illicites au Canada Juin 2002. Ottawa: Section de l’analyse antidrogue, Sous-direction des analyses criminelles, Direction des renseignements criminels, Gendarmerie Royale du Canada. Hassall and Associates. 2001. Hydroponics as an Agricultural Production System. Rural Industries Research and Development Corporation Publication 01-141. Available from: http://www.rirdc.gov.au/reports/Ras/01-141.pdf

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Le Quotidien. 2002. “Sagamie Hydroponique” (March 29): 14. Leguerrier, Y. 1989. “Les Entreprises de Prostitution Commerciales: Les Commerces Ephémères des Marches Illicites,” Criminologie 22: 35–63. Mitchell, B. 2002. “Cannabis Set Up Operation Busted,” Toronto Star (March 29): B02. Morselli, C. and C. Giguere. 2006. “Legitimate Strengths in Criminal Networks,” Crime, Law, and Social Change 45: 201–26. National Competition Policy Legislation Review. 2002. “Licensing of Hydroponics Retailers,” Practical Hydroponics and Greenhouses. Available from: http://www.hydroponics.com.au/legislation.html#five Paul, C. 2003. “Retail Industry Reforms,” Practical Hydroponics and Greenhouses 73. Available from: http://www.hydroponics.com.au/back_issues/issue73.html Réseau de Développement de l’Industrie Florale. 2006. Bulletin d’Information du Réseau de Développement de l’Industrie Florale 1, no. 5: 1–2. Available from : http://www.fihoq.qc.ca/infolettre-rdij-jan-2006.pdf Review Panel. 2002. Proposal to Licence Hydroponics Equipment Retailers: Report of the Review Panel. Government of South Australia, National Competition Policy Review. Available from: http://www.premcab.sa.gov.au/pdf/competition/ncp_hydroponics_review.pdf Roberto, K. 2005. How-To Hydroponics, 4th ed. Farmingdale, NY: Futuregarden. Statistic Canada. 2007. Crime Statistics, by Detailed Offences, Annual (Number), 1977 to 2005. Ottawa: Statistics Canada. Utterback, J.M. 1994. Mastering the Dynamics of Innovation. Boston, Harvard Business School Press. Warner, B.D. and B.W. Coomer. 2003. “Neighborhood Drug Arrest Rates: Are they a Meaningful Indicator of Drug Activity? A Research Note,” Journal of Research in Crime and Delinquency 40: 123–38. Weisheit, R.A. 1992. Domestic Marijuana: A Neglected Industry. New York, Greenwood Press.

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Value-adding and Value-extracting Entrepreneurship at the Margins Kirk Frith, University of Lincoln, Lincoln, United Kingdom Gerard McElwee, University of Lincoln, Lincoln, United Kingdom ABSTRACT. Empirical data is reported from two case studies on the methods used to establish and grow the businesses of two entrepreneurs operating in very different environments: one legitimate, the other illegitimate. Both utilize strong social skills to legitimize their behaviours but neither can be considered as mainstream or conventional entrepreneurial actors. The findings suggest that, despite the very different outcomes associated with their actions, both entrepreneurs exhibit similar enterprising skills and managerial capabilities as found in entrepreneurs engaged in non-marginal activities. RÉSUMÉ. On rapporte ici des données empiriques, provenant de deux études de cas, sur les méthodes utilisées pour mettre en place et exploiter deux entreprises opérant en milieux fort différents—l’un légitime et l’autre non. Les deux entrepreneurs se servent de solides aptitudes sociales pour légitimer leurs comportements, mais ni l’un ni l’autre ne peuvent être tenus pour des acteurs entrepreneuriaux conventionnels ou de type majoritaire. Nos conclusions démontrent qu’en dépit des résultats très différents découlant de leurs actions, ces deux entrepreneurs possèdent des capacités d’initiative et des compétences de gestion similaires à celles des entrepreneurs engagés dans des activités non marginales.

Introduction Entrepreneurship is widely regarded as a driver of economic development and growth (Harper, 2003). Williams (2008) argues there appears to be a clear distinction between “necessity-driven” entrepreneurs pushed into entrepreneurship because other options for work are absent or unsatisfactory, and “opportunity-driven” entrepreneurs who engage in entrepreneurship out of choice. In this paper, however, we utilize a different bifurcation of entrepreneurs operating at the margins: “value-adding” and “value-extracting” entrepreneurs. To do this, empirical evidence will be presented from interviews with two entrepreneurs. This paper will first define what is meant by entrepreneurship at the margins. It will then comment on the bifurcation of entrepreneurs at the margin as “value-adding” or “value-extracting” and the extent to which the activity of these entrepreneurs can become accepted and/or tolerated by external actors particularly if an ethical code is adopted and followed. This will be illustrated and explored by two case studies; one of a “social entrepreneur,” and one of a drug dealer. Both entrepreneurs, as will be seen, exhibit characteristics, for example, strategic awareness, opportunity spotting and networking, usually associated with more traditional notions of entrepreneurship. The final section will bring together some conclusions about the relevance and insights that can be drawn by deliberately dichotomizing “value-adding” and “value-extracting” entrepreneurship as a mechanism for understanding the challenges and constraints faced by entrepreneurs who operate at the margins. The first task is to define what is meant by “entrepreneurship at the margins,” “valueadding,” and “value-extracting.” Clearly, entrepreneurship at the margins can be located

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within what Williams (2006) refers to as the informal economy but, and as will be seen, this is not necessarily a specific characteristic. Entrepreneurship at the Margins The promotion of enterprise and entrepreneurship has tended to focus on business startup in the formal sector and, as a consequence, has paid little attention to the nature and types of entrepreneurship that occur at the margins. Research into entrepreneurship at the margins has sought to explore why certain groups and individuals, despite not fitting the conventional description of the entrepreneur, have managed to engage in enterprise and entrepreneurship. As an academic discipline, entrepreneurship has always been concerned with understanding how entrepreneurs work at and beyond the boundaries of what is known and, occasionally, of what is accepted in the pursuit of profits. However, the majority of research exploring entrepreneurship at the margins has tended to focus on the marginalized entrepreneur rather than on entrepreneurship at the margins per se. Cases of entrepreneurship involving minority entrepreneurs (Galloway, 2007), illegal enterprises (Rehn and Taalas, 2004; Smith, 2007; Williams, 2008), drug dealers (Frith and McElwee, 2008a, 2008b) and other such marginal activities (Storr and Butkevich, 2007) have been the most common instantiations of this type of research to date. The individuals involved in these enterprises have been commonly portrayed as deviant and often as social outcasts who operate at the margins of society. This type of research has, by and large, documented cases of entrepreneurship that mainstream, and hence more widely accepted, entrepreneurship research has tended to ignore. The activities pursued in this type of research have generally been small in scale and to have had relatively little impact upon the wider community in which they have been situated. Frith and McElwee (2008b) argue, however, that these actors have both an economic and a social function, both of which offer critical but in themselves insufficient insights into entrepreneurship at the margins. Nevertheless, as Galloway (2007: 271) suggests, research exploring entrepreneurship at the margins has helped to challenge “current stereotype-based knowledge” and draw attention to the heterogeneity or diversity of entrepreneurial activities and individuals which, according to Schindutte et al. (2005: 27–28), has furthered the “development of … theory regarding the larger population.” In much of the recent literature on entrepreneurs’ motives, there has been a tendency to differentiate between necessity- and opportunity-driven entrepreneurs (Harding et al., 2006; Maritz, 2004; Minniti et al., 2006; Perunovic, 2005). This paper argues, however, that squeezing entrepreneurs into one side or the other of this either/or dichotomy oversimplifies entrepreneurs’ motives and obfuscates how they change over time. This necessity/opportunity dualism is not only too simplistic to explain entrepreneurs’ motives since both necessity and opportunity factors are commonly involved, but there is often a temporal fluidity in their motives, usually from necessity-oriented to opportunity-oriented factors. The lived practice is therefore more integrative and dynamic than captured by this static either/or dualism. Furthermore, concentrating exclusively on the motives that underlie entrepreneurial action necessarily avoids discussion of the social consequences of their activities. As such, we turn to another important, though frequently overlooked dualism within the entrepreneurship literature, that of value-adding and value-extracting entrepreneurship. “Value-adding” and “Value-extracting” Entrepreneurship For Kirzner, a substantial proportion of entrepreneurial activity does not occur at the

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margins, does not enrich or expand the totality of human knowledge but, nevertheless, helps to improve market efficiency and overall economic welfare (Kirzner, 1973). Entrepreneurs who are engaged in activities of arbitrage, for example, are considered as value-adding entrepreneurs as they work to ensure that resources are put to their most productive or profitable use. Value-adding entrepreneurship can therefore be defined as those types of entrepreneurial activities which are legitimate but which do little to change or affect the margins within which they operate. Value-extracting entrepreneurship can be defined as those types of entrepreneurial activities that occur within existing margins but which impoverish or damage the community within which they occur. Illegal enterprises, including drug-dealing and fencing (selling “hot” or stolen goods), for example, are perhaps the most common forms of this type of activity and tend to follow or mimic very closely legitimate forms of entrepreneurship. Indeed, removing or ignoring the moral or ethical issues associated with such activities renders them almost imperceptible from traditional forms of entrepreneurship. Smith (2007: 245) argues that entrepreneurship at the margins should move away from mainstream or typical cases of entrepreneurship and instead focus on cases of entrepreneurship that are at the “edge of the known and accepted” as there are “many areas of entrepreneurship that exist at the boundaries of our knowledge and that are worthy of further study.” Although this definition focuses attention upon entrepreneurship at the margins as opposed to entrepreneurship on the margins, it makes it clear that there is an aspect of entrepreneurship (level of acceptance) that is very important to the growth and survival of such endeavors. As argued above, there are entrepreneurs working within the margins of what is known and accepted; however, there are also entrepreneurs whose activities help to influence and shape the margins themselves. As such, we take the view that research should be concerned with all types of entrepreneurial activities at the margins which themselves are in the process of being challenged, reconsidered, redefined, and, in certain circumstances, redrawn altogether. This paper explores, with specific reference, the processes and mechanisms used to achieve and leverage degrees of acceptance. Entrepreneurship at the margins poses ethical and moral issues for both the entrepreneurs themselves and the actors with whom they interact. For some commentators, entrepreneurship and ethics appear as conflicting forces. Wempe (2005), for example, argues that, until very recently, entrepreneurship and ethics were regarded as naturally opposed: There is the view that ethics (together with the law) limits entrepreneurship. Ethics (and laws) formulates standards that give entrepreneurship some space. Ethics and entrepreneurship are seen as two entirely separate areas. Entrepreneurship is viewed as amoral, or perhaps even as immoral. Entrepreneurs need to exploit opportunities and consider all options. This should occur within the boundaries set by the law, and complemented by ethics. (Wempe, 2005: 215) Atherton (2004) argues that as a result of this dynamic, the majority of entrepreneurship research has deliberately overlooked or simply not considered the ethical dimension. A reason for this, according to Wempe, is that entrepreneurship has traditionally been understood as an economic pursuit in which self-interest or the interests of small groups of individuals predominate—especially in situations where the future of a business is at stake and the investment and future well-being of the owner is in jeopardy (Schramm, 2006). As a consequence, entrepreneurship and ethics have tended to be kept as separate academic disciplines (Hannafey, 2003). Given that entrepreneurship involves exploiting

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better or superior information than is possessed by trading counterparts (Kirzner, 1973), ethical considerations appear particularly intractable. As a consequence, the entrepreneur has been most commonly presented as a lone individual, a maverick hero whose skills and expertise in opportunity-spotting are singularly concerned with profit maximisation (Nodoushani, and Nodoushani, 2000). However, depictions of the entrepreneur as a dispassionate and efficient calculator of economic costs and benefits neglects that fact that entrepreneurs are socially active individuals whose actions and behaviours alter, both positively and negatively, the environment within which they and others both work and live. Furthermore, such characterisations do not resonate with real-world accounts and experiences in which entrepreneurs are often seen to be at the forefront of social change. To illustrate this dynamic, two very different case studies are presented in order to explore in more detail the challenges facing entrepreneurial individuals who are prepared to initiate ventures that are on or transgress the boundaries of what is known and/or accepted. The first case study used in this paper charts the developmental history of a social enterprise based in the East Midlands of the UK, while the second case study charts the developmental history of a drug-dealing circle also based in the East Midlands of the UK. This theoretical approach is in keeping with the suggestion of Etzioni (1987: 175), who argued that the activities of entrepreneurs help to change obsolescent and ossified societal patterns: entrepreneurship is studied here as the force that promotes societal reality testing. Societal patterns (institutions, organizations, rules, etc.) tend to ossify, lagging ever more behind constantly changing environments. Entrepreneurs, by promoting new patterns, help bring society and its component units in touch with reality … the focus here is on the contribution of entrepreneurship to the society at large and the economy embedded within it. The two cases presented seek to explore in more detail the assertion made by Etzioni and to explore the notion of societal reality testing in greater depth. Methodology The entrepreneurs in both of these cases were interviewed over a number of months in 2006 by one of the authors using what has been termed the “phenomenological interview” as initially proposed by Thompson et al. (1989) and discussed by Cope, where: “the aim of the interview is to gain a first person description of some specified domain of experience” (2003: 15). Unstructured interviews were used to allow the respondents a choice in what account they gave, thereby avoiding imposing too much form on the nature of the response. Using relatively unstructured techniques allowed the interviewees to feel free to describe their experiences in some detail without putting them either under any pressure to respond in a particular way, as much as is practicable, or indeed to push them in any particular direction. Interviewing and visiting both interviewees on a number of occasions over a period of several months also helped to develop a strong rapport between the interviewer and interviewee which, in turn, improved the interview responses both in terms of openness and honesty.

