(Journal of Developmental Entrepreneurship, Oct 2002 by Kiggundu, Moses N)
Studies show that entrepreneurs enjoy higher social status and wider social relationships in their respective communities than non-entrepreneurs do. It has not been empirically established whether these rich and extended social and family relations are associated with entrepreneurial success. While the entrepreneurs perform various community leadership roles (Jorgensen, Hafsi & Kiggundu, 1986; Dia, 1996; Kiggundu, 2001), the business suffers as a result of neglect, extended social and family obligations and extra-firm demands. Buame (1996) and Kallon (1990) concluded that social and family relations disadvantaged entrepreneurs in West Africa. A Ghanaian entrepreneur had to relocate his business away from his hometown at great expense in order to protect his business interests because, as he put it "it is your closest people who seek your downfall through superstitious means, Obeyifuo, you know" (Buame, 1996, p. 166). Kallon reported that over one half (56.3%) of the entrepreneurs thought that social relations were harmful to the business and less than one quarter (23.4%) thought social attitudes were helpful. Yet, more than 70 percent of them reported that they enjoyed higher social status than their fathers had achieved. Sam (1998) reported that three previously successful Nigerian family firms had to close because when the owner died, the siblings, from polygamous families, could not agree among themselves on how to settle the estate without dissolving the businesses.
Dia (1996) provides a positive interpretation of the effects of social status, social relations and social transfers for African entrepreneurship. Because Dia explains African institutional failures in terms of institutional disconnect, he logically provides solutions in terms of institutional reconnect: reconciliation, twinning, linkages, and capacity building. Accordingly, he sees social relations, social capital and social transfers as the building blocks for reconnecting Africans and their institutions, including indigenous firms. The African entrepreneur provides a critical link in the process of institutional reconnect and reconciliation. Kennedy (1988), in a study of capitalism in the Sudan, supports Dia's conclusions. These entrepreneurs consolidate social relations and social status through intermarriages between wealthy families, business partnerships between immigrants and local entrepreneurs, political contributions to business-friendly political parties or regimes, and maintaining close business and personal ties. African entrepreneurs need to enhance their social skills (e.g. negotiations) to navigate through complex, dynamic, and often interrelated family and social relations so as to advance the commercial interests of their businesses.
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