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University of Amsterdam Graduate School of Social Science
Youth Entrepreneurship in the New Economy
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A critical reflection on entrepreneurial opportunities and challenges in the
neoliberal era
A Master Thesis
In International Development Studies
By Leonie Linke
Under the supervision of Yatun Sastramidjaja
Abstract
In the neoliberal ‘new economy’, the social category youth is presented as an opportunity rather than an obstacle. Young people are expected to embrace the free economy, to accept flexible working conditions and to adapt to any changing economic and political circumstances. The entrepreneurial, innovative economy is booming: co-working spaces open all over the world and increasingly young people become entrepreneurs. Yet, young entrepreneurs face numerous challenges such as increasing competition. To understand the rise of youth entrepreneurship and its relationship with the neoliberal ‘new economy’, this thesis takes a closer look into transforming labour markets, neoliberal values and practices and the notion of the neoliberal self. Mexico, the location of the case study, is currently experiencing a boom of entrepreneurial policies and an increasing number of entrepreneurs and small-medium-sized enterprises. Based on qualitative research, including semi-structured interviews with young entrepreneurs, this thesis explores their motivations for becoming entrepreneurs, as well as challenges they are experiencing. This investigation problematizes the overly optimistic neoliberal discourse on youth entrepreneurship. As the research findings show, young entrepreneurs have internalized neoliberal values and practices to such a high degree that there is no space in entrepreneurial discourses for a critical reflection on entrepreneurship and particularly on the issue of entrepreneurial challenges and the limits of neoliberal political economic practices.
Table of content
Abstract ... 1
Introduction ... 3
1 Theoretical framework ... 10
1.1 The new economy ... 10
1.2 Entrepreneurship ... 15
1.3 Neoliberalism ... 19
1.4 Neoliberal self... 22
1.5 Youth ... 25
1.6 Mexico ... 27
2 Methodology and Problem statement ... 29
2.1 Epistemology and Ontology ... 29
2.2 Unit of analysis, Method and Research Design ... 30
2.3 Research question and sub-questions ... 34
2.4 Operationalization ... 35
2.5 Quality criteria and Ethics ... 38
3 Empirical chapter: Entrepreneurial opportunities ... 42
3.1 Setting the scene ... 42
3.2 The vision of changing the world ... 45
3.3 The strive for freedom & responsibility ... 50
3.4 Sub-conclusion ... 52
4 Empirical Chapter: Entrepreneurial challenges... 54
4.1 External threats ... 55 4.2 Internal threats ... 59 4.3 Sub-conclusion ... 69 5 Conclusion ... 71 Literature ... 75 Appendix ... 80
Introduction
The main intention of this research project is to reflect on the concept entrepreneurship by not only focusing on the dominant entrepreneurial discourse about opportunities but simultaneously by detecting aspects of entrepreneurial challenges. The research question
how do young entrepreneurs in Mexico perceive entrepreneurial opportunities and challenges in the neoliberal new economy? was purposely formulated in an open way as it aims to, firstly,
explore an insufficiently researched topic and, secondly, to break through common assumptions about entrepreneurship. The investigation, consisting of 28 semi-structured interviews with young entrepreneurs, was conducted between September 2018 until the end of November 2018. The following introduction chapter aims to emphasize the relevance of this study and the relevance of the research location by reflecting on historic and current economic, political and social aspects of Mexico and the issue of youth entrepreneurship in the neoliberal ‘new economy’.
The research location: Mexico
In 2018, Mexico elected a new president: Andrés Manuel López Obregon, also called “AMLO”, which is his official nickname. These elections demarcate a turning point in Mexico’s political arena. Since the 1920s, there were only two parties in power. After seventy-one years of being the only-ruling party, the (neo)liberal PRI (Institutional Revolutionary Party) was replaced by the centre-right PAN (National Action Party) in the elections of 2000. However, the reign of the PAN lasted only until 2012, until it was replaced by the PRI led by the former president Enrique Peña Nieto (Tuckman 2012). AMLO and his party MORENA (National
Regeneration Movement), however, serve a socialist, nationalist, left-wing agenda. While
former presidents proceeded with neoliberal policies, AMLO and his adherents pursue ‘anti-neoliberal’ ideals. On the 29th of May 2019, for instance, the new environment secretary gave a speech, in which he blames “parasitic and predatory neoliberals” for global warming by claiming: “Human beings are not responsible for global warming, as a superficial environmentalism and uncritical science would like to tell us. The responsible are a parasitic and predatory minority, and that minority has a name: neoliberalism” (Mexican News Daily 2019 I). To fully comprehend this transition in Mexicans’ mindsets and political preferences from neoliberal to socialist politicians, it is important to briefly reflect on Mexico’s history and the current economic situation.
In the beginning of the sixteenth century, Spanish troops arrived on the Mexican mainland and started to conquer and colonize the indigenous people. The period of colonisation started in 1521 and ended after almost three hundred years in 1821 with the Mexican war of independence. While the nineteenth century was determined by political riots and the American-Mexican war, the Mexican revolution from 1910 demarcate another major turning point in Mexico’s history as it gave birth to a new constitution in 1917 which is still in place (Edmonds-Polit & Shirk 2009).
While the Mexican revolution was meant to establish a democratic and fair political system, post-revolutionary Mexico from the 1940s onwards was dominated by single-party authority, the centralization of power and restrained political opposition under the regime of the PRI. Its cruel and repressive way of governing Mexican population became obvious during the so-called Massacre at Tlatelolco1 in 1968 when student protests, which had been rising from the late 1950s onwards, reached its peak and were violently repressed with military and police force. The student protests arose, because “while the post-war prosperity had led to declines in the overall levels of poverty and inequality, the opportunities created for the middle sectors did not match their expectations and instead created a large population of upwardly mobile young people, whose dreams and aspirations appeared to be growing even faster than Mexico’s economy” (Edmonds-Poli & Shirk 2009: 83). In the massacre on the 2nd of October in 1968 more than three hundred students were killed, and over a thousand others got arrested.2
After the massacre from 1968, a political shift from a single-party ruling system towards an open democracy in the 1980s proceeded. In the late 1970s and the early 1980s, Mexico experienced an economic boom due to the discovery of considerable oil deposits in the Gulf of Mexico. The economic boom, however, was followed by the so-called “lost decade” starting with an economic crisis of 1982 when economic growth of 8% in 1981 dropped to 0% in 1982 (ibid.)
1 Tlatelolco is a neighbourhood in Mexico City. The massacre took place at its main square La Plaza de las tres
culturas [Square of the three cultures]. It is a square of major significance as it represents the three cultures
shaping Mexico’s society: a pre-Hispanic Aztecan archaeological side, a Catholic church built during the period of colonialization and a new building complex from the 1960s as a representor of independent Mexico.