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Case Study: Hill Holt Wood History Hill Holt Wood, a 34-acre ancient woodland in Lincolnshire, was purchased by Karen and Nigel Lowthrop in 1995. The purchase capital of £30,000 was raised through the sale of the Lowthrops’ fencing company which they had owned and managed for the previous 10 years. Hill Holt Wood was in very poor condition when Karen and Nigel first took ownership; invasive rhododendron had taken hold of large tracts of land, the drainage system had been severely damaged leaving much of the surface area of the woodland waterlogged and inaccessible, and the vast majority of the quality timber had been removed and sold. However, Karen and Nigel felt that they had the knowledge and the motivation required to restore Hill Holt Wood to its original or natural condition. In 1996, Karen and Nigel sold their house and used the proceeds to purchase a 30-foot American Winnebago. Within weeks, Karen and Nigel had moved into the Winnebago and onto the woodland so as to save the morning/evening commute time to and from the wood as well as to demonstrate to their neighbours and the local community their commitment to the development of the site. Nigel felt strongly that the interest and support of the local community would prove essential if the project was going to succeed: When we first arrived there was a lot of suspicion with regards to what we were doing and why we were doing it. I think people thought that we were radical environmentalists and that the wood was going to be filled with “tree-huggers” and other such types. We had to work really hard to demonstrate to our neighbours that we were genuinely interested in making a difference so we decided to try and include them in every step of the project. In the first instance, involvement with the community took the form of simple measures such as attending local events, meeting and speaking with their neighbours and inviting as many people to come and visit them in the woodland as possible. This, Karen and Nigel felt, helped to break down some of the suspicions that they had picked up on when they first arrived, before they had time to take root. Two years after the purchase of Hill Holt Wood, Karen and Nigel established the Hill Holt Wood Management Committee as a permanent link between themselves and the local community. The committee was designed to act in an advisory role and included representatives from a number of local organizations as well as a number of influential locals. There were many reasons given for establishing the committee, the most significant being the need to increase the input from the local community, improve the overall transparency of the project, and create a greater sense of shared ownership: I use those words [transparency, openness, trust, inclusiveness] in reports that I write, and use them to explain how we developed the trust of the local community and how to get community support and that’s why I’m always telling people everything about the business and involving as many people as possible, you know, I’m sticking to my principles, I’m saying that we are open and transparent and we will tell people how much the site is worth, how much we earn, how much the business turns over, everything! However, despite the very obvious success enjoyed by Karen and Nigel and all those involved in and associated with Hill Holt Wood, the key challenge, convincing external

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stakeholders and organizations of the benefits of Hill Holt Wood’s approach to woodland management, was still very difficult: the farmers’ union still don’t see it and they still don’t understand it and they still don’t listen to it, they still dismiss it as a one-off, you know, they don’t see how it could impact on other sites. They always say that you might do one per county, that’s always been the argument, now, if I can get a mirror project set up two miles to the east of us and another one two miles to the west of us, one of which is bigger than Hill Holt, and, erm, if, if they work to the level that I think they can work, then in three years’ time the total jobs employed on those three sites could be 80, possibly 90, with a turnover of £3,500,000, maybe £4,000,000 … now if we can do that, then they can’t argue with it, they can’t argue that there is an approach that they can’t apply to an awful lot of farmland, to a lot of sites around the country. In an attempt to convince outsiders of the merits of Hill Holt Wood, Nigel worked extensively and almost exclusively on promoting to others the work that was being undertaken at Hill Holt Wood. One dimension to this promotion was giving talks and presentations across the UK. However, the biggest challenge was encouraging people to come and see the woodland for themselves: To start with it was like pulling teeth, we were just dismissed and nobody wanted to talk to us let alone to come and visit the site … it’s very difficult as a small project to get recognized, to get seen, apart from the fact that you’ve got no track record and the who the hell are you kind of attitudes, but there’s also the fact that if you’ve got government departments that fund projects that they can hold them up as successes and what they don’t want is some independent who’s actually doing better than their funded project. The next important step in the development of Hill Holt Wood was to make the project economically sustainable and to demonstrate the viability of their strategy. Through his contacts in the local area, Nigel discovered that there was an opportunity to provide on-site courses for local young offenders who had been excluded from mainstream education. In exchange for working with these young people and teaching them basic life skills such as teamwork and responsibility, Hill Holt Wood would receive appropriate remuneration per student per day. Nigel realized that he could use these young people to help him to achieve his vision for Hill Holt Wood and so he tailored the learning courses around improving, managing and maintaining the learning environment (i.e. the wood itself). The first group of learners arrived at Hill Holt Wood in 1998. The new direction taken by Hill Holt Wood as a result of pursuing this opportunity opened a number of new avenues and brought the project to the attention of a wider range of individuals and groups that previously would not have been interested in the project: We’ve had visitors coming to the site from any number of different agencies including DEFRA [The UK government Department of Environment, Food and Rural Affairs], the DTI, [The UK government Department of Trade and Industry], the Office of the Deputy Prime Minister, the Forestry Commission; we’ve even had visitors from the royal family. That’s what’s so great about what we’re doing, it appeals to so many different organizations on so many different levels. The

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more stakeholders we’ve got interested in Hill Holt Wood the easier we’ve found it to do the thing—the difficulty was in getting them here in the first place! In 2001, Karen and Nigel were granted planning permission for the building of an ecohouse in their woodland. The planning permission for the eco-house was granted by the District Council in part recognition of the business-generated income that was beginning to come from forestry and business-related activities ancillary to forestry. However, Karen and Nigel feel that the planning permission would not have been given without the hard work and support of the local community. In keeping with this belief, Karen and Nigel elected to increase the community membership from the initial four-parish network established in 1997 to an 11-parish network by 2002, covering a total population in excess of 10,000. In late 2002, and at the insistence of Karen and Nigel, the Volunteer Board of Directors (VBD) took full control of Hill Holt Wood (buying Karen and Nigel out of the business for a fee well below the true market value but allowing them to proportion off a part of the woodland for their new house). The VBD asked Karen and Nigel to continue in their roles as manager and director, respectively. Selling Hill Holt Wood to the community was, according to Nigel, a key factor in ensuring the long-term sustainability of the project: People thought we were barmy when Karen and I gave up the business and gave it to the community but we’ve actually done better out of it personally than if we’d stayed running it. It’s interesting that the executive committee actually argued with me in favour of my salary going up! The move into becoming a social enterprise was driven by considerations of sustainability; it helps to make the business more sustainable, it helps to make the community link more stable. The real difference is how the business is becoming less dependent on me; it won’t be long now until it is totally independent. I think it could survive without me… If Karen and I both left, it would, it would be too difficult at the moment but, I guess, in another year or so I think it would be fine, it might even do better! Throughout this time, the numbers of learners arriving at Hill Holt Wood grew steadily as did the numbers of staff employed as rangers or as administrative assistants. In addition Hill Holt Wood was awarded a number of local, regional and national awards in recognition of their achievements both for enterprise and entrepreneurship as well as for their contribution in developing new approaches to helping young offenders find new meaning in their lives and careers. With regards to the future, Karen and Nigel both feel that they have developed a business that can be used as a template for other similar projects across the country: It’s now taking that and saying that it can happen all over the country. It will be difficult to set up more projects like this along the same sort of lines; the element of community control, the element of environmental lead and the different approach to the countryside, it’s difficult to win people over in the short term but we’ve proven that if you persist, it can be done. However, despite the success of the project to date, the desire to convince an ever increasing audience of the merits of their approach appears not to have diminished:

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Table 1. Key Achievements Timeline

Key Achievements

1995

Hill Holt Wood Purchased by Karen and Nigel Lowthrop

1997 1998

Management committee established Friends of Hill Holt Wood formed Education, Environment and Financial committees established First learners arrived (New Deal) Runners up Lincolnshire Environmental Award

People Employed

Employs 3 staff Employs 3 staff

1999

First straw-bale building erected

Employs 3 staff

2001

Planning permission granted for eco-house

Employs 3 staff

2002

“Solutions 4” learners arrive Social enterprise formed Investor in People standard awarded (IIP)

Employs 6 staff

2003

“Employment-2-Enterprise” contract awarded

Employs 8 staff

2004

Royal visit IIP retained

Employs 17 staff

2005

Adult learning inspectorate passed (Grade 2) Winner Enterprising Solutions Award Winner Entrepreneur of the Year Award Winner Lincolnshire Environmental Award (group award)

Employs 18 staff

It’s the underlying idea, I’m trying to win people over to the idea, to the underlying concept of sustainable development, and to the benefits that can be gained by linking the urban with the rural. It’s great to be involved in a whole string of meetings now about that and talking at conferences and being sought out for conferences and so on. Discussion As can be seen from the case study of Hill Holt Wood, the challenges facing new and innovative businesses are often acute. Even in cases where the social benefits appear quite obvious to outsiders familiar with the project, there tends to be strong resistance when old patterns and routines and established ways of working are challenged and shown to be outmoded. Karen and Nigel attempted to overcome these challenges by taking an inclusive approach, by involving as many people as possible in their project. However, including local stakeholders in the project involved more than simply allowing them to walk around the woodland; it required full and ongoing communication between both parties. This approach allowed Karen and Nigel to develop strong relationships with the key stakeholders in the area and to gain the trust that was so critical in terms of developing and expanding the site. Once the trust of the local community had been gained, it was essential for the long-term sustainability of the business to get other, and possibly more powerful, stakeholders involved in the business. However, the challenges of involving more distant stakeholders were far greater for a number of reasons. Firstly, the greater the distance away from the site these stakeholders were, the more difficult it was to convince them to visit the site. Secondly, the less proximate these stakeholders were, the less like stakeholders they felt and so the less interest they had in the project. Nevertheless, as far as Karen and Nigel were concerned, these individuals and organizations were stakeholders and were perhaps the biggest obstacle in the way of securing the future of Hill Holt Wood. As such, Karen and Nigel expended a great deal of effort in trying to contact these stakeholders and in trying to communicate to them the benefits of adopting their approach to woodland management.

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Gradually, over time and on the crest of the “green wave,” more and more individuals from across the UK began to visit and become involved in the Hill Holt Wood project, culminating in a visit from HRH the Earl of Wessex. The visits of such key individuals made a significant difference in terms of Hill Holt Wood’s ability to open the doors to other stakeholders, to get them interested and to encourage them to contribute to the project. The issues discussed here are not unique; indeed, in many ways it is the archetypal story of the entrepreneur emerging victorious against all odds. Such stories which depict hard-working and devoted individuals in pursuit of their dreams of and for a better world are pervasive. The promotion of entrepreneurship has been based largely on this type of story with the inference that individuals who are successful in their private endeavors will improve not only their own economic well-being but also that of others. Entrepreneurship, from this perspective, is understood and [re]presented as both a private and a public good. However, the prevailing assumption that underpins such stories has come under increasing scrutiny in recent years; “there are a variety of roles among which the entrepreneur’s efforts can be [allocated], and some of those roles do not follow the constructive and innovative script that is conventionally attributed to that person” (Baumol, 1990: 894). Case Study: Jim Smith History Jim Smith studied for a business management degree at university from 2002to 2005. Prior to beginning his studies, Jim Smith worked five years for a large company as a lowlevel department supervisor. However, a lack of on-the-job recognition and a feeling that the rewards he was given were not commensurate with the efforts that he was making, meant that he made a decision to go on to further education. Jim Smith knew, however, that he would not be in receipt of any financial assistance whilst he was studying and that, as a result, he would be obliged to support himself throughout his studies. As such, Jim Smith arrived at university anxious to find a suitable means for making enough money to cover his expenses. By nature a gregarious and inquiring individual, Jim Smith made a number of new friends and acquaintances within his first few weeks at university. It was at a campus party that he noticed a number of students sitting around smoking marijuana. After a long and informative conversation, Jim Smith discovered that the marijuana had been brought to university by one of the students but that the quantity brought was almost exhausted. In addition, the students had remarked that they had no way of obtaining any further supply until they went home for the Christmas break (still three months away). Recognizing a very obvious level of demand and being made aware of supply shortages, Jim Smith quickly made the decision to travel home and find a marijuana supplier that he could trust and who would be prepared to make the long journey to university to deliver the product: The way I see it there’s only two ways to make money at university, well, there’s actually three; you can go and work for a retail shop or at a bar and earn four pounds fifty an hour, you can promote nights at local pubs and clubs which is what a lot of students do or you can sell drugs. It was an easy choice for me to make given my previous experience of the retail trade. Furthermore, Jim Smith expressed the opinion that if he hadn’t chosen to become a drug dealer then someone else would have taken his place and fulfilled that function: If people take drugs, they take drugs—that’s the bottom line. If people are smoking marijuana before they come to university, then you can

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pretty much guarantee that sooner or later they will find a new supplier. It just so happens that I noticed the opportunity before they got to meet the incumbent suppliers and so managed to take advantage of the situation. It was not a difficult decision for Jim Smith to make, especially given his view that this situation presented a very real opportunity for him to make the money he needed to pay his way through his studies: I think it was about November, October/November, when I started selling in large quantities. When I arrived at university, there were only two guys that you could go to for that sort of thing serving the whole student population. I mean, if you look at it, when I started there, there was maybe eight or nine thousand students, erm, and, I mean, only two people serving that market. I mean, you think, that’s not very competitive, you know, it sounded more like a monopoly, really! I think that most people stay well clear from supplying drugs, you know, they’re happy enough to consume the products, they’re just not prepared to take the associated risks of supplying them. Although word of mouth was the main driver in the growth and development of the business, Jim Smith also worked hard in actively promoting his products; Jim Smith continually asked the most popular students at the university, members of the students’ union as well as the university’s leading promoters (of night-club events), to help expand his business by referring as many customers to him as possible. In addition, Jim Smith used his position as a first-year living in university-supplied accommodation to network with his fellow students and to build his customer base as a result: I was in a great position to exploit the fact that the first-years didn’t know the area, didn’t know where to go to get their gear and didn’t really know anyone outside the first year. This meant that almost immediately I had a firm grip on my customer base. The main problem I had was expanding beyond that set of students, especially getting access to the first-years that didn’t live on campus. I used the friendships that I had developed both in class and outside to spread the word that I was the man who could help and, before I knew it, my phone started to ring all hours of the day and night. Of course, the marketing of illicit products presents a number of very significant challenges. Firstly, traditional marketing channels are not available, and secondly, and perhaps more worrying for the seller, as the business profile grows, so do the chances of being discovered by the authorities. However, when Jim Smith was asked whether he was concerned about being discovered, he replied that he was not. Indeed, during the course of the interview, it became very obvious that, although he was aware of the legal ramifications of being a drug dealer, he felt that what he was doing was not socially unacceptable and that, as a result, the chances of anyone “blowing the whistle” on him were fairly remote: I stayed away from all of the harder drugs, although I was occasionally asked if I could get hold of them. I think that people really don’t mind if someone’s selling marijuana and making a few quid on the side. On the other hand, I think people really look down on you if you’re selling things like crack or ecstasy and try and stop you from doing it. I wasn’t

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really doing anyone any harm and I think people knew that and so didn’t have a problem with me. As word spread amongst his fellow students, Jim Smith’s customer base grew rapidly and he soon found himself incapable of meeting demand (in terms of the time it took for him to visit all of his customers). As a result, Jim Smith made the decision to set up a number of smaller dealers and to begin working as a distributor. Again, this decision resulted in a number of distinct challenges and potential threats to the business and to Jim Smith himself. To counter these new dangers, Jim Smith decided that the best way to conduct matters was to bring all of his dealers together and to try and run the business as a kind of family business. To this end, Jim Smith encouraged his dealers to communicate with one another on a regular basis to discuss any issues/problems that they were having with their clients or with selling their products. In addition, Jim Smith organized bi-weekly meetings where all the dealers would get together over dinner and a few pints of beer. The work spent on developing these relationships was minimal in comparison to the benefits that it brought: I asked my guys to share their products with each other so that if someone was finding it difficult to sell their gear, the others could take over and shift it for them. This meant that I could make more orders of larger quantities on a more regular basis which was good for all of us. In addition, it was important that my guys didn’t try and take their customers from each other, you know, everyone was serving their own little niche, selling to their friends and so on, and so everyone had really good relationships with their clients which meant that there was a lot more trust embedded in the process than there might have been if everyone was just out for themselves. Building up strong networks of social trust also involved being very open with everyone and not trying to hide anything. The need to be open was particularly pressing when Jim Smith moved into shared accommodation for his second year of studies. All of Jim Smith’s flatmates were aware of the fact that he was selling marijuana (though none of them were involved in the business directly), and all of his flatmates had to accept the constant stream of visitors coming to the house at all hours. To limit any sense of annoyance that may have arisen, Jim Smith paid all the communal bills, including utilities and telephone and internet charges, as well as organizing frequent and all-expenses-paid nights out (courtesy of Jim Smith’s promoter friends). In return for these payments, Jim Smith’s flatmates were happy to tolerate the various goings-on associated with living with a drug dealer as well as, on occasion, passing some marijuana on to the other dealers if Jim Smith was unavailable: I know I was asking a lot of my flatmates to be using their home as the base for a drug dealing operation. I could have gone and lived on my own, but I didn’t want to lose that sense of being at university. I made sure they knew what it would entail before moving in and I reassured them that although I would be holding small quantities, I had arrangements for storing the large deliveries when they arrived so that there was no danger for my flatmates in case of a break-in or a bust. By the time Jim Smith’s studies were nearing completion, his activities as a drug dealer had become known by almost the entire student population. Although Jim Smith felt that this wasn’t a problem in terms of his security (and very probably good for business), the constant demands placed on him as a result were overwhelming:

