How paying–it–forward expands entrepreneurial functioning in Kenya’s informal settlements

With over 1 billion of people living in informal settlements, micro–entrepreneurship accounts for a large proportion of business activities, providing necessity services otherwise unreachable through normal means. Understanding the role of micro–entrepreneurship in extreme condition is an important component of the grand humanitarian challenge of how to alleviate poverty. Existing theory has suggested that extreme events such as COVID–19 can induce a poverty–constrained mindset, however during our preparatory field work we found micro–entrepreneurs who were able to sustain their entrepreneurial activities used a paying–it–forward mechanism to expand their own functioning by simultaneously improving others. We tested this counter–factual insight by using panel data covering the trading histories of 2,255 entrepreneurs who lived and traded in Kenya’s informal settlements. Our dynamic regression estimated the interplay between paying–it–forward and emerging network structures. The results confirm that paying–it–forward expands entrepreneurial functioning through two contrasting interaction effects with network structures that either amplify or attenuate the prosocial impact of paying–it–forward on others’ welfare during the COVID–19 pandemic lockdown. These research findings hold practical implications for humanitarian agencies and policy makers who have to juggle between resource allocations and entrepreneurship policies for communities dealing with multiple hardships