Research & Projects

This paper presents a study of entrepreneurship as a socially devalued occupational choice for the growing population of university-educated young people in sub-Saharan Africa. We refer to this group as “choice entrepreneurs,” those with the ability to choose between starting their own venture and wage employment in an existing business. Grounded ethnographic interviews suggest that this understudied group are reticent to choose entrepreneurship because of three social barriers that devalue this occupational choice: status stigma arising from entrepreneurship’s association with less educated necessity entrepreneurs who are unable to secure wage employment, corruption stigma arising from expectations that owners rather than employees may be expected to deal with unethical bribe solicitations when they arise and parental expectations that their educated children will secure wage employment rather than start their own business. We test these barriers using a two-part field study (N=1,737) of a survey followed by a behavioral game experiment using students at elite universities in Ghana, Kenya, and South Africa. Results support our predictions that these social barriers inhibit entrepreneurship as an occupational choice for these educational elites which in turn impedes job creation in sub-Saharan Africa. A concluding discussion highlights how our study in sub-Saharan Africa relates to mainstream research on occupational choice and suggests future research on similar impediments to entrepreneurship in developed contexts. 

One of the most important decisions made by entrepreneurs is the type of business to start. Two sources of information for making this decision include an individual’s private information obtained through past experiences and social information which is obtained by observing those around you. It makes sense that entrepreneurs, especially microentrepreneurs, would look to those around them when deciding what type of business to start. Private information can be costly. It takes both time and resources to test out different businesses before settling on a successful one. As such, social information acts as a shortcut. If an entrepreneur sees others doing a certain activity and succeeding at it, then they might conclude that they can also successfully start a similar business. This is particularly true for microentrepreneurs. This type of behavior can have positive effects such as cost savings, but it can also lead to herding behavior which has been shown to have some negative effects. Using agent-based models, this study examines the effects of herding behavior on the optimal diversification of businesses in markets. Under what circumstances might herding behavior lead to efficient optimization of diversification and under what circumstances does it lead to the overcrowding of markets? The study examines the effects of variables such as skepticism in social learning, satisficing versus profit maximization behavior, and information sharing on the development of markets. It also examines how herding behavior might emerge across varying contexts, both across different countries and within countries.

The Theory of Planned Behavior (TPB) is frequently used as a framework for predicting entrepreneurial intention. Despite strong beliefs that subjective normative beliefs should affect the decision of whether or not to start a business, one of three antecedents found in the TPB framework, prior studies have typically found little to no effect. Utilizing a mixed-effect model to analyze multilevel data on 697,950 individuals from 84 different countries, this study examines under what conditions subjective normative beliefs have a significant effect on entrepreneurial intentions.