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I had to be on my best behaviour at all times, you know, I had to go out and show my face at all the big evening events, but I had to be careful not to get too drunk in case I did anything silly and upset anybody. It was really difficult trying to keep everyone on my good side to prevent any negativity occurring, you know, it felt like being on a first date all the time. Although all these people were my customers, I felt exposed all the time and so, in some senses, I felt like I was their customer inasmuch as they held so much power over me. It got to be really hard on me and so as I was nearing the end of my time at uni I began to think about packing it all in and concentrating solely on my work. At approximately the same time as Jim Smith was contemplating cessation of trading, there was a break-in at his house. Although no one could be sure of the motives for the break-in, Jim Smith, in conversation with his flatmates, decided to stop all his activities and to make sure that everyone else knew as well: I have to be honest, it was really scary and I think it really upset my flatmates a lot. There was no way they would have let me continue dealing from the house even if I wanted to—which I didn’t. Although the breakin could have been just bad luck, the fact that it occurred really brought home to me and my flatmates the dangers that I was exposing us all to. I think I was naïve in a lot of ways, you know, I thought I could get in, make some money and get out, but maybe the break-in was a warning against such complacency. I stopped selling immediately and told my dealers that if they wanted to carry on, which I advised against, then they would have to find their own source of supply. As it turned out, lots of people quickly learnt of the break-in and all were supportive of my decision to get out of the business. The thing that struck me the most was that whilst I was selling the drugs I had no problem with doing it, but as soon as I stopped it really made me think about the dangers I had placed myself and others in. Discussion The details of the second case study suggest that the broad promotion of enterprise and entrepreneurship may not always lead to outcomes that are consonant with the assumption of economic and social development. Baumol (1990) argues that conceptualizations of entrepreneurship as a purely economic pursuit are too narrow. Indeed, Baumol (1990: 897–98) argues that such depictions are misleading as they do not consider the wider outcomes that often accompany entrepreneurial activities; “if entrepreneurs are defined, simply, to be persons who are ingenious and creative in finding ways that add value to their own wealth, power, and prestige, then it is to be expected that not all of them will be overly concerned with whether an activity that achieves these goals adds much or little to the social product.” Indeed, according to Schramm (2006: 279), although economic incentives may be at the heart of many entrepreneurial endeavors, it is important not to ignore the social outcomes that often arise; for many entrepreneurs “the temptation to set aside ethical standards is always present because the gains are so large for the individual who decides to work outside the rules.” This case study suggests, however, that understanding entrepreneurship as an individual activity does not correspond to real-world accounts of entrepreneurship where there is

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frequently a cited need, certainly if the business is to grow, to involve more and more people in a business. As such, the “temptation to set aside ethical considerations” applies not only to the entrepreneurs themselves, but also to all those individuals who are involved in the enterprise in some way or fashion. Referring back to Etzioni’s (1987) notion of societal reality testing, this case study suggests that entrepreneurs who are able to generate sufficient social capital are able to involve people in activities that they would normally have left well alone. The two case studies are almost polar extremes of what can be achieved at the margins of entrepreneurship. Hill Holt Wood reads very much like a pioneer story where the vision of one family, over many years, began to influence national policy on woodland management and conservation. The case study is concerned with both the margins of what was known and of what was acceptable, but through hard work and perseverance, the unknown became the known and the unacceptable became the accepted. In effect, the margins were redefined in favor of Hill Holt Wood and in favor of the innovations introduced therein. The consequences of this newly acquired endorsement were such that new but similar projects immediately began to spring up across the UK with the full and immediate support of both local and national organizations. The second case study, on the other hand, demonstrates that entrepreneurs can take advantage of the uncertainty that exists at the margins to further their own levels of personal gain. Furthermore, in doing so, the behaviours and ethical considerations of associated and proximate individuals can be compromised. In such instances, the margins, certainly at a local level, are redrawn again but this time at a cost to society rather than at a gain. Given such activities, it is somewhat disconcerting that the acknowledgement that entrepreneurship is, in some cases, as extractive as it is additional is remarkably absent from the majority of entrepreneurship texts despite some well-founded and astute observations; it is often assumed that an economy of private enterprise has an automatic bias towards [improvement], but this is not so… It has a bias only towards profit” (Hobsbawm, 1969: 40). Although a great deal of entrepreneurship research does not explore the ethical consequences of entrepreneurial activities, it is clear that many entrepreneurial initiatives do much to influence and shape the behaviours and ethics of the communities within which they occur. The first case study demonstrated, both locally and nationally, that there was a need to increase awareness of the importance of ancient woodlands. The second case study demonstrated that people are prepared to turn a blind eye to the activities of their friends if those activities do not cause them any discomfort or harm. Both case studies suggest that there is still a lot of research that needs to be done to further our understanding of how entrepreneurs shape the social expectations or ethical frameworks within which they operate (Bucar et al., 2003). The skills and capabilities used by the entrepreneurs in the case studies were extremely similar: to further their business pursuits, both parties needed their businesses to be sanctioned by the communities within which they were embedded and both parties had to work very hard to include all the people around them who might assist in the development and expansion of their businesses. Entrepreneurship is not, as we have seen, limited to the economic domain and has farreaching consequences, although these consequences are often largely hidden and not recognized by the entrepreneurs themselves. In an environment in which an ever-increasing emphasis has been placed on the importance of entrepreneurship, especially within further and higher education institutions, there appears to be a greater need to raise awareness of

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the non-economic impacts and outcomes of entrepreneurial activities and to encourage greater levels of responsibility and accountability. Whether this should be the responsibility of educators or whether the responsibility rests across society and social structures more broadly is not clear. However, what has become increasingly obvious in recent years is that the unfettered pursuit of wealth and success in the guise of entrepreneurship can have disastrous consequences on the communities in which they are situated. On the other hand, as suggested by Etzioni (1987), entrepreneurs can do much to break down ossified societal practices and to usher in new and improved business practices which enrich both the entrepreneurs and the communities within which they are based. Conclusions The central discussion on which this paper has been based—that is, the similarities in approach to entrepreneurship in two very different contexts—has important policy implications. Until now, there has been an assumption that entrepreneurs are engaged primarily in value-adding activities and that value-extracting forms of entrepreneurship can be eradicated from the economic landscape by increasing the level of punishments and chance of detection (Renooy et al., 2004). This paper reveals, however, that if governments adopt such an approach, they may well with one hand deter precisely the types of entrepreneurship and enterprise that, with the other hand through their enterprise culture policies, they are seeking to nurture. Recognizing the integrative and dynamic nature of entrepreneurial behaviours is, therefore, more than simply a matter of academic interest. A fuller and more nuanced understanding of value-extracting entrepreneurs’ motives and behaviours is crucial so that appropriate public policy decisions can be taken towards this hidden enterprise culture, such as initiatives to enable these entrepreneurs to legitimise their business ventures rather than solely measures to eradicate these enterprises. If this paper therefore stimulates further studies that evaluate whether there is the same co-presence of opportunity factors and dynamism in entrepreneurs’ motives elsewhere, as well as encouraginggreater reflection on what should be done about the prevalence of valueextracting entrepreneurs, then the paper will have fulfilled its objectives. Contact Information For further information on this article contact: Gerard McElwee, Reader in Rural Enterprise, University of Lincoln, Lincoln, LN6 7RT, United Kingdom. Tel: 00 44 (0) 1522 88 6423 E-mail: [email protected]

References Atherton, A. 2004. “Unbundling Enterprise and Entrepreneurship: From Perceptions and Preoccupations to Concept and Practice,” International Journal of Entrepreneurship and Innovation 5, no. 2: 121–27. Baumol, W. 1990. “Entrepreneurship: Productive, Unproductive and Destructive,” Journal of Political Economy 98, no. 5: 893–921. Bucar, B., M. Glas and D. Hisrich. 2003. “Ethics and Entrepreneurs: An International Comparative Study,” Journal of Business Venturing 18, no. 2: 261–81. Buckley, P. and M. Casson. 2001. “The Moral Basis of Global Capitalism: Beyond the Eclectic Theory,” International Journal of the Economics of Business 8, no. 2: 303–27. Cope, J.P. 2003. “Researching Entrepreneurship through Phenomenological Inquiry: Philosophical and Methodological Issues.” Working paper LUMSWP2003b/052, Lancaster University. Etzioni, A. 1987. “Entrepreneurship, Adaptation and Legitimization,” Journal of Economic Behavior and Organization 8: 175–89.

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Frith, K. and G. McElwee. 2008a. “The Entrepreneurial Wide Boy: A Modern Morality Tale,” International Journal of Entrepreneurship and Small Business 5, no. 5 (forthcoming). ——. 2008b. “An Emergent Entrepreneur? A Story of a Drug Dealer in a Restricted Entrepreneurial Environment,” Society and Business Review 3, no. 2: 270–86. Galloway, L. 2007. “Entrepreneurship and the Gay Minority: Why the Silence?,” International Journal of Entrepreneurship and Innovation 8, no. 4: 271–80. Hannafey, F. 2003. “Entrepreneurship and Ethics: A Literature Review,” Journal of Business Ethics 46, no. 2: 99–110. Harding, R., D. Brooksbank, M. Hart, D. Jones-Evans, J. Levie, J. O'Reilly and J. Walker. 2006. Global Entrepreneurship Monitor United Kingdom 2005. London: London Business School. Harper, D. 2003. Foundations of Entrepreneurship and Economic Development. New York: Routledge. Hobsbawm, E. 1969. Industry and Empire from 1750 to the Present Day. Harmondsworth: Penguin. Kirzner, I. 1973. Competition and Entrepreneurship. Chicago: University of Chicago Press. Maritz, A. 2004. “New Zealand Necessity Entrepreneurs,” International Journal of Entrepreneurship and Small Business 1: 255–64. Minniti, M., W. Bygrave and E. Autio. 2006. Global Entrepreneurship Monitor: 2005 Executive Report. London: London Business School. Nodoushani, O. and P.A. Nodoushani. 2000. “Second Thoughts on the Entrepreneurial Myth,” International Journal of Entrepreneurship and Innovation 1, no. 1: 7–13. Perunovic, Z. 2005. Introducing Opportunity-Based Entrepreneurship in a Transition Economy, Policy Brief 39. University of Michigan: The William Davidson Institute. Rehn, A. and S. Taalas. 2004. “‘Znakomstva I Svyazi!’ [Acquaintances and Connections]: Blat, the Soviet Union, and Mundane Entrepreneurship,” Entrepreneurship and Regional Development 16, no. 3: 235–50. Renooy P., S. Ivarsson, O. Wusten-Gristai and R. Meijer. 2004. Undeclared Work in an Enlarged Union. European Commission: Directorate-Generale for Employment and Social Affairs. Schindehutte, M., M. Morris and J. Allen. 2005. “Homosexuality and Entrepreneurship: Implications of Gay Identity for the Venture-Creation Experience,” International Journal of Entrepreneurship and Innovation 6, no. 1: 27–40. Schramm, C. 2006. “The High Price of Low Ethics: How Corruption Imperils Entrepreneurship and American Democracy,” Journal of Markets and Morality 9, no. 2: 277–91. Schumpeter, J. 1942. Capitalism, Socialism and Democracy. London: Routledge. Smith, R. 2007. “Special Issue: Listening to Voices from the Margins of Entrepreneurship,” International Journal of Entrepreneurship and Innovation 8, no. 4: 245–50. Storr, V. and B. Butkevich. 2007. “Subalternity and Entrepreneurship: Tales of Marginalised but Enterprising Characters, Oppressive Settings and Haunting Plots,” International Journal of Entrepreneurship and Innovation 8, no. 4: 251–60. Thompson, C., W. Locander and H. Pollio. 1989. “Putting Consumer Experience Back into Consumer Research: The Philosophy and Method of Existential Phenomenology,” Journal of Consumer Research 16: 33–146. Warren, L. 2007. “The Establishment Strikes Back? The Life and Times of Takafumi Horie,” International Journal of Entrepreneurship and Innovation 8, no. 4: 261–70. Wempe, J. 2005 “Ethical Entrepreneurship and Fair Trade,” Journal of Business Ethics 60, no. 3: 211–20. Williams, C.C. 2006. The Hidden Enterprise Culture: Entrepreneurship in the Underground Economy. Cheltenham: Edward Elgar. ——. 2008. “Beyond Necessity- Versus Opportunity-driven Entrepreneurship: A Study of Informal Entrepreneurs in England, Russia and Ukraine.” International Journal of Entrepreneurship and Innovation 9, no. 3: 157–65.

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Beyond Legitimate Entrepreneurship: The Prevalence of Off-the-Books Entrepreneurs in Ukraine Colin C. Williams, University of Sheffield, United Kingdom ABSTRACT. Although entrepreneurs are commonly represented as risk-takers, there has been little evaluation of the extent to which they might weigh up the costs of being caught and the level of punishments, and engage in off-the-books work practices. Reporting a survey conducted in Ukraine during late 2005 and early 2006 of 331 entrepreneurs (defined as individuals starting-up an enterprise in the past three years), however, just 10% are found to operate on a wholly legitimate basis, while 39% have a license to trade and/or have registered their business but conduct a portion of their trade off-the-books and 51% operate wholly unregistered enterprises conducting all of their trade in the informal economy. The outcome is a call to move beyond the cleansed ideal-type representation of entrepreneurs as legitimate and wholesome super heroes that pervades the literature and towards a fuller understanding of the lived practice of entrepreneurship in the contemporary world. RÉSUMÉ. Malgré que les entrepreneurs soient fréquemment décrits comme étant des preneurs de risques, il y a néanmoins peu d’études évaluant dans quelle mesure ils peuvent soupeser les coûts économiques de se faire prendre ainsi que la gravité des sanctions qu’il leur serait imposées et exercer leurs activités commerciales au noir. Un sondage mené en Ukraine de la fin 2005 au début 2006 auprès de 331 entrepreneurs ayant démarré une entreprise au cours des trois dernières années indique que seulement 10 % d’entre eux exploitent leur entreprise en toute légalité. Par contre, 39 % ont un permis d’exploitation et/ou une entreprise immatriculée, mais exercent une partie de leurs activités commerciales au noir, tandis que 51 % exploitent des entreprises non immatriculées et sans permis et exercent la totalité de leurs activités commerciales au noir. Ces résultats amènent à conclure, en premier lieu, de la nécessité de redéfinir cette représentation des entrepreneurs les décrivant comme étant de véritables superhéros à l’image saine; une représentation idéaliste de ceux-ci qui fait omission de tout trait indésirable et qui est répandue dans la littérature. En deuxième lieu, il faut faire en sorte d’avoir une meilleure compréhension de l’entrepreneuriat tel qu’exercé dans le monde d’aujourd’hui.

