Perceiving and dealing with risks
A study of small business entrepreneurs in the
accommodation sector in Cartagena de Indias Colombia
Anna Viktoria Bußmann
11259922
MsC International Development Studies Research Master
Graduate School of Social Sciences
University of Amsterdam
Supervisor: Dr. Hebe Verrest
Second reader: Dr. Nicky Pouw
June 2018
Word Count: 32608
i
Abstract
Being a small business entrepreneur in Cartagena de Indias, a vibrant touristic city in the Colombian Caribbean, means facing a variety of risks affecting both business and personal life. Entrepreneurship is seen as an important driver for economic development but small business entrepreneurship in developing countries is increasingly context-related. Existing literature has not sufficiently addressed the context of small business entrepreneurship, neglecting factors such as the individual backgrounds of entrepreneurs, household situations, societal and environmental aspects and their relation to risks. Instead research has largely focused on broader economic patterns and psychological traits. The objective of this study was therefore to address this gap in the literature, by investigating the perception of and dealing with a variety of risks by small business entrepreneurs in the tourist accommodation sector in Cartagena. This research follows the ideas of sociological and psychological studies by exploring the risk relationship with entrepreneurship from a more personal angle. Using a mixed methods design, this study aimed at further contributing to the current understanding of entrepreneurial risk in developing countries by focusing on how small business entrepreneurs in Cartagena de Indias, perceive and deal with distinct but interrelated risks.
The interviews and surveys conducted demonstrated that different risks are often interlinked. The resulting data revealed that socio-economic and environmental risks, as well as challenges affecting the household and personal lives of entrepreneurs’ form part of a broader context. This environment is impacted by the entrepreneur themselves, institutional actors, and the business clients. The different risks identified included: financial issues, problems related to infrastructure and insecurity, threats imposed by drug and sex tourism, corruption, flooding and pollution and discrimination. The perception of risk and the individual ability to deal with risk are influenced by a variety of different factors. More in particular, this research has provided an impetus for considering the importance of business type and structure in influencing the entrepreneurial risk perception. Those factors impact risk perception through influencing the entrepreneurial sense of control over the risk, and the responsibility and dependence associated with the business. The paper concludes that strategies of dealing with risks are problem-solution oriented, reflecting a fast response to short-term issues, instead of implementing long-term strategies. Entrepreneurs mainly follow the strategy of business survival in their risk navigation. Risk navigation tactics and measures are influenced by locally produced structures with a special emphasis on the role of the local government and tourists. This research contributes to existing literature by providing a deeper understanding of entrepreneurial activity in developing countries, including insights into the interplay of risk perception and dealing, and by highlighting a variety of risks that go beyond the common understanding of risk in purely financial terms.
ii
Acknowledgements
This thesis would have not been without the support of several people involved. Therefore, I want to use the following lines to thank the people who played a major role in this process. However, I want to stress that writing a thesis is a social process and that I am thankful for the support I have received by anybody involved in this journey. To convey this message in a personal manner, I decided to write in English and Spanish.
My heartfelt thanks to my supervisor, Dr. Hebe Verrest, whose encouragement, guidance, and support helped me to gain a deep understanding of risk perception and dealing with risks by small business entrepreneurs. She supported me during the whole thesis journey including the elaboration of my research proposal, my fieldwork, and the writing process. Furthermore, I want to thank all my study friends for their professional and emotional support. I want to thank my friend Alex for taking the time to read my work and providing her worthful feedback. I owe my deepest gratitude to my family. I particularly want to thank my parents Gabriele and Hans for always supporting me in finding my way and following my dreams.
Primero quisiera agradecer a todas las personas que han compartido sus historias conmigo, especialmente a quienes contribuyeron con sus valiosas experiencias en las entrevistas y la encuesta. Un sincero agradecimiento a la Universidad de Cartagena por su apoyo durante mi investigación en esta hermosa ciudad del Caribe colombiano, a mi supervisor local, Profesor Andrés Escobar, por compartir sus conocimientos sobre el contexto cartagenero y sobre el uso de los métodos cuantitativos aplicados en este trabajo. También, mis sinceras gracias al equipo del Departamento de Investigaciones Económicas y Sociales de esta casa de estudios por su colaboración y por todo el rico café, los deliciosos enyucados y todas las charlas compartidas en las que aprendí tanto sobre Cartagena y la hermosa Colombia. Menis y Grace, gracias por su paciencia y la ayuda en la elaboración de la encuesta; así como a los y las estudiantes que desinteresadamente apoyaron en la aplicación de la misma. Muchas gracias también a mi compañera del programa de Maestría, Marifer, quien me ha apoyado tanto con consejos profesionales como con su gran amistad. Finalmente, quiero agradecer de todo mi corazón a Antony por mostrarme diferentes facetas del mundo cartagenero, enseñarme el español costeño y el gran apoyo emocional, mismo que me ha brindado fortaleza y motivación para mirar adelante y seguir con mi trabajo hasta en las situaciones difíciles.
iii
Content
Abstract ... i
Acknowledgements ...ii
List of tables and figures ... v
List of appendices ... vi
List of acronyms and abbreviations ... vi
1. Introduction ... 1
1.1 Aim of the research ... 2
1.2 Relevance of research ... 2
1.3 General context of research ... 3
1.4 Problem statement ... 4 1.5 Research questions ... 5 1.6 Thesis outline ... 5 2. Theoretical Framework ... 6 2.1 Epistemological Standpoint ... 6 2.2 Concept of entrepreneurship ... 6 2.3 Concept of risk ... 7 2.4 Conclusion ... 9 2.4.1 Conceptual Framework ... 11 3. Research context ... 12
3.1 Entrepreneurial context and tourism in Colombia ... 12
3.2 Historical context ... 13
3.3 Economy and the impact of tourism ... 13
3.3.1 Urban heritage and spatial inequalities ... 14
3.3.2 Discrimination, race and image of exoticness ... 15
3.3.3 Cartagena’s beaches ... 16 3.4 Study Context ... 16 4. Research methods ... 18 4.1 Operationalization ... 18 4.2 Research design ... 19 4.2.1 Qualitative methods ... 19 4.2.2 Quantitative methods... 20 4.3 Sampling ... 23 4.4 Data Quality ... 24 4.4.1 Qualitative strand ... 24 4.4.2 Quantitative strand ... 25
iv
4.6 Methodological Reflection ... 26
5.Risks and risk perception ... 28
5.1 Individual Risks: no need for consideration? ... 31
5.2 Socio-economic risks: Playing a game with uncertain rules ... 34
5.2.1 Price level in Cartagena ... 34
5.2.2 Unstable policies and institutions ... 34
5.3 Environmental risk: Risks for Humanity ... 35
5.3.1 Beach pollution ... 35
5.3.2 Climate change ... 36
5.4 Social risks: The social bomb ... 39
5.4.1 Social inequality ... 39
5.4.2 Sex and drug tourism ... 40
5.5 Conclusion ... 41
6. Influences on risk perception ... 43
6.1 Regression analysis ... 43
6.1.1 Model 1: Influence on general risk perception ... 44
6.1.2 Model 2: Influence on socio-economic risk perception ... 46
6.1.3 Model 3: Influence on social risk perception ... 47
6.1.4 Model 4: Influence on environmental risk perception ... 49
6.1.5 Model 5: Influence on individual risk perception ... 50
6.2 Conclusion ... 53
7. Risk Navigation ... 54
7.1 Strategy and priorities ... 54
7.2 Tactics and risk responses ... 55
