bringing africa in: promising directions for management research · 2016-04-13 · bringing africa...
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r Academy of Management Journal2016, Vol. 59, No. 2, 377–393.http://dx.doi.org/10.5465/amj.2016.4002
FROM THE EDITORS
BRINGING AFRICA IN: PROMISING DIRECTIONS FOR MANAGEMENTRESEARCH
Africa is beginning to capture the imagination ofentrepreneurs, corporate executives, and scholars asan emerging market of new growth opportunities.Over 15 years, the continent has experienced an av-erage growth rate of 5% (World Economic Forum,2015: v). Out of its 54 countries, 26 have achievedmiddle-income status, while the proportion of thoseliving in extreme poverty has fallen from 51% in2005 to 42% in 2014 (African Development Bank,2014a: 49). Although there are regional differences,the primary drivers of growth have been rapidlyemerging consumer markets, regional economic in-tegration, investment in infrastructure, technologi-cal leap-frogging, and the opening up of newmarkets,especially in the service sector.Africaneconomies alsoface commensurate challenges. Across the continent,economies remain largely agrarian, underpinned byresource-driven growth and still dominated by the in-formal sector. But what is it about the context thatmakes Africa such fertile territory for managementscholarship?
The greatest challenge to business in Africa stemsfrom the persistence of institutional voids, under-stood as the absence of market-supporting institu-tions, specialized intermediaries, contract-enforcingmechanisms, and efficient transportation and com-munication networks (Khanna & Palepu, 2013). Inorder to be successful, the private sector that gener-ates 90% of employment, two-thirds of investment,and 70% of economic output on the continent needsto cope with the challenges presented by undevel-oped market institutions and missing infrastructure(African Development Bank, 2013: 34). Neverthe-less, several new trends in recent years have beenchanging the ways business is done in Africa. Therapid expansion of information and communicationnetworks—specifically, mobile technology—has pro-vided tremendous new opportunities. By 2025, half ofthe people on the continent will have Internet access,connecting them to services in health care, education,finance, retail, and government (McKinsey GlobalInstitute, 2010). Instead of playing catch-up, entrepre-neurs in Africa are “hacking” existing infrastructuregaps through technology, connecting Africans to new
goods and services (e.g., mobile applications for ac-tivities ranging from private security in Ghana andmonitoring patients in Zimbabwe to cattle herdingin Kenya and connecting dirty laundry to itinerantwasherwomen in Uganda). Inventive approaches todelivering new sources of value creation go hand inhand with Africa’s surprising demographics, whereover half of the continent’s 1.1 billion population arecurrently under the age of 25. This unprecedentedpopulation growth will lead to a projected increase inthe workforce of nearly 450million between 2010 and2035. The diversity of the African context is capturedin Table 1, which outlines some of the human, eco-nomic, and institutional development indicators ina select set of countries.
Africa is the world’s second largest continent,covering over 30 million square kilometers, or thesize of China, India, the United States, and most ofEurope combined (“The true true size,” 2010). Inmany ways, the global economy is now looking toAfrica for the resources to sustain its development.The continent contains 30% of the world’s mineralsas well as the largest reserves of precious metals,with more than 40% of global reserves of gold, 60%of cobalt, and90%ofplatinum(KPMG,2013).Asoneof the world’s driest continents, 90% of its soils areunsuitable for agriculture and only 0.25% have lowto moderate potential for sustainable farming. Waterscarcity impacts the lives of more than 300 millionAfricans, of whom approximately 75% rely ongroundwater as their primary source of drinkingwater, which represents only 15% of the continent’srenewable water resources. Meanwhile, global warm-ing is aggravating the situation, presentingmultilateralorganizations, national governments, and private sec-tor participants with immense challenges for ensuringfood and water security.
