Informal Family Business in Africa

Abstract

Employing grounded theory based on comparative case studies of informal microfinanced businesses in East Africa, we build a theoretical foundation for studying the establishment and evolution of family firms in emerging markets. We show that East African entrepreneurs not only use both strong family and strong community ties to establish and grow businesses, but they also use strong community ties to counterbalance the obligations that strong extended family ties create. In addition, we show that economic informality presents opportunities for some entrepreneurial businesses but not others to cycle rapidly from opportunity to opportunity as they maneuver toward higher value–creating ventures.