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Small businesses performance in West African border regions: Do social networks pay off?

  • KUEPIE Mathias
  • TENIKUE Michel
  • WALTHER Olivier

This paper studies the link between economic performance and social networks in West Africa. Using first-hand data collected on 358 small-scale traders in five border markets between Niger, Nigeria and Benin, we are particularly interested in testing whether the most well-connected actors of trade networks are also the most successful in terms of monthly sales and profit. The paper shows that the overall economic performance of traders is affected by the socio-professional position of the actors with whom they are connected. While social ties with local religious leaders have no effect on their business, support received from civil servants, politicians, and security authorities translates into economic performance. The paper also shows significant differences between countries, regions and marketplaces. Social connections developed with state representatives have a much greater effect on economic performances in Niger and Benin than in Nigeria, where average profit is much higher. Experience is more closely correlated with profit in the region where traders have developed re-export trade activities than where petty trade is the dominant form of business.

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Paper provided by LISER in its series LISER Working Paper Series with number 2014-06.

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Length: 28 pages
Date of creation: May 2014
Date of revision:
Handle: RePEc:irs:cepswp:2014-06
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  1. Andre Hofmeyr, 2010. "Social Networks And Ethnic Niches: An Econometric Analysis Of The Manufacturing Sector In South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 78(1), pages 107-130, 03.
  2. Conley, T.G. & Udry, C.R., 2000. "Learning about a New Technology: Pineapple in Ghana," Papers 817, Yale - Economic Growth Center.
  3. Kuepie, Mathias & Nordman, Christophe J. & Roubaud, François, 2009. "Education and earnings in urban West Africa," Journal of Comparative Economics, Elsevier, vol. 37(3), pages 491-515, September.
  4. Susan Godlonton & Justine Burns, 2006. "Social Networks, Employment and Worker Discouragement: Evidence from South Africa," SALDRU Working Papers 6, Southern Africa Labour and Development Research Unit, University of Cape Town.
  5. Marcel Fafchamps, 2004. "Market Institutions in Sub-Saharan Africa: Theory and Evidence," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262062364, June.
  6. Torben Dall Schmidt & Peter Sandholt Jensen, 2012. "Social networks and regional recruitment of foreign labour: Firm recruitment methods and spatial sorting in Denmark," Papers in Regional Science, Wiley Blackwell, vol. 91(4), pages 795-821, November.
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  8. repec:cup:cbooks:9780521887243 is not listed on IDEAS
  9. Volker Schöer & Neil Rankin & Gareth Roberts, 2014. "Accessing The First Job In A Slack Labour Market: Job Matching In South Africa," Journal of International Development, John Wiley & Sons, Ltd., vol. 26(1), pages 1-22, 01.
  10. Mano, Yukichi & Yamano, Takashi & Suzuki, Aya & Matsumoto, Tomoya, 2011. "Local and Personal Networks in Employment and the Development of Labor Markets: Evidence from the Cut Flower Industry in Ethiopia," World Development, Elsevier, vol. 39(10), pages 1760-1770.
  11. Peter Urwin & Giorgio Di Pietro & Patrick Sturgis & Gregor Jack, 2008. "Networking and Accumulation of Social Capital," American Journal of Economics and Sociology, Wiley Blackwell, vol. 67(5), pages 941-968, November.
  12. Philippe LeMay-Boucher & Jo�l Noret & Vincent Somville, 2013. "Facing Misfortune: Expenditures on Magico-Religious Powers for Cure and Protection in Benin," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 22(2), pages 300-322, March.
  13. Marcel Fafchamps, 2002. "Returns to social network capital among traders," Oxford Economic Papers, Oxford University Press, vol. 54(2), pages 173-206, April.
  14. ISHIWATA Ayako & Petr MATOUS & TODO Yasuyuki, 2014. "Effects of Business Networks on Firm Growth in a Cluster of Microenterprises: Evidence from rural Ethiopia," Discussion papers 14014, Research Institute of Economy, Trade and Industry (RIETI).
  15. Pasquier-Doumer, Laure & Nordman, Christophe Jalil, 2013. "Transitions in a West African Labour Market: The Role of Social Networks," Economics Papers from University Paris Dauphine 123456789/12204, Paris Dauphine University.
  16. Olivier Walther, 2012. "Traders, agricultural entrepreneurs and the development of cross-border regions in West Africa," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 24(3-4), pages 123-141, April.
  17. Mark Granovetter, 2005. "The Impact of Social Structure on Economic Outcomes," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 33-50, Winter.
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