Increasing investments from multinational firmsand growing entrepreneurial activity within the in-formal economy are occurringwithin heterogeneousand volatile sociopolitical contexts characterized byfragile governance. Africa has been gradually tran-sitioning towardmore stable institutional frameworks,with an increasing number of countries undergoing
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TABLE1
Human
,Eco
nom
ic,a
ndInstitution
alDev
elop
men
tinTen
Cou
ntriesfrom
Africa’sFiveReg
ions
Reg
ionan
dCou
ntry
Pop
ulation
aGDPper
capitaa
GDPper
capita
grow
th(%
)aOpen
ness
(trade)
aHuman
dev
.(ran
k)b
Eco
n.freed
om(ran
k)c
Political
righ
tsd
Civillibe
rtiesd
Corru
ption
(ran
k)e
North
Africa
Algeria
3914
193.4
1.8
62.5
0.73
6(83)
5.20
(151
)6
536
(100
)Moroc
co34
7490
.71
80.9
0.62
8(126
)6.46
(109
)5
439
(80)
WestA
frica
Ghan
a26
.840
81.7
1.6
88.5
0.57
9(140
)6.20
(128
)1
248
(61)
Nigeria
177.5
5911
.23.5
310.51
4(152
)6.44
(111
)4
527
(136
)Cen
tral
Africa
Cam
eroo
n22
.829
72.2
3.3
52.9
0.51
2(153
)6.34
(118
)6
627
(136
)Chad
13.6
2182
3.8
76.6
0.39
2(185
)5.13
(154
)7
622
(154
)EastA
frica
Ethiopia
9714
99.8
7.5
40.7
0.44
2(174
)5.68
(143
)6
633
(110
)Ken
ya44
.929
54.1
2.6
50.3
0.54
8(145
)7.16
(66)
44
25(145
)Sou
thernAfrica
Ango
la24
.272
27.4
0.6
101
0.53
2(149
)5.37
(148
)6
519
(161
)Sou
thAfrica
5413
046.2
20.1
64.4
0.66
6(116
)6.74
(96)
22
44(67)
Africaf
1154
.958
31.4
1.5
80.5
0.52
46.24
1–7
2–7
34
China
1364
.313
206.4
6,7
41.5
0.72
7(90)
6.44
(111
)7
636
(100
)German
y80
.945
802.1
1.3
84.7
0.91
6(6)
7.50
(29)
11
79(12)
United
States
318.9
5462
9.5
1.6
300.91
5(5)
7.73
(16)
11
74(17)
aW
orld
Ban
k(201
4).P
opulation
dataarein
million
s;GDPper
capitadataareba
sedon
purchasingpow
erparity;
GDPper
capitagrow
th(%
)5
GDPper
capitagrow
thrate;
open
ness(trade)
5thesu
mof
exports
andim
ports
ofproductsan
dservices
asash
areof
GDP.
bUnited
NationsHuman
Dev
elop
men
tProgram
(201
5)(201
4data).T
heHuman
Dev
elop
men
tIndex
isaco
mpositeindex
basedon
life
expec
tancy
,meanan
dex
pectedye
arsof
schoo
ling,an
dgrossnationalinco
meper
capitameasu
res.Here,“0”
representsthelowestand“1”
thehighestv
alueof
human
dev
elop
men
t.Ran
ksof
countriesin
thedatasetba
sed
ontheHuman
Dev
elop
men
tIndex
arein
paren
theses.
cGwartney
,Law
son,andHall(20
15)(20
13data).“0”
representsthelowestd
egreean
d“10
”thehighestd
egreeof
econ
omic
free
dom
.Theindex
cove
rsfive
area
s,en
compassing
size
ofgo
vernmen
t,lega
lsystem
andsecu
rity
ofproperty
righ
ts,sou
ndnessof
mon
ey,freed
omto
trad
einternationally,a
ndregu
lation
.Cou
ntryranks
arein
paren
theses.
dPuddington
,Rep
ucc
i,Dunham
,Nelson,andRoy
lance
(201
5)(201
4data).“1”
representsthegreatestdegreean
d“7”
representsthesm
allestdegreeof
free
dom
inpoliticalrigh
tsan
dcivilliberties.C
ountryranks
arein
paren
theses.
eTransp
aren
cyInternational
(201
5)(201
4va
lues).“0”
indicates
thehighestlev
elof
corruption
and“10
0”indicates
that
thepublic
sector
ofaco
untryisfree
from
corruption
.Cou
ntryranks
arein
paren
theses.
fAve
rages,ex
ceptp
opulation
(total)a
ndpolitical
righ
tsan
dcivilliberties
(ran
ge).