Introduction Despite the recurring depiction of entrepreneurs as risk-taking super-heroes, the literature on entrepreneurship has seldom questioned whether this means that they always play the game by the rulebook. Notably absent from nearly all literature on entrepreneurship, that is, is the notion that these risk-takers might weigh up the costs of being caught and the level of punishments and then decide to do some or all of their business on an off-thebooks basis. In this paper, therefore, the aim is to evaluate the degree to which entrepreneurs operate in the off-the-books economy in order to question the validity of the idealtype representations of entrepreneurs as legitimate super-heroes that permeates the entrepreneurship literature. In the first section of this paper, therefore, the ways in which entrepreneurship has been conventionally depicted in the literature will be reviewed so as to display how the wholesome, clean and pure narratives of entrepreneurship that dominate the literature have written out off-the-books entrepreneurs from their portrayals followed in the second section by a review of what is known about the relationship between entrepreneurship and off-the-books endeavor. The third section then reports one of the first surveys to evaluate the degree to which entrepreneurs start-up their businesses trading on an off-

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the-books basis conducted in Ukraine during 2005–06. Finding that the vast majority of entrepreneurs start-up on an off-the-books basis, the concluding section calls for a move beyond the currently dominant super-hero representation of entrepreneurs and towards a fuller understanding of the lived realities of entrepreneurship. Before commencing, however, it is necessary to define what is here meant by off-thebooks work or what has been variously called “informal employment,” the “underground economy,” “shadow work” and “hidden sector” to name but a few of the nouns and adjectives employed. Despite the array of terms, a strong consensus exists amongst both academics and policy-makers regarding how to define such work. The off-the-books economy is widely accepted as referring to the paid production and sale of goods and services that are unregistered by, or hidden from the state for tax and/or benefit purposes but which are legal in all other respects (European Commission, 1998; Feige, 1999; Grabiner, 2000; ILO, 2002a; Marcelli, Pastor and Joassart, 1999; OECD, 2000a, b, 2002; Portes, 1994; Thomas, 1992; Williams and Windebank, 1998). As such, only paid work that is illegal because of its non-declaration to the state for tax and/or social security purposes is included in the off-the-books economy. Paid work in which the good and/or service itself is illegal (such as drug trafficking) is excluded, as is unpaid work. This economic sphere, like all others, nevertheless, possesses blurred edges. Some include work where gifts are given. Moreover, illegal services in some nations are legal in others, such as prostitution, meaning that what is included in the off-the-books economy can differ significantly across nations. Here, however, and reflecting the consensus, only paid transactions are included, and solely exchanges of legal goods and services in the country under consideration. Representations of Entrepreneurship Unlike the off-the-books economy where there is a strong consensus regarding what it is, entrepreneurship has proven far harder to pin down. This has been the case for a long time. As Cole (1969: 17) put it nearly four decades ago, “for ten years we ran a research centre in entrepreneurial history and for ten years we tried to define the entrepreneur. We never succeeded.” Some two decades later, the literature was still no closer. As Brockhaus and Horowitz (1986: 42) concluded, “there is no generic definition of the entrepreneur” while Shaver and Scott (1991: 24) argued that “entrepreneurship is like obscenity: nobody agrees what it is, but we all know it when we seen it.” Today, little has changed. In a now notorious phrase, Hull, Bosley and Udell (1980) likened the search for a definition of the entrepreneur as akin to “hunting the heffalump.” An agreed definition remains as distant as ever. Why might this be the case? In one very insightful explanation, Jones and Spicer (2005: 235) contend: But what if research into the entrepreneur has, in its very failure, identified something critically important about the operation of the category of the entrepreneur, that is, that it is essentially indefinable, vacuous, empty? What if entrepreneurship has not failed at all, but has uncovered something significant about the underlying structure of entrepreneurial discourse, that is, that “the entrepreneur” is an empty signifier, an open space or “lack” whose operative function is not to “exist” in the usual sense but to structure phantasmal attachment? This is an important insight because even if the literature has been unable to reach any consensus on how to define entrepreneurship, there does seem to be strong and broad agreement on two issues regarding its representation.

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Nearly all representations in the voluminous literature, first, depict entrepreneurship in a positive and virtuous manner and second, portray it in a relatively clean and sanitized way. Indeed, for the purposes of this paper, as well as this special issue which seeks to understand why many activities in morally, legally and ethically contested contexts are not usually considered as entrepreneurship, this insight is crucial. It is perhaps this overarching desire of the “mainstream” entrepreneurship literature to provide a positive, virtuous and clean portrait of entrepreneurs that results in other (and “othered”) forms of entrepreneurship being consigned to the margins or even put outside the boundaries of entrepreneurship. As Jones and Spicer (2005: 237) explain, such a portrayal: offers a narrative structure to the fantasy that coordinates desire. It points to an unattainable and only vaguely specified object, and directs desire towards that object… One secures identity not in ‘being’ an enterprising subject but in the gap between the subject and the object of desire. This lack is central to maintaining desiring … it is precisely the … mysterious nature of entrepreneurship discourse that allows it to be so effective in enlisting budding entrepreneurs and reproducing the current relations of economic domination. Viewed in this manner, it quickly becomes apparent why off-the-books entrepreneurs have been written out of mainstream entrepreneurship. To detail how off-the-books enterprises and entrepreneurs are an inherent part of the lived practice of contemporary entrepreneurship, to put it plainly, would tarnish this object of desire and curtail people’s emotive attachment to achieving this fantasy state of being. To see that nearly all definitions and depictions of entrepreneurship represent it as a desired object, one needs only consider how they are acclaimed as what Cannon (1991) calls “economic heroes” or Burns (2001: 1) views as “the stuff of ‘legends’ … held in high esteem and held up as role models to be emulated”; they are “super heroes” (Burns, 2001: 24). This super-heroic status is apparent whichever theoretical approach to entrepreneurship is adopted (see Cunningham and Lischeron, 1991: 47). Whether one adopts the “great person” perspective that views them as born (rather than made) and reads them as possessing a “sixth sense” along with intuition, vigor, energy, persistence and self-esteem and contrasts them with “mortals” who “lack what it takes,” or one adopts the more socially constructed theoretical approaches of the classical, management, leadership or intrapreneurship schools of thought, the assumption is that the entrepreneur is a super heroic figure possessing virtuous attributes that “lesser mortals” do not. In none of these schools are negative attributes ever attached to the entrepreneur. What, therefore, are these positive qualities possessed by the entrepreneur? This is the subject of much debate. Different commentators and schools of thought put forward contrasting attributes, champion certain qualities over others, argue over whether particular traits are applicable or not, and debate the emphasis given to different qualities, or sets of qualities. Indeed, so much so that it feels somewhat like walking into a minefield to provide here a list of the possible characteristics, traits and/or qualities of entrepreneurs. Yet this needs to be briefly done if one is to more fully understand how the entrepreneur is being defined and depicted in this voluminous literature as well as how they are always represented in heroic terms. Here, therefore, and following Burns (2001: 27), the various characteristics, traits and/or qualities possessed by entrepreneurs that are being debated in the literature are listed as: the need for independence; the need for achievement; internal locus of control; ability to live with uncertainty and take measured risks; opportunistic;

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innovative; self-confident; proactive and decisive with higher energy; self-motivated; and vision and flair. Many similar lists exist, albeit with slightly different emphases (e.g., Baty. 1990; Blanchflower and Meyer. 1991; Bolton and Thompson. 2000; Brockhaus and Horowitz. 1986; Carr. 2002; Chell, Haworth and Brearly. 1991; Kanter. 1983; McClelland. 1961; Schumpeter. 1996; Storey and Sykes. 1996). The intense debates over each and every one of these characteristics need not here overly concern us. What is important is that all of these qualities construct a representation of the entrepreneur as a heroic figure. To see this, one needs only consider that if the above are the qualities of entrepreneurs, then the dualistic opposite, the “non-entrepreneur,” is somebody who is dependent, lacks the will to achieve, believes in destiny, cannot live with uncertainty and avoids risks, fails to take opportunities, lacks the ability to innovate, lacks confidence, is reactive, indecisive and lacks energy, lacks the ability to motivate themselves and has no vision or flair. Put in more theoretical terms, the entrepreneur/non-entrepreneur dualism represents what Derrida (1967) calls a binary hierarchy. For this apostle of post-structuralist thought, hierarchical binaries lie at the core of western thought which, first, conceptualizes objects/identities as dualisms where each side is stable, bounded and constituted via negation and second, reads the resultant binary structures hierarchically in that the first term (the superordinate) is endowed with positivity and the second term, the subordinate (or subservient) “other,” with negativity. Viewed through this lens, it is quickly apparent that entrepreneurship is a superordinate endowed with positivity while the unnamed nonentrepreneurship category is the subordinate “other” endowed with negativity whose meaning is established solely in relation to its superordinate opposite. To contest such binary hierarchical thought, Derrida (1967) argues that first, one can revalue the subordinate term, namely the non-entrepreneur. The problem, however, and as he points out, is that revaluing the subordinate in a binary hierarchy is difficult since it also tends to be closely associated with the subordinate terms in other binary hierarchies (e.g., non-entrepreneur is associated as shown above with dependency, an external locus of control, risk avoidance, an inability to innovate, indecision, no vision, a lack of flair, motivation and energy). A second strategy is thus to highlight the inter-dependencies between the two sides of the dualism and a third strategy is to blur the boundaries between the terms so as to undermine the solidity and fixity of identity/presence. It is this latter strategy that is adopted in this paper. The intent is to show the disparity between the ideal-type representation and the everyday realities of entrepreneurship where participants do not always play by the rulebook in order to sully the clean, sanitized and virtuous image of the entrepreneur as always possessing positive attributes. To achieve this, I here focus upon unraveling the nature of entrepreneurship in Ukraine so as to bring to the fore how many entrepreneurs engage in off-the-books transactions in their daily practices in order to challenge the notion that these are super-heroic figures. Before doing so, however, it is first necessary to briefly review what is already known about entrepreneurs who engage in off-the-books work. Entrepreneurship and Off-the-Books Work Over the years, a small but steadily expanding stream of entrepreneurship thought has explicitly challenged this largely wholesome representation of entrepreneurship. The study by Kets de Vries (1977) is one of the best known attempts to attach negative attributes to entrepreneurs by arguing that they are the product of unhappy family backgrounds,

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particularly situations in which the father is a controller and manipulator who is remote and often seen as a deserter. The classic study of the entrepreneur as somebody who does not always play by the rulebook, meanwhile, is that of Collins, Moore and Unwalla (1964), partially corroborated by Bhide and Stevenson (1990). There are also more recent attempts to deconstruct the virtuous and positive image of the entrepreneur (e.g., Armstrong, 2005; Deutschmann, 2001; Fournier, 1998; Jones and Spicer, 2005, 2006; Williams, 2007). Here, I wish to further contribute to this tarnishing of the entrepreneur by taking as a starting point the “old adage that if you scratch an entrepreneur you will find a ‘spiv’” (Burns, 2001: 4) and studying whether entrepreneurs engage in off-thebooks transactions. In most countries, a significant proportion of economic endeavor takes place in the off-the-books economy. This is the case whatever region of the world is considered. In the diverse array of countries that constitute the Third World, one of the most widely accepted estimates is that between one-half to three-quarters of non-agricultural employment is located in the off-the-books economy and that the majority who engage in such work do so on an own account or self-employed basis. Some 48% of non-agricultural employment in North Africa is estimated to be off-the-books, 51% in Latin America, 65% in Asia and 72% in sub-Saharan Africa (ILO 2002b). Differentiating between those working off-thebooks on their own account in self-employment and those in off-the-books waged employment (such as casual day laborers, domestic workers, temporary workers without secure contracts or social protection), moreover, the finding is that the self-employed comprise a greater share of off-the-books workers than waged employees, representing 70% of informal workers in sub-Saharan Africa, 62% in North Africa, 60% in Latin America and 59% in Asia (ILO, 2002b). Indeed, in recent decades, it has been increasingly recognized that many of these selfemployed operating off-the-books display entrepreneurial qualities (Browne, 2004; Cross, 2000; De Soto, 1989, 2001; Franks, 1994; ILO, 2002a; Rakowski, 1994). From street-sellers in the Dominican Republic (Itzigsohn, 2000) and Somalia (Little, 2003), through offthe-books garment businesses in India (Das, 2003; Unni and Rani, 2003) and the Philippines (Doane, Srikajon and Ofreneo, 2003), to home-based micro-enterprises in Mexico (Staudt, 1998) and Martinique (Browne, 2004), the now widespread consensus is that this is a sphere of enterprise and entrepreneurship (Itzigsohn, 2000; Otero, 1994; Rakowski, 1994). As the ILO (2002a: 54) state, the off-the-books economy acts as “an incubator for business potential and … transitional base for accessibility and graduation to the formal economy” and many off-the-books workers show “real business acumen, creativity, dynamism and innovation.” During the past few years, and reflecting this, a similar representation has begun to emerge when discussing the off-the-books economy in the western world (Evans, Syrett and Williams, 2006; Renooy et al., 2004; Small Business Council, 2004; Williams, 2004, 2006, 2007) and importantly given the focus of this paper, also the transition economies of East-Central Europe (Smallbone and Welter, 2001). Indeed, in transition economies, this representation of the off-the-books economy both as a site of, as well as “seedbed” for, entrepreneurship has been widespread for some time (Smallbone and Welter, 2001; Szelenyi, 1988). Until now, however, there has been a paucity of evidence on the degree to which entrepreneurs start-up on an off-the-books basis. Although numerous studies enumerate the size of the off-the-books economy, few if any have so far evaluated the proportion of business ventures that start-out in this

