Evaluación del aprendizaje en el marco de la resolución de problemas

2.1.1THE NATURE OF SELF-EMPLOYMENT IN THE DEVELOPING WORLD

One of the most striking features of self-employment in the developing world is the lack of diversity. It is well established, and indeed readily observable,6 _{that many people} run the same business in close proximity of each other. Mimicry and replication of existing ventures are thus the norm as explained by Berner, Gomez, & Knorringa (2012: 383):

The range of commodities on offer in the numerous shops is rather narrow, such as snacks, soft drinks, alcohol, cigarettes, toothpaste, detergents and other goods of daily need. Typically, every seventh building along a street houses a store like this, limiting the prospective customer base to some 10 families, who in addition patronize open markets and discounters for bulk purchases. What looks like a desperate situation in business terms is clearly quite attractive to slum dwellers. In Manila, we asked how

6 _{For instance, on a single 400m stretch of road, I counted 27 cell phone stands – largely selling the same}

phones – on market day (Thursday), and 19 the next day (Friday). Overall, there were around 250 businesses on this stretch of road.

they would use a US$1000 lottery win, and the majority responded that they would open up yet another neighbourhood store.

The replication underpinning these ventures makes them conceptually and practically distinct from the customary focus of entrepreneurship research (Bruton et al., 2013). In particular, they are not based on the detection of non-equilibrium imperfections in product or factor markets (e.g. discovery opportunities, e.g. Kirzner, 1979; Shane & Venkataraman, 2000), or on the novel and iterative use of an entrepreneur’s resources, abilities, and social contacts to develop a new market (e.g. creation opportunities, e.g. Alvarez & Barney, 2007; Sarasvathy, 2008). Nor are these ventures based on bringing together known demand and known supply in an unexploited market (e.g. recognition opportunities, e.g. Sarasvathy et al., 2010). Finally, this replication is not the same as the Western world’s franchising model (Winter & Szulanski, 2001). Instead, ventures in the developing world mimic what “can be observed by almost all actors in an economy” (Alvarez & Barney, 2014: 165), leading to outcomes criticized as generating minimal economic wealth, and being inefficient and non-scalable (Porta & Shleifer, 2008).

Numerous institutional factors underlie this vitally different nature of self- employment. As other sources treat these comprehensively, and there is widespread agreement, I touch on them only briefly. First, financial institutions are largely inaccessible, and even informal financing mechanisms have limited reach (Osei-Assibey, Bokpin, & Twerefou, 2012). Second, overall physical infrastructure is inadequate (Webb, Kistruck, Ireland, & Ketchen, Jr., 2010). Underdeveloped information and communications technology (ICT) inhibits knowledge acquisition, while problematic physical infrastructure increases transaction costs and hinders planning (Dearden, Shafik, & Tedd, 2011). Third, legal institutions are problematic, as a lack of property rights, contract law, and government support constrains economic activity to the informal economy (De Soto, 2000, 2002). This

further limits business dealings to trust-based networks (Zakaria, 1999). Finally, overall levels of human capital are low. There is limited access to schooling (UNESCO, 2015), which is often of low quality (UNESCO, 2004) or at least ill-prepares students for business (African Management Initiative, 2012: 22). Speaking of Ghana, Debrah (2007) emphasizes the broad mismatch between the skills needed in the workforce, and those taught in the education system.

Paradoxically, the very factors that inhibit self-employment are also the reasons why it is necessary. Because of these conditions, the numbers of formal small, medium, and large enterprises are limited, thus drastically constraining wage-employment (ILO, 2012). For instance, only 16% of employment in sub-Saharan Africa is wage-based, with this number projected to rise to only 20% by 2020 (Fox et al., 2013). Self-employment and working in someone else’s microenterprise are the only options. These second option is generally low-paying and low-prestige.

Furthermore, these factors also inhibit growth. The lack of institutional support is particularly noteworthy (Brown, 2015; Sutter, Webb, Kistruck, & Bailey, 2013). Indeed, fewer than 3% of MSEs in Africa and Latin America grow to four or more employees, and only 12% experience any growth (Nichter & Goldmark, 2009). However, numerous sources point to the fact that the self-employed consistently strive to grow their business activities, even if it does not mean adding more employees (Clark, 2010; Hansen, Little, & Milgram, 2014; Viswanathan, 2013).

2.1.2THEORY AND SELF-EMPLOYMENT IN THE DEVELOPING WORLD

Certainly, many studies explore the nature of self-employment in the developing world. However, most either explore how macro-institutional factors effect self- employment, or how context moderates known relationships that come from theory

generated in the Western world. Fitting into the first category are Thai and Turkina’s (2014) insightful study about the determinants of national rates of informal versus formal self- employment, as well as Kistruck, Webb, Sutter, and Ireland’s (2011) paper on the how the developing world’s institutional challenges impact the ability to use microfranchising as a poverty alleviation tool.

The second category is broader and includes work such as Honig’s (1998) exploration of social, human, and financial capitals’ impact on Jamaican microentrepreneurs’ performance. Similarly, Bhagavatula, Elfring, van Tilburg, and van de Bunt (2010), and Bradley, McMullen, Artz, and Simiyu (2012) study the role of social networks in exploiting innovative opportunities. For their part, Bhagavatula et al. confirm the notion that networks having many structural holes facilitate learning about novel opportunities. Bradley et al. find the opposite regarding strong ties, namely that they are detrimental to innovation, as they insulate entrepreneurs from novel information.

Bradley et al. (p. 697) further add, “[e]xposure to family business allows an individual to learn how to start and develop a business either through apprenticeship or vicariously. Many of the information and skills necessary for decision making are not codified but are learned tacitly [through this exposure].” In doing this, they echo Colombier and Masclet’s (2008) findings that French children with self-employed parents are more likely to become self-employed, especially in the same occupation as their parents.

To be clear, I do not suggest these approaches are problematic. On the contrary, such studies provide key insights into understanding self-employment in a different context. What I do suggest, is that given what we know of the developing world’s unique nature, there is ample room to supplement current knowledge by building theory from the developing context, rather than transferring theory to it. In particular, the prevalence of necessity-based self-employment, its continuously changing nature over the course of a

career, and its inadequately studied modes of growth, present an occasion for building contextually grounded theory. Further, I agree with the approach of De Castro, Khavul, & Bruton (2014) and Khavul et al. (2009), namely that an inductive qualitative analysis is needed to properly account for, and develop theory about, the developing context.

With this in mind, I asked two related research questions. First, how do the careers

of the developing world’s self-employed unfold over time? In asking this, I view venture

selection, growth, and exit decisions as temporally interconnected. Second, what guides

career decisions? In this, I expected limited human and financial capital, as well as

underdeveloped formal institutions to play a constraining role. Further, given the general nature of mutual-dependence in resource scarce environments, and insights from existing studies, I expect social capital to be heavily involved, due to there being nothing else to draw on (Narayan & Petesch, 2002).

Finally, in assessing the importance of these questions, it is noteworthy that 131 of the world’s 193 countries, having 80% of global population, are developing (World Bank, 2015). These countries also collectively see much higher rates of entrepreneurship than the developed world. The developing context is thus the globally dominant one, even more so in considering self-employment; the affluent context within which most theory was developed is in fact the anomaly.