378 AprilAcademy of Management Journal
peaceful transfer of power through democratic elec-toral processes. In 2011, 18 countries were considereddemocracies, compared to four in 1991, and onlya handful did not havemulti-party systems or failed tohold regular elections (African Development Bank,2014b: 17). The shift toward democracy has been as-sociated with devolution of power from central gov-ernments to local authorities. Institutional reformsinfluenced by multilateral organizations and devel-opment banks have pushed most countries to buildrelatively robust legal and policy frameworks forbudgeting and public expenditure management, im-proving local market conditions.
As management scholarship expands its geo-graphical interest from Western and Eastern de-veloped economies to the rest of the world, it is timeto bring Africa in to our mainstream research andtheories. There is a paucity of studies that shed lighton underresearched phenomena that remain majorconcerns for business in Africa. Our objective is toinspire management scholars to adopt Africa asa research context, by demonstrating how theseunderstudied phenomena influence existing theo-ries aswell as hownewly emerging phenomena havethe potential to generate new theories in manage-ment research.
AFRICA AS A RESEARCH CONTEXT
Recent calls for research have highlighted a smallbut growing interest in management scholarshipabout Africa (e.g., George, 2015; Zoogah, 2008).While initiatives such as the nascent African Acad-emyofManagement are fostering anewgenerationofscholars, studies suggest that research within Africaremains limited, with approximately 2% of authorsbased there (Acquaah, Zoogah, & Kwesiga, 2013). Inorder to understand how management scholarshiphas benefitted from the continent as a research con-text, we give an overview of this emergent literature.Based on the title, abstract, or keywords containing“Africa” and “emerging economies” in the fields ofbusiness and economics, the Social Sciences Cita-tion Index contains 552 peer-reviewed articles onAfrica published between 1990 and 2015.1 Withinthis population, 154 articles relate specifically to“business management in Africa,” of which roughly30% (n 5 41) are featured in top management jour-nals ranked within the Academic Journal Guidepublished by the Chartered Association of BusinessSchools (2015). All 154 articles were downloaded,
read, and coded in order to standardize the informa-tion gathered and identify theoretical perspectives,management issues, methodologies, and key findingsfromthepapers, aswell as the sector andgeographicalcontext of each empirical study. In keeping with ourobjectives, management themes relevant to businessin Africa were analyzed to reveal broader patternsofdiscussion, aswell as toprovidehigh-level insights.A first observation is the notable growth of manage-ment scholarship on Africa over the last decade, aswell as the scant attention it has received previously(Figure 1).
Scholarly interest in Africa varies significantlyacross regions, with studies concentrated amongthose countries with the highest gross domesticproduct (GDP), hence the neglect of 38 Africancountries, particularly within Central Africa (n5 1).An overwhelming majority of research takes placewithin Southern Africa (Figure 2). South Africa (n559), in particular, has received the greatest attentionsince itwas invited to join theBRICSgroupof leadingemerging-market countries (Brazil, Russia, India,China, and South Africa) in 2001. This is also due toits regional economic importance, as suggested by70%of all top-rankedAfrican companies bycountry,sector, turnover, and profits originating from SouthAfrica (Horwitz, 2012). Countries that follow, interms of publications, include Ghana, Nigeria, andKenya, with less than 10 publications each.