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sphere. This is a significant gap in our understanding that needs to be filled. Below, in consequence, one of the first known studies to investigate this is reported. Evaluating Entrepreneurship in Ukraine Ukraine, the second-largest successor state of the former Soviet Union, is a country in which there exist strong tensions between the state and society and severe economic problems. As the 2004 New Europe Barometer reveals, although two-thirds of people in new EU member states state that most public officials are corrupt, 92% in Ukraine believe this is the case—the highest figure in all 13 East-Central European countries studied (Rose, 2005). The outcome is low “tax morality”; few Ukrainians believe in paying tax since they do not trust the state to use it for redistributive or collective purposes. When coupled with the fact that official employment declined by about one-third between 1990 and 1999 (Cherneyshev, 2006) and that 73% of Ukrainians assert that they receive insufficient from their main income to buy what they really need (Rose, 2005), it would be surprising if offthe-books transactions were not rife in contemporary Ukraine. Until now, however, and despite numerous contemporary surveys of the Ukraine labor market, including the Ukrainian Longitudinal Monitoring Survey (Brown, Earle and Vakhitov, 2006; Kupets, 2006; Lehmann and Terrell, 2006; Lehmann, Pignatti and Wadsworth, 2006), the Labor Force Survey-based modular Decent Work Survey, the Enterprise Labor Flexibility and Security Survey and the People’s Security Survey (Cherneyshev, 2006; Standing, 2005; Standing and Zoldos, 2001), no attempt has been made to directly collect data on off-the-books working practices (Dean, 2002). Instead, only indirect measurement methods using proxy indicators have been used to estimate its size. According to these, the off-the-books economy in Ukraine is equivalent to 47.3–53.7% of GDP using physical input proxies (Schneider and Enste, 2000) and 55–70% using currency demand (Dzvinka, 2002), with official Ukrainian government estimates, based on such proxies, asserting that it is equivalent to 55% of Ukraine’s GDP (NCRU, 2005). Indeed, this perhaps explains why the official government statistics for Ukraine identify that the official unemployment rate in 2006 (using the ILO definition) is 7.9% when only 57.1% of the total population aged 15–70 in 2006 were in employment (State Statistics Committee of Ukraine, 2006). Nevertheless, both OECD experts in their handbook on measurement methods (OECD, 2002) and the most recent European Commission report on undeclared work (Renooy et al., 2004), as well as a host of academic evaluations (Thomas, 1992; Williams, 2004, 2006; Williams and Windebank, 1998) conclude that proxy measures are very limited in their usefulness. Indeed, for our purpose here which is to investigate the proportion of businesses that start-up in the off-the-books economy, such indirect proxy indicators are of little use beyond suggesting that a significant proportion of business might be operating in this sphere. In consequence, and in order to estimate the proportion of businesses that start-up on an off-the-books basis, as well as the size and nature of the off-the-books economy, during late 2005 and early 2006, a direct survey was conducted. Given the significant differences previously identified in the magnitude and nature of the off-the-books economy across affluent and deprived, as well as urban and rural, populations (Williams and Windebank, 1998), a maximum variation sampling technique was used based on these two variables to select four contrasting localities. First, and in the capital of Kiev, an affluent area was chosen, namely Perchersk, along with a deprived neighborhood, namely Vynogardar. Continuing the process of maximum variation sampling, a deprived rural area

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near Vasilikiv was then chosen, and finally, a town on the Ukrainian/Slovakia border was selected, U hgorod. Within each locality, a spatially stratified sampling methodology was then employed to select households for interview (Kitchen and Tate, 2001). In each of the four localities, 150 households were interviewed (600 in total). In consequence, if there were 3,000 households in the area and 150 interviews were sought, then the researcher called at every twentieth household. If there was no response and/or the interviewer was refused an interview, then the twenty-first household was visited, then the nineteenth, twenty-second, eighteenth and so on. This provided a spatially stratified sample of each area. To investigate whether people had started up new business ventures and whether they had done so off-the-books, structured face-to-face interviews were conducted. Some new to this subject might believe that respondents would be unwilling to divulge such information to interviewers. However, the common finding of direct surveys across the world is that just because this work is hidden from the state for tax or social security purposes does not mean that people are unwilling to openly discuss such work with academic researchers (for a review, see Williams, 2004). Here, therefore, face-to-face interviews were conducted. First of all, this gathered data on gross household income, the employment status of household members, their employment histories, ages and gender, as well as whether they had engaged in self-employed endeavor over the past 36 months and/or started up some new business venture. Second, they were asked about the forms of work they most relied on to maintain their living standard. Third, closed-ended questions were asked about the forms of work both used by their household to get common tasks completed as well as whether members supplied both unpaid and off-the-books jobs in relation to specific tasks, followed by open-ended questions about other off-the-books work conducted and its relative importance to their household income. Fourth and finally, and using five-point likert scaling, attitudinal questions were posed about their views of the economy, politics, everyday life and their future prospects. Below, the findings are reported on, first, the importance of off-the-books work to their living standards and second, whether those who had started up self-employed and/or new business ventures in the past 36 months had done so by conducting some or all of their transactions on an off-the-books basis. The Prevalence of Off-the-Books Practices in Ukraine To understand the degree to which the surveyed population rely on off-the-books transactions for their livelihoods, respondents were asked about the form of work most important to their standard of living, along with the second most important. One in six (16.4%) reported that they rely primarily on off-the-books work for their livelihoods (see Table 1). Moreover, a further quarter of respondents state that off-the-books work is the second most important contributor to their standard of living. Some 28% of all households primarily dependent on subsistence production, that is, cite off-the-books work as their secondary strategy, 22% reliant principally on mutual aid, 30% chiefly reliant on formal employment and 14% primarily dependent on state benefits. In total, therefore, some 40% of all Ukraine households cite off-the-books work as either the principal or secondary contributor to their livelihood. Who, therefore, depends on off-the-books working practices? Contrary to the “marginality thesis” which holds that off-the-books work is concentrated amongst marginalized groups such as the unemployed or deprived populations (e.g., Gallin, 2001; Kim, 2005), this survey finds that this is not the case. As Table 2 displays, just 12.5% of house-

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Table 1. Primary and second most important form of work for living standard: % of households Secondary strategy

Primary strategy

Selfprovisioning

Unpaid mutual aid

Off-thebooks work

Formal job

Benefits

All

Selfprovisioning

0.9

1.7

2.2

2.4

0.5

7.7

Mutual aid

0.2

0.9

1.0

1.4

1.0

4.5

Off-thebooks work

3.4

4.1

1.5

6.0

1.4

16.4

Formal job

10.3

17.5

18.4

9.5

5.7

61.4

Pension/ Benefits

2.9

4.1

1.4

0.5

1.0

9.9

Source: 2005–06 Ukraine survey.

holds with no formal wage earner cite off-the-books work as their primary strategy compared with 23.5% of households with one formal wage earner and 13.9% of households with multiple formal wage-earners. Indeed, of all households primarily reliant on off-thebooks work for their livelihood, some 51% are multiple-earner households (58% of all households surveyed), 43% single earner households (29% of surveyed households) and just 6% no-earner households (12% of surveyed households). This study thus reinforces the wealth of previous literature that has refuted the marginality thesis both in western nations (Jensen, Cornwell and Findeis, 1995; van Geuns, Mevissen and Renooy, 1987; Renooy, 1990; Williams, 2005) and transition economies (Rosser, Rosser and Ahmed, 2000; Wallace and Latcheva, 2006). In consequence, the off-the-books economy is not some marginal sphere of minor importance to a limited range of households but, rather, is an important practice for a large proportion of the Ukraine population. Table 2. Primary sphere relied on by Ukraine households, 2005–06: by type of household Primary strategy %

Unpaid mutual Self-provisioning aid

Off-the-books work

Formal employment

Pension/benefits

Employment status of household Multiple earner

4.7

1.5

13.9

78.6

1.1

Single earner

8.4

4.8

23.5

56.0

7.2

No earnerworking age

37.5

18.8

12.5

18.8

12.5

No-earner-retired

5.4

3.6

5.4

10.7

75.0

Gross Household Income/month (gr) <600

9.6

4.1

15.1

41.1

30.1

600–1399

6.7

3.3

13.4

61.9

14.6

1400–2199

6.6

4.1

17.3

71.1

0.8

2200–2999

3.4

1.7

18.6

73.3

1.7

3000–3799

10.2

2.6

15.4

69.2

2.6

3800+

4.5

0

22.7

72.7

0

Source: 2005–06 Ukraine Survey.

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What types of off-the-books work, therefore, do these respondents engage in for their livelihoods? The ILO (2002b), as discussed earlier, sub-divides participants in off-thebooks work into those who are self-employed and those engaged in waged employment on an off-the-books basis. If a significant proportion of off-the-books workers in Ukraine are in waged employment, then this sphere cannot be represented as a hidden enterprise culture and seedbed for new enterprise creation. The finding, however, is that just 28% of those engaged in off-the-books work are in waged employment. This is similar to the earlier reported finding by the ILO (2002b) that elsewhere in developing nations some 30–40% of off-the-books workers are found to be in waged employment on an off-thebooks basis. The vast majority of off-the-books workers (72%), however, are not waged employees but doing so on an own account basis. Below, therefore, we analyze one segment of these self-employed, namely those who have started-up a new business ventures during the past three years so as to enumerate the degree to which entrepreneurs start up on an off-the-books basis. How Many Entrepreneurs Start-Up Trading Off-the-Books? The 600 face-to-face interviews conducted revealed a high-level of entrepreneurship in contemporary Ukraine. Some 331 individuals asserted that they had started-up an enterprise in the past three years. Of these, just 33 (10%) stated that their business ventures were wholly legitimate operations that were registered with the state, in possession of the required licenses and conducting all of their transactions on a declared basis for tax and social insurance purposes. The remaining 298 entrepreneurs (90%) stated that their business ventures operated wholly or partially in the off-the-books economy. Some 39% of all entrepreneurs starting-up a business venture in the past three years, that is, had a license to trade and/or the business was registered but a portion of their trade was conducted in the off-the-books economy, while 51% operated on a wholly unregistered basis with no license to trade and all of their trade was conducted on an off-the-books basis. In consequence, over half of all business start-ups are not even on the radar screen of the state and of those business start-ups registered and on the state’s radar screen, some 80% operate partially in the off-the-books economy. Who, therefore, are these nascent entrepreneurs operating wholly or partially in the off-the-books economy? Above, it has been already displayed that those most dependent on the off-the-books economy are not the unemployed and relatively low-income populations as depicted in the marginality thesis. Instead, they are already in formal employment and spread across the income spectrum. The same applies when analyzing those entrepreneurs starting-up business ventures. On the whole, some 55% are in formal employment and operating their business alongside their formal waged work as an “on-the side” business venture and the remaining 45% are a mixture of various categories of people registered as non-employed including the “economically inactive” such as housewives and others unregistered as engaging in any form of employment, pensioners and people claiming unemployment benefit. This finding reinforces the evidence elsewhere that those startingup enterprises tend to be people in waged employment, often depicted as straddling the legitimate and off-the-books economy as a “risk-reduction strategy” (McCormick, 1998), and that it is only later in the development of the enterprise that they might become fully self-employed and to leave their waged employment (e.g., Reynolds et al., 2002). As a study in Russia has displayed, 26.5% of the new self-employed work on an off-the-books basis as a second job at the outset, displaying how the off-the-books sphere is an incubator for new self-employed businesses (Guariglia and Kim, 2006).

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Turning to the gender of those starting-up enterprises operating wholly or partially in the off-the-books economy, moreover, although the split between men and women entrepreneurs was 40:60 for wholly off-the-books nascent enterprises, the gender ratio for ownership of nascent legitimate enterprises conducting a portion of their trade off-the-books was 70:30 in favor of men. Wholly off-the-books nascent enterprises, therefore, are operated more by women, while legitimate nascent enterprises trading off-the-books were predominantly operated by men. Most wholly off-the-books business start-ups, moreover, are relatively small-scale piecemeal operations operated as part of a survival strategy by the owner, whilst the legitimate enterprise start-ups operating partially in the off-the-books economy are relatively larger-scale and operated by their proprietors more to “get-ahead” that to “get-by.” Indeed, nearly all wholly off-the-books business start-ups had no employees, while some 35% of registered business start-ups working partially off-the-books had additional employees. Examining the sectors in which such enterprises operated, the vast majority (90%) were service sector rather than manufacturing sector enterprises, and most of these (85%) sold chiefly to final users rather than other firms (i.e., they were chiefly consumer service or business-to-consumer enterprises rather than business-to-business firms). This consumer service sector focus, nevertheless, was more marked amongst wholly off-the-books business start-ups than amongst registered business start-ups conducting a portion of their trade off-the-books (95% of wholly off-the-books start-ups were in the consumer services sector compared with 70% of registered start-ups trading partially off-the-books). Of those setting up an enterprise, about 80% use the skills, tools and/or social networks directly related to their current or previous formal employment and/or employment-place in their off-the-books business ventures. For example, those working as plumbers in their formal occupation tend to operate plumbing enterprises “on the side” or tend to use contacts from their employment-place in order to find work for their off-thebooks enterprise. An example would be university teachers who offer University entrance examination candidates tuition on an off-the-books basis in order to help them pass their entrance examinations. The remaining fifth of those starting-up a business are doing so in fields that arose out of what Stebbins (2004) refers to as some “serious leisure” such as a hobby or interest that leads them to set up enterprises selling goods produced or services resulting from it. This included those who had learned some skill by pursuing some hobby or interest (such as painting, carpentry) and had then decided to establish an enterprise based on this skill. In Ukraine, therefore, the vast majority (90%) of entrepreneurs are starting-up their business ventures either partially or wholly on an off-the-books basis. Such entrepreneurs, in consequence, cannot be depicted as some small segment of the totality of entrepreneurs existing in the margins. They are the “mainstream” of total entrepreneurial activity and it is legitimate entrepreneurs who inhabit the margins. If entrepreneurship is to be understood in Ukraine, then it is little use adhering to the more wholesome and virtuous textbook representation of entrepreneurs as legitimate super-heroes and focusing upon solely this group since they are only a small minority of all entrepreneurs. Conclusions The starting point of this paper was that much of the entrepreneurship literature errs towards representing entrepreneurs first, in a positive and virtuous manner, and second, in a clean and sanitized way. The problem, however, is that there seems to be marked discrepancy between such textbook celebratory odes to the entrepreneur as wholesome super heroes and the lived realities of entrepreneurship.