2 ‘Official sources’ claim that only a few dozen students were killed during the massacre (Edmonds-Poli & Shirk 2009). The incident and the actual death poll were never properly investigated. Though, it was a common notion among the Mexicans I got to know that the number of killed students is calculated to be around 400. This claim was supported by the media (Edmonds-Poli & Shirk 2009). I was able to attend the demonstration of the 50s years anniversary of the massacre on 2nd of October 2018 during my fieldwork period and to meet an eyewitness of the Massacre of Tlatelolco.
While the PRI kept the political power in that time, it long lost their appreciation of the population and it is very likely that the PRI won following elections by using electoral fraud. Nevertheless, what became significant in the 1970s and 1980s was the shift of political ideology and economic political practices. Under the major influence of the USA, Mexican political leaders applied neoliberal policies and reforms such as stimulating (foreign) investments, controlling government spending, (re)privatizing of banks and a number of other industries, and renegotiating Mexican debts (which occurred due to the economic crisis of 1982). Additionally, Mexico applied the ideals of free markets and trade in 1994 by developing and entering one of the biggest international trade agreements: The North American Free Trade Agreement (NAFTA) of which Mexico next to the USA and Canada is part of (Edmonds-Poli & Shirk 2009). Consequently, Mexico achieved what had seemed impossible in the 1980s: managing the economic crisis, bringing forward economic growth and turning into an important trade partner of western nations (ibid.).
What follows from this reflection on Mexico’s latest political and economic development, is that today’s youth (and, in particular, the interviewed entrepreneurs) were born in the 1980s and 1990s which were dominated by an economic crisis followed by globalization and significant neoliberal labour reforms. As a result of those reforms, employment rates started to rise, and the economy begun to grow and to strengthen. Additionally, the awareness of the massacre of hundreds of young student protesters in 1968 is still present in today’s youth’s mindsets. These significant incidents and transformations certainly shape Mexican youth’s ideas, values and aspirations.
Nowadays, Mexico is the second biggest economy in Latin America after Brazil. Mexico is considered as an “upper middle-income country” due to its GDP ranking on spot 15 of all economies worldwide3. Although Mexico’s GINI coefficient, a measurement tool of nationwide income inequality, is shrinking in recent years, it is still defined as “high” (World Bank Data 2016 I) making Mexico a country of unequal income distribution and issues of socio-economic inequality. Inequality in Mexico is predominantly related to predatory elites, labour market segmentation, discrimination against women and non-whites and to unequal opportunities particularly in higher education (Lustig et al 2012: 129). Although neoliberal reforms fostered economic growth and managed to pull out Mexico of its economic crisis in
3 This calculation by Statistics Times is based on the International Monetary Fund World Economic Outlook (October - 2018). Available online: http://statisticstimes.com/economy/projected-world-gdp-ranking.php
the late twentieth century, Mexican unemployment rates nowadays are expected to increase (World Bank Data 2016 II).
The issue: Entrepreneurship in the neoliberal new economy
Neoliberal reforms in Mexico resulted in an increase in skilled labour and in a decrease of socio-economic inequality (Lustig et al 2012). However, low minimum wages and poor working conditions still dominate the Mexican working environment and shape its labour market. In neoliberal societies, in which the responsibility is no longer assigned to governmental institutions, individuals are expected to fulfil the societal needs by constantly developing and optimizing themselves (see chapter 1.4). Entrepreneurs, thereby, must be understood as an inherent part of the ‘new economy’ and of neoliberal societies. They epitomize freedom and self-responsibility within the labour markets and the opportunity-driven force behind economic and social development (see chapter 1.2). It is, thus, not surprising that entrepreneurial policies are globally on the rise. In Mexico, the policy attention has shifted from the establishment of large firms to the development of SMEs
(small-and-medium-sized enterprises) since the 1980s. The support and consequential the rise of
entrepreneurship became exponential in recent years with the creation of the national institute for entrepreneurs INADEM (Instituto Nacional del Emprendedor) in 2013. INADEM is a decentralized government programme which aims to bring forward innovation and competitiveness among SMEs on national levels, to establish an entrepreneurial culture in Mexico and to support national businesses to scale-up and to access international markets (see chapter 1.6). Additionally, Mexico City is turning into a ‘hot-spot’ for entrepreneurs and is not only in Mexico but also internationally considered as a city of creativity and innovation (Cervantes & Nardi 2012; PwC 2016).
Neoliberal advocates present entrepreneurship as an opportunity to embrace free labour markets, to work independently and self-responsibly and to set a social impact by improving certain industries and by innovating the economy. This discourse of opportunity leaves little room for narratives on the possible ‘downsides’ of entrepreneurship. While entrepreneurship is a ‘hot-topic’, due to policy focus and large investments in that field, it has been insufficiently researched. This investigation aims to fill the gaps in academic literature not only on entrepreneurship as such but particularly on entrepreneurial challenges, threats and failure as seen from the perspective of the social group that is targeted most by policies
aimed at stimulating entrepreneurship: young people. Considering the lack of empirical studies on the experiences of young entrepreneurs, this investigation is exploratory in nature. Therefore, it employs a qualitative method and from a social scientist and anthropological perspective which is a rare approach in entrepreneurial studies (see chapter 2.1 and 2.2).
The purpose of this research is to understand the concept entrepreneurship and the way discourses about entrepreneurial opportunities and challenges shape entrepreneurial activities. Thus, it aims to contribute to a more reflected, critical discourse on entrepreneurship by investigating both dimensions: entrepreneurial opportunities and entrepreneurial challenges. Thereby, neither entrepreneurial opportunities nor entrepreneurial challenges are defined as something positive or something negative. I am arguing with the ILO (2008), who claim in their prospect on ‘Decent Work and Youth in Latin America’ in 2008, that “entrepreneurship, particularly youth entrepreneurship, can be a real opportunity for young people. Unfortunately, this subject has not been sufficiently analysed” (ILO 2008: 66).
In order to guarantee labour markets in which quality and not quantity of entrepreneurship is predominant, the concept needs to be more investigated, particularly its limits. Consequently, it will be possible to reflect on limits of neoliberal societies. This is important in order to ensure that the promotion of entrepreneurship and consequently entrepreneurial activities are not just a opportunistic response to precarious labour markets and indecent job opportunities. To fully comprehend the interconnection between the neoliberal new economy and the rise of entrepreneurship, the theoretical framework offers a broad range of background information on six different issues.
