The Evolution of Microenterprise Strategies in the United States

Abstract

Forty years ago President Lyndon B. Johnson put into motion legislation designed to strike a blow at the causes and consequences of poverty. Although newer strategies aimed at poverty reduction have been developed over the intervening years, it is easy to conclude from observing newspaper headlines that poverty continues to be a pressing problem. Microenterprise is one of the more recent poverty alleviation strategies. As a strategy, microenterprise has emerged only recently in the United States, following the example of the Grameen Bank in Bangladesh. Initially, in suit with the model of the Grameen Bank, microenterprise programs focused on the provision of credit. Over time, however, American microenterprise programs have adapted and evolved, shifting their focus away from credit to training and technical assistance. This paper performs first-order and second-order analyses in an attempt to understand how the microenterprise model has evolved in the United States. The first-order analysis will examine the economic, social and political contexts that constrain credit oriented microenterprise strategies. The second-order analysis will examine these contexts with regard to the process of diffusion of innovations. The first-order analysis will reveal the contexts within the United States that have precluded the widespread adoption of the original strategy, while the second-order analysis will reveal how context constrains or facilitates the process of diffusion.