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In this paper this has been shown by highlighting how many entrepreneurs work on an off-the-books basis. Until now, and despite the common representation of entrepreneurs as risk-taking heroes, it has been seldom if ever questioned whether this means that they always keep to the rules. Notable by its absence from most literature on entrepreneurship, that is, is the notion that risk-takers might weigh up the probability of being caught and the level of punishments and decide to do some or all of their business on an off-the-books basis. Reported the results of one of the first known surveys to identify the proportion of businesses that start-up in the off-the-books economy, this paper has revealed that in Ukraine during 2005–06, just 10% of those who had started up business ventures in the past three years were operating on a wholly legitimate basis, 39% had a license to trade as self-employed and/or had registered their businesses but were conducting a portion of their trade in the off-the-books economy while the majority (51%) operated wholly unregistered off-the-books enterprises and/or did not have a license to trade as self-employed and conducted all of their trade on an off-the-books basis. Here, in consequence, the depiction of enterprise culture as composed of super-hero entrepreneurs playing by the rulebook in their business lives is transcended. Although there may be a gleaming “whiter-than-white” textbook depiction of entrepreneurship, this is here asserted to represent but the tip of the iceberg and beneath the surface, so far largely ignored, exists a large hidden enterprise culture composed of entrepreneurs who do not always play within the bounds of the law. By shining a light on this hidden enterprise culture beneath the waterline, the aim has been to begin to tarnish the sanitized and clean representation of entrepreneurship by revealing the everyday lived realities. Of course, not all entrepreneurs engage in illegitimate off-the-books transactions and it is not the intention here to say that they do. Denoting entrepreneurs as always breaking the rules is as erroneous as asserting that they are always virtuous and follow the letter of the law. The point is that some of these so-called “super-heroes” are not perhaps as clean-cut and above board as is asserted in text-book depictions. This finding has major implications for public policy. Until now, a common tendency especially in East-Central Europe has been to seek to eradicate the off-the-books economy by increasing the actual or perceived likelihood of detection and the level of penalties for those caught. However, this paper has revealed that if governments pursue such a policy of eradication, they will with one hand be stamping out precisely the enterprise culture that with another hand they are so desperately seeking to foster. To resolve this, governments need to perhaps concentrate on facilitating the legitimization of such off-thebooks enterprises rather than simply seek to eradicate them. This requires a shift in public policy away from the current punitive deterrence approach and towards a more enabling approach that seeks to help off-the-books enterprise move into the legitimate economy. Measures that might be used include regulatory and tax simplification initiatives, the provision of business advice and support on how to put their affairs in order, amnesties for off-the-books enterprises making a voluntary disclosure of their past tax evasion activities, as well as broader awareness raising campaigns and education on the benefits of tax compliance (see Williams, 2006). If pursued, then the current discrepancies and contradictions in public policy towards entrepreneurship and the off-the-books economy would be overcome. Of course, whether it is the case in other countries that business ventures often startup off-the-books, and the degree to which this is the case, now needs to be investigated.

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This study of Ukraine pinpoints a potentially important facet of entrepreneurship that has been so far subject to little empirical investigation. It is perhaps time therefore that further research was conducted to evaluate the proportion of business start-ups in other countries that are wholly legitimate ventures, the share that are registered enterprises conducting a portion of their trade off-the-books and the percentage that are wholly unregistered enterprises conducting all of their trade on an off-the-books basis. If this paper stimulates such research and encourages greater consideration of the lived realities of entrepreneurship so as to transcend the virtuous ideal-type of the entrepreneur, then it will have achieved its objective. Acknowledgements This paper arises out of a project entitled “Surviving post-socialism: evaluating the role of the informal sector in Ukraine,” funded by the UK’s Economic and Social Research Council (Grant No. RES000220985).

Contact Information For further information on this article, contact: Colin C Williams, Professor of Public Policy, Centre for Regional Economic and Enterprise Development (CREED), School of Management, University of Sheffield, 9 Mappin Street, Sheffield S1 9DT, United Kingdom E-mail: [email protected]

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Extracting Value from Their Environment: Some Observations on Pimping and Prostitution as Entrepreneurship Robert Smith, The Charles P. Skene Centre for Entrepreneurship, Aberdeen Business School, The Robert Gordon University, Aberdeen, Scotland Maria L. Christou, Criminologist and Independent Academic ABSTRACT. There has been an upsurge in academic studies relating to the underclass as a marginalized group. Notwithstanding this, the literature seldom represents the underclass as an economically active grouping. This study counters this stance by considering street prostitutes and pimps as economically active members of an entrepreneurial underclass. Although previous studies have wrapped the prostitute (and particularly the Madame) in the mantle of entrepreneurship, none have sought to do so in relation to the pimp who traditionally has been portrayed as a swaggering, flamboyant, violent, ruthless, calculating individual existing at the margins of society. In reality they remain an elusive and difficult to research genre. Few ever publicly accept the persona. Indeed, pimping runs contrary to accepted masculine doxa of what it means to be a man, making it deeply shameful to live off the immoral earnings of women. This paper, based upon the observations of the authors, adopts a semiotic perspective to refocus these elusive characters in the entrepreneurial and criminological gaze. By concentrating upon prostitution and pimping as an entrepreneurial behaviour, and not on the prostitutes and pimps as entrepreneurial types, the paper contributes to extant knowledge by developing an appreciation of entrepreneurial strategies employed by them to create and extract value from their environment. The methodology circumvented the issues of access allowing a wider sociological discussion to develop, as well as highlighting other ethical issues of researching street-level entrepreneurship. RÉSUMÉ. On a constaté chez les universitaires une flambée d’intérêt pour le quart-monde en tant que groupe marginalisé. Malgré cela, la documentation représente rarement le quart-monde comme un groupement économiquement actif. La présente étude renverse cette attitude en considérant prostituées et souteneurs comme des membres économiquement actifs du quart-monde entrepreneurial. Bien que des études précédentes aient revêtu les prostituées (et en particulier les tenancières de maison close) du manteau de l’entrepreneuriat, aucune n’a cherché à le faire en relation avec les souteneurs, traditionnellement décrits comme des fanfarons flamboyants, violents, impitoyables et calculateurs qui vivent en marge de la société. En réalité ils représentent un genre difficile à joindre et à étudier, et peu d’entre eux acceptent publiquement cette image. En fait, être souteneur va à l’encontre de l’idéal masculin qui couvre de honte celui qui vit des gains immoraux des femmes. Cet article, basé sur les observations des auteurs, adopte une perspective sémiotique afin de livrer ces personnages insaisissables au regard entrepreneurial et criminologue. En se concentrant sur les activités de prostitution et de souteneur en tant que comportements entrepreneuriaux, et non sur les prostituées et les souteneurs en tant que types entrepreneuriaux, cet article contribue aux connaissances existantes en développant une appréciation des stratégies entrepreneuriales visant à créer et exploiter de la valeur à partir du milieu ambiant. Cette méthodologie contourne les problèmes d’accès et permet une discussion sociologique plus large, tout en soulignant d’autres questions morales concernant la recherche sur l’entrepreneuriat de la rue.

Introduction Traditionally the underclass are viewed as an economically surplus and thus marginalized social grouping. This paper examines a form of street-level entrepreneurship practiced in an underclass environment, concentrating primarily upon the thriving Scottish city of

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Aberdeen, but using research material gathered in other British cities. In criminology, of late several academic studies have sought to (re)construct the underclass (Hayward and Yar, 2006; Johnson et al., 2006). Mention of constructionism brings wider socio-cultural issues into play—in popular culture, being of the underclass is synonymous with being streetwise. In entrepreneurial mythology much is made of the streetwise nature of many entrepreneurs. In this paper we therefore consider street-level prostitutes and pimps as entrepreneurial types. At the outset, this work was conceived as a study of “the pimp as entrepreneur.” Although existing studies such as those of Heyl (1978) and Francis (1986) have wrapped the prostitute in the mantle of entrepreneurship, traditionally the pimp has been portrayed as a swaggering, flamboyant, violent, ruthless, calculating, cowardly individual existing at the margins of society. We find it ironic that these words are also commonly used to describe entrepreneurial behaviour. By logical extension it is perhaps plausible (in some cases) to socially reconstruct the pimp as an entrepreneur figure rather than the prostitute. However, as the study progressed we found that concentrating upon the ideal type of pimp and prostitute we encountered obscured appreciation of the entrepreneurial strategies used by many street-level prostitutes and pimps to extract value from their environment. Thus, in seeking to establish whether the pimp (as an ideal type) could be found on the streets of a British city we initially fixated upon floating social constructions of the pimp and the entrepreneur establishing many parallels between the pimp and entrepreneur in both the constructs and literature; however, it was not until we adopted a more holistic view of pimps and their prostitutes by observing them in action in their environment that we came to appreciate the full extent of their entrepreneurial income generating strategies. This paper resulted from a chance encounter between the authors at a criminology conference. During the ensuing discussions the subject of pimps arose and an area of mutual research interest developed. The second author recounted her research activities into prostitution, articulating that researching prostitution is both ethically and physically dangerous. She told an intriguing tale of the field (in the manner of Van Maannen, 1988) of how when conducting street research she had been physically assaulted and verbally abused by a pimp and his entourage, who were annoyed that she would not pay him for using up his girls’ time. These aspects and other ethical issues will be further developed in the methodology section. As experienced researchers, the authors appreciated that gaining research access to an actual pimp would be difficult to negotiate because few would publicly acknowledge this stigmatized label. From this standpoint emerged the idea of conducting a study using observations gathered in the field. This was made possible by the extent of the empirical street research conducted by the second author in American and British cities over a number of years. This paper has four sections. The first relates to a literature review of the entrepreneurship–prostitution nexus, setting up a theoretical underpinning enabling comparisons to be drawn between the pimp and the entrepreneur. Section two discusses important methodological and ethical issues, whilst section three presents observations gathered during the actual research. Section four discusses the implications of the research and in particular its contribution to entrepreneurship theory. Understanding the Entrepreneurship–Prostitution Nexus According to Ringdal (1997) and Van Brunschot et al. (1999: 47), the practice of prostitution has been labeled “the world’s oldest profession.” Academic appreciation of the entrepreneurship–prostitution nexus is not a new phenomenon and a limited number of

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studies portray prostitutes and madames as entrepreneurs. Studies that emphasise the entrepreneurial nature of prostitution include those of Heyl (1978) and Francis (1986). However, these studies concentrate upon the female control of prostitution as opposed to the male domination of vulnerable women by pimps. This section provides a literature review of the entrepreneurship–prostitution nexus concentrating upon the dearth of literature in relation to the pimp as a genre. We adopt the definition posited by Anderson (1995, 2000), for whom entrepreneurship can be articulated as the “creation and extraction of value from an environment.” This definition has merit in relation to our analysis of prostitution as entrepreneurship because by its very nature the concept of value remains vague and elusive. Also, Anderson (2000) applies this definition in relation to the notion of periphery, which is also of interest because the periphery is traditionally seen as a poor environment. Prostitutes work on the periphery of legality but still manage to extract value from their environment. However, it is necessary to stress three class-based themes that run through the literature of entrepreneurship (Smith, 2006). These are (1) the focus on the entrepreneurial middle classes; (2) the eulogisation of the working class entrepreneur and its associated storyline of the poor-boymade-good; and (3) the hagiography of the respectable peasant entrepreneur. These three theoretical frameworks lead us to consider the possibility of underclass entrepreneurship. Considering the Possibility of an Entrepreneurial Underclass Emergence, ethnicity and marginality are all hallowed and recurrent themes in entrepreneurial narrative. Nevertheless, it is a valid observation that despite society’s fascination with the Algeresque (and clichéd) storyline of the poor-boy-made-good, the equally powerful constructions of the entrepreneur as hero, and entrepreneurship as a morally delineated activity, serve to exclude the underclass from a permanent position in entrepreneurship theory. The themes of overcoming poverty, discrimination and blighted education are merely starting points in the epic story that is entrepreneurship. Indeed, entrepreneurship is billed as an escape from an impoverished environment. The entrepreneur is cast as somehow being special, as being different. Seldom is consideration given to the possibility that entrepreneurship may be an integral part in the fabric of underclass existence. Thus the working and middle classes have the entrepreneur as a role model and the underclasses—their criminal counterparts. If the very fabric of society is woven from individual acts of entrepreneurship, why are members of the underclass excluded from this rich tapestry, particularly when eminent economists such as Baumol (1990) accept that entrepreneurship can be productive, unproductive and destructive? For us, prostitution is, at best, an unproductive, and, at worst, a potentially destructive form of entrepreneurship. Prostitution can be viewed as a deviant behaviour, nevertheless Cloward and Ohlin (1960) argued that some manifestations of deviance are attributable to the presence, or absence, of institutionalised opportunities to achieve culturally preferable results compliant with the “dream of material success and being your own boss.” Moreover, Claster (1992: 130) describes the emergence of criminal subcultures where legitimate means for achieving success are inadequate, but illegitimate avenues of prosperity exist such as prostitution, gambling, and illegal drugs. Cloward & Ohlin (1960) argue that the absence of illegal avenues of wealth creation make society worse because the displaced energy is channeled into retreatist (drugs) or conflict (violence) subcultures. Cloward and Ohlin’s good versus evil model is built on the premise that “those from the humblest origin aspire at the outset to success as defined by the dominant majority and only resort to delinquent behaviour as barriers arise.” These arguments are the criminological equivalent to

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Baumol’s argument that entrepreneurs emerge from all strata of society and that entrepreneurs and criminals come from the same societal pool. Thus, those who live off the immoral earnings of prostitutes can be considered entrepreneurs. Notwithstanding this, there are issues of social constructionism to be considered. Dealing with the Issue of Social Constructionism Various conflicting social constructions combine to make consideration of the prostitute and pimp as entrepreneur problematic. These are the socially constructed nature of: entrepreneurship (Chell et al., 2000); the underclass (Morris, 2002); urban space (Baker, 2006); sexuality (Brison, 2001); prostitution and pimping (Van Brunschot et al., 1999). These often conflicting constructions set up competing narratives, ideologies and social imageries, which are difficult to reconcile. We have already touched upon the predominant social constructions of the entrepreneur as hero and saint and also noted that the underclass (as a genre) are generally not regarded as being entrepreneurial per se. Prostitution is generally regarded as a problem associated with urbanity. Indeed, Baker (2006) makes reference to the social construction of urban space where whores and pimps make a living. In addition, sexuality is a taboo subject as are prostitution and pimping. The prostitute is commonly portrayed in the media as “a morally depraved woman” (Van Brunschot et al., 1999: 56). This particularly gendered social construction is tempered by the caveat that she has been led astray. In the folklore of America, the prostitute is allowed a place alongside the entrepreneur as a folk hero, as evidenced by such ballads as “Hickory Hollers Tramp” (O.C. Smith) where the women is wronged by a philandering, alcoholic husband who leaves her to raise 14 hungry children. She does this by turning to prostitution but remains an all-American mom to be proud of. In a similar manner, Boje (2001: 202) in researching the striptease business in America tells of the “rags to riches story told by big business to attract labor” and of the lure of easy money, citing the movies Showgirls and Gypsy as examples. Boje (2001: 205) eloquently narrates the stories of showgirls selling us the “spectacle of rags to riches, the American Dream realized in the career move from Strip Club to Showgirl, from strip tease to Big Bucks Casino Shows.” These examples illustrate how prostitution, like deviance and criminality, can be linked to the American Dream and thus entrepreneurship. However, Van Brunshot et al. (1999) also highlight another social construction, visible in contemporary discourse—namely the prostitute as a deviant and morally depraved junky. The overall tone towards prostitution as socially constructed is that of moral disproval. The pimp is another stigmatised social construction (Baker, 2006). Pimping runs contrary to accepted masculine doxa of what it means to be a man, making it deeply shameful to live off the immoral earnings of women. Indeed, Paoli (2003: 70) stresses that the Italian Cosa Nostra initially forbade the organization of prostitution as being dishonourable. In a similar vein, Volkov (2002: 104) writing of the Russian Mafiya stresses, “Although quite profitable, prostitution, was regarded as an inferior business, capable of downgrading the relative status of the group, since it lived off women’s income.” This ingrained stigma may also account for the dearth of studies in relation to pimps per se and may be an artefact of the difficulty in negotiating research access, as few men ever publicly accept the persona. Psychologically, this stigma may run deeper in that Tsang (1996) argues that prostitution is not consistent with dominant Protestant or Catholic values. Ideologically, this makes prostitution incompatible with entrepreneurial ideology with its espousal of morality and reverence of traditional values. Thus in Western societies a number of related factors conspire to drive the entrepreneur in the sex trade underground, or