Chapter 1.1 about the ‘new economy’ demonstrates how, due to a global demographic dividend, global working-age cohorts outnumber any other age cohorts and how, consequently, labour markets are transforming. Instead of reflecting on the precarity and uncertainty of these transforming labour markets, however, industries and the employers’ perspective tend to accuse education systems and individuals for their lack of skills to obtain decent work. The dominant discourse focuses on the demand side, rather than on the supply side and understands the ‘new economy’ solely as an opportunity to embrace free labour markets and flexible working conditions. Chapter 1.2, which briefly reflects on the origins of entrepreneurship and the current entrepreneurial boom, supports this claim. It illustrates how key stakeholders for creating an entrepreneurial culture - policy makers, the private sector,
educators and researchers - (GEM 2016/2017: 11) increasingly show interest in entrepreneurship as it perfectly embodies the free, independent and opportunity-driven working environment of the ‘new economy’.
This image of entrepreneurship is in alliance with neoliberal perceptions of the individual as a free and self-responsible body and the neoliberal value of equal opportunities which will be explained in chapter 1.3. In neoliberal societies, neoliberal advocates, working with persuasion rather than with coercion, encourage individuals to keep investing in themselves and to promote themselves in the best possible way. Thereby, individuals are transforming their selves into neoliberal selves. The notion of the neoliberal self, also referred to as the entrepreneurial self, is explained in chapter 1.4.
Subsequently, in chapter 1.5, the social concept ‘youth’ is presented. This supports the claim that ‘youth’ is not only the future working force and face major obstacles and discrimination within labour markets. Moreover, ‘youth’ is an integral part of neoliberal societies as young people are considered to be the trigger for constant economic, social and political development. Thus, particularly young people are encouraged to become entrepreneurs. After reflecting on major important youth and entrepreneurial policies in Mexico in chapter 1.6, the thesis continues to reflect on the methodology and the problem statement in chapter 2.
To fully comprehend the theoretical assumptions, the findings, and the methodological approach, my epistemological and ontological position is outlined in chapter 2.1. Subsequently, in chapter 2.2, the method (consisting of qualitative semi-structured in-depths interviews), the research population (consisting of twenty-eight young Mexican entrepreneurs), and the research design are introduced. Afterwards, the research question, its dimensions and its three sub-questions are presented in chapter 2.3. The operationalization of the two main concepts – entrepreneurial opportunities and entrepreneurial challenges – follows in chapter 2.4. The methodological chapter ends with a reflection on the two quality criteria reliability and validity, on ethical considerations and on the positionality of the researcher in chapter 2.5.
The empirical chapters start with a short introduction by “setting the scene” (chapter 3.1). It aims to help the reader to capture and sense the atmosphere of the entrepreneurial culture. Afterwards, the findings of entrepreneurial opportunities consisting of “the vision of changing the world” (chapter 3.2) and “the strive for freedom and responsibly” (chapter 3.3)
are presented. Chapter 4 focuses on perceived entrepreneurial challenges. Those are divided into “external threats” (chapter 4.1) and “internal threats” (chapter 4.2). The thesis ends with a conclusion in which the research question is answered by linking the theoretical framework with the empirical data.
1 Theoretical framework
“The labour market is never free. It was created through coercion and is re-created every day by laws, regulations, prohibitions, fines and the fear of unemployment” (Mason 2015: 153).
1.1 The new economy
Demographic changeDemographics are a structural force and play an important role in societies for politics and economics. The average age of the population has a significant impact on the demand and supply for products and services. It influences the kind and the quantity of goods that will be bought and produced. For instance, while elderly people more often request services such as health care, young people are more interested in material goods such as cars, clothing, or housing. Demographics, thus, play an important role in economic transformations and enable the emergence of new phenomena such as the entrepreneurial culture, the main concept of analysis (OECD 2017; Drucker 1985).
The world’s population is currently growing, although not as significantly anymore as in recent years. Moreover, the global population age is expected to enlarge which means that the number of elderly people (60+) is expected to grow. Currently, almost half (46%) of the world’s population is considered as adults between the age of 25 to 59. The second largest segment of age-groups are children under the age of 14 (26%). Youth, defined as those between 15 and 24 years old, count for 16% and elderly people (60+) for 13% (UN 2017: 17). This indicates that the working-age population, defined by the OECD as those between 15 and 64 years old (OECD 2014), is currently the highest among all age groups, whereby the categories ‘youth’ and ‘working-age cohort’ overlap. In Mexico, the country of the case study, the ratio of different age groups is almost the same as the global population proportion: 27% of Mexicans are under 14 and 18% are aged between 15 and 24. Adults (25-59) account for 45% and 10% is above 60 (United Nations 2017: 20). The working-age population in Mexico accounted for 65% in the latest estimations of the OECD in 2014 (OECD 2014).
The scenario in which the cohort of working-aged people is higher than the one of the non-working-age population is called a demographic dividend. In order to enable the demographic dividend having a positive impact on a nation’s economy, the government and related institutions need to ensure that the labour market offers enough job opportunities. If this cannot be assured, unemployment rates will rise. In Mexico, compared to other countries in Latin America and the Caribbean, the unemployment rate is relative low. Although the
youth unemployment rate is double as high as the Mexican average unemployment rate (a ratio from 3.4% to 7.0%), it is still under the average of the Latin American and Caribbean region. However, and this is interesting also because it was confirmed by many of the interview participants, the minimum wage of Mexico is among a few others the lowest in the Latin American and Caribbean region4 (ILO 2018; UN 2017).
The presentation of the world’s population distribution, the dominance of the working-age cohort and the concept of a demographic dividend helps to comprehend the discourse on youth in the neoliberal era outlined in chapter 1.5.
Changing labour markets and alternative economic models
Nowadays, there exists “no one widely-accepted model of the new global economy” (Rodriguez 2005: 12) but rather a various number of different terms to describe the new economy. Richard Heeks (2017), a professor of Development Informatics, makes a first attempt to structurally examine and clarify different terminologies such as gig economy, shared economy, platform economy, online labour, crowd-work, etc. Gig economy is probably among the most popular ones of those terminologies. The term refers to the performance of a music gig which is played for one time at one particular evening for a specific audience (Friedman 2014). Translated into the context of labour market issues, gig economy refers to the idea that people are increasingly employed for just one task at a time, thus “freelancing” (Heeks 2017).
For the purpose of this research, it is not necessary to understand the different terminologies in detail but rather to know what they have in common. The WEC (World
Employment Confederation)5 examines in their white paper from 2016 the main
characteristics of the current global economy focusing on the transformations taking place within labour markets. Among others, the WEC (2016) identifies the emergence of multifaceted and discontinuous career paths, the increasing interconnection between work and private life (e.g. co-working spaces), and the growing expectations of individuals as main characteristics of the new economy (WEC 2016: 1). From the employers’ perspective, these
4 This data derives from the ILO Labour Overview (2018) for the Latin American and Caribbean region. The calculations are based on 16 countries: Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru and Uruguay.