7.2.1 Precautions ... 57
7.2.2 Create and use networks ... 58
7.2.3 Reducing risk’s impact and harm... 59
7.2.4 Survival techniques ... 60
7.2.5 Convert risk in opportunity ... 61
7.3 Conclusion ... 62
8. Conclusion ... 64
8.1 Risk perception ... 64
8.2 Risk navigation ... 65
8.3 Reflection on research aim ... 66
8.4 Theoretical implications and conceptual framework ... 66
8.5 Recommendations ... 68
Publication bibliography ... 70
v
List of tables and figures
Figure 1: Entrepreneurial context ... 1
Figure 2: Concept Entrepreneurship ... 10
Figure 3: Conceptual Framework: Risk perception and navigation... 11
Figure 4: Contribution of tourism to the Colombian GDP 2007-2017, forecast 2027... 12
Figure 5: Distribution property type and job position ... 21
Figure 6: Distribution different types of small accommodation businesses ... 21
Figure 7:Distribution of entrepreneurs according to their ethnical auto-denomination ... 22
Figure 8: average risk perception per risk-group ... 31
Figure 9: Highest risks according to averages on risk perception ... 33
Figure 10: Tactics risk navigation ... 65
Figure 11: Revised Conceptual Framework ... 68
Graphic 1: Murallas as they can be seen today ... 14
Graphic 2: Rehabilitated houses in the city center ... 15
Graphic 9: Flooding of the city center due to heavy rain ... 37
Map 1: Study Location Cartagena de Indias ... 4
Map 2: Spatial Focus study including El Centro, San Diego, La Matuna and Getsemaní ... 17
Table 1: Business classification Colombia... 19
Table 2: factors used as independent variables regression analysis ... 22
Table 3: Socio-economic risks ... 28
Table 4: Social risks ... 29
Table 5: Environmental risks ... 30
Table 6: Individual risks ... 30
Table 7: Aspects, drivers and actors beach pollution ... 36
Table 8: Aspects, drivers and actors flooding ... 38
Table 9: Independent variables regression analysis ... 44
Table 10: Model 1 general risk perception ... 45
Table 11: Model 1 contribution independent variables ... 46
Table 12: Model 2: Socio-economic risk perception ... 47
Table 13: model 2: contribution independent variables ... 47
Table 14: Modell 3: Social risk perception ... 48
Table 15: Model 3: contribution independent variables ... 48
Table 16: Model 4: Environmental risk perception ... 49
Table 17: Model 4: contribution independent variables ... 49
Table 18: Model 5: Individual risk perception ... 50
Table 19: Model 5: contribution independent variables ... 51
Table 20: overview findings regression models 1-5 ... 51
vi
List of appendices
Appendix 1: operationalization table………..76
Appendix 2: interview guides………79
Appendix 3: overview interview participants……….86
Appendix 4: list informal conversations……….87
Appendix 5: survey………..88
Appendix 6: data analysis SPSS outputs……….92
List of acronyms and abbreviations
COP Colombian Peso
FARC Fuerzas Armadas Revolucionarias de Colombia
GDP Gross Domestic Product
GEM Global Entrepreneurship Monitor
LEDC Less economically developed countries
OECD Organization for Economic Co-operation and Development NTS-TS Norma Técnica Sectorial Colombiana
SMMLV Salarios Mínimos Mensuales Legal Vigente
vii
-1
1. Introduction
Entrepreneurs are continually confronted with a variety of risks, making the understanding of, and the capacity to deal with, threats and obstacles an unrelenting task. This diversity of risks includes socio-economic and environmental shocks and stresses, further societal threats, and individual obstacles. However, our understanding of the diversity of risks faced by entrepreneurs and the ways in which small business entrepreneurs respond to them is limited, thus representing a gap in the literature. When referring to economic structures and thinking about economic growth, entrepreneurship is not only considered an important driving force of development, but also as an important factor in shaping its broader context. However, entrepreneurship and risk have always been intertwined (Bays 1988; Block et al. 2015; Naldi et al. 2007), making the perception and dealing with risk an essential topic when researching entrepreneurship.
Close inspection of business literature has shown that entrepreneurs are usually understood to be risk takers. However, further studies suggest that many entrepreneurs try to avoid risks (Macko and Tyszka 2009; Block et al. 2015). Moreover, sociological and psychological studies have demonstrated that risk is often constructed by individuals and society and thus depends on personal perceptions and circumstances ( Douglas 1992,pp.12-14; Beck 1986, p.76). Sociologist, Ulrich Beck abolished the objective and scientific view on risks and highlighted the impact of modern risks such as climate change on society (Beck 1986, 2007). Less economically developed countries (LEDC) mainly have dynamic economies which are impacted by the country’s history, geography, and society, leading to the fact that entrepreneurs face different risks, including economic, environmental, and individual concerns. These issues affect entrepreneurs across business and personal life. This highlights the need to study risk beyond its current context in positivist science as something to be examined from a largely financial perspective. Instead risk should be analyzed with an emphasis on the entrepreneurial context, as a means of explaining entrepreneurial activity. This context describes a complex interplay of socio-economic, societal, and environmental landscapes and their influence on the household and individual level (compare figure 1).
2
1.1 Aim of the research
The aim of this research is to investigate alternative perspectives to the debate on risk and entrepreneurship; by considering different types of risks the study goes beyond the conventional understanding of financial business risks and offers a new approach of understanding entrepreneurial risk perception and risk response. This approach contributes to a more holistic view on entrepreneurship by taking into account the individual characteristics, the environmental and societal landscape of entrepreneurs. In this research risk and entrepreneurship will be studied using a mixed method design and by focusing on the case of small business entrepreneurs in the hotel sector in Cartagena de Indias, Colombia. Their perception of economic, social, environmental, and individual risks arising from the specific context of the tourism sector in Cartagena de Indias will be examined. It will be explored which factors are perceived as risks and how the entrepreneurs deal with them.
1.2 Relevance of research
Entrepreneurship is understood to be a driving force of economic development. It is thought to contribute by playing an important role in innovation and progress (Acs et al. 2008), offering different personal gains on the micro-economic level (Gries and Naudé 2011) and through the provision of entrepreneurs as multipliers that act by motivating others to participate in the economy and resultantly stimulate economic growth (McMullen 2011, p. 193; Naudé 2009; Acs et al. 2008). Critiques on the importance of entrepreneurship for development mainly relate to the idea of survivalist entrepreneurship driven by necessity which is not considered to lead to economic growth and progress (Naudé 2009, 2011; Acs et al. 2008; Gries and Naudé 2009). It is the case however, that entrepreneurship has become essential for daily economic life in many LEDCs. Survival businesses and other small ventures help to guarantee basic needs for parts of the population and have an important impact on local economies as they provide markets for local goods, pay taxes and reinvest (Morris et al. 2015). Moreover the high integration of business and household have made entrepreneurship an important aspect of society (Verrest 2013). Despite its relevance for economic growth and development within the business area, entrepreneurship is not yet a broadly studied topic when it comes to development economics (Naudé 2009). Additionally, modern risks such as climate change impact existing global inequalities and therefore influence development (Beck 1986,p.55). For these reasons, furthering knowledge of entrepreneurial risk is essential to ensure proper understanding of economic and societal structures and development possibilities in many countries.
