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Innovation and entrepreneurship in Africa and Asia

Sustainable growth turns out to be the best method to fight poverty and innovation is key to achieving it. Unfortunately small enterprises in countries such as Kenya, South Africa, Indonesia and Vietnam are only growing at a snail’s pace. What are the reasons for this and how can it be changed? Professors Patrick Vermeulen and Joris Knoben of the Institute for Management Research are studying how to stimulate innovation in developing countries.

Innovation and growth are important. A larger company offers work to more people, avails itself of more knowledge, has more development opportunities and is able to wield more influence. Professor of Strategy and International Management Patrick Vermeulen: “Despite all this, in many developing countries small companies never or almost never grow, while larger companies there are experiencing growth. We want to know what causes this. And what it will take – people, means or measures – to stimulate innovation and growth.”

For their research they selected ten countries: Kenya, Tanzania, Ethiopia, Ghana, Uganda, South Africa, Vietnam, India, Indonesia and Bangladesh. The researchers from Nijmegen are investigating the small and medium sized enterprises in these countries. Through questionnaires they have collected data for quantitative analysis from hundreds of companies, and in addition they visit and interview business owners.

Female influence

One of the stimulating factors they have discovered is the participation of women, says Professor of Business Economics Joris Knoben. “Even in countries with great gender inequality, women have demonstrable influence in the smooth operation of an enterprise. This not only holds true for female managers but also for lower level employees. On paper, men are in charge, but in practice, women are often the ones who make all the difference; daughters who after a study abroad are running the company for their father, wives who are doing the bookkeeping for their husbands.”

Innovation and Entrepreneurship

Source: neelsky / Shutterstock.com

The researchers were surprised by the competition between entrepreneurs, or rather the lack of it. Vermeulen: “In Kenya I visited a furniture maker who was located in a street with a very great number of other furniture makers. That surprised me to start with: why would these competing shops all locate themselves so closely together? Next I heard that one manufacturer wasn’t keeping his knowledge about a clever method of manufacturing – valuable expertise! – to himself, but was sharing it with the others.”

Western glasses

“A lot of our western theories don’t apply in Africa and Asia,” says Vermeulen. “Kenyan entrepreneurs for example, are not trying to distinguish themselves. This is because his clients are not going to base their purchase on the quality of his products as much as on his background, his tribe. So you are not helping entrepreneurs in these countries if you give them strategies and advice aimed at individual growth and profit. Stimulating cooperation is far more important there to encourage growth.”

Knoben: “You can’t overlook the local political cultural and economic relations, or the values and standards that the community shares. It makes no sense to say: ‘Think about yourself some more and less about your tribe’, or ‘give women equal rights’. We need to take off our western glasses if we want to help African, Asian and also European policy makers with advice on sustainable growth. Another important factor is time. Change takes place in small steps.”

Open and curious

Knoben and Vermeulen are very passionate about their research. Vermeulen: “We are under no illusion that we are going to personally eradicate poverty. But we are able to provide them with insights into how innovation and sustainability can have a better chance in these countries and how this can contribute to the reduction of poverty. A bag of money, or another trade mission are not going to make a big difference. The difference has to come from local policy makers, researchers and entrepreneurs there.” “That’s also why it’s so inspiring to see how open, driven and curious they are,” adds Knoben.

Link

  • Coordinated Country Case Studies: Innovation and Growth, Raising Productivity in Low Income Countries

This project is funded with support from the Department for International Development (DFID) in the framework of the research project “Enabling Innovation and Productivity Growth in Low Income Countries” (EIP-LIC/PO5639)