5 “The World Employment Confederation is the voice of the employment industry at global level, representing
national federations across 50 countries [including Mexico] and 7 of the largest international companies (e.g. The Adecco Group, ManpowerGroup, and Randstad) operating in HR services, including agency work, recruitment, career management and RPO & MSP” (see Website WEC: https://www.wecglobal.org/index.php?id=121).
transformations appear due to changes in individuals’ mindsets and aspirations, rather than due to structural developments. In fact, as the political economist Mayssoun Sukarieh and the anthropologist Stuart Tannock claim in their book Youth Rising (2015), policy attention has shifted from a global economic perspective to an individual one. Instead of analysing the issue of a labour market not able to supply enough job opportunities for the rising number of working-age cohorts, the attention has shifted to a critical evaluation of education systems. Those are accused of not providing young people with the skills requested in the new economy and, as a result, ‘youth’ is not able to fulfil the employers’ requirements. Thus, according to this reasoning, rising youth unemployment rates are an outcome of failed education and missing skills of individuals, rather than structural issues such as rising competition and increasing instability of labour markets (Sukarieh & Tannock 2015).
Another trait of the new economy is the emergence and incorporation of alternative business models such as green economy or blue economy, which refer to environmentally sustainable economies. While green economy is more an all-encompassing concept, blue economy focuses on one main pillar: the world’s oceans and is concerned with maritime fishing and transport, the pollution and waste management of the oceans, and see side tourism. Both the green and the blue economy were mentioned by one of the interview participants (interview 17) and the green economy – also not explicitly named green economy – was part of the conversation with interview participants from interview 12, 26 and 29. The growing popularity of such concepts reflects a prevailing idea: that many of today’s economic business models are about to transform. They are not only about growth and profit, straight and purely economic anymore. With the awareness of environmental risks such as climate change and the pollution of our oceans, an increasing number of enterprises nowadays try to combine conventional economic models with values such as sustainability, human wellbeing, reduced environmental risks, social equity and inclusiveness6. As part of this new approach of re-thinking conventional business models, the concept social entrepreneurship has emerged.
6 The green economy as defined by the UN Environment (n.d.): “An inclusive green economy is one that improves
human well-being and builds social equity while reducing environmental risks and scarcities. An inclusive green economy is an alternative to today's dominant economic model, which exacerbates inequalities, encourages waste, triggers resource scarcities, and generates widespread threats to the environment and human health. Over the past decade, the concept of the green economy has emerged as a strategic priority for many governments.“ (UN Environment Website: https://www.unenvironment.org/explore-topics/green-economy/about-green-economy)
The main essence that distinguishes social entrepreneurs from business entrepreneurs is the former’s strive for setting a social impact by creating and sustaining social values, not just
private ones. The social impact is more important to them than making profit or satisfying the
client’s need (Dees 2001). Social entrepreneurs strive for systematic change (or system change) and sustainable development: “They [social entrepreneurs] attack the underlying causes of problems, rather than simply treating symptoms” (Dees 2001: 4).
Although social entrepreneurship has gained popularity over the last decades, there exists valid criticism on the concept which was also addressed by my interview participants (see chapter 3.2). The main issue with the term social entrepreneurship is the social within the terminology (Tan et al. 2005). Is the social in the term social enterprise associated with
societal – so anything that benefits society or a certain segment in society? Then one could
argue that any conventional business is a social enterprise insofar as it generates jobs and is thereby setting a social impact. Or is the social in the term social enterprise associated with
altruistic? (ibid.). In this case, the concept social entrepreneurship is non-existent because an
enterprise cannot be altruistic. It is the nature of a business to sustain itself and to grow by producing and selling a certain product or service thereby striving for profit.
I agree with Daniela Papi-Thornton, an educator about social change, who claims that social enterprises are nothing else than social businesses – businesses with a “social” mission or businesses offering “social” products and services (for instance, handbags from recycled waste materials) (Papi-Thornton 2017). If social entrepreneurship was as revolutionary as media, public and academia presents it to be, it would be an altruistic model in which the social entrepreneurs solely work to improve livelihoods for a certain segment in society, for the environment or the society as a whole without profiting from their innovative idea at all. Though, as long as social enterprises strive for their own sustainability and growth, although their products or services might also benefit others, the concept is just a revised version of or another terminology for social business. While the idea of being socially responsible was prevalent among the interview participants, the concept of social entrepreneurship was rather rejected by the entrepreneurs. None of them consider him or herself a social entrepreneur and many of them disagree with the differentiation between business and social enterprises (see chapter 3.2).
The emergence of a co-working culture
As has been listed by the WEC (2016) as one of the main characteristics of the ‘new economy’, a working culture is currently emerging consisting of so-called start-up hubs, co-working spaces, and furthermore acceleration programs and incubators. I want to reflect on this specific pillar since the observation of those places was part of my investigation and led to some very interesting insights.
The term “start-up” is not the same as an enterprise or business. Instead, it refers to the nascent stage of a company. While “hubs” are the general term to describe a co-working space for start-ups, accelerators and incubators slightly differ from each other. Both programmes offer co-working space, some of them combined with advisory aid and others with financial aid as well. The term co-working space was introduced in 2005 by Brad Neuberg in San Francisco. Since that time, the concept has been applied in many cities worldwide mainly those who are famous for its business culture or known as ‘creative cities’ such as Amsterdam, Berlin, London, New York and San Francisco. Some scholars argue those places foster innovation by combining working space with a social and collaborative atmosphere (Moriset 2013; Cabral & van Winden 2016).
In a study conducted in 2013, the French geographer, Bruno Moriset, put the estimated number of co-working spaces worldwide at approximately 2,500 (Moriset 2013). To assess the number of co-working spaces around the globe is a difficult endeavour, however, as there exist many local working spaces such as COW in Mexico City (see chapter 3). The rise of co-working spaces follows general labour-market related trends such as distributed, interorganizational, independent, peer-to-peer and collaborative work (Spinuzzi 2012). As Clay Spinuzzi (2012), a professor of rhetoric communication, defines it: “[co-working spaces are] open-plan office environments where workers work next to other unaffiliated professionals for a fee” (Spinuzzi 2012: 399 cited in Cabral & van Winden 2016: 3). These co-working spaces are appealing to entrepreneurs who strive for a free, independent and collaborative working environment (see chapter 3.3). Thus, it is not surprising that with the rising amount of co-working spaces, simultaneously the number of entrepreneurs started to increase.