Increasing risks to society (Beck 1986) and their inherent natural relation to entrepreneurship therefore create the need to consider a variety of entrepreneurial risks in the context of development studies. Business studies have largely focused on the financial aspect of business risks and studies provide a general understanding of the economic context of a country without considering the social environment in detail, neglecting individual factors impacting entrepreneurial skills and opportunities. However, business opportunities and success depend highly on the specific entrepreneurial context and the entrepreneur’s skills (Gries and Naudé 2009) leading to the fact that a better understanding of the entrepreneurial context becomes essential to study entrepreneurship in developing countries. Therefore, entrepreneurship research creates a need to look beyond the common understanding of directly business-related risks as financial issues and must consider the entrepreneurial activity in its relation to different factors such as those provided by the societal and environmental landscape and individual level.
Studying risks for small business entrepreneurs in the local tourism sector is further important from a societal relevance perspective as this sector provides the largest source of employment in Cartagena (Pulido Sierra et al. 2018). Moreover the city aims at establishing a sustainable tourism environment creating a need to consider the interplay of different forces including societal and environmental aspects in this sector (incontec 2014). This study gives small business entrepreneurs in Cartagena a voice which becomes essential for creating awareness of the variety of risks affecting
3 them. These aspects offer first insights that could contribute to the establishment of measures for institutions involved in supporting local entrepreneurship. As described before, risks are understood in different ways by individuals creating distinct perceptions of the topic.
The context for small business entrepreneurs in Cartagena is increasingly dynamic influenced by changes in the local government, the (inter)national growth of the tourism sector and further macro-economic forces. The increasing influence of societal and environmental aspects as risks, creates the need to understand risk mitigation from a different angle. This study will therefore use the concept of social navigation (Vigh 2010) to explore the entrepreneurial dealing with a variety of risks. This research gives insights into the role of small business entrepreneurs by referring to the accommodation sector in Cartagena. Gaining insights how small business entrepreneurs deal with a variety of risks in the local context is an aspect of societal relevance as it provides opportunities to establish measures for promoting and supporting small business entrepreneurship in the tourism sector in Cartagena. Moreover, this research contributes to three academic debates: It gives insights into the role of small business entrepreneurs by referring to the accommodation sector in Cartagena. The research further becomes relevant to academia as it contributes to the debate of entrepreneurial risks by emphasizing the need to consider a variety of risks and offers new insights into the topic of entrepreneurial risk dealing through emphasizing a navigation approach.
1.3 General context of research
This research concentrates on the context of entrepreneurship and risk in Colombia. Colombia presents a particularly relevant place to study entrepreneurship, as the country generally has a very positive attitude towards entrepreneurship (Global Entrepreneurship Monitor 2016) and shows recent positive economic and social developments that impact this topic. Similar to other countries in the region, small and medium size companies are very important for the Colombian economy and a new focus has been given to promote entrepreneurship among them (Rodríguez 2015, p. 617).
Although entrepreneurial activity is important in any sector of the Colombian economy, this study will focus on the tourism sector as it not only offers plentiful entrepreneurial opportunities, but it is also particularly vulnerable to risk. Risk in the tourism industry can be a result of limited knowledge by participants, the complex nature of tourism as an activity, because of global and local market structures and because of various practicalities related to service provision (Williams and Balaz 2015). Further threats in the tourism sector include political, technological and social issues (Thomas et al. 2011). The tourism industry is also highly vulnerable to exogenous threats such as natural disasters (Williams and Balaz 2015). Despite these threats1 however, small business entrepreneurs still consider the tourism sector to be attractive due to low-barriers of entry (Thomas et al. 2011). Information on small businesses is currently considered a gap in tourism research as studies tend to focus on big players in the sector (Page et al. 1999) meaning smaller organizations in the tourism sector remain under-theorized and under-researched in the literature (Thomas et al. 2011). Furthermore, research on small businesses in the tourism sector has largely focused on narrow and isolated concepts related to these organizations (Thomas et al. 2011), often neglecting personal, household and business level influences and interactions between them. The main focus of entrepreneurial research on socio-economic risks and the fact that the concept of risk is generally considered to remain undertheorized in the context of tourism research (Williams and Balaz 2015) create a need for further research in the field.
Cartagena de Indias is located on the Caribbean coast of Colombia and offers an interesting site to explore how small business entrepreneurs perceive and deal with risks. The coastal city is heavily dependent on tourism as it is not only one of the country’s most visited attractions, demonstrating the
4 highest increase in tourism rates country wide2, but also considered a UNESCO world heritage site (Conaway 2012). Tourism is understood to be the third pillar in the regional economy of Cartagena and offers greater possibilities to small-scale entrepreneurs than the industrial sector. Moreover, it is considered to reduce social inequalities as a broad part of the population can participate in this economic sector (Meisel Roca et al. 2008). Nevertheless, the tourism industry has also played an ambiguous role in the city’s development and enhanced exclusion of the city’s vulnerable population.
Map 1: Study Location Cartagena de Indias
Source: googlemaps
Under greater scrutiny it becomes clear, that Cartagena is a city of great disparities, portraying itself as a modern tourist city on the one hand, and counting with a huge part of its population suffering from hunger, poverty, violence, sexual exploitation, drugs and exclusion on the other (Carrillo Romero et al. 2013). Moreover, rising sea levels caused by climate change create new threats for the city and its inhabitants (Andrade et al. 2013). Therefore, it becomes evident that the tourism sector in Cartagena offers opportunities to small business entrepreneurs but that entrepreneurial activity in this industry is also related to different challenges and threats.
1.4 Problem statement
As mentioned prior, entrepreneurs in the hotel sector in Cartagena have to face a variety of risks related to environmental, socio-economic and individual factors caused by the city’s location, the nature of the tourism industry, particularities of the Colombian market in addition to social heterogeneity and city structure. This problem highlights the need to examine risks beyond an understanding in financial terms but considering the individual characteristics of small business entrepreneurs and their societal, and environmental context. This research will therefore analyze risk perception and how entrepreneurs deal with threats by exploring a variety of concerns understood as risks by the entrepreneurs. Following this approach, it will consider socio-economic, environmental, and individual aspects.