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into red-light areas where they are more difficult to research. This further restricts the opportunity of researchers to study prostitutes and pimps as predatory street actors. However, in popular culture, the pimp is commonly portrayed in the media as a pantomime figure, a stereotypical representation of an archetypal figure embedded in the social consciousness. Such misleading ideal typifications, steeped as they are in the semiotics of American street culture, result from a body of socially constructed imagery perpetuated in the media. Such images are misleading because the symbolism and meanings associated with class based semiotics associated with individual ethnic groupings and their cultures do not always transfer across cultures. These stereotypes may indeed obscure from view the fact that, as underclass actors, prostitutes and pimps are economically active and form part of a wider alternative street economy. However, at an abstract level, these apparently disparate constructs can be linked by the notion of deviance. Nevertheless, theories of entrepreneurship are primarily focused on the individual, their attributes and behaviours and not on the concept of place and environment. As will be seen, the environment is an important element in the social construction of underclass entrepreneurship. Repositioning the Prostitute within the Entrepreneurial Underclass Perhaps the most widely known study of the entrepreneurship–prostitution nexus was that of Heyl (1978) in her seminal study “The Madame as Entrepreneur.” However, Heyl had preceded this study with a similar one in 1977 entitled “The Madame as Teacher.” This is a significant distinction because it acknowledges the divisions of practice and takes cognizance of the different roles the madame performs in separating the craft side of prostitution from its practice as a business. Both activities are examples of co-terminus social organization. The madame and the brothel play a central role in the organization of prostitution primarily because they create a different, more controlled dynamic from the street prostitutes surveyed in this study. The presence of a madame and the semi-legitimacy of the brothel reconstruct the sexual experience in a more civilized manner. The “woman to woman” engagement literally takes the “man” out of “management” and the girls away from the domination and violence of the pimp. An appreciation of the madame as an entrepreneur also has other historical precedents. Indeed, Hudson (2002) discusses the remarkable life story of Mary Ellen Pleasant, born a slave but as a free woman achieved entrepreneurial success. She developed the trusting persona of “Mammy” and transformed prostitution in San Fransico, becoming an entrepreneur and literate abolitionist. Other academics have sought to reconstruct prostitution as entrepreneurship. Francis (1986) researched “The street queen as a sexual entrepreneur,” and Phillip and Dann (1998) describe the bar girls/prostitutes in central Bangkok as entrepreneurs. To continue this theme, Hershatter (1989) discusses the role of the petty entrepreneur in a historical perspective in the hierarchy of Shanghai prostitution between 1870 and 1949. Sun (2002) discussed Anhui women as invisible entrepreneurs because of their gender in a patriarchal China, classing those in domestic servitude and those engaged in prostitution as being entrepreneurs without an enterprise. This is significant from the perspective of underclass entrepreneurship because Arlacchi (1986) in researching the Italian peasant also considered this possibility. This point introduces the concept of subsistence entrepreneurship. Indeed, Valenzuela (2001) argued with some conviction that the literature of entrepreneurship is primarily elitist, concentrating upon proprietorship and does not engage with the activities of the underclass. Valenzuela (2001) classified these workers under the disadvantageous rubric of survivalist entrepreneurs. This label could equally apply to the

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street prostitute and the pimp. The idea that prostitution is a form of entrepreneurship is fast gaining momentum as evidenced by three recent studies by Della Giusta et al. (2007, forthcoming and forthcoming) who seek to explore prostitution from an economic and thus entrepreneurial perspective. Indeed, Della Giusta et al. (2007) refer to prostitution as a denied industry and interestingly talk of feminist economics. This is relevant because entrepreneurship is studied from the perspective of masculine economics. Schaab (2005) stresses that the types of work offered to women who lack education often pay significantly less than what a man would make as a laborer, therefore making prostitution a viable proposition. This example illustrates the disparity between feminine and masculine economics. Schaab introduces the concept of social capital into the argument by the use of the phrase “Her Body, His Capital.” This begs the question of whose capital one has to consider in assessing entrepreneurial proclivity? Bourdieu (1986) posited different categories of capital—financial, social, and human. Pimping spans all three and, because of street encounters, involves an unwritten triadic contract and often a clash of capitals. Emotional capital may also come into play in the relationship if a love interest is involved between the pimp and prostitute. However, the Madame and pimp are not the only entrepreneurial typologies available to those engaged in the sex industry. Indeed, Van der Poel (1992) stresses that male prostitution is generally regarded as a deviant, challenging activity and argues that this is so because researchers concentrate upon problematic categories and have avoided studying successful male prostitutes who may naturally be more enterprising. Van der Poel studied male prostitution as a career choice in Amsterdam, a rational commercial serviceorientated business with economic and social characteristics in common with other small and medium sized businesses. The successful gigolo can also be socially reconstructed as a predatory entrepreneurial type. Considering the Pimp as Entrepreneur Although men do not appear to willingly accept the title of pimp, other acceptable masculine labels exist, namely “Hustler” and “Player.” These labels are also commonly used to describe entrepreneurs. Academic studies of hustling abound (Steward, 1991; Wright and Colhoun, 2001; and Gates, 2004). Wright and Calhoun (2001), using an ethnographic approach, profile the activities of Tyrone, a hoodlum who is a part-time pimp and hustler, and of Oscar, who describes himself as being kind of entrepreneur, both operating out of a barber shop in a southern American city. The shop provides three levels of activity, namely legal, quasi-legal and illegal services. Indeed, Gates (2004) writes of young black kids having a new entrepreneurial spirit. Desman (n.d.) discusses the socio-pathology of entrepreneurs and criminals and states that prostitution, bootlegging, black-marketing, and illicit gambling are common delinquent threads running through both genres. Furthermore, Kloosterman (2001) describes prostitution as an easy market for immigrant entrepreneurs to engage in because of its ease of accessibility and lack of start up capital required. Prostitution enables entrepreneurs to extract large profits from the work of women under their control thereby accumulating a considerable amount of capital quickly. Furthermore, Butkevich and Storr (2001) discuss entrepreneurs as cultural characters, noting how in hostile environments they adapt to the opportunities available even if that entails pimping or thieving. This again resonates with the work of Baumol (1999). On the Importance of Place Place is important because it links in with social constructionism. Moreover, as this study

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takes place at a street level it makes it incumbent upon us to understand the influence of place. Rojeck and Urry (1997: 7) discuss how traditionally, since Victorian times, the street has been reconstructed as a dangerous playground for the rich and the middle classes—a “fantasy land” where one can engage with prostitutes. The street scenario is enacted as a socially constructed script in which the pimp, prostitute and the punter know their place. There is a symbiotic element present whereby all accrue benefit in the manner of a relation of exchange as envisaged by Volkov (2002: 25). This concept lies at the very core of this paper and is central to understanding prostitution and pimping as entrepreneurship because Volkov (2002: 15) talks of the “city as a market place for needs” and of “free economies of exchange.” For entrepreneurship to occur there must be a taking between and an exchange of value(s). Furthermore, Volkov (2002: 21) refers to “Predatory man.” This phraseology is relevant because it encompasses the pimp as entrepreneur and the customer as punter. The prostitute is also a predator because customers are merely pound notes or dollar bills or “Mugs” and “Punters” as envisaged by Hobbs (1986) who populate the lowest level of his entrepreneurial scale. Nor does social constructionism end there, because a form of living street theatre ensues whereby all three have to look and act the part. The pimp has to be recognisable as such to act as a visual deterrent; the prostitute has to look risqué; and the punter knows that he will fare better if he is mild mannered and well dressed. The pimp and prostitute scan the environment looking for deviations from this well-rehearsed social script in case their quarry are undercover police or other predators. The pimp must project an aura of latent violence; the prostitute must exude a halo of dangerous sexuality; and the punter must project a suitably subdued and ashamed persona. If all stick to the script then the three actors collectively create and extract value from the environment (as envisaged by Anderson, 1995). As this study is set in a British context it is necessary to consider entrepreneurship, prostitution and pimping from a cultural perspective because so far many of the studies of prostitution as entrepreneurship have been American or Asian. Sociologists writing about class in a British context have long appreciated that prostitution allowed many poor married working-class women and widows an avenue out of poverty. Indeed, Bourke (1994: 38) reminds us that many working-class women “sought social mobility through prostitution, using the job to save money to buy a tobacconist shop or simply to live at a higher standard of luxury.” Nevertheless, other historical studies shed light on the issue of underclass enterprise and particularly those who engage in prostitution or live off immoral earnings. One classic study is that of Quennell (1960) who presented selected sections of the original works of the Victorian researcher Henry Mayhew. In this work, Quennell (1960: 103) discusses the roles of such enterprising street actors as procuresses, pimps, bullies, clandestine prostitutes, fancy men and panderers, and in doing so paints a vivid word picture of self-enterprise at street level. Interestingly, Mayhew (no doubt influenced by his exposure to Victorian masculine doxa and the socially constructed nature of Victorian sexuality) had little to say about the subject of pimps. Despite acknowledging that they were frequently spoken about, he preferred to doubt that many actually existed, stressing that women were more likely to act as pimps than men. We believe that this was merely an early example of how social constructionism, combined with masculine doxa, influenced the middle class research gaze because professional Victorian men could not envisage men acting in such an ungentlemanly manner. Like Mayhew before us, we went in search of the elusive pimp. In seeking to reconstruct the pimp as an entrepreneur, it is necessary to stipulate that there is no one all-defining definition of entrepreneurship. In the literature, particularly in the British context, one senses a pejorative attitude towards the

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entrepreneur articulated so succinctly by Baker (in Chapman, 1968: 9), who describes “the petty entrepreneurs and the slick smart Alecs of Grab Street who thrive on the society who spawns them.” Having considered the entrepreneurship-prostitution nexus and issues of social constructionism and class, it is helpful to discuss ethical issues that impinge upon this research. Ethical Issues The purpose of this section is to discuss ethical issues relating to this research and to develop an appreciation of street-level entrepreneurship. The research raises a number of ethical issues of interest to other researchers. The first relates to issues of access. As stated in researching elusive social groups, such as pimps, it can be difficult to gain research access. The second author has conducted numerous research forays into areas where street prostitution is carried out, both in the US and in major cities in the UK. Such research can lead to conflict with other street stakeholders. One simply cannot just turn up and start asking questions of pimps without becoming an accepted part of the street scene because street-girls are adept at telling people what they want to hear. One has to earn their respect by talking to them and demonstrating that as a researcher you know what you are speaking about. Confidences are not developed instantly. It can take many evenings. It is also a dangerous activity. On one occasion when conducting research, the second author became involved in an altercation with a pimp who was annoyed that she was taking up the time of his girls. He demanded payment. When this was refused he assaulted her. Nosy researchers are bad for business. It is simply not ethical to offer payment for research access. This led to her taking the unusual step of hiring the services of a bodyguard for protection. When conducting research it is easy to lose focus of everything but one’s respondent. However, this also has the effect of changing the street dynamic because the bodyguard can be mistaken for a “Minder.” It would be easy for other street actors to misread the signs. The consequences could have serious ramifications because they could be mistaken for competition by other firms of villains. Yet, there is simply no other way. On several occasions the second author has encountered hostility from street cops who cannot understand her presence on their streets. This is despite having a policy of writing to the individual forces expressing her intentions. She has been threatened with arrest and has had to stand her ground when told in no uncertain terms to leave the area. This takes dedication and courage. As a result the prostitutes and pimps now treat her with a wary respect. However, if her bodyguard was attacked and had to defend himself she could find herself in court having to defend her actions. This makes the research all the more ethically and physically dangerous. Understandably, her research practices, bold as they are, do not ingratiate her with the pimps. Observations on Pimping and Prostitution This section reports on the empirical research conducted by the second author. We are aware that in choosing to research street level prostitution we may have limited our chances of encountering examples of entrepreneurship because of the stratified nature of the organization of prostitution. Gutauskas et al. (2004: 213), who studied prostitution in Lithuania, stress that it is conducted on three distinct levels: the lowest tier being drug addicts and the homeless; the second tier being those who prostitute themselves in bars, restaurants, and hotels without a pimp; and the third and most profitable form of prostitution is organised and conducted by pimps. Most Lithuanian pimps supervise from seven

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to 10 prostitutes and can take from 50% to 70% of the money generated by the prostitute (Gutauskas et al., 2004: 213–14). This model is almost universal in western countries. Although the research is set in Aberdeen, the second author has conducted research in London, Manchester, Hull, Edinburgh (Leith), and Glasgow. This underpins the findings in relation to Aberdeen. Leith is the least accommodating alongside Manchester to research because both are major cities with extreme drug-related problems. Manchester, however, is mainly more problematic because of the obvious presence of the pimps who are more than willing to show the girls precisely who is in charge. Glasgow girls also appear to be more willing to risk their safety, whereas Edinburgh ladies use networking and converse with each other using mobile phones and texts to warn each other of problem customers or perverts. This example of entrepreneurial cooperation does reduce the need for an individual minder/pimp and obviously increases their earning power by cutting out the middleman. Aberdeen is a major city and is the third largest in Scotland, after Glasgow and Edinburgh. It has a population of 202,370. It is a relatively wealthy city, being the oil capital of Europe, and has a large thriving seaport and vibrant industries. As is the case in many major cities, prostitution is stratified. There are several lap-dancing bars, which comprise the legal side of the sex industry. According to one respondent, there is a street trade in rent-boys and male prostitutes carried out discretely in the city centre. There are also several brothels in the west end of the city reputedly owned and organised by businessmen. These tend to service a wealthy middle-class clientele and the prostitutes are more up-market, often students paying their own way through university. The businessman acts as a father figure and mentor. As an aside, there is a suggestion that Eastern European organized crime groups have set up brothels run by pimps (along the lines of those described by Gutauskas et al., 2004). An interesting aspect is that for an additional fee the proprietors of the brothels videotape the encounter and hand the customers a CD or video to take home and watch later. This is clear evidence of entrepreneurial strategies in action. Aberdeen has a tolerance zone/red light district situated (where the trade had traditionally been operated) in the harbour area. Other Scottish cities such as Glasgow and Edinburgh had tolerance zones but abandoned them. The tolerance zone makes researching prostitution easier and less dangerous. Prior to discussing the pimps themselves it is helpful to discuss the street based prostitutes. Prostitutes and Street Prostitution The street prostitutes surveyed operated in the tolerance zone. In relation to Scotland it is difficult to find the average street prostitute because of the different geographic areas and regional differences and socio-cultural settings. The most visible girls tend to be older than they look. A mean age in Glasgow is 23, whilst in Edinburgh it is 27. Almost all of the prostitutes surveyed were on drugs or alcohol, or both. This is in line with research that suggests that 97% of street prostitutes in Britain have drug misuse issues. Only two prostitutes claim never to have used drugs and hope to avoid it in the future. They acknowledge that they are exceptions. All but one in Aberdeen are White. In Edinburgh, Glasgow and Dundee they are all White. Most have poor communication skills, though this is likely to be more attributable to their constant drug/alcohol use than any reflection on their intellectual capacity. One older and articulate prostitute (aged 47) displays remarkable business acumen but lacks the drive and/or funds to get started. Many prostitutes narrate a background of abuse both physical and sexual. The women surveyed come from different socio-economic