1.2 Entrepreneurship
Classic definitions and current theories
There exist numerous definitions of entrepreneurship. To start with the term itself, it originates from the French word “entreprendre” which can be simply translated into to
undertake (Solimano 2014). An entrepreneur, therefore, is an undertaker or for those who are
familiar with German, an entrepreneur is an Unternehmer. In the field of economics, the term starts to appear in the seventeenth and eighteenth century in France and was originally associated with someone undertaking a certain project or activity before it turned into the more concrete association of someone creating new and better ways of doing things in order to bring forward economic development (Dees 2001).
This definition shifted over the past last centuries, but the core of the concept remains the same. In the nineteenth century, entrepreneurship is mostly associated with the French economist Jean Baptiste Say who, around 1800, defines an entrepreneur as someone “[…who] shifts economic resources out of an area of lower and into an area of higher productivity and greater yield” (J. B. Say cited in Dees 2001: 1; cited in Drucker 1985: 21).
One of the economists mostly associated with entrepreneurship is Joseph Schumpeter who in the 20th century links entrepreneurship with the term changemakers by claiming: “The function of entrepreneurs is to reform or revolutionize the pattern of production” (J. Schumpeter cited in Dees 2001: 1). He, moreover, defines the main difference between entrepreneurs and other participants in the labour market as the former having “[...] the capacity to undertake new decisions in the unchartered waters of new activities, under conditions of uncertainty and risk“ (Solimano 2014: 19).
The two most popular names mentioned with regard to entrepreneurship studies nowadays are Peter F. Drucker, an American-Austrian educator, and Howard Stevenson, a professor at the Harvard Business School. Both add the term opportunity within discourses on entrepreneurship. Drucker (1985), for instance, claims that “[…] this defines entrepreneur and entrepreneurship—the entrepreneur always searches for change, responds to it, and exploits it as an opportunity” (Drucker 1985: 27-28). Stevenson (1990) argues that “[…] pursuing opportunity, whether through specific company structures or not, constitutes the core of entrepreneurship, both individuals and corporate” (Stevenson & Jarillo 1990: 25).
The notion of opportunity within discourses on entrepreneurship generated the differentiation between “entrepreneurs by opportunity” versus “entrepreneurs by necessity”. Already mentioned by Drucker (1985), the notion was turned into a concrete concept as
introduced by the GEM (Global Entrepreneurship Monitor) and increasingly adopted in scholarly literature as well. Drucker (1985) claims that
[…] the husband and wife who open another delicatessen store or another Mexican restaurant in the American suburb surely take a risk. But are they entrepreneurs? All they do is what has been done many times before. […] Indeed, entrepreneurs are a minority among new businesses. They create something new, something different; they change or transmute values (Drucker 1985: 21-22).
As the economists of Finance and Management Studies, Joern Block, Philipp Sandner and Frank Spiegel (2015) mention, the two concrete concepts “entrepreneurs by opportunity” as opposed to “entrepreneurs by necessity” were introduced by the GEM in 2001. Entrepreneurs by opportunity are considered to create growth-oriented, innovative enterprises, whereas innovation is defined as “[…] the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service” (Drucker 1985: 20). Young entrepreneurs by opportunity, or also referred to as “by choice”, are often people from middle- and upper middle-classes. Most of them have high school degrees and over 50% have university degrees and working experiences.
As opposed to entrepreneurs by opportunity or choice, entrepreneurs by necessity are “involuntary entrepreneurs”. They have no other employment opportunity than creating their own businesses. These businesses mostly operate informally among the lower classes and the community of the poor. Entrepreneurs by necessity are often young people, who are school-dropouts or with a low level of education. While entrepreneurs by opportunity in general consist of a male majority, entrepreneurs by necessity are often women. Furthermore, enterprises by necessity mostly offer very basic products and services. They are less innovative than enterprises by opportunity, they do not have a strategic business plan, their starting capital is eminently lower, and they are extremely vulnerable to competition (Berner et al. 2012; Block et al. 2015; LListerri & Angelelli 2007).
Although, those concepts are commonly used in literature on entrepreneurship, there exists valid criticism. Some authors such as the economist Colin C. Williams (2008) criticize the distinctions for being too oversimplified and for denying the existence of different motivations for creating businesses especially in the informal sector. Others such as Block et al. (2015) researched attitudes among entrepreneurs by opportunity and found evidence that also within this group exists necessity. For instance, in Germany, 18.6% of the questioned
entrepreneurs consider themselves as entrepreneurs by necessity although they would certainly not be defined as such by the classic distinction (ibid.).
The association with the term opportunity within discourses on entrepreneurship seems to be two-sided. While Drucker (1985) initially argued entrepreneurs perceive change as an opportunity, nowadays entrepreneurship itself seems to be the opportunity – for instance, an opportunity to improve the entrepreneur’s situations (GEM 2016/2017).
Regardless of different definitions, there has been a remarkable increase in the number of SMEs7 and of entrepreneurs since the 1970s and even more significant since the 1980s. While SMEs (mostly in the service sector and those defined as SMEs by opportunity) were always important for national economies, economic structures in the years before the 1970s and 1980s were dominated by the emergence and establishment of large firms (Rodriguez 2005).
The most important difference between SMEs and larger companies is, obviously, their size. This can bring advantages as well as disadvantages. On the one hand, the decision-making process in SMEs is often faster and more efficient because of the informality in communication and the absence of bureaucracy. They can adapt quickly to changes in the labour market and serve market niche which demand specialised products. Furthermore, they are able to establish a closer relation with their clients and their demands as well as within their enterprise. On the other hand, however, SMEs have – because of their size – limited resources and material and therefore difficulties to attract investors and expanding their business. They are vulnerable to client’s payments, international competition and instable cash flows and often face legal barriers, because regulations as well as support programs are often time-consuming and complex as they were established for larger companies (Rodriguez 2005). As my research has shown, another disadvantage of SMEs is that they are vulnerable to personal conflicts within their enterprises which will be elaborated in detail in the empirical chapters.
Although many scholars mention “the high level of mortality among SMEs” (Rodriguez 2005: 205) and list various reasons for their failure, numbers and statistics of failed enterprises
7 There does not exist one definition of what counts as a small-and-medium sized enterprise. The OECD defines SMEs as: “[…] non-subsidiary, independent firms, which employ fewer than a given number of employees. This
number varies across countries. The most frequent upper limit designating a SME is 250 employees, as in the European Union. However, some countries such as the United States consider SMEs should include firms with fewer than 500 employees. Small firms are generally those with fewer than 50 employees, while micro-enterprises have 10 or fewer employees” (OECD 2000: 7 cited in Rodriguez 2005: 33).
are hard to detect. One of the reasons might be the problematic definition of what counts as a failed business. Is the closure of a business automatically a failure? The two directors at the Small Business Research Centre at the Kingston Business School, David Stokes and Robert Blackburn (2002) criticize the lack of attention towards the existence of many different reasons for closing a business and address the issue with defining those who close their business “failed entrepreneurs” (e.g. this could have a negative impact on their future career paths). Also, the economist Jason Cope (2011) intends to understand the termination of
venture failure and its impact on and outcomes of failure and the learning process of
entrepreneurs who closed their businesses. Others, such as the business economists Diamanto Politis and Jonas Gabrielsson (2009) investigate on attitudes of entrepreneurs towards failure discovering that the term includes many positive aspects and the GEM Global Report from 2018/2019, for instance, investigates on the fear of failure among entrepreneurs in 49 countries around the globe. Interestingly, “Latin America stands out for its low fear of failure rate. In every economy in this region, fewer than one-third of those seeing opportunities state that fear of failure would prevent them from starting a business” (GEM 2018/2019: 13). Statistics on how many enterprises and SMEs fail and for what reasons, however, are almost absent which might also be an outcome of the prevailing discourse on entrepreneurship as an opportunity.
