International entrepreneurship in Sub-Saharan Africa: interfirm coordination and local economy dynamics in the informal economy
Journal of Small Business and Enterprise Development
Article publication date: 2 May 2022
Issue publication date: 19 May 2023
The International Labor Organization (2020) estimates that eight out of ten enterprises (i.e. own-account workers and small economic units) are informal worldwide. However, less is known about the internationalization of informal enterprises. Here, it is argued that economic blocs, such as sub-Saharan Africa, with a greater proportion of informal enterprises, may provide broader societal legitimacy for them to operate internationally. Thus, informal firms would need to collaborate with other firms to overcome their resource constraints. Geographic colocation is one way to facilitate positive interfirm interactions that promote networking and subsequently cooperation. The purpose of this paper is, thus, to addresses two questions. Firstly, how and to what extent does interfirm marketing cooperation in geographic colocation influence the internationalization of micro and small informal manufacturing enterprises? Secondly, how do the perceived benefits of local external economies moderate this relationship?
The study draws evidence from 125 randomly selected informal enterprises located in two major clusters in Ghana, using a mixed-method approach.
The partial least square - structural equation modeling (PLS-SEM) analysis applied revealed two central points. Firstly, sharing marketing costs allows informal firms to upgrade their phases of export development directly. Secondly, the linkage of increasing sales activities and local external economies encourages the progress of the phases of export development and the scope of internationalization. Results confirm that the cluster benefits of interfirm cooperation and local external economies on the informal firm internationalization process complement each other in addition to their linear relationship.
The study contributes to understanding the nexus of the informal sector, geographic colocation and the entrepreneurial internationalization literature. The results should motivate researchers and policymakers to approach informal firm internationalization through collaborative business activities.
An earlier draft of this manuscript was presented at the “Conducting field research in methodologically challenging settings virtual workshop (2020)”, University of Surrey, UK. The authors remain grateful to the participants who witnessed their presentation and provided insightful comments. They wish to thank Agathe Déan, a statistical engineer at Maison des Sciences de l'Homme Lyon St-Etienne (USR 2005), CNRS, for her support. They would also like to acknowledge the comments of Richard Afriyie Owusu, Nathaniel Boso, Worlasi Korku Cudjoe and Valentina De Marchi, who read the drafts paper and provided helpful comments. Finally, they appreciate the support of the trade associations in the Suame Manufacturing Cluster and Sokoban Wood Village, Ghana.
Boafo, C., Catanzaro, A. and Dornberger, U. (2023), "International entrepreneurship in Sub-Saharan Africa: interfirm coordination and local economy dynamics in the informal economy", Journal of Small Business and Enterprise Development, Vol. 30 No. 3, pp. 587-620. https://doi.org/10.1108/JSBED-02-2021-0065
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