Microenterprise as Complement or Substitute? Institutional Ecosystems and Refugee Women’s Entrepreneurship in the United States

Abstract

This study examines how state-level microenterprise policy environments impact the economic opportunities for refugee women in the United States and whether microentrepreneurship is a complement or substitute to formal employment. While integration policies emphasize wage employment, refugee women often remain out of formal labour markets due to various barriers. It channels many into necessity-driven microenterprises, which are hardly considered in official integration metrics. To address this gap, the study develops a Microenterprise Ecosystem Index (MEI) across all 50 US states and the District of Columbia, providing a comparative framework of institutional opportunity structures for refugee women.  The index captures cross-state variation in cottage food regulation, microloan access, and the presence of a federal refugee microenterprise program. The analysis uses a combination of institutional benchmarking with qualitative case evidence to identify mechanisms linking policy environments and entrepreneurial outcomes. The findings depict significant variation in the interstate ecosystem quality, with the presence of federal microenterprise programs emerging as the strongest driver of differences. Coordinated ecosystems tend to create conditions that support more viable forms of entrepreneurship, while fragmented ecosystems push many activities into lower-return informal work. The evidence from case studies also suggests that microenterprises often complement formal employment through income generation, skill development, credit access, and building gradual pathways towards either formal business growth or wage employment. The study proposes an ecosystem-based institutional framework for refugee entrepreneurship and highlights how microenterprises remain an under-measured dimension of integration that collaborates with formal labour markets. Overall, the findings suggest that current metrics of integration understate the economic contributions of refugee women and disregard key pathways of economic incorporation.