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Do immigrant-owned businesses grow financially? An empirical study of African immigrant-owned businesses in the South Africa

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  • Tengeh, RK
  • Ballard, HB
  • Slabbert, AS

Abstract

Given the fact that numerous challenges prohibit African immigrants from availing financial capital for the purpose of starting a business in South Africa, this paper sets out to investigate whether those that succeeded experienced a significant increment in their financial capital three or more years after start-up. This paper was designed within the quantitative and qualitative research paradigms. A triangulation of three methods was utilised to collect and analyze the data. From a quantitative perspective, the survey questionnaire was used. To complement the quantitative approach, personal interviews and focus groups were utilised as the methods within the qualitative approach paradigm. The primary data collection instrument used was the survey questionnaire which was complemented by personal interviews and focus group debates. The results revealed that the majority (71,1%) African immigrants had an estimated start-up financial in the range of R 1 000 and R 5 000, which tended to vary across the different ethnic groups studied. After three of more years, the estimated financial capital of the majority (39,3%) of the respondents moved to a new range of R 50 001 to R 100 000. Noting a disparity in capital growth exhibited by the different ethnic groups, it was found that all the Ethiopians who started with a capital within the range of R1 000-R5 000 moved into a new capital range (R50 001- R100 000) three or more years after business start-up. Although the absolute migration in terms of capital demonstrated by the Ethiopians is not into the highest capital range, they were nonetheless the only country that experienced this phenomenal growth. In terms of occupying the highest capital range (R250 001- R500 000), 11,1% of Cameroonians moved into that range followed by 7,4% of Somalians. Using an increase in financial capital (generated by ploughing back profits) as a proxy for growth, we were able to prove that these African immigrants owned business grow and the rate of growth varied across the different ethnic groups studied.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 40610.

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Date of creation: 2012
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Publication status: Published in African Journal of Business Management 19.6(2012): pp. 6070-6081
Handle: RePEc:pra:mprapa:40610

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Keywords: Immigrant entrepreneurship; immigrant-owned businesses; financial capital; financial growth; African immigrants; business start-up resources and South Africa;

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  1. repec:dgr:uvatin:2003050 is not listed on IDEAS
  2. Tengeh, Robertson Khan & Ballard, Harry & Slabbert, Andre, 2011. "A framework for acquiring the resources vital for the start-up of a business in South Africa:an African Immigrant’s Perspective," MPRA Paper 34211, University Library of Munich, Germany.
  3. Alicia Robb & Robert Fairlie, 2009. "Determinants of business success: an examination of Asian-owned businesses in the USA," Journal of Population Economics, Springer, Springer, vol. 22(4), pages 827-858, October.
  4. Nonna Kushnirovich & Sibylle Heilbrunn, 2008. "Financial Funding Of Immigrant Businesses," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., World Scientific Publishing Co. Pte. Ltd., vol. 13(02), pages 167-184.
  5. Colombo, Massimo G. & Delmastro, Marco & Grilli, Luca, 2004. "Entrepreneurs' human capital and the start-up size of new technology-based firms," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 22(8-9), pages 1183-1211, November.
  6. C. Mirjam van Praag, 2003. "Business Survival and Success of Young Small Business Owners," Tinbergen Institute Discussion Papers 03-050/3, Tinbergen Institute.
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