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9.0 The Entrepreneurial Firm Organization Form: Entrepreneurs and entrepreneurship in Africa

Guest post by: Journal of Development Entrepreneurship

Article Overview: Organization form refers to the design, structuring and management of the entrepreneurial firm, including descriptive (e.g., age, size, location, sector), and structural (e.g., ownership) variables.

9.0 The Entrepreneurial Firm Organization Form: Entrepreneurs and entrepreneurship in Africa

(Journal of Developmental Entrepreneurship, Oct 2002 by Kiggundu, Moses N)

There are many entrepreneurial activities and firms in Africa because selfemployment is a key driving force. Most of these are very small in size which makes them vulnerable. Failure rates are quite high, especially in the first two to five years. Women dominate the small and micro enterprises (SMEs) sector, both as owners and workers. Paid employment is limited, and the entrepreneurial activities' overall contribution to family income is limited; often below minimum wage levels. Thus, most of these entrepreneurs will remain poor (Horn, 1995). Most of these activities are located in rural areas, where mortality rates are also high (Charmes, 1999; Mead & Liedholm, 1998). While Kallon (1990) reported that Sierra Leone rural firms were more profitable because of competition in the urban areas, Mead and Liedholm (1998) reported that rural firms suffer from high mortality rates especially during the first five years.

Commerce (trading, vendors) dominates this sector, but manufacturing and services are gaining prominence, especially in the rural areas. Successful firms are more likely in manufacturing, rather than trading or services. Productivity and the capacity to innovate, to introduce new technology, and to manage strategically are related to owner entrepreneurial competencies, enterprise size, location, and networking or clustering.

In summary, there is no shortage of entrepreneurs or people willing to take risks to start business activities. Most of these are very small one-person operations mostly in the easy-to-enter trading and service sector, which is also the least profitable. They provide only a limited range of services or products, and do not innovate either by way of new products /services or markets. The more the macroeconomic conditions worsen, the more of these micro enterprises open up because they are predominantly a push type.

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Article Tags: entrepreneurial activities, entrepreneurs, Journal of Developmental Entrepreneurship, micro enterprises, mortality rates, rural areas



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