The appeal of the opportunity discourse might have also contributed to the growing attention being paid to SMEs and entrepreneurship in literature as well as in policy models. For instance, in the last decades many journals dealing specifically with SMEs and entrepreneurship have emerged (e.g. the Journal of Entrepreneurship, the Journal of
International Entrepreneurship or the Entrepreneurship Research Journal). Politicians and
related stakeholders started to show interest in SMEs on national, regional and local levels. Internationally, conferences and seminars about SMEs were established and also academia started to focus on SME-related research (Rodriguez 2005). Furthermore, NGOs
(non-governmental organizations) started to show an interest in entrepreneurship as well as SMEs8. Why these patterns started to change in the late twentieth century with the rise of entrepreneurial activities, particularly among young people, and the increasing number of SMEs, is not entirely clear. Drucker (1985) argues that:
8 See, for instance, Ashoka’s programme on Social Entrepreneurship or Oxfam’s strategies on Youth Entrepreneurship and Micro-financing.
[…] the causes are likely to lie in changes in values, perceptions, and attitude, changes perhaps in demographics, in institutions […], perhaps changes in education as well. […] Surely the emergence of the entrepreneurial economy is as much a cultural and psychological as it is an economic or technological event“ (Drucker 1985: 13-14).
These changes started to emerge in a period of reconstructing conventional economic and political systems from the mid twentieth century onwards. Thereby, neoliberal policies actively stimulated these changes for specific economic and political purposes (Sukarieh & Tannock 2015).
1.3 Neoliberalism
In this thesis I argue that the current global economic and political system is dominated by a neoliberal doctrine. According to David Harvey (2005), a professor of anthropology and geography in the tradition of Marx:
Neoliberalism is in the first instance a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade (Harvey 2005: 2).
Thereby, the role of the state is to establish free markets and to provide access to them. Besides these tasks, state intervention in neoliberal economies should be kept to a minimum. Neoliberal ideas evolved after the great slump of the 1930s and World War II when it became obvious that capitalist and communist political and economic systems had failed. In order to guarantee peace, well-being and stability, a compromise between labour and capital, and an even interconnection between state, market and democratic institutions had to be established. As a result, the Bretton Woods system was implemented and certain institutions such as the United Nations (UN), the World Bank (WB) and the International Monetary Fund (IMF) were created. These approaches were meant to stabilize the international relationship between countries, thereby transferring the responsibility from state action to market mechanisms. To guarantee international free trade, an internationally fixed exchange rate was established. Additionally, a structural adjustment programme was initiated in order to provide loans to “underdeveloped countries” to achieve economic development. This new world order
was constructed under the major influence of the US military power and spread world-wide only leaving out the Soviet Union and its allies (Harvey 2005: 9-10).
Neoliberal political economic practices encompassing policies of deregulation, privatization and liberalization became increasingly popular in the 1970s and 1980s under the regimes of Margaret Thatcher (Great Britain) and Ronald Reagan (USA). Many countries worldwide applied neoliberal economic restructuring reforms, mainly from the 1970s and 1980s onwards but predominantly after 1989 with the collapse of the Soviet Union, aided by technological advances in communication and transportation (Block 2001). The same applies for Mexico, which was considered to be “[...] one of the world’s most aggressive “new globalizers”” (Parrado 2005: 734).
Although, neoliberal reforms in most cases indeed lead to economic growth, they often simultaneously increase poverty and inequality (Parrado 2005). This has different reasons. First of all, the macro-economic processes of neoliberal globalization teamed with technological innovation open up the possibility for big companies to compete on a global level. Multi-nationals of the global North outsource their labour to countries of the global South where wages are lower. Secondly, neoliberalism is a market-oriented economic model, in which the privatization of government resources is central and government protection (almost) absent. The process of deregulation enables the accumulation of capital to a massive extent. Another result of neoliberal policies was the shift in legal protections which led to a decrease of labour unions. Furthermore, due to the possibility of free movements of people, migration from low-wage countries to wealthier countries started to increase which resulted in a labour surplus and growing unemployment rates not only in the global South but also in the global North (Kalleberg 2009).
Neoliberal thinkers present neoliberalism as an appealing ideology: as the “new freedom”9. They define human dignity and individual freedom as core values of neoliberal societies and aim to persuade humankind of its inevitability for a free and dignified life. To put it with David Harvey’s (2005) words:
For any way of thought to become dominant, a conceptual apparatus has to be advanced that appeals to our intuitions and instincts, to our values and our desires […]. If successful, this conceptual apparatus becomes so embedded in common sense as to be taken for granted and not open to
question. The founding figures of neoliberal thought took political ideals of human dignity and individual freedom as fundamental, as ‘the central values of civilization’. In so doing they chose wisely, for these are indeed compelling and seductive ideals (Harvey 2005: 5).
Neoliberal theory suggests that its central values - individual freedom and dignity - can be guaranteed by free markets and trade (Harvey 2005). This neoliberal thinking implies that firstly, every individual is free to choose how to participate in the labour market and secondly, is thus responsible for her or his choices. Neoliberal theory makes us believe that equality of
opportunity (Friedman & Friedman 1980s; Mill 1859 cited in Greig et al. 2007) and thus equality of outcome (Tawney 1931 cited in Greig et al. 2007) exists and are an integral part of
neoliberal societies. As the scholars Alastair Greig, David Hulme and Mark Tuner (2005) frame neoliberal thinking in their book on Challenging Global Inequality (2005):
Equality of opportunity posits that everyone should have an equal chance to achieve the benefits and rewards a society can offer. None should be privileged or held back because of their social attributes. The outcomes that individuals achieve – income, wealth, marital status, social position, education level – will vary, but this will depend on a person’s efforts, abilities and choices (Greig et al. 2007: 11).
