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Minority entrepreneurs and firm performance in sub-Saharan Africa

Author

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  • Vijaya Ramachandran
  • Manju Kedia Shah

Abstract

This study focuses on the role of entrepreneurs in the private sector in sub-Saharan Africa. Using data from the Regional Program on Enterprise Development (RPED) and controlling for various factors, our analysis compares growth rates of indigenously owned African firms with firms owned by entrepreneurs of Asian or European descent, in Kenya, Zambia, Zimbabwe, and Tanzania. We find that after controlling for firm size and age, various entrepreneurial characteristics, and sector and country differences, minority (or non-indigenous) entrepreneur firms start out larger and grow significantly faster than indigenously-owned African firms. Our results are consistent with theories that argue that informational and financial networks created by minority entrepreneurs provide access to credit, information, and technology for members of these networks. We also find that within indigenously-owned African firms, entrepreneurs with secondary and/or university education realise a higher rate of growth; access to education presumably enables indigenous African entrepreneurs to develop managerial skills that serve as a substitute for the informational and financial networks created by minority entrepreneurs.

Suggested Citation

  • Vijaya Ramachandran & Manju Kedia Shah, 1999. "Minority entrepreneurs and firm performance in sub-Saharan Africa," Journal of Development Studies, Taylor & Francis Journals, vol. 36(2), pages 71-87.
  • Handle: RePEc:taf:jdevst:v:36:y:1999:i:2:p:71-87
    DOI: 10.1080/00220389908422621
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    References listed on IDEAS

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    1. Biggs, T. & Shah, M. & Srivastava, P., 1995. "Technological Capabilities and Learning in African Enterprises," Papers 288, World Bank - Technical Papers.
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    Cited by:

    1. Rijkers, Bob & Söderbom, Måns & Loening, Josef L., 2010. "A Rural-Urban Comparison of Manufacturing Enterprise Performance in Ethiopia," World Development, Elsevier, vol. 38(9), pages 1278-1296, September.
    2. Francesco Quatraro & Marco Vivarelli, 2015. "Drivers of Entrepreneurship and Post-entry Performance of Newborn Firms in Developing Countries," World Bank Research Observer, World Bank Group, vol. 30(2), pages 277-305.
    3. Tetsushi Sonobe & John Akoten & Keijiro Otsuka, 2011. "The growth process of informal enterprises in Sub-Saharan Africa: a case study of a metalworking cluster in Nairobi," Small Business Economics, Springer, vol. 36(3), pages 323-335, April.
    4. Mano, Yukichi & Iddrisu, Alhassan & Yoshino, Yutaka & Sonobe, Tetsushi, 2012. "How Can Micro and Small Enterprises in Sub-Saharan Africa Become More Productive? The Impacts of Experimental Basic Managerial Training," World Development, Elsevier, vol. 40(3), pages 458-468.
    5. Mohammad Mafizur Rahman & Muhammad Shahbaz, 2013. "Do Imports and Foreign Capital Inflows Lead Economic Growth? Cointegration and Causality Analysis in Pakistan," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 14(1), pages 59-81, March.
    6. Taye Mengistae, 2006. "Competition and entrepreneurs' human capital in small business longevity and growth," Journal of Development Studies, Taylor & Francis Journals, vol. 42(5), pages 812-836.
    7. Domingo Soriano & Gary Castrogiovanni, 2012. "The impact of education, experience and inner circle advisors on SME performance: insights from a study of public development centers," Small Business Economics, Springer, vol. 38(3), pages 333-349, April.
    8. Tetsushi Sonobe & John E. Akoten & Keijiro Otsuka, 2009. "An Exploration into the Successful Development of the Leather-Shoe Industry in Ethiopia," Review of Development Economics, Wiley Blackwell, vol. 13(4), pages 719-736, November.
    9. Rey-Martí, Andrea & Ribeiro-Soriano, Domingo & Sánchez-García, José Luis, 2016. "Giving back to society: Job creation through social entrepreneurship," Journal of Business Research, Elsevier, vol. 69(6), pages 2067-2072.
    10. Calza, Elisa & Goedhuys, Micheline, 2016. "Entrepreneurial heterogeneity and the design of entrepreneurship policies for economic growth and inclusive development," MERIT Working Papers 043, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    11. Arne Bigsten & Mans Söderbom, 2006. "What Have We Learned from a Decade of Manufacturing Enterprise Surveys in Africa?," World Bank Research Observer, World Bank Group, vol. 21(2), pages 241-265.
    12. Alhassan Iddrisu & Yukichi Mano & Tetsushi Sonobe, 2012. "Entrepreneurial Skills and Industrial Development: The Case of a Car Repair and Metalworking Cluster in Ghana," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 3(3), pages 302-326, September.
    13. Micheline Goedhuys & Leo Sleuwaegen, 2010. "High-growth entrepreneurial firms in Africa: a quantile regression approach," Small Business Economics, Springer, vol. 34(1), pages 31-51, January.
    14. Justin van der Sluis & Mirjam van Praag & Wim Vijverberg, 2003. "Entrepreneurship Selection and Performance," Tinbergen Institute Discussion Papers 03-046/3, Tinbergen Institute, revised 24 Sep 2004.
    15. Shimada, Go, 2013. "The Economic Implications Of Comprehensive Approach To Learning On Industrial Development (Policy And Managerial Capability Learning):," Working Papers 1001, JICA Research Institute.
    16. Marco Vivarelli, 2013. "Is entrepreneurship necessarily good? Microeconomic evidence from developed and developing countries," Industrial and Corporate Change, Oxford University Press, vol. 22(6), pages 1453-1495, December.
    17. Quatraro, Francesco & Vivarelli, Marco, 2013. "Entrepreneurship In A Developing Country Context," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 201314, University of Turin.
    18. repec:wbk:wbpubs:28026 is not listed on IDEAS
    19. Andrea Rey-Martí & Domingo Ribeiro-Soriano & Daniel Palacios-Marqués, 2016. "Entrepreneurial attributes of human capital and contingency factors in the culinary tourism," International Entrepreneurship and Management Journal, Springer, vol. 12(1), pages 67-85, March.
    20. Muhammad Shahbaz & Mohammad Mafizur Rahman, 2012. "The Dynamic of Financial Development, Imports, Foreign Direct Investment and Economic Growth: Cointegration and Causality Analysis in Pakistan," Global Business Review, International Management Institute, vol. 13(2), pages 201-219, June.
    21. Soriano, Domingo Ribeiro, 2010. "Management factors affecting the performance of technology firms," Journal of Business Research, Elsevier, vol. 63(5), pages 463-470, May.
    22. Mengistae, Taye, 2001. "Indigenous ethnicity and entrepreneurial success in Africa : some evidence from Ethiopia," Policy Research Working Paper Series 2534, The World Bank.
    23. Francesco Quatraro & Marco Vivarelli, 2013. "Entry and Post-Entry Dynamics in Developing Countries," GREDEG Working Papers 2013-20, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.

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