Entrepreneurs as Prime Targets: Insights from Mexican Ventures on the Link Between Visibility and Crime of Varying Severity
In this article, professors Sanchez-Ruiz, Wood, Michaelis, and Suarez study entrepreneurs in Mexico as targets of crime. Entrepreneurs can be attractive targets of crime because they assemble resources and thus are seen as having something of value. Building on this, the research team suspected that when entrepreneurs engage in certain business activities (e.g., depositing money at a bank, selling at a public market, or transporting goods), they become more visible to criminals, and are likely to become victims of crime. In response to the threat of crime victimization, the researchers focused on how crime of varying severity (i.e., ranging from simple theft to more serious crime like extortion and kidnapping) pushes entrepreneurs toward reducing the visibility of the business venture, through such means as truncating growth, relocating, or discontinuing the venture. The researchers found that entrepreneurs who experienced severe crime were more likely to reduce growth or relocate their business, but the most likely outcome was to discontinue the business. This research highlights a very troubling reality that typical business routines associated with a growing business tend to attract crime, which can result in entrepreneurs deciding to shut down a successful business venture.
What you need to know:
Entrepreneurs in Mexico are indeed prime targets of crime. Interviews with entrepreneurs from Mexico revealed that crime does follow them, as expressed by an interviewee: “Crime opportunities followed the typical routines of my business (such as transacting in cash) that made me noticeable to criminals.” As such, experiencing crime pushes entrepreneurs towards reducing visibility, such as truncating growth, relocating or discontinuing the venture. Survey data from more than eighty thousand legally registered entrepreneur-led ventures in Mexico provide strong support for these relationships. The realization that visible business activities will attract criminals, and being victimized by criminals increases the odds of entrepreneurs choosing not to grow the business, has important real-world implications. Mexico is a country plagued by high levels of criminal activities, and the research findings suggest that as entrepreneurs become prime targets of crime through the routine venture activities that they engage in, they are less likely to pursue the business activities needed to elevate the Mexican economy.
MORE DETAILS:
What did the researchers do:
Mexico has been described as an environment where crime is so attractive that it has become an industry. To understand Mexican entrepreneurs’ experiences in this environment, the research team conducted one-on-one interviews with 14 entrepreneurs. Interviews indicated that routine business activities, like selling in the central market, increases visibility among criminals, thus making entrepreneurs noticeable as a potential target. Building on these insights, the researchers analyzed survey data from 87,486 legally registered entrepreneur-led ventures in Mexico. They find that as routine venture activities increase, entrepreneurs encounter crime of increasing severity, with the routine venture activity of making transactions at a bank serving as the strongest attractor of more severe crime. To deal with the pressures of crime, the researchers find that entrepreneurs can respond to crime with counterproductive entrepreneurial choices (e.g., truncating growth and discontinuation), which creates tension. On the one hand, routine business activities increase efficiency and legitimacy, which are critical for long-term success. However, on the other hand, engaging in routines increases the risk of being targeted by criminals. This is a challenging confluence (i.e., catch-22) of forces that entrepreneurs in high crime contexts must navigate.
What did the research find:
The study outlines how the dynamics of crime relate to entrepreneurs’ experiences with managing a business venture in Mexico. The research findings highlight the mechanism of venture visibility as an attractor of crime, and truncating venture growth or discontinuing the venture as a common response to criminal pressures. The core concept is one of flying under criminals' radar by restricting sales and keeping business ventures small. Truncating growth is difficult for entrepreneurs because it forces a choice between wanting to increase venture revenue but also taking the risk of increased visibility among criminals. The data indicates that, while entrepreneurs attempt to reduce their appeal to criminals, such efforts may inadvertently also diminish their attractiveness to customers. The researchers discuss that the avoidance response is essentially a strategic response to crime as an institutional pressure.
How can you use this research:
Entrepreneurs or aspiring entrepreneurs operating in areas with a high prevalence of crime need to appreciate the role of venture visibility and recognize the severity of the business impact of crime. Crime can range in severity from simple theft to kidnapping, and our data indicates that the threat of exposure to crime of varying severity can push individuals away from entrepreneurial activity. For those looking to support entrepreneurs, it is essential to take steps to prevent crime. It is also important to note how the entrepreneurs interviewed shed light on how they navigate visibility as a creator of criminal awareness. Along these lines, it is important to recognize that entrepreneurs will respond to crime with counterproductive entrepreneurial choices like reducing size or shutting down the venture. Looking forward, reducing the threat of severe crime against entrepreneurs is likely to aid in developing a more robust business environment where entrepreneurial activity can flourish.
Want to know more:
Contact: Paul Sanchez-Ruiz at psanch26@iastate.edu
Article Citation: Sanchez-Ruiz, P., Wood, M. S., Michaelis, T. L., & Suarez, J. (2023). Entrepreneurs as prime targets: Insights from Mexican ventures on the link between venture visibility and crime of varying severity. Journal of Business Venturing, 38(6), https://doi.org/10.1016/j.jbusvent.2023.106339.