This approach highly misses to reflect reality: individual circumstances or social attributes such as gender, age, ethnicity, and socio-economic status as well as mental and physical health prevent every individual from having the same opportunities (Greig et al. 2007) The extent to which a woman or young people can participate in the labour market, for instance, is in many countries lower than for adult men. They do not have an equal chance of opportunities and therefore not an equal chance of outcome (ibid.). The opportunity of choosing freely and thus of being a “free individual” as neoliberal thinkers promote the core attributes of the “new freedom” are simply absent. Yet, the neoliberal discourse of individual freedom and dignity dominates public thinking and has become an integral part of the way we perceive the world, and ourselves.
1.4 Neoliberal self
Neoliberal practices and neoliberal subjectivity
In 1978, Michel Foucault, a French philosopher, was the first one to discuss the idea of how people use neoliberal practices10 to transform themselves into neoliberal selves. Although, back then he had no ethnographic evidence to support his claims, nowadays authors such as Allan and McElhinny (2017) or Ganti (2014) cited by the anthropologist Ilana Gershon (2018) confirm his ideas with empirical data. Technologies of social engineering or neoliberal practices can be defined as attempts of optimizing oneself: to brand oneself like a product or to invest in oneself like in a business. Ann Anagnost (2013), an American anthropologist, uses the notion of a never-ending self-development of the individual to frame neoliberal practices.
These practices can be well perceived in social media and on online business platforms such as LinkedIn. Additionally, there start to emerge various numbers of workshops which teach job seekers how to promote oneself in the best possible way. As Gershon (2018) explains it in her study on US corporate hiring: “[…] career counselors openly recommended that job seekers view themselves as a business (and many did), and the resume ́, cover letter, and LinkedIn profile as marketing documents.” (Gershon 2018: 175).
This type of (neo-) liberal governmentality as Foucault (1988, 2003, 2008) cited by the cultural anthropologist Jeesok Song (2011) phrases it, is not a common way of governing the population from above. In neoliberal societies, the population is not perceived as a mass but rather as individual bodies that have to be taught how to be responsible for one’s own. Technologies of social engineering or neoliberal practices must not be understood as a macro-project but rather as a micro-macro-project of managing oneself. In neoliberal societies, the individual comes at first. Hence, in neoliberal societies the individual is responsible for fulfilling the need of the society’s economy by striving for constant personal development and self-improvement (Song 2011).
These processes can be well understood when taking a closer look at post-socialist countries that transformed or are currently transforming into liberal societies. The social scientist Hairong Yan (2013) states that, in order to restructure (post-socialist) economies, the worker’s subjectivity must be restructured. Instead of placing the community before the
10 In this section, the notion of “neoliberal practices” refers to individual neoliberal practices. It shall not be confused with the notion of “neoliberal political economic practices” which was used in the previous chapter and which refers to policies rather than to individuals’ practices.
individual and propagate individuals just being part of a bigger system, now new models of self-discipline and self-management are being taught. The neoliberal idea of everyone being
responsible for oneself becomes evident. In a neoliberal era, responsibility is no longer
assigned to governments or the community, but it is transferred to the individual (Yan 2013; Gershon 2018).
Harvey (2005) argues that the advocates of neoliberal ideology inhabit influential positions in financial institutions (e.g. central banks), in education (e.g. universities and ‘think thanks’), in the media and in international organizations (e.g. IMF, WB or WTO). As a result, neoliberalism has become incorporated into our societies and our daily lives and determines the way we perceive the world. To put it with David Harvey’s words (2005):
Neoliberalism has, in short, become hegemonic as a mode of discourse. It has pervasive effects on ways of thought to the point where it has become incorporated into the common-sense way many of us interpret, live in, and understand the world (Harvey 2005: 3).
We have internalized neoliberalism without being aware of it turning our selves into neoliberal selves (Anagnost 2013). How is it possible that individuals are not aware of internalizing neoliberal values and practicing neoliberalism? As the anthropologist Peter S. Cahn (2008) and also David Harvey (2005) suggests, this is because neoliberal advocates use compelling values (see chapter 1.3) and work with persuasion rather than with coercion. Neoliberal discourse persuades us that constantly working on ourselves, that consuming certain products and that learning new assets and skills, is what we really want and need in order to achieve (economic) freedom and to transform ourselves into the individual we seek to be. The neoliberal ethos of empowerment which links to the notion of entrepreneurial opportunities (see chapter 1.2) is what makes us internalize neoliberal values and practice neoliberalism without questioning it (Anagnost 2013).
The embodiment of neoliberal values is certainly a global phenomenon, but it differs from national (even regional and local), cultural and historical context to one another (Anagnost 2013). Although the phenomenon might be best perceived in former socialist countries which are currently incorporating neoliberal values into their societies, also in Mexico this phenomenon can be well examined, as my research has shown and as Cahn (2008) suggests in his study on Multilevel Marketers in Neoliberal Mexico. Interestingly, however, in Mexico, the population’s mentality towards politics has changed. While former presidents
continued with neoliberal policy programmes, although free trade could not resolve social and economic problems in Mexico (Cahn 2008), last year (2018) Mexico has elected a new president who can be understood as quite the opposite of the former presidents. It appears as if Mexicans are no longer persuaded by neoliberal policies fulfilling what they promise.
The entrepreneurial self
A related notion to the “neoliberal self” is that of the “entrepreneurial self”. As cited by Gershon (2018), those terminologies are often used synonymously by authors inspired by Foucault such as Boltanski and Chiapello (2006), Cruickshank (1999), Lane (2011) and Rose (1990). However, by focusing on entrepreneurial activities in the economy, entrepreneurs seem to have internalized neoliberalism even more than employees or job seekers. Entrepreneurs, moreover, act in the economy with a different agency than non-entrepreneurs. Gershon (2018) defines an “entrepreneurial self” as follows:
Being an entrepreneurial self involves seeing oneself as a bundle of skills, assets, qualities, experiences, and relationships, a bundle that must be consciously managed and constantly enhanced. […] This concept of agency requires a reflexive stance in which people are subjects for themselves—a collection of ever-transforming processes to be managed (Gershon 2018: 175).
The entrepreneurial self (or simply the entrepreneur) is not only taking part in the labour market that already exist but is creating something new. Joseph Schumpeter’s (1883-1950) notion of creative destruction is often associated with entrepreneurial activities. By creating something new, entrepreneurs disrupt patterns of the labour market and the economy as such. Creative destruction generates economic growth and entrepreneurs are the ones triggering it (Dees 2001; Drucker 1985). In the new economy, however, entrepreneurship is not the exception anymore. It is part of a global neoliberal discourse about self-management and self-improvement and of a labour market which requests entrepreneurial skills from individuals (see, for instance, Torii & O’Connell 2017). Furthermore, as my research has shown, entrepreneurs have significantly internalized neoliberal values, particularly, the values of self-responsibility, flexibility and adaptability. In an ever-changing labour market “[…] far from being attached to an occupation or clinging to a qualification, the great man proves
adaptable and flexible, able to switch from one situation to a very different one, and adjust to
it” (Boltanski & Chiapello 2006: 112 cited in Gershon 2008: 176; emphasis in original). Particularly today’s youth – the ‘future working force’ – is expected to be flexible and
adaptable as young people are the ones facing an unpredictable labour market that is determined by demographic, technical, economic and political change.
