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Transnational lifestyle entrepreneurs in the Wild West: A case study on Playa Gigante, Nicaragua
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School of Economics |
Master's thesis
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en
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98
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Abstract
Introduction
While social entrepreneurs and high-growth, high-risk ventures are catching the eyes of the
youth, it is lifestyle entrepreneurs that are catching the eyes of the politicians. The business
models used by lifestyle entrepreneurs require very little movement of resources, very few
employees and tend not to expand. All of these factors are critical for maintaining a healthy
macro and micro level economy.
A lifestyle entrepreneur focuses more on the life rewards within the context of people that enjoy
and have a passion for what they are doing. Intrinsic satisfaction is of greater value than extrinsic
rewards (Rodriguez, 2010). Reasons for choosing to become a lifestyle entrepreneur are vast, but
the underlying difference in lifestyle entrepreneurs compared to other types of entrepreneurs is
that passion is placed before profit. That is to say intrinsic satisfaction is greater than extrinsic
rewards (Rodriguez, 2010). With passion as a priority, lifestyle entrepreneurs are more likely to
create ventures that are unlikely to generate economic returns large enough to interest outside
investors (Sullivan, 2007).
Aim and Objectives
The aim of this research is to discover the strategies of lifestyle entrepreneurs operating in
potentially hostile environments, characterized by scarce resources, an uneducated labor force,
corruption, lack of infrastructure (roads, hospitals, police, fire, water and waste disposal), lack of
formal institutions, lack of a local customer base, scarce technology access and an abundance of
tropical diseases. Given the Wild West context, the research question inspiring the research is,
how do lifestyle entrepreneurs create and sustain viable ventures while maintaining their way of
life? Supporting objectives were:
a) to explore the contextual factors impacting entrepreneurs in Playa Gigante, Nicaragua
b) to explore the realities of creating lifestyle ventures in Playa Gigante and the self-imposed
limitations of venture growth the entrepreneurs operate within.
c) to investigate and establish the active coping strategies developed by the entrepreneurs
d) to inductively discover theories and practices to better prepare lifestyle entrepreneurs in
developing economies for the future.
Theoretical Framework
The premise of this study is lifestyle entrepreneurship theory, along with Sarasvathy’s (2008)
effectuation logic process. Effectuation logic looks at entrepreneurs’ thought processes and
actions. It is logic, not just theory. While others yield and plan, effectuating entrepreneurs press
forward. They trek on and actively explore in a holistic manner the dynamics of the venture’s
environment. They examine all the possible opportunities with an open mind and without
prejudice. The logic is a process, an action, thus a verb. Within a world of uncertainty,
effectuation logic is a process that all entrepreneurs operating within a harsh entrepreneurial
context should be able to grasp. It is a creative process, much like the creation of a quilt. It
requires gathering the experience of intrinsic and extrinsic opportunities and patching together
the positives of each to build a unique and personally rewarding venture over time (Sarasvathy,
2008).
Methodology
Through a grounded theory approach, eight transnational cases were explored over a three month
period. Surveys, interviews and observations were gathered while participating in their daily
lives. Data were coded and sorted in line with Strauss and Corbin’s grounded theory approach
(1990). After gathering data and outside of Nicaragua, an unstructured interview took place with
a Nicaraguan entrepreneurial expert. Through triangulation of data points, 38 critical concepts
were grouped into 4 major categories. The 4 categories developed the foundation to
systematically find the solution to the aim and objectives of the study.
Findings
The analysis of Playa Gigante highlights the lack of supportive infrastructures and formal tools
needed for starting a business in Playa Gigante. However, the entrepreneurs of this region
display a uniform set of traits that have been applied to successfully debunk those hurdles. It is
important to note that all the cases demonstrated the utilization of Sarasvathy’s effectuation logic
without any prior knowledge to the logic’s theoretical existence. Local networks, knowledge and
experience key stoned their opportunities and abilities to create a balance between a successful
business venture and personal lifestyle preferences.
A key finding in the analysis was the lack of trust that all entrepreneurs expressed with
governmental regulations and officials. The high level of corruption entrepreneurs experienced
everyday was one of many external forces that threatened their creativity and success. With this
lack of support in a developing region, the lifestyle entrepreneurs developed behaviors similar to
the effectual logic suggested by Saravathsy to provide for their families and the local
community.
Despite harsh economic environments, these cases have succeeded and followed in the footsteps
of pioneering entrepreneurs who risked relocating to newly discovered lands to pursue and build
a venture. The findings of this study will aide future entrepreneurial pioneers as they seek to start
a new business in a developing region.
Conclusions
The research of this study shows that entrepreneurial ventures in Playa Gigante are financially
sustainable. This diverse set of entrepreneurs developed coping strategies similar to those
suggested by Dr. Sarasvathy. Their businesses thrive, and so do their personal lives. Could
effectuation logic be a critical process needed to ensure success for lifestyle entrepreneurs in
developing regions like Nicaragua and around the world?