Beyond these initial insights, our overview sug-gested three categories to describe the current chal-lenges addressed within management scholarshipon Africa: (1) navigating institutional voids, by de-signing around weak institutional infrastructureand overcoming human and financial resource con-straints to seek value creation opportunities, (2)building capabilities, by promoting managerial ca-pacity, positiveemployeebehavior, andethical values,and (3) enabling opportunities, by implementingnew market-entry strategies and adopting governancemodes and organizational designs for operatingwithininformalmarkets. Table 2 summarizes the key featuresof each of these three categories, and Figure 3 providesan overview of the different topics coveredwithin eachcategory and the relative attention they have received.
Navigating Institutional Voids
Of the three challenges identified, the most funda-mental is how organizations navigate “institutionalvoids,” which can be understood as the businesssupport infrastructure or “ecosystems” that determineresource availability and enable fair market access for1 As at January 16, 2016.
2016 379George, Corbishley, Khayesi, Haas, and Tihanyi
inclusive growth (George, McGahan, & Prabhu, 2012;Khanna & Palepu, 2013).
Institutional infrastructure. Institutional infra-structure and the associated organizational chal-lenges dominate much of the literature on Africa(Ofori-Dankwa & Julian, 2013). They are the back-drop to many studies on how firms adapt to surviveor, in some cases, fail to survive as a result of volatileand uncertain environments. For instance, in SouthAfrica, small- and medium-sized enterprises haveamong the highest failure rates in the world (70%),largely attributable to external factors (Olawale &Garwe, 2010). Due to differences in transaction costs
across Africa, companies operating on the continentface institutional costs that create differences in firmcompetitiveness and profitability (Ngobo & Fouda,2012). It is possible, however, for organizations todesign around costs incurred from the environment.Competitive value chain activities can be enactedthrough a combination of business entities, as hasbeen shown in the evolution of coordinated inputsupply and service delivery for the development ofdairy hubs in central Ethiopia (Jaleta, Gebremedhin,Tegegne, Jemaneh, Lemma, & Hoekstra, 2013).
Market liberalization has also played a major rolein increasing both the quality and intensity of value
FIGURE 1Number of Publications by Year (1990–2015)
0
5
10
15
20
25
30
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
FIGURE 2Number of Publications by Region
0 10 20 30 40 50 60 70 80
Regional
International
Central Africa
West Africa
Southern Africa
East Africa
North Africa
380 AprilAcademy of Management Journal
chain activities, as captured by studies of privatesector development across a number of industries inKenya during the post-liberalization period (Kijima,Yamano, & Baltenweck, 2010).WithinmanyAfricanmarkets, corruption is a source of uncertainty andtransaction costs to which multinational firms areparticularly vulnerable as “institution takers.” Inresponse, several multinationals have developedcapabilities that allow them to mitigate the effects ofcorruption in the host country (Luiz & Stewart,2014), either through positive political engagement(Luo & Junkunc, 2008) or by using institutional re-forms to their advantage, such as adopting corporatesocial responsibility (CSR) practices to improvestakeholder relationships (Arya & Zhang, 2009).
Further contributing to its institutional plurality,Africa is a continent of extreme ethnic and linguisticvariety, dating back to before colonial rule when itcomprised up to 10,000 different states and autono-mous groups with distinct languages and customs.Today, more than 25% of all languages are spokenonly in Africa, with over 2,000 recognized languagesspoken on the continent (Heine & Nurse, 2000). Thisextensive ethnic and linguistic diversity affects howindividuals, groups, and organizations relate to oneanother, and has a bearing on how business is doneas well as the costs of doing business in Africa for
global companies (Luiz, 2015; Michalopoulos &Papaioannou, 2015).
Cultural affinity helps to build social capital andcommunity networks, such as in the case of entre-preneurial orientation (Saeed et al., 2014). Con-versely, cultural distance may alienate organizationalparticipants from the context in which they are oper-ating. When organizational participants form net-works or engage in stakeholder relations acrossdiverse ethnic group and tribal identities, theiridentities and cultures often have an impact ontheir behaviors and the actions of their organiza-tions (Thomas, 2000). At amarket level, actors fromdiverse and competing social groups can come to-gether to identify as members of a common marketrather than as agents of discrete social groups. Ina study on investor recruitment into the NairobiSecurities Exchange, despite high levels of inter-ethnic distrust and weak formal institutions, dis-parate groups were able to integrate themselvesusing professional social identities to resolve con-flict (Yenkey, 2015).