1.5 Youth
There exist numerous concepts and definitions of youth. The United Nations and the International Labour Organization, for instance, define young people as those between the age of 15 and 24, while UN Habitat expanded the age to 32, and the African Youth Charter from 2006 to 35 (UNESCO 2017). For the purpose of my research, however, I will define youth as a social concept rather than a certain age category. This definition is based on concepts of authors such as Alcinda Honwana (2014), a professor of International Development, or the political economist Mayssoun Sukarieh and the anthropologist Stuart Tannock (2015). Honwana (2014) “[…] understands youth as defined by social expectations and responsibilities and considers all those who, despite their age, have not been able to attain social adulthood as youth.” (p.20). The social scientist and anthropologist with a focus on childhood and youth studies, Allison James, claims that “[…] youth is a border category that is ambiguous, betwixt and between, "neither child nor adult."” (James 1986: 155 cited in Sukarieh & Tannock 2015: 24).
Youth discourses and policies have become significantly popular in recent decades as an integral part of neoliberal societies. Neoliberalism is based on the idea of a constant social, economic and technological development and youth as a social category is the trigger of this social change (Ewen 1976 cited in Sukarieh & Tannock 2015). As a result, neoliberal advocates around the globe have been developing and expanding youth policies and programs in the last few decades particularly concerned with business training, financial literacy and entrepreneurial skills (ibid.). Sukarieh and Tannock (2015) explain the link between neoliberalism and the image of youth by claiming:
[…] it is perfectly understandable that neoliberal reformers would seek both to link neoliberal ideals and ideology with the image of youth, and to inculcate neoliberal subjectivities among the young through education, training and youth development programs that promote such concepts as youth entrepreneurship and financial literacy (Sukarieh & Tannock 2015: 24).
Youth is associated with (upwards) development, with future prospects and in popular belief with “hope”. Young people are the future voters and citizens and can bring forward social democratic and economic change (ILO 2008: 10). While youth is also often associated
with negative aspects such as their high unemployment rates, with a disruptive force that brings socio-political unrest, or with trouble-makers, in recent years youth discourses and policies have focused on promoting youth as an opportunity.
To socially construct youth in a positive way, however, is not any less harmful than constructing them negatively since, either way, these youth discourses serve political interests. To put it with Sukarieh and Tannock (2015):
What needs to be recognized more clearly, then, is that the act of promoting youth, proclaiming their power, strength or virtue, or celebrating their innate creativity or revolutionary potential is not inherently any more progressive, critical or radical- or just or accurate- than is criticizing youth, complaining about youth, disregarding youth or focusing on their shortcomings, problems and deficits (Sukarieh & Tannock 2015: 30).
Although, youth is internationally promoted as an opportunity rather than an obstacle, young people often face barriers and discrimination when entering the labour market or within the labour market. Due to young people’s limited working experiences, youth unemployment rates are naturally higher than the ones of an elderly age-group. Young people, nowadays, face major challenges finding a job. Since the global working force doubles (e.g. by integrating former socialist as well as developing countries in the global economy), young people are confronted with an enormously competitive job market which is no longer restricted to national economies. When competition increases, (young) people are more likely to accept low and precarious working conditions (ILO 2008). Furthermore, there might exist a link between the growing number of young entrepreneurs and poor working conditions. The ILO (2008) claims in a report on ‘Decent Work and Youth in Latin America’ that “[…] ventures launched by young people are a defensive response to the lack of job opportunities since many of them do so out of a need of income and not because they have identified a business opportunity” (ILO 2008: 29).
As mentioned previously, constructing ‘youth’ in a certain way always serves political and economic purposes. In the neoliberal new economy, ‘youth’ constitutes social change and is the trigger of political and economic development. Thereby, young people are expected to embrace free labour markets and the traits of the ‘new economy’ by continuously investing in their self-optimization. Mexico, thereby, is an accurate presenter of this neoliberal notion as it not only initiated a various number of entrepreneurial policies but particularly a sizeable amount of youth policies in recent years.
1.6 Mexico
In 1985, Drucker argues that “[…] so far, the entrepreneurial economy is purely an American phenomenon.” (Drucker 1985: 7). However, this argument is no longer valid considering that countries such as Mexico are increasingly turning into an entrepreneurial
economy. At the same time, Mexico’s economy shows some very specific and remarkable
issues dealing with entrepreneurship.
In 2016, PwC (PricewaterhouseCoopers), the second biggest multinational professional service network, lists Mexico City as a “city of opportunity” among other cities such as Amsterdam, New York, Berlin, Hong Kong, San Francisco, London, Dubai and the like (PwC 2016). Mexico City is increasingly turning into an innovative city. Following the examples of San Francisco and other start-up cultural cities, it attempts to create an environment that supports and promotes innovation and start-ups. Therefore, it turns its rather low value-added service sector into an innovation-based one (Cervantes & Nardi 2012).
Another indication for Mexico’s attempt to establish an innovative and entrepreneurial ecosystem not only in Mexico City but nation-wide, is the foundation of the INADEM programme in 2013. It was launched in the last year of the penultimate Mexican president Felipe Calderón (2006-2012) and continued during the last president’s term, Enrique Peña Nieto (2012-2018). Already before the times of INADEM, under the former president Vincente Fox (2000-2006), the Ministry of Economics had an under-ministry particularly established for the support of SMEs. INADEM also initiated the Red de Apoyo al Emprendedor [Support
Network for Entrepreneurs], a programme aiming to provide a support network for
entrepreneurs and helping them to find applicable products, services and programmes (OECD/ECLAC/CAF 2016). Burdens for entrepreneurs in Mexico remained high until 2016. Since then, enabled through a new legislation, Mexicans are able to start and register small-scale businesses without any extra costs within 24 hours (ibid.). Currently, Mexico has after Brazil the highest number of start-ups in Latin America. Mexican start-ups are evenly distributed across the country whereas Mexico City accounts for 32% of all start-ups located in Mexico (Database AngelList cited in OECD 2016).
Particularly, in the field of technological innovation, Mexico is outstanding. The National Council of Science and Technology (CONACYT) initiated in 2009 the Programa de Estímulo a la Innovación [Programme to Stimulate Innovation] in order to enhance the technological