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backgrounds with the middle class and even upper class being represented. Interestingly, drug use had brought them to the streets, resulting in their families ignoring their existence. Glasgow in particular had a high proportion—in fact all the women spoken to had been sexually abused as children, either by a relative, family friend or other person in authority. 75% of those in Glasgow had been raised in a local authority home, and of those three quarters had removed themselves and lived on the streets before they reached 16 years of age. In contrast, in Edinburgh only 25% had been subjected to sexual abuse as a child whereas one third claimed to have had no abuse. Heroin was the most commonly used drug, though cocaine was used by approximately 25% of all Scottish prostitutes surveyed. Other drugs, including prescription medication, were also used when available but particularly when their main choice was not obtainable due to lack of funds or scarcity. There is thus no ‘typical’ street prostitute. Many common threads tie them together, but equally many keep them apart. Many choose not to disclose their history for various reasons and others tell different stories to different people/agencies. Alcohol and drug use are common, but again not every prostitute has an addiction; one or two (claim) to have overcome their addiction but still solicit because the money is better than state benefits. Pathways into prostitution are complicated. The Traditional Pimp The traditional pimp–prostitute relationship is a coercive (predatory) relationship entailing luring vulnerable girls and women into relationships. The pimp acts as a lover and undermines the confidence of the girl generally through abusive bullying and violent behaviour and coerces her into acting as a prostitute. The relationship may become that of entrepreneur–lover. In Aberdeen, Edinburgh and Glasgow there is not a culture of pimping in the traditional sense we understand exists in other countries. Thus the authors did not encounter stereotypical pimps and certainly no flamboyant examples such as those encountered whilst researching in America. This is to be expected because it demonstrates the ideal typification of the pimp as socially constructed. Such images are caricatures, grotesque parodies of the American Dream. Nevertheless, it must be remembered that in its place within the culture that spawned it, does have a currency as street “cred.” In Britain very few of the pimps observed fit this ideal typification. In Britain, the vast majority of pimps observed are more careful about flaunting their occupation for obvious reasons. No metallic pink Mercedes cars with alloys, no fur coats or white suits. Such pretensions do not sit well with the British psyche and are bad for business because they attract unwanted police attention, not to mention ridicule. Instead, the British pimp carefully cultivates the regional variation of their hard-man image. This is evidence of the rationalisation of conduct to maximise the extraction of value (and thus entrepreneurship). At another level many pimps have other income streams such as drug dealing, smuggling contraband, extortion and so forth in which prostitution is but one part of their business portfolio. These illegal entrepreneurial activities qualify them for consideration of being criminal entrepreneurs. It could be argued that the traditional pimp provides an entrepreneurial service to their prostitutes if both are engaged in a joint enterprise. There are quite considerable regional variations (as one would expect). Those areas where the pimps are more overt in their actions and behaviour are places such as parts of London, Manchester, Hull and parts of Newcastle. Here their dress style and their behaviour patterns are quite different. They dress in a more obvious business style with business suits worn with a somewhat crass style and jewellery (bling). Their vehicles tend to

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be Range Rovers and other large 4X4 vehicles. Occasionally, for those individuals who are less inclined to show their money, or because of financial constraints, cars are made to look more “high end” than they actually are—such as making the exhaust bigger/ louder, etc. The pimps also tend to work in groups of more than two in these areas. These are the most obvious entrepreneurial types, the top end of the entrepreneurial scale—boys doing business (Newburn and Stanko, 1995), controlling their assets. Teamworking is evident and the atmosphere is tense. In the larger cities in England such as Manchester and Liverpool pimps adopt a gangstery persona. This was not found to be the case in Aberdeen or other Scottish cities. It may well be that the girls surveyed are reluctant to admit that their partner is a pimp. Those girls who do admit this (primarily those from south of the border) tend to be more wearily resigned to their role as “worker” though many still defend the pimp and his actions (e.g. they are violent, but the girls—like many in domestic situations—blame themselves for making their men angry). Also, the pimps—according to the girls—do a good job in protecting them, but again they acknowledge that they work harder and longer than they probably would if they had no one there. They also admit that they are annoyed about giving their money away, but many feel there’s no alternative or—more importantly—no escape. In the night-time economy the streets of our major cities can be dangerous places. Alcohol- and drug-fuelled violence is often unleashed as well as verbal abuse, taunts and disrespect. Thus it could be argued that some pimps do provide a service to the girls, allowing them to work unmolested. However, in Scotland the predominance is for the consensual boyfriend–girlfriend variety. Pimp-prostitute Partnerships These are generally partners in life and in crime. The prostitution is merely another income stream to provide money for drugs and feeding the children. Such partners are usually in their mid 20s or slightly older. They are either generally from established criminal families or have gravitated from a criminal culture of drug abuse and alcohol dependency, and usually both have criminal records for petty crime such as assault, theft by shoplifting, robbery, carrying weapons and other street crimes. The main point is that both partners are streetwise and come to the realization through life experience that selling sex is easier and less risky than committing street crimes because the penalties are lower. Those girls who work with “boyfriends” are grateful for their presence as it makes them feel safer. These are exploitative but protective partners who use sex as a strategy to provide the wherewithal to obtain alcohol and drug money. The boyfriend acts as driver, minder and negotiator. Turning a few tricks to them is less immoral than robbing or stealing. This particular dynamic seems to be applicable in Aberdeen and Leith (Edinburgh), whereas Glasgow appears to have a mixture of consensual and non-consensual partnerships underway. The prostitution provides a stability of income in an otherwise chaotic lifestyle. It can break the vicious cycle of crime, court appearances, and jail. Admittedly it is an illegal form of subsistence entrepreneurship. These low-level street entrepreneurs are entrenched in the underclass milieu and are unlikely to climb the entrepreneurial ladder to success. Such pimp-prostitute partnerships can be viewed as being co-preneurial couples as envisaged by Marshack (1973). These couples are usually husbands and wives or long-term common law partners, although the authors are aware of a case study where a man was pimping a very young-looking girl in Aberdeen. The girl looked well under 16 and her protector was in fact a father figure. Enquiry with other prostitutes confirmed that

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this was indeed her father, who was exploiting the fact that the 17-year-old looked much younger and therefore fetched a higher price. Leaving aside issues of morality, it is evidence of entrepreneurial guile. This is a very different dynamic because the boyfriend will not adopt the street persona of a pimp, nor engage in the visual semiotics of bragging associated with that genre. It also makes the prosecution of pimping very difficult from a policing perspective because it is difficult to prove that the boyfriend is living beyond their means—the ethos behind this genre of prostitutes is summed up by Sterk (n.d.) as “Tricking and Tripping.” Hunt (1990) argues that the link between drug-taking and prostitution has turned prostitution into a more consensual crime and discusses how drugs lure female addicts into committing a battery of crimes such as prostitution, robbery, shoplifting and burglary. Hunt also stresses that the street-level drug dealer is often an individual entrepreneur who is in a position to use his near monopoly to his advantage. This frenetic activity is an entrepreneurial activity because it is the extraction of multiple income streams as envisaged by Carter et al. (2004). Their activity is a risk based opportunity model of income generation. However, the need to achieve is mood driven because once they have earned sufficient income to meet their needs they stop working (see Figure 1 for a visual representation of street level entrepreneurship achieved via extracting multiple income streams).

Figure 1. Entrepreneurial income streams.

The Pimp as an Entrepreneur of Violence The pimp can also be regarded as an entrepreneur of violence by extending Vladim Volkov’s (2002) concept of “violent entrepreneurship.” For Volkov (2002: 25), violent entrepreneurship is a legitimate method of extracting income. The anthropologist Anton Blok (1972) also used the term to describe a particular genre of Italian Mafioso as “violent peasant entrepreneurs.” Volkov (2002: xiii–xiv) refers to an “exclusively male world where male virtues associated with violent contest prevail.” This aptly describes the violent underworld domain inhabited by the pimps in our study. The pimps observed could

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be described as entrepreneurs of violence because to them violence was merely another commodity to exploit as a form of exploitable social capital, which gives them leverage to extract value from their environment. The girls are commodities to be bought and sold. Violence and threats are used to protect their property (the girls) and their patch, and to punish the girls if they step out of line. As entrepreneurs of violence the pimps use their reputations, social capital and social skills to dominate their environment. In doing so they shape their professional and personal identities, both of which revolve around being the man. Thus the semiotics of gangsterism and machismo combine to present a culturally credible symbolism enabling and empowering them to control their environment physically, mentally and symbolically. These are thus techniques and stratagems for the maintenance of masculine dominance. The pimps observed during this study can be classified as entrepreneurs at many different levels—as entrepreneurs of violence, or as enterprising individuals or couples capitalising on their specific socio-cultural capital. Alternatively, others are businessmen or criminal entrepreneurs. Concluding Observations This paper contributes to extant knowledge by developing an appreciation of street-level entrepreneurs who operate in a shadow economy. There are limitations to the research practices of observing and street-level interviewing. It does not permit direct access to pimps, nor does it allow one to research the dynamics of mixed entrepreneurial income streams. Many questions remain unanswered: Is it their main income generation activity or do they have multiple income streams? Are these all illegal or do they bolster legal entrepreneurial incomes? Also, how do pimps reinvest their earnings? Do they reinvest it in small businesses (shops, taxi firms, etc.) or is it their undeclared beer-money to reinvest in hedonistic lifestyles—partying, drug misuse, gambling, betting, expensive restaurants? If this is the case then the illegal money re-circulates in the legal economy. Are all pimps men? Do women use violence to gain competitive entrepreneurial advantage? Do they make the girls work double shifts or in other avenues in the sex industry? The answer to these questions and others requires further research using different methodologies and techniques, making it a legitimate field of research because entrepreneurship is not merely found in legal commerce or in small and family businesses. Another interesting avenue of research lies in exploring the modus vivendi pimps and other street entrepreneurs have with street actors such as taxi drivers, pub owners, hotel concierges and even street cops. Is this space achieved via bribes, payments, or by the sheer force of personal magnetism? Or is it achieved by the projection of a hardman image and a reputation for extreme violence? It would be also beneficial to research the link between libido and entrepreneurial proclivity because the pimp, through the prostitute, provides a basic human need. We found little evidence of the (elusive) archetypal pimp in Aberdeen or other Scottish cities. We cannot state categorically that they do not exist, but they are certainly elusive. From our research it appears that the typical pimp in Scotland is more likely to be a boyfriend or father figure. Nevertheless, our research also demonstrates that there is evidence of individual entrepreneurship manifested at a street level. Therefore, it can be argued with some justification that some pimps (but not all) are entrepreneurs. The pimps and prostitutes surveyed for this study make a living out of the exchange by extracting value from an environment and some even practice entrepreneurship as envisaged by Anderson (1995).

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In writing the paper we were struck by the recurring theme of morality and how and why pimping and prostitution are accorded various moral statuses. However, the relationship between entrepreneurship and morality is very complicated. This caused us to question the connection between entrepreneurship and morality or whether it is a stance adopted by the wider populace that bears little, if anything, to do with the act of enterprising. Might entrepreneurship, in other words, be conceived of as a morally neutral act which adds or extracts social value accordingly? Entrepreneurship is an amoral concept but paradoxically entrepreneurs are not amoral or neutral—they are either imbued with morals or they are not. Arguably, as entrepreneurial processes—opportunity identification and exploitation are also neutral it is merely the evaluation placed upon it by the entrepreneurs, their peers and society which is morally laden. The notion that entrepreneurship need not be as Anderson (1995) suggests the creation and extraction from an environment but the extraction of value is a significant step forward from the original definition. The significance of criminal/deviant entrepreneurship lies within the entrepreneur and not the concept. It is only how it is operationalised that differs. Contact Information For further information on this article, contact: Robert Smith, The Charles P. Skene Centre for Entrepreneurship, Aberdeen Business School, The Robert Gordon University, Aberdeen, AB10 7QE E-mail: [email protected]. Maria L Christou, Criminologist and Independent Academic E-mail: [email protected]

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Contributors is lecturer in criminology at the University of Teesside, UK. His research interests include illegal markets. GEORGIOS ANTONOPOULOS

DAVID M. BOJE is the Endowed Bank of America Professor at the College of Business, New Mexico State University, Las Cruces, New Mexico. MARTIN BOUCHARD is Assistant Professor at the School of Criminology, Simon Fraser University. His main line of research focuses on various dimensions of illegal drug markets, with a special emphasis on the marijuana cultivation industry. CLAUDE B. DION is a research assistant at the University of Montreal. Her research focuses on illegal drug markets.

is a research student. His particular area of interest is entrepreneurial cognition and the development of entrepreneurial insight and learning.

KIRK FRITH

FARZAD R. KHAN is Assistant Professor at the Suleman Dawood School of Business, Lahore University of Management Sciences (LUMS), Lahore, Pakistan.

is Reader in Rural Enterprise and editor of the International Journal of Entrepreneurship and Innovation. His research interest is Rural Entrepreneurship.

GERARD MCELWEE

JAY MITRA is the Founding Professor of Business Enterprise and Innovation, Director of the Centre for Entrepreneurship Research at the University of Essex, and Head of the School of Entrepreneurship and Business at the University of Essex, Southend, UK.

is Professor of Public Policy and Director of the Centre for Regional Economic and Enterprise Development (CREED) in the School of Management at the University of Sheffield in the United Kingdom. His research interests are in the informal economy and its public policy implications. Recent books include Re-thinking the Future of Work (Palgrave-Macmillan, 2007) and The Hidden Enterprise Culture (Edward Elgar, 2006).

COLIN C. WILLIAMS

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Manuel de redaction pour le Journal of Small Business and Entrepreneurship Guidelines for Authors Submission guidelines can be found on the web site at www.jsbe.com On trouvera les directives de soumission au site www.jsbe.com

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The Journal of Small Business and Entrepreneurship Robert Anderson, Managing Editor Faculty of Administration, University of Regina Regina, Saskatchewan, Canada S4S 0A2 (306) 585-4728, fax (306) 585-4805 [email protected]

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The Journal of Small Business and Entrepreneurship Robert Anderson, Managing Editor Faculty of Administration, University of Regina Regina, Saskatchewan, Canada S4S 0A2 (306) 585-4728, fax (306) 585-4805 [email protected]

JSBE

JOURNAL OF SMALL BUSINESS & ENTREPRENEURSHIP

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