The importance of local identities in Africa thatlead individuals to identify asmuchwith their ethnicgroups as with their nations also speaks to the con-temporary role of tribal leaders (chiefs), who influ-ence various aspects of the economy and polity in
TABLE 2Management Research in Africa
Navigating institutional voids Developing capabilities Enabling opportunities
Subthemes Weak institutional infrastructure,financial and human capitalconstraints, inclusive market access
Nurturing responsible managementculture, employee commitment, andethical business values
Market entrymodes bymultinationals,organizational forms, scale andscope in informal economies
Managementissues
Small- and medium-sized enterprisesupport structures, regulatorypressures, rural marketparticipation, property rights,gender and race equality
Managerial competences, employeecommitment, corporate socialresponsibility, governance, culturalrelativity
Multinational companies’ base-of-the-pyramid strategies, strategicalliances, corporate communityinvolvement, informalentrepreneurship
Focal theories Institutional theory, businessecosystems, resource-based view,resource constraints
Organizational citizenship, agencytheory, trust, practice diffusion
Transaction costs, social andorganizational networks, innovationdiffusion
Levels ofanalysis
System, industry, firm (macro) Firm, individual (micro) Firm, individual (meso)
Coredisciplines
Development, industrial economics Human resource management,organizational behavior
Strategy, entrepreneurship, marketing
Number ofpapers
55 49 50
Empiricalcontexts
Financial services, mining, energy,food
Information and communicationstechnology, construction, healthcare, media, tourism
Agriculture, financial services,insurance
Representativeworks
Ofori-Dankwa and Julian (2013);Yenkey (2015)
Horwitz (2012); Saeed, Yousafzai, andEngelen (2014); Urban and Streak(2013)
George, Kotha, Parikh, Alnuaimi, andBahaj (2015); Khavul, Bruton, andWood (2009); Kistruck and Beamish(2010)
2016 381George, Corbishley, Khayesi, Haas, and Tihanyi
Africa. These factors suggest the need for furtherstudy on how tribal institutions work side by sidewith the institutions of themodern state. To establishlegitimacy, multinational firms have been shown tobenefit by adapting to local languages, adopting re-gional “lingua francas,” such as Swahili, to enhancetheir ties with local stakeholders and work effec-tively within “communities of place” (e.g., Luiz,2015; Mufwene, 2002). Within industries requiringa high degree of community embeddedness, such asmining, this involves communicating and workingwith people who “steward” the land their ancestorshave inhabited for centuries (Selmier, Newenham-Kahindi, & Oh, 2015). Multinational firms may alsoneed to modify their organizational structures inorder to reach remote communities with their localsubsidiaries. These contingencies have importantimplications for intra-organizational control, au-thority, and work integration.
Resource constraints.Resource constraints posedby gaps in basic infrastructure such as transportationand access to human and financial capital posesubstantial barriers to business in Africa. They caninhibit exportmarkets and limit internationalization(Debrah & Mmieh, 2009), as well as discourage themarket entry of multinational firms. Additionally,
there are severe constraints on domestic growthposed by a lack of human capital as well as financialcapital owing to the shortages in an educated work-force and the limited availability of credit and pri-vate equity investment, both for large firms (Fisman,2001) and microenterprises (Umoh, 2006).