2 Data from the Corporación Turismo Cartagena (2015), has revealed that the increase of the tourism industry in Cartagena is
the highest on national level and much higher than the world average (4,4%), reflected by a growth rate of 13 % (2011-2014) compared to 7,7% on a national level Ayala García and Meisel Roca 2016
5
1.5 Research questions
By focusing on the perception and navigation of risks by entrepreneurs in the Colombian tourism sector, with an emphasis on the hotel sector in Cartagena de Indias, this study will contribute to find answers to the following question:
How do entrepreneurs of small businesses in the tourism sector of Cartagena de Indias, perceive socio-economic, environmental, and individual risks and which actions emerge from this perception in order to navigate between them?
Including the following sub-questions:
• What aspects do entrepreneurs of small businesses operating in the hotel sector in Cartagena
consider to be socio-economic, environmental, and individual risks?
• To what extent explain individual and business characteristics the variation of risk perceptions
by small business entrepreneurs in the accommodation sector in Cartagena?
• How do entrepreneurs navigate between perceived risks: How do they set priorities between
them, which strategies are used to do so and how are said strategies planned and executed?
1.6 Thesis outline
The next chapter will describe the theoretical framework employed by this study. After that the study context will be explained and the methods used will be highlighted in chapter four. Chapter five will then explain the empirical findings dealing with risk perception. The following chapter will analyze the influence of individual and business characteristics on this perception. Chapter seven will deal with risk navigation. Finally, the last chapter will provide an answer to the general research question and a conclusion to the research.
6
2. Theoretical Framework
This chapter will explain the theoretical base for the study by first clarifying the epistemological standpoint. Moreover, the concepts of entrepreneurship, entrepreneurial diversity and risk will be considered in further detail. The chapter concludes by pointing out the understanding of those concepts within this study.
2.1 Epistemological Standpoint
This study embarks from a critical realist point of view; therefore, it considers an ontology based on a realist world view. This understanding relies on the concept of one measurable reality, but acknowledges the difficulties in measuring it (Gray 2004, 2009, 2014). However, perceptions of this truth might differ as they are influenced by concepts, schemata and different discourse (Sayer 2006). Moreover, critical realism acknowledges social construction but stresses distinct outcomes in individual cases. As individuals have personal characteristics, they are affected in different ways by the impact of their environment (Sayer 2006). Thus, critical realism understands: “ a cause [to be] a mechanism that produces change” (Sayer 2006). Every object as well as each discourse has their own agency in producing a power to make change. This agency however, is influenced by the context the object finds itself in. The same applies to the consequences caused by the implemented actions: they are particular to the context and cannot be understood to always show the same result if based on a different time or context (Sayer 2006). Embarking from this epistemology towards the research topic, the concept of entrepreneurship and risk must be considered in further detail.
2.2 Concept of entrepreneurship
Entrepreneurship has recently gained importance in the field of development as bottom-up approaches have become more meaningful. McMullen makes clear by referring to Easterly that new approaches in development focusing on empowerment and endogenous transformation have underlined the importance of entrepreneurship for sustainable economic development (McMullen 2011, p. 186). Nevertheless there exists a variety of definitions dealing with the concept and those have also changed over time (Hisrich and Peters 1989/2002).
Definitions of entrepreneurship have developed over time as different theories have influenced them. Davidsson summarizes these different understandings from Schumpeter to modern thinkers: “The former associates entrepreneurship with innovative and change-oriented behavior, whereas the latter include also task-related motivation, expertise, and expectation of gain for self.” (Davidsson 2004, p. 1). Moreover, he concludes amongst the diversity of approaches that there are two main distinct understandings of entrepreneurship describing different social realities: The first understanding highlights the importance of being self-employed as a key characteristic of entrepreneurship whereas the second concept implements a macro-economic view on entrepreneurship by stressing the importance of innovation and change (Davidsson 2004, p. 4).
Innovative entrepreneurs provide the market either with product or process innovation leading to economic growth. In the same way, McMullen shows by referring to Moyo, that some entrepreneurs have provided solutions to regional problems which have had a macro impact (McMullen 2011, p. 190). Innovation related to Schumpeter’s concept of creative destruction is leading to economic growth and has made entrepreneurship an increasingly important factor for economic development. In the same way, entrepreneurs are likely to not only motivate themselves but also others to provide financial means and human capital and therefore promote economic growth (McMullen 2011, p. 193). In contrast necessity-driven entrepreneurs should be named. They usually become self-employed due to a lack of other employment activities and are likely to operate in small businesses within the informal economy. Businesses created out of necessity often operate on a survival basis without creating innovation. However, they become essential as they guarantee the
7 basic needs for a part of the population and impact local economies by providing markets for local goods, paying taxes and reinvesting in the market (Morris et al. 2015). Furthermore, being an entrepreneur provides the individual with personal gains as it offers a mean to expand human capabilities (Gries and Naudé 2011). In the same way, the study of home-based micro-businesses in Colombia shows that they often operate based on creativity and closely linked to the household leading to benefits for the family and community (Gough and Kellett 2001). Moreover, small business entrepreneurship is essential for employment in developing countries and has become an important aspect of society caused by the close relation between businesses and households (Verrest 2013).
Another variable that should be taken into account when referring to entrepreneurship is the business size. As described before, small business entrepreneurship becomes especially important in LEDCs considering its societal relevance. Nevertheless, small business entrepreneurs are not a homogenous group which will be pointed out in the following.
Diversity of entrepreneurs
With regards to small business entrepreneurs, it must be taken into account that this group is heterogeneous, and that performance is influenced by differences in skills and capital. In their study in West-Africa, Grimm, Knorringa and Lay found out that survival entrepreneurs differ from the “top-part” of entrepreneurs by counting with smaller capital, less skills and distinct risk aversion. However, they also identified a third group, “constrained gazelles”, counting with small capital but higher skills which locates them between the survival entrepreneurs and top performers (Grimm et al. 2012). In their comparative study Ferreira and Fernandes pointed out that rational economic choices do not solely influence entrepreneurial activity. The business location and decision-making process of entrepreneurs is hugely influenced by culture and emotions spinning around the entrepreneur’s personal background including factors such as where they were born and raised (Ferreira and Fernandes 2015). The entrepreneurial context impacts the entrepreneurial self-esteem and influences how people look for business opportunities. Cultural norms, beliefs and discrimination might impact the entrepreneurial performance of a certain group of entrepreneurs. This has become particularly important when considering obstacles to female entrepreneurship in developing countries (Minniti and Naudé 2010). As described before traditional literature has stressed the close relation between taking risks and entrepreneurial success, however there has been a growing debate on the role of entrepreneurs as risk takers. In developing countries not making use of business opportunities is not solely linked to a lack of psychological commitment but impacted by the perception of high risk caused by great uncertainties arising from the context (Gries and Naudé 2011). In the following, the concept of risk will therefore be considered more in detail by emphasizing risk perception and the dealing with risks.
