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Kinship ties and entrepreneurship in Western Africa

Author

Listed:
  • Michael Grimm
  • Flore Gubert

    (LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique)

  • Ousman Koriko
  • Jann Lay
  • Christophe Jalil Nordman

Abstract

Small entrepreneurs in poor countries achieve relatively high marginal returns to capital but show only low re-investment rates. The literature is rather inconclusive about the possible causes. We explore whether ‘forced redistribution', i.e. abusive demands by the kin, affects the allocation of capital and labor to the household firm. We use an original data-set covering household firms in seven economic centers in Western Africa. We find some evidence that family and kinship ties within the city rather enhance labor effort and the use of capital. However, the stronger the ties to the village of origin the lower input use which is supporting the ‘forced redistribution' hypothesis. Given that such redistribution is partly the consequence of a lack of formal insurance mechanisms, these results suggest that the provision of health insurance and other insurance devices may have positive indirect effects on private sector development.

Suggested Citation

  • Michael Grimm & Flore Gubert & Ousman Koriko & Jann Lay & Christophe Jalil Nordman, 2013. "Kinship ties and entrepreneurship in Western Africa," Post-Print hal-01521952, HAL.
    • Handle: RePEc:hal:journl:hal-01521952
    DOI: 10.1080/08276331.2013.771854
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    1. repec:dau:papers:123456789/12203 is not listed on IDEAS
    2. Castañeda Dower, Paul & Gerber, Theodore P. & Weber, Shlomo, 2022. "Firms, kinship networks, and economic growth in the Kyrgyz Republic," Journal of Comparative Economics, Elsevier, vol. 50(4), pages 997-1018.
    3. Pablo Ruiz-Palomino & Ricardo Martínez-Cañas, 2021. "From opportunity recognition to the start-up phase: the moderating role of family and friends-based entrepreneurial social networks," International Entrepreneurship and Management Journal, Springer, vol. 17(3), pages 1159-1182, September.
    4. Christophe Nordman & Julia Vaillant, 2013. "Inputs, Gender Roles or Sharing Norms? Assessing the Gender Performance Gap Among Informal Entrepreneurs in Madagascar," Working Papers DT/2013/15, DIAL (Développement, Institutions et Mondialisation).
    5. Boso, Nathaniel & Danso, Albert & Leonidou, Constantinos & Uddin, Moshfique & Adeola, Ogechi & Hultman, Magnus, 2017. "Does financial resource slack drive sustainability expenditure in developing economy small and medium-sized enterprises?," Journal of Business Research, Elsevier, vol. 80(C), pages 247-256.
    6. Bramoullé, Yann & Goyal, Sanjeev, 2016. "Favoritism," Journal of Development Economics, Elsevier, vol. 122(C), pages 16-27.
    7. Ingela Alger & Laura Juarez & Miriam Juarez-Torres & Josepa Miquel-Florensa, 2020. "Do Informal Transfers Induce Lower Efforts? Evidence from Lab-in-the-Field Experiments in Rural Mexico," Economic Development and Cultural Change, University of Chicago Press, vol. 69(1), pages 107-171.
    8. Nordman, Christophe J. & Pasquier-Doumer, Laure, 2015. "Transitions in a West African labour market: The role of family networks," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 54(C), pages 74-85.
    9. Jean-Philippe Berrou & Claire Gondard-Delcroix, 2018. "Dynamics of social networks of urban informal entrepreneurs in an African economy," Review of Social Economy, Taylor & Francis Journals, vol. 76(2), pages 167-197, April.
    10. Kosfeld, Michael & Vollan, Björn & Hadnes, Myriam & Nilgen, Marco, 2021. "The Fetters of the Sib - An Experimental Study in Burkina Faso," CEPR Discussion Papers 15876, C.E.P.R. Discussion Papers.
    11. Jean-Philippe Berrou & François Combarnous & Thomas Eekhout, 2017. "Les TIC : une réponse au défi du développement des micro et petites entreprises informelles en Afrique sub-saharienne ?," Working Papers hal-02148324, HAL.
    12. Walther, Olivier J. & Tenikue, Michel & Trémolières, Marie, 2019. "Economic performance, gender and social networks in West African food systems," World Development, Elsevier, vol. 124(C), pages 1-1.
    13. Jean-Philippe Berrou & François Combarnous, 2018. "Beyond Solidarity and Accumulation Networks in Urban Informal African Economies," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 30(4), pages 652-675, September.
    14. World Bank Group, 2015. "Tanzania Mainland Poverty Assessment," World Bank Publications - Reports 22021, The World Bank Group.
    15. Christophe Nordman & Laure Pasquier-Doumer, 2013. "Transitions in a West African Labour Market: The Role of Social Networks," Working Papers DT/2013/12, DIAL (Développement, Institutions et Mondialisation).
    16. Eliana Carranza & Aletheia Donald & Florian Grosset & Supreet Kaur, 2022. "The Social Tax: Redistributive Pressure and Labor Supply," NBER Working Papers 30438, National Bureau of Economic Research, Inc.
    17. Nguyen Thi Thu Phuong & Laure Pasquier-Doumer, 2018. "The role of Social Networks on Household Business Performance in Vietnam: A qualitative assessment," Working Papers DT/2018/13, DIAL (Développement, Institutions et Mondialisation).
    18. Quentin Chapus & Christophe Jalil Nordman, 2021. "You're all I need to get by? Analyzing young entrepreneurs’ networks in Morocco from a “quantified narratives” method," Post-Print hal-03191620, HAL.
    19. Getahun Fenta Kebede, 2020. "Network Locations or Embedded Resources? The Effects of Entrepreneurs’ Social Networks on Informal Enterprise Performance in Ethiopia," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 11(2), pages 630-659, June.
    20. Hundera, Mulu, 2019. "Role conflict, coping strategies and female entrepreneurial success in sub-Saharan Africa," Other publications TiSEM 3e263b0c-3bf3-474a-8a20-b, Tilburg University, School of Economics and Management.

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