The relationship between institutional environ-ments and resource munificence in the Africancontext—particularly the almost equal importanceassigned to formal resources (human capital, accessto finance, technology, and managerial capabilities)and informal resources (local knowledge, traditionaltechnologies, and networks of trust)—has been welldocumented (Zoogah, Peng, & Woldu, 2015). Wherethere is a shortfall in formal institutions, the capa-bility to mobilize informal resources becomes evenmore important for organizational effectiveness andsurvival. For example, entrepreneurs leveraging lo-cal knowledge can build successful, scalable busi-nesses and even gain competitive advantage overforeign rivals (Dia, 1996), while multinationals areable to build sustainable relationships with localstakeholders by means of employing “local re-sources,” such as regional languages and leadershippractices (Luiz, 2015). An interregional surveyamong themanagers of multinational subsidiaries in
FIGURE 3Overview of Articles
Inclusive growth
Managerial capacity25
20
15
10
5
0
Employee behaviors
Ethics & valuesResource constraints
Institutional infrastucture
Governance choice Informal enterprise
Market entry
DEVELOPINGCAPABILITIES
INSTITUTIONALVOIDS
ENABLINGOPPORTUNITIES
382 AprilAcademy of Management Journal
South Africa and Egypt has also considered howresource-seeking strategies affect governance de-cisions relating to market entry modes, which varyacross institutional contexts. The study found that,in weaker institutional frameworks, joint ventureshelp foreign firms to acquire scarce resources thatwould otherwise be inaccessible to them, while, instrong institutional frameworks, acquisitions playa more important role in accessing resources andembedding organizations within local contexts(Meyer, Estrin, Bhaumik, & Peng, 2009).
Insights into managerial and corporate practicesamong domestic African firms offer alternative ex-planations to hypotheses developed within resource-abundant contexts such as Europe andNorthAmerica.For instance,whereas existing theory related to CSRpractices suggests these “discretionary” activitiesare a function of slack resources (Surroca, Tribo, &Waddock, 2010; Waddock & Graves, 1997), inresource-constrained settings such asWesternAfrica,institutional differences elicit alternative responses.For example, as a function of limited pressures fromlocal governments to make such investments, onestudy of 41 large firms across 12 sectors in Ghanafound a negative relationship between financial re-source availability and CSR spending among firms(Julian & Ofori-Dankwa, 2013).
In Africa, entrepreneurial small- and medium-sized firms are frequently unable to access financialresources due to risk aversion by domestic bankinginstitutions. As a result, entrepreneurs often rely onresources present within their family or communitycontext. This sometimes creates strong social obli-gations or demands that would not otherwise bepresent. Findings from a survey of 242 entrepre-neurial firms in Uganda on the importance of socialcapital within informal economic sectors suggestthat entrepreneurs are likely to incur greater costs ofaccumulation when they rely on kinship networks,contrary to network theories that emphasize the ef-ficiency of tie strength at the individual level due tothe ease ofmonitoring and sanctioning of participantbehavior (Khayesi, George, & Antonakis, 2014). Alsohighlighting the implications of family support,women serving as heads of households were morelikely than men to consider entrepreneurship whenthey suffered wealth loss from natural disasters(George, Kotha, et al., 2015).
Inclusive growth. Inclusive growth requiresbridging inequalities of market access, which re-mains a significant challenge for African businesses.For instance, assisting rural dwellers to effectivelyexploit resources in remote areas requires their
access to a range of enabling services and conditions(Temu, 1999). Gradual extensions of such servicesand domestic market transformations are havingobservable effects on rural and semi-urban areas(Reardon, Stamoulis, & Pingali, 2007), while localempowerment interventions such as cereal bankingare helping communities to improve accessibility topremium markets (Mwaura, Tungani, Sikuku, &Woomer, 2012). However, prevailing social norms,such as gender discrimination, as well as the lack ofenforcement of property rights laws continue toprevent inclusivemarket access to financial services.Development banks have aimed to overcome thisdivide. But, while some studies argue that micro-credit schemes targeted at women have successfullyovercome gender inequalities (Johnson, 2004),others find that the disproportionate emphasis onproviding microfinance to poor women at the ex-clusion of poor men constitutes a shortsighted pov-erty alleviation strategy that can actually oppresswomen rather than empower them, thereby con-straining household incomes (Barsoum, 2006).There are also mixed results from policy initiativesdirected at female workplace equality, such as theSouth African Employment Equity Act of 1998; thisact affirms women’s right to equal employment op-portunities, and yet the representation of South Af-ricanwomenwithinmanagement positionsdeclinedbetween 2008 and 2012 (BWA, 2012).
