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Do immigrant-owned businesses grow financially? An empirical study of African immigrant-owned businesses in the South Africa

Author

Listed:
  • Tengeh, RK
  • Ballard, HB
  • Slabbert, AS

Abstract

Given the fact that numerous challenges prohibit African immigrants from availing financial capital for the purpose of starting a business in South Africa, this paper sets out to investigate whether those that succeeded experienced a significant increment in their financial capital three or more years after start-up. This paper was designed within the quantitative and qualitative research paradigms. A triangulation of three methods was utilised to collect and analyze the data. From a quantitative perspective, the survey questionnaire was used. To complement the quantitative approach, personal interviews and focus groups were utilised as the methods within the qualitative approach paradigm. The primary data collection instrument used was the survey questionnaire which was complemented by personal interviews and focus group debates. The results revealed that the majority (71,1%) African immigrants had an estimated start-up financial in the range of R 1 000 and R 5 000, which tended to vary across the different ethnic groups studied. After three of more years, the estimated financial capital of the majority (39,3%) of the respondents moved to a new range of R 50 001 to R 100 000. Noting a disparity in capital growth exhibited by the different ethnic groups, it was found that all the Ethiopians who started with a capital within the range of R1 000-R5 000 moved into a new capital range (R50 001- R100 000) three or more years after business start-up. Although the absolute migration in terms of capital demonstrated by the Ethiopians is not into the highest capital range, they were nonetheless the only country that experienced this phenomenal growth. In terms of occupying the highest capital range (R250 001- R500 000), 11,1% of Cameroonians moved into that range followed by 7,4% of Somalians. Using an increase in financial capital (generated by ploughing back profits) as a proxy for growth, we were able to prove that these African immigrants owned business grow and the rate of growth varied across the different ethnic groups studied.

Suggested Citation

  • Tengeh, RK & Ballard, HB & Slabbert, AS, 2012. "Do immigrant-owned businesses grow financially? An empirical study of African immigrant-owned businesses in the South Africa," MPRA Paper 40610, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:40610
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    References listed on IDEAS

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    1. Merz, Joachim & Paic, Peter, 2006. "Start-up Success of Freelancers: New Microeconometric Evidence from the German Socio-Economic Panel," IZA Discussion Papers 2036, Institute of Labor Economics (IZA).
    2. repec:bla:obuest:v:63:y:2001:i:3:p:333-58 is not listed on IDEAS
    3. Sonja Markova & Tatjana Petkovska-Mircevska, 2009. "Financing Options for Entrepreneurial Ventures," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 11(26), pages 597-604, June.
    4. Alicia Robb & Robert Fairlie, 2009. "Determinants of business success: an examination of Asian-owned businesses in the USA," Journal of Population Economics, Springer;European Society for Population Economics, vol. 22(4), pages 827-858, October.
    5. Colombo, Massimo G. & Delmastro, Marco & Grilli, Luca, 2004. "Entrepreneurs' human capital and the start-up size of new technology-based firms," International Journal of Industrial Organization, Elsevier, vol. 22(8-9), pages 1183-1211, November.
    6. Tengeh, Robertson Khan & Ballard, Harry & Slabbert, Andre, 2011. "A framework for acquiring the resources vital for the start-up of a business in South Africa:an African Immigrant’s Perspective," MPRA Paper 34211, University Library of Munich, Germany.
    7. Joachim Merz & Peter Paic, 2006. "New microeconometric evidence from the German Socio-Economic Panel," FFB-Discussionpaper 56, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    8. Nonna Kushnirovich & Sibylle Heilbrunn, 2008. "Financial Funding Of Immigrant Businesses," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 13(02), pages 167-184.
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    10. C. Mirjam van Praag, 2003. "Business Survival and Success of Young Small Business Owners," Tinbergen Institute Discussion Papers 03-050/3, Tinbergen Institute.
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    Cited by:

    1. Mang’unyi Eric & Govender Krishna K., 2019. "Exploring the Development Strategies of Rural Small, Medium and Micro Enterprises," Journal of Management and Business Administration. Central Europe, Sciendo, vol. 27(4), pages 95-123, December.
    2. Bernard Lama Ngota & Sookdhev Rajkaran & Sanjay Balkaran & Eric E Mang’unyi, 2017. "Exploring the African Immigrant Entrepreneurship - Job Creation Nexus: A South African Case Study," International Review of Management and Marketing, Econjournals, vol. 7(3), pages 143-149.
    3. Fatoki Olawale, 2018. "Environmental Sustainability Practices of Immigrant-Owned Small and Medium Enterprises in South Africa," European Review of Applied Sociology, Sciendo, vol. 11(17), pages 27-43, December.
    4. Elijah Yendaw, 2022. "Driving factors and sources of capital for immigrant entrepreneurs in Ghana," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 12(1), pages 53-69, December.

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    More about this item

    Keywords

    Immigrant entrepreneurship; immigrant-owned businesses; financial capital; financial growth; African immigrants; business start-up resources and South Africa;
    All these keywords.

    JEL classification:

    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration
    • A19 - General Economics and Teaching - - General Economics - - - Other
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • A10 - General Economics and Teaching - - General Economics - - - General

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