Entrepreneurship and economic development : An investigation into small and medium enterprises' opportunity identification, creation, success and failure in five African countries

• Main Author: Mustapha, Umar Musa
• Published: University of Portsmouth 2008
• Subjects: 337
• Online Access: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.511206

Small and Medium Enterprise (SME) creation is an important factor that drives developing world economies. Curiously, African SMEs, while being significant in number, tend to be insignificant in terms of contribution to GDP. Overall, they contribute only 1% to GDP growth on an annual basis. Further, the creation and operation of SMEs in Africa appears to be continually stifled by both intrinsic and extrinsic factors. The study use quantitative and qualitative methods to investigate determinants of SME success and failure in Africa as well as the characteristics of successful and unsuccessful African entrepreneurs. The methodology chosen was a mixed methods approach. The quantitative findings of a survey of 705 businesses in Africa were complemented by qualitative personal interviews of sixteen successful entrepreneurs. Univariate and multivariate descriptive statistics which includes principal component analysis and regression analysis are used to analyse the questionnaire data and build a predictive model of SMEs creation, success and failure. The quantitative results are more powerful for predicting individual SME success rates , than they are for predicting country specific SME success rates. The mixed method approach utilized in this study found significant results with respect to the goals of the research. There appear to be significant variables that create barriers to the creation and operation of African SMEs. These variables most significantly include infrastructure, managerial skill, education, access to capital, and access to qualified staff. These barriers also form a pattern of extrinsic and intrinsic determinants to success. The extrinsic determinants are infrastructure, access to capital, poor government policies, and competition from imports while the intrinsic determinants are education, staffing, and managerial skill. This research finds that there are likely to be distinctive differences between the socio-economic background, experience, skills and knowledge behind successful SME creation and unsuccessful SME creation. These differences are most significantly managerial skill and education. Finally, this study finds that there are distinctive differences between successful business creators and unsuccessful business creators with respect to their motivations and opportunity identification. These differences were found to be opportunism and the concern for the welfare of those surrounding the SME creator.