2.3 Concept of risk
Risk Perception
Entrepreneurship has always been closely related to risks as entrepreneurs are often considered to be risk takers (Bays 1988; Hvide and Panos 2014; Macko and Tyszka 2009). It is the case however that there is a growing debate regarding entrepreneurs as risk takers as recent studies have demonstrated that in fact, many entrepreneurs try to avoid risks (Macko and Tyszka 2009; Block et al. 2015). When referring to risk, one should consider different conceptions of the term. First of all, the scientific view on risk has strongly been influenced by neoclassical economics and is based on the assumption of the homo economicus3. Generally speaking, the scientific view assumes that people are able to recognize real dangers and find out about the real causes of those risks by defining them objectively (Douglas 1992). As a ground for decision-making, the calculation of risk is deeply embedded in science and manufacturing. Behavioral economics has challenged this idea of rationality and provided a more
3 The homo-economics as described by micro-economic theory assumes that individuals make rational choices in order to
8 modern understanding of risk (Douglas 1992). Behavioral economics represented by Tversky and Kahnemann showed that there are major phenomena proving that individuals do not make choices based on rationality and that decisions can be context-dependent (Tversky and Kahneman 1992).
In contrast to economists, sociologists and anthropologists do not see risk as solely a probability of an event, but also the impact of its result and the personal value attributed to this outcome (Douglas 1992). When dealing with risk in sociology, Ulrich Beck’s approach of the risk society is essential in understanding the definition of risk. Beck has denied the objective and scientific view on risks, stressing that risk should be understood in terms of individual constructs and has also highlighted the impacts that modern and global risks (Modernisierungsrisiken) such as climate change have on society (Beck 1986). Although, risks are often understood as dangers, Beck makes clear that they have a second face portraying opportunity (Beck 2007). This approach becomes relevant in the case of entrepreneurs as they are often understood to take risks and convert them into opportunities to create their businesses (Bays 1988; Cardenas and Carpenter 2013). Furthermore, sociology highlights a social influence on risk caused by its relation to intersubjectivity (Douglas 1992) and the influence of the broader context on risks such as the political spectrum (Beck 2007). Considering risks as deriving from industrialization and global processes (Beck 1986) and their relation to intersubjectivity (Douglas 1992), it becomes clear that risks act across a broad spectrum, influenced by environmental, societal and economic aspects. It is worth noting however, that the effects of risk can differ greatly amongst individuals as they are influenced by distinct circumstances (Beck 1986) as does risk perception which differs according to personal skills and household situations (Macko and Tyszka 2009; Block et al. 2015).
Dealing with risk
Within the field of entrepreneurship, risk and opportunity may lie very close to one another, and often the ways in which entrepreneurs deal with obstacles determines whether an issue is to become a threat or an opportunity (Knight 1921/1957/2006, p.264 ff.). Entrepreneurs have to deal with different risks and respond to them in order to guarantee business success. Literature on risk management suggests that entrepreneurs should consider the importance of different risks first and then become proactive in mitigating the most harmful risks as a means of avoiding obstacles to the longevity of their business (Lackey 2012). Risk management theory considers the following steps as part of the risk mitigation process: First the identification of possible risks, second an evaluation of those, and an identification and implementation of the appropriate risk response (Lackey 2012; Henschel 2010,p.10). Henschel makes clear by referring to Oehler and Unser (2001) that businesses can use four main risk management strategies, these being: to avoid risks, to reduce risks, to transfer risks, or to assume risks (Henschel 2010,p.11). Moreover, entrepreneurs can deal with risks in both an active manner, by impacting the nature of the risk or in a passive manner, by focusing on the consequences, in dealing with the risk (Ganseforth 2012) .
Although theory on risk management tries to give rational strategies for dealing with risks it must be considered that entrepreneurs are individuals who make decisions based on personal perception and cognitive traits. When referring to the cognition of entrepreneurs it becomes clear that their decision-making process is related to different biases including over-optimism and an illusion of control whilst also being influenced by different personal variables such as the perceived self-efficacy and the intrinsic motivation (Wadeson 2009). Moreover, the dealing with risks is closely linked to the perception of those: A study of Nigerian businessmen has shown that being a successful entrepreneur does not mean to count with a high-risk propensity but that acting according to their risk perception becomes useful element. Entrepreneurs perceiving higher risks result in taking precautionary actions against those leading to greater business success (Willebrands et al. 2012).
In her research in Romania, Dănciulescu found that the daily state of mind, the level of education, moral principles and mentality of business owners affect their aversion and treatment with risks (Dănciulescu 2015). Individual context and traits are heavily integrated into how business owners
9 deal with risks. In their study on household response to hazards, Lindell and Hwang found out that the ways in which subjects dealt with risks were influenced by gender, age, ethnicity, and income, with each of these factors impacting the decision-making process. Furthermore, personal expectations, personality and psychological traits also play a role in impacting hazard response (Lindell and Hwang 2008).
When referring to how individuals deal with obstacles and threats in an unstable environment, Vigh's theory of social navigation should be considered. Drawing from the behavior of young men in a war context, social navigation refers to the ways in which agents deal with uncertain situations whilst being influenced by a variety of drivers via self-organization in accordance to the interplay of forces in an unstable and dynamic environment (Vigh 2009). The concept is thus rather fittingly described as the “navigation through dangerous waters” (Vigh 2010). Social navigation theory highlights: “motion within motion” expressed through the concept of dubriagem (Vigh 2009). It considers a moving agent within a changing environment. Dubriagem describes a motion of getting through an uncertain situation whilst progressing step by step in different directions, with an emphasis on flexibility and tactics (Vigh 2009). Within his theory of social navigation Vigh makes clear by referring to Deleuze and Guattari (2002) and de Certeau (1984) that tactics are what agents use to navigate between and across boundaries hindered by structures. This way of navigation also depends on personal capabilities and the possibilities offered by the context (Vigh 2010). Social navigation describes the process of dealing with the present whilst also progressing towards the future, which is done by following an imagined path through an unstable environment (Vigh 2009). This involves constant assessment and reassessment of one’s current situation as well as the attempt to establish paths into an uncertain future (Vigh 2009).
2.4 Conclusion
The review of literature as described above has highlighted two different approaches regarding the understanding of risks. The scientific view emphasizing risks as objective and measurable and therefore linked to a calculation of risk enabling mitigation by entrepreneurs. The second approach highlighted risk perception as depending on the context including a variety of societal and environmental risks. As described above business literature lacks an understanding of this variety of threats in a changing environment. Small business entrepreneurs in LEDCs face a variety of risks introduced by a dynamic context creating the need to understand the dealing with risk beyond financial calculation of risk factors and through taking into account their day-today behavior. Drawing from this conclusion it will be emphasized on how these concepts were considered in this study: The chapters to follow will provide insights into the context of Cartagena and the operationalization of these concepts and the methods used in this research.
Entrepreneurship and Entrepreneurial Variety
Due to its high importance within the development context, this study uses the definition of self-employment as a basis to understand entrepreneurship. Therefore, the concept of innovation is not considered as the main component of entrepreneurship, instead this approach includes all independently owned organizations and their owners or managers in its definition of entrepreneurs (Davidsson 2004, p. 4). This understanding of entrepreneurship is related to the critical realist perspective through its view of entrepreneurial activity as a cause of a different risk and reward structures impacting individuals in both working and private life. Moreover, this study considers entrepreneurship through a social science lens. Therefore, it is essential to understand entrepreneurship not as an independent activity but as an activity that influences, but also is impacted, by the entrepreneur’s context such as the household situation and individual characteristics. In the same way, the entrepreneur is perceived as an individual with personal characteristics and who has personal agency over actions. However, this power to provide change is influenced by the personal context entrepreneurs find themselves in.
10 The understanding of entrepreneurship as described in this research included businesses that were established out of necessity or caused by the opposite approach namely the perception of market opportunities. Moreover, entrepreneurship as defined by this study includes activities related to self-employment, management, and business ownership. The study considered small business entrepreneurship due to its importance in the local economy and the tourism sector which will be analyzed more in detail in the following chapter.
Figure 2: Concept Entrepreneurship
Diversity of entrepreneurs
As pointed out before, small business entrepreneurs have distinct financial possibilities, different traits and characteristics which have an impact on the business performance and risk perception (Grimm et al. 2012). The variety of entrepreneurs within this study considers differences in the business structure and type on the one hand, and personal characteristics on the other. Personal characteristics analyzed in this research aim at giving insights into the individual and household level which become essential to understand the entrepreneurial decision-making (Ferreira and Fernandes 2015) and help to explain personal skills and attitudes. Therefore, this understanding considers variables such as gender, age, education, ethnicity, and origin. The concept of entrepreneurial diversity builds a basis upon which to learn about the different types of entrepreneurs by focusing on similarities and differences between them considering their relation to risks.
Risk perception and navigation
As risks can be understood in different ways, this study implied a broader understanding of risk by combining an economic point of view with a sociologist understanding of risk. This combination is enabled by a critical realist perspective on risk as critical realism acknowledges things to exist, but makes clear that the description and understanding of these things depend on the available knowledge (Sayer 2006). Relating this to the definition of risk and therefore following a realist ontology and a more scientific understanding of risk in the first step, risks are understood to be real and to exist largely independent of an individual’s knowledge of them. However, the perception of those risks differs from individual to individual and is context-dependent (Tversky and Kahneman 1992). Therefore, the risk definition building a base for this research stresses the importance of including further risks affecting the business and the entrepreneurial individual beyond the economic understanding such as
11 This study considered a variety of risks that are described as part of three different categories: socio-economic risks, environmental risks, and individual risks. Socio-socio-economic risks include issues related to volatile markets and a lack of institutional support which have a large impact on entrepreneurship in developing nations (Quatraro and Vivarelli 2015). Moreover, the Modernisierungsrisiken as introduced by Beck have an impact on society and especially on developing nations (Beck 1986), leading to the fact that considering environmental issues becomes important in understand risks for entrepreneurs. Individual characteristics of entrepreneurs should further be considered as for example discrimination of female entrepreneurs have an impact on the gender gap in entrepreneurship (Minniti and Naudé 2010). The study’s focus will be put on the personal perception and navigation of those risks (see figure 2).
Drawing from entrepreneurial and household risk responses, this study sees the individual agency in dealing with risks as influenced by actors in the context and depending on the situational environment (Lindell and Hwang 2008) and personal characteristics of the entrepreneur (Dănciulescu 2015). Considering the unstable context of Cartagena and the variety of forces impacting its tourism sector, which will be explained more in detail in the following chapter, it becomes clear that the entrepreneurial context cannot be considered as static. Therefore, embarking from a critical realist point of view and further considering the changing structure of risks and the personal perception of those, this research refers to the concept of social navigation to learn how entrepreneurs deal with risks. Vigh describes the concept of social navigation in unstable environments as the “navigation through dangerous waters” (Vigh 2010). Social navigation underlines: “motion within motion” (Vigh 2009,p.420) referring to moving agents within a changing environment. This provides a solid foundation upon which to consider the ways in which entrepreneurs deal with risks that are considered to be shaped by different perceptions and that are not static over time as described above. Within his theory of social navigation Vigh makes clear by referring to Deleuze and Guattari (2002) and de Certeau (1984) that tactics are for agents to navigate between and across boundaries hindered by structures. Social navigation provides a good base from which to follow the critical realist approach of personal perception and individual capabilities in dealing with situations as this way of navigation also depends on the individual capabilities and the possibilities caused by the context (Vigh 2010).
2.4.1 Conceptual Framework
12
3. Research context
This chapter will provide deeper insights into the research context by considering the entrepreneurial environment in the country, the tourism sector and particularities regarding Cartagena.
3.1 Entrepreneurial context and tourism in Colombia
When talking about Colombia, Crissien Castillo points out that entrepreneurship becomes an important driving force for economic development to create a counter weight to weak institutions which hinder sustainable economic development (Crissien Castillo 2009, p. 69).
Colombia has implemented the highest amount of reforms in order to promote entrepreneurship in the Latin American region and reduced the numbers of days to create a business from 44 (2003) to 11 in 2017 (The World Bank Group 10/31/2017). Today Colombia has become an important player in the Latin America as it is now considered as the third best economy in the region, after Mexico and Peru (The World Bank Group 10/31/2017). The country’s new focus on entrepreneurship is caused by the understanding of its growing importance in an increasingly globalized economy which is becoming characterized by small enterprises (Rodríguez 2015, p. 617). Tourism has become increasingly important for the Colombian economy during the recent years. The country offers a variety of unique tourist sights due to its geographical situation and cultural variety. These include beaches, mountains, rivers and various sights of cultural interest which provide opportunities for sun and beach tourism, history and culture, sports and adventure, festivals and city life as well as agro- and eco-tourism (Brida et al. 2009).
After a period of diminishing tourism related to the conflict situation, (inter)national tourism has been growing steadily in Colombia as of 2002 (Candela Bello 2015).4 Figure 4 demonstrates a steady increase in the contribution of tourism to the Colombian GDP. Further strong growth is estimated in the years to come. This is also related to the peace agreement between the government and the FARC leading to a perception of a safer tourist destination and the growing promotion of the destination5.
Source: (World Travel and Tourism Council (WTTC) 2017)
This study will focus on Cartagena de Indias located on the Caribbean coast of Colombia. The city is one of the country’s most important tourist destinations, offering scenic Caribbean beaches on the one hand and a UNESCO world heritage site on the other.
4 During 1980s and 90s international tourism activity diminished drastically due to the violence and insecurity mainly caused
by narcotrafficker groups. It took 30 years for the sector to recover and come back to the same level of international travelers as in 1980 Candela Bello 2015.
5 The Colombian government signed a treaty with the FARC to ensure a ceasefire, the peace process is a still ungoing process
and will be influenced by the outcome of the elections this year.
13
3.2 Historical context
In order to understand Cartagena’s current situation, one must first understand it’s history. Spanish colonizers first founded the city of Cartagena in 1533, in a naturally sheltered bay in the Caribbean Sea. The city, a product of early globalization, developed quickly and its port soon became one of the most important in terms of South American trade routes (Conaway 2012) due to its positioning in the Atlantic system, a trade triangular system joining Europe, Africa and the Americas (Landes 1999, pp.60-78). Within this system, Cartagena acted as one of the main distribution points for Spanish goods, as well as for slaves to be used as workforce in gold mines, on estates and in domestic work (La Cruz‐ Vergara 2016; Múnera 2008,p.92). Many people, mainly from West Central Africa, were forcefully brought to Cartagena (Block 2012) during the 17th century resulting in a dominantly black and mulato6 population in the city (Múnera 2008,pp.95-96). The concept of race and segregation played an essential role in Cartagena from its foundation onwards.
Early life in the city was defined by stark inequalities, created on at the local level but also as a part of the global system7. Power structures in Cartagena’s society were determined by class and race as worked in a pyramidal system of hierarchy, which positioned the black and indigenous population at the bottom and the white population at its top. This history has had a great impact on social and economic life (Wade 1993,p.20) and still impacts the identity and perception of individuals in Cartagena’s current population to the extent where it has shaped local power structures of today. Moreover, Cartagena has long been rejected by the Republic which is centered in the Andean region and perceives the coastal zones as less developed due to its climate and the racial and cultural traits of its population. However, it is stated that this sense of “otherness” felt toward the coastal regions has been giving a new value to Cartagena more recently, as cultural, racial and territorial prejudices are used by its tourism industry to create an image of a close and harmless exoticness (Cunin and Rinaudo 2008).
3.3 Economy and the impact of tourism
Nowadays, Cartagena is thought to be an important economic center, characterized by its strong industrial sector that largely relies on the petrochemical industry and by through its role as the busiest port in Colombia (Conaway 2012). Small enterprises play an essential role in the economy as micro, small and medium size enterprises contribute to 99% of economic participation in the region of North Bolivar (Pulido Sierra et al. 2018). Moreover, the city was declared UNESCO World Heritage in 1984, which provided it with importance at both national and international levels and led to great development in the tourism sector (Carrillo Romero et al. 2013). As a result, modern day Cartagena is often described as a tourism hub, where (inter)national celebrities and society people come to spend their vacations and where cruise ships define the landscape of tourism (Conaway 2012). Drawing from data of the Chamber of Commerce, it is clear that today the tourism sector plays an essential role in the local economy as the highest number of businesses and employees are involved in it compared to other industrial sectors (Pulido Sierra et al. 2018). Although Cartagena is one of the richest cities in Colombia with regards to its GDP, it is also one of the cities with a major percentage of its population living below the poverty line. Inequalities8 are further re-enforced by a low level of education and inadequate public services in comparison to other major Colombian cities. Moreover, salaries in Cartagena are low when compared to cities such as Bogotá (Ayala García and Meisel Roca 2016) and it is estimated that more than half of the economy operates on the informal market (Pulido Sierra et al.
6 Mulatos are described by the Spanish colonizers as part of the mestizaje to be the children of a black and a white parent. 7 Múnera describes this life in the port city as a carnival atmosphere defined by foreign merchants and adventurers, bars and
dances, black and mulata women who were forced to prostitute themselves, by smuggling activities, corrupt elites and authorities and the Inquisition persecuting Jews and black magic Múnera 2008.
8 Cartagena has with great spatial inequalities: in Colombia the different parts of each city are defined as estratos ranking from
one to six, making one the lowest and 6 the highest estrato. Those estratos are considered to reflect the socio-economic level of its population. Almost 70 percent of Cartagena’s population is defined as living in estratos 1 and 2 Cartagena Comovamos 2016 making up a big contrast to the touristic areas of the city.
14 2018). Current persistence of these great disparities within the city’s population and the continuance of urban segregation within the city are closely related to the impact of the tourism industry which has largely shaped Cartagena’s current socio-economic situation.
The development of the tourism sector started in 1923 through promotion of the historic city center and the murallas (city walls) as tourist attractions in particular (graphic 1). In addition, laws to enhance tourism were abolished from 1931 onwards and the development of its yearly beauty contest, infrastructural changes such as better transport structure and the construction of hotels and an airport, led to further increases of tourism in the city (Carrillo Romero et al. 2013). Colombia and Cartagena in particular have shown a surge in tourism when held against the world average in the years 2014-2015. Data from the Corporación Turismo Cartagena (2015), has revealed that the increase of the tourism industry seen by Cartagena is the highest at national level and much higher than the world average (4,4%), reflected by a growth rate of 13 % (2011-2014) compared to 7,7% on a national level (Candela Bello 2015). Upon closer inspection of those visiting Cartagena, it was found that 84% of individuals travelled for tourism purposes (Candela Bello 2015). The majority of tourists use national flights to get to the city, followed by cruise ships and international flights (Pulido Sierra et al. 2018). Moreover, Cartagena’s airport shows the highest growth of arrivals on a national level (Pachón 2017).
3.3.1 Urban heritage and spatial inequalities
A large part of Cartagena’s downtown area is in good condition, providing a safe and modern ambience through the preservation of its historic architecture. This was first enabled by public investments to rehabilitate monuments and then by independent private interest enhanced by investments from the country’s economic and social elite on the other (Rojas 1999, pp.33-43). Spatial segregation existed in Cartagena from its foundation on, but this has been reinforced through the development of the tourism sector: The municipality made use of public policies and projects to promote tourism by creating and regulating spaces for tourism development and focusing on the reconstruction of historic sights. Those included the maintenance of the UNESCO heritage and the construction of infrastructure in touristic areas (Carrillo Romero et al. 2013).
15 These policies and the focus on the tourist areas, meant that the vulnerable population on the periphery of the city was left behind and not included in the infrastructural projects9. The murallas still have a great impact on the city life as they separate the tourist area from the poorer outsides (Mestre Martí and Castillo Mena 2017). Moreover, economic structures have also caused the displacement of large parts of the former population from the city center: The buildings declared part of the UNESCO World Heritage have caught the attention of national and foreign investors in order to reconstruct them. This has led to greater living costs and the development of those buildings into tourist accommodation, causing the expulsion of local people from the city center. (Mestre Martí and Castillo Mena 2017).Rehabilitation of the urban heritage in Cartagena has led to renovations improving the status and outer appeal of many historical houses. This however as resulted in changes to real estate prices , ultimately making the purchase of a square meter of land in Cartagena the most expensive in Colombia (Posso Jiménez 2013, 2015) and thus leading to the displacement of the local population. Land use has changed from residential areas to hostels, hotels, restaurants and bars (Posso Jiménez 2015,p.113).As a result, modern Cartagena has two distinct faces caused by spatial inequalities related to the exclusion of the vulnerable population10 and great differences in personal security, health care, education and job opportunities. This spatial segregation reflects the existence of two different Cartagenas, that inside the murallas and along the tourist beaches and then that left outside.
3.3.2 Discrimination, race and image of exoticness
As described prior, the perceptions of Cartagena’s “otherness” felt by different parts of the Republic have been successfully converted into a promotion technique for tourism. During times of the armed conflict the city used this image in order to distance itself from the violent events happening across the country. This cultivated a perception of security for international tourists interested in travelling to Cartagena whilst also helping promoting an exotic image to national tourists (Cunin and Rinaudo 2008). This idea of exoticness stems from Cartagena’s colonial history labelling it as diverse port town demonstrating a carnival culture. However, today this culture is no longer portrayed as “wild” and “less developed”, but instead as the domesticated “other” that is friendly and exciting. This concept of the
9 The case of the barrio Getsemaní, which was judged to be the area of the black and poor during the 18th century Block 2012,
reveals how segregation has been intensified through the development of a tourist sector on. The case of the barrio Getsemaní, which was judged to be the area of the black and poor during the 18th century Block 2012, reveals how segregation has been
intensified through the development of a tourist sector on.
10 The vulnerable population is defined by the fact that they have not eaten any of the three basic meals on one day or several
days within one week. Additionally, it must be said that the majority of this population is also from Afro-descent. Ayala García and Meisel Roca 2016.
16 “other” still deals with cultural and territorial differences that are mainly implicitly racialized as part of the tourism discourse (Cunin and Rinaudo 2008).
This concept of the “other” has led to a tourist fantasy of a Caribbean city relying on old colonial structures by preserving the colonial hierarchies, further strengthening its perceived exoticness through portrayal of its population as a labor force to serve the tourists (Celis 2013). This perception of service is relates back to the entertainment of the more powerful in historical times where the afro-population was largely considered inferior, and as a source of entertainment, healing and sorcery or sexual gratification by the white population (Wade 1993,p.23). Moreover, Cartagena has emerged as a destination for sex tourism, resulting in the exploitation of women and children in the city11. Current newspaper articles imply that sex tourism in Cartagena has continued to grow in recent years, and the existence and promotion of events involving prostitution, sexual abuse of minors and drug consumption have become a prominent issue in the city. Today a growing number of women fleeing from the social and economic crisis in Venezuela are particularly vulnerable as they turn to the sex trade for work once they are unable to find other job opportunities in Colombia (El Universal 2018; Semana 2017, 2018; RCN 2017).
Nevertheless, programs have been implemented to reduce the impact of sex tourism and to provide greater involvement of minorities in the tourism sector. The certification of the historic city center as a space for sustainable tourism is understood as a great step towards greater environmental sustainability and social inclusion in Cartagena’s tourism sector. It is thought to enable the growing involvement of locals and small entrepreneurs in the tourism sector (Candela Bello 2015). One important step here is the Norma Técnica Sectorial Colombiana (NTS-TS) that describes the sustainability requirements for lodging and accommodation facilities aiming at promoting sustainable tourism in Colombia. Those requirements must be fulfilled by the businesses operating in the sector in order to renew their business registration and include for example environmental standards and practices of dealing with social issues such as sexual abuse of minors (incontec 2014).
3.3.3 Cartagena’s beaches
Cartagena attracts tourists through its Caribbean beaches including both the beaches in the city and those of the nearby islands belonging to it (Quintero and Bernal 2007). Environmental risks such as sea level rise due to by climate change pose a particular stress to coastal cities such as Cartagena, leaving its tourism sector vulnerable12. Beach morphology is becoming threated by the rising sea level, as evidenced by an increase in coastal erosions resulting from changes in wave patterns (Bernal et al. 2016). Shrinking beaches and frequent flooding (Andrade et al. 2013) are likely to have a heavy impact on Cartagena’s population and its tourist industry. Climate change will cause changes in rainfall patterns. The tourist industry will be affected drastically by the effects of climate change and greater vulnerability to environmental risk will lead to growing inequalities in Cartagena (Ayala García and Meisel Roca 2016).
3.4 Study Context
This study focuses on the hotel sector as it is one of the principal components for occupation activity can be found in the commercial, gastronomic and hotel sector (Cartagena Comovamos 2016). The hotel sector has been growing continuously and especially between 2013 and 2017 (Pérez Fuentes et al. 2013). This research was conducted in the historical center of Cartagena including the barrios El Centro, San Diego, La Matuna and Getsemaní (see map 1). All businesses involved were located in the central area of the city offering a variety of tourist attractions, including the UNESCO world heritage.
11 Ayala and Meisel make clear by referring to the foundation renacer, that 650 children, of those 70% female, were victims
of sexual exploitation in Cartagena in 2011 Ayala García and Meisel Roca 2016.
12 The sea level in the Colombian Caribbean is expected to rise by 40 cm comparing the year 2060 to the year 2001 Robertson
et al. 2003. In the same way, Ayala and Meisel reveal the impact of sea level increase in the case of Cartagena by projecting the rise for the year 2020 by 2cm compared to the 1990 sea level Ayala García and Meisel Roca 2016.
17 In contrast to Cartagena’s beach areas (Bocagrande and Crespo), which are dominated by international hotel chains, the centric barrios count mainly with small businesses operating in the hotel sector.
The first investments by national and international investors related to urban rehabilitation, were made in the zones inside of the city walls including San Diego and El Centro. However, as the supply of property in these has now come to an end, Getsemaní has become increasibly popular in the eyes of investors (Posso Jiménez 2015, pp.111-112). Whereas the barrios
(neighborhoods) in the historical center have gone through a strong gentrification process and are today mainly exclusive tourist areas (El Centro, San Diego), Getsemaní is considered to be undergoing this process and in a transition phase.
Source: adaptation from Google Maps
Getsemaní was founded between 1564 and 1600 and is located north of the historic city (Pérez, Álvarez, Alexánder 2013), and close to the harbor (Posso Jiménez 2013; (Rius-Ulldemolins and Posso Jiménez 2016). Although the barrio played an important role in Cartagena’s history and its independence in particular (Pérez, Álvarez, Alexánder 2013), it was regularly stigmatized and widely perceived as being linked to drug trade and consumption, crimes and prostitution. These perceptions led to interference in the neighborhoods and the implementation of policies aiming to “recover” public spaces which has since resulted in the initiation of gentrification (Posso Jiménez 2015, pp.128-130)13
.
Today, Getsemaní represents a barrio of social stratum three with a population of 5883 people (Herrera G and Mastrascusa V. 2017). It is thought to have a very different culture from that in the historic center as it is a reflection of Caribbean life through the mixture, or “living-together” (Convivencia) of criollos, migrants and members of the afro-descent population (Pérez, Álvarez, Alexánder 2013). Its unique mixture of residents has converted it into a multicultural neighborhood that has attracted the interest of tourists who are recognizing it more and more as an artistic urban space (Posso Jiménez 2013). From the year 2000 onwards, Getsemani has gained popularity in the eyes of private investors and the street “Calle de la Media Luna” became the first to host the hostels in the area (Posso Jiménez 2013). Since then, more and more investors have been attracted by Getsemaní’s culture (Pérez, Álvarez, Alexánder 2013) and the area is seen as a space for economic development through tourism (Herrera G and Mastrascusa V. 2017). Growing investments in the increasing tourism industry and the new population in the barrio have led to displacement of the original inhabitants, a lack of understanding with regards to the historic processes and relations in the neighborhood (Pérez, Álvarez, Alexánder 2013) as well as the creation of greater amounts of waste causing environmental harm (Herrera G and Mastrascusa V. 2017).
13 This included for example the resettlement of the market place Bazurto to an outer area of the city Posso Jiménez 2013.