Developing Capabilities, Embedding Values
African firms are constrained not only by financialfactors but also by human capital, owing to lack ofeducation and inadequate technical skills. A sub-stantial literature is devoted to the importance ofmanagement and employee development and in-vestigating how human resource management prac-tices differ in African contexts.
Managerial capacity. Managerial capacitythrough training is essential for the achievement oforganizational goals and human capital develop-ment. Even basic-level management training hasbeen shown to improve business practices and per-formance in the African context (Mano, Iddrisu,Yoshino, & Sonobe, 2012). One stream of literatureconsiders management practices particularly prev-alent in Africa; for example, some firms in SouthAfrica take advantage of thebenefits of barter trading,minimizing potential hazards through dedicatedpersonnel responsible for ensuring accountabilityand good practice (Oliver & Mpinganjira, 2011).Another stream focuses on more widely studied
2016 383George, Corbishley, Khayesi, Haas, and Tihanyi
practices targeted at building entrepreneurial ca-pacity and innovation within management teams(Urban & Streak, 2013; Van Wyk & Adonisi, 2011)and new product development models adopted bymanagers (Yan & Makinde, 2011).
Social capital and the extent to which manage-rial networking relationships with external entitiessuch as government bureaucrats and communityleaders matter to organizational performance havebeen given significant attention in African scholar-ship (Acquaah & Eshun, 2010). Diffusion of man-agement practices across cultures is also a dominantsubtheme. For instance, studies suggest mixed atti-tudes among domesticmanagers toward prospectiveforeign joint ventures (Akande & Banai, 2009) andhighlight how Western-based human resourcemanagement can be modified to embrace culturaldiversity in an African context (Sartorius, Merino, &Carmichael, 2011).
Employee behaviors. Employee behaviors andwork relations in Africa have so far been relativelyunderstudied (Wood, Dibben, Stride, & Webster,2011). This may reflect the lack of training anddevelopment or the relative scarcity of high-qualitylabor present within the context itself. For in-stance, a study on the construction industry inTanzania revealed no systematic, industry-widetraining program for professionals in the industry(Debrah & Ofori, 2006). Nonetheless, the fewstudies that do exist suggest a number of factorsthat are important in Africa. Employee relations inthe informal sector provide insights into the dy-namics of the local market liberalization and tradeunion renewal, with findings from Mozambiqueshowing progress in employment rights and greateremployee engagement despite the declining im-portance of unions (Dibben, 2010). The relation-ship between leadership and morale has been alsostudied in the African context, and communica-tion, fostering trust, and team building are shownto be important for employee motivation whenenduring pressures for organizational improve-ment (Ngambi, 2011). According to some empiricalevidence, employees in Africa are as concernedabout fulfilling their training and education needsand participating in workplace decisions on is-sues that affect them as their Western counter-parts (Ferreira & van Antwerpen, 2011; Ukandu &Ukpere, 2011).
Embedding ethics and values. Research on CSRsuggests that corporations often adopt socially re-sponsible policies in order to secure legitimacyor differentiate themselves from their competitors
(Arya & Zhang, 2009). Yet, in contexts where cor-ruption is considered widespread and deeply rootedas a social and cultural phenomenon that hinderspublic welfare and social development, how is legit-imacy established? An organizational view of firm-level corruption in emerging economies is a frontierissue in the realm of international management re-search. Studies show that questionable firm practicessuch as graft are influenced by the firm’s foundingconditions, legitimization in the market, and capa-bilities (Luo &Han, 2009). Other studies highlight thecritical role that both national and the organizationalcontexts play in shaping ethical climates in compa-nies (Parboteeah, Seriki, & Hoegl, 2014).
At the individual level, studies focus on percep-tions of improper business practices across a num-ber of countries, showing different tolerances todamage resulting from unethical behavior (Ahmed,Chung, & Eichenseher, 2003) and emphasizing therole of human resource management in “carryingthe mantle” of ethical stewardship (Erasmus &Wordsworth, 2006). Other studies consider theembeddedness of CSR practices and the extent towhich home countries influence how multinationalsadapt tooperatewithincorruptmarkets suchas theoiland gas industry in Nigeria (Amaeshi & Amao, 2009).The link between organizational misconduct (e.g.,corruption and fraud) and how it affects participa-tion at the market level is also an expanding researchfield with potential contributions for literature onorganizational stigma, status, and social evalua-tions (Yenkey, 2016).
Enabling Opportunities of Scale and Scope
With gradual institutional development inemerging markets, theories of economies of scalehave underpinned multinational and corporatestrategies for targeting mass production to harnessthe potential of the so-called “bottom billion”(Prahalad, 2004). However, Africa—and its informaleconomy in particular—poses challenges both tomultinationals and to domestic businesses lookingto deliver goods and services. The dynamics of en-trepreneurship underpinning small business devel-opment in informal economies and rural areas arebased on different forms of social capital, and oftenrequire new organizational forms or alternativegovernance arrangements to ensure access. Marketentry strategies and the political and economiccomplexities of international joint ventures, publicprivate partnerships, or acquisitions by foreign firmsare also dominant subthemes within literature on
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Africa. Finally, understanding the consumption andlives of the poor—particularly, adoption behaviorsamong consumers with diverse preferences andheterogeneous cultural attitudes—represents anadditional concern for business and managementscholars alike.
Entrepreneurship in the informal economy. En-trepreneurship in the informal economy is widelyconsidered an important locus of opportunitywithinAfrica (Peng, Wang, & Jiang, 2008; Webb, Bruton,Tihanyi, & Ireland, 2013). Yet, the idiosyncraticpractices and organizational challenges involved incompeting, operating, and surviving in suchmarketshave been relatively understudied. Scholarship onnew organizational forms, characterized by hybridgovernance and community-based interventionssuchas cooperatives, has openedupnewavenues forresearch on organization design in low-cost settings.One study on a new, community-based organiza-tional form examined a coffee market cooperative inKenya (Temu, 1999). This study attributes the suc-cess of the cooperative to its grassroots origins,a strong sense of ownership by the “client-owner,”and its ability to strategically tap the coffee economyby fitting well within the socioeconomic milieu ofthe local people, making use of principles found ininformal financial practices (Temu, 1999).
Some studies seek to understand the key successfactors for rural entrepreneurship at an individuallevel. For instance, entrepreneurial self-efficacy isan importantmotivational construct that influencesindividual choice, goals, and emotional reactions,as well as the persistence of rural entrepreneurs inAfrica (Urban, 2012). Other studies emphasize so-cial structure and the importance of social capital,family ties, and communal orientation as a drivingforce for entrepreneurship (George, Kotha, et al.,2015; Khayesi et al., 2014). Similar studies alsoshow the presence of social and cultural barriersthat negatively influence entrepreneurship; for in-stance, when family networks are strong, they cansupport the newly created enterprisewith funds andlabor, but also sap the profits of an established en-terprise with requests for financial aid and jobs forrelatives (Khavul et al., 2009; Khayesi & George,2011).
A study on social intrapreneurship within Africanand Latin America found that cognitive, network,and cultural embeddedness plays a constraining roleon organizational choices, and that this is particu-larly pronounced in organizations that previouslyoperated as non-profit organizations (Kistruck &Beamish, 2010). Results from an empirical study of
384 social enterprises from 19 sub-Saharan Africancountries suggest that ethnic group identity, as wellas acute poverty, influence both self-perception andactivity choices of individuals, pointing to an addi-tional influence on entrepreneurial action not cap-tured in previous research (Rivera-Santos, Holt,Littlewood, & Kolk, 2015). Yet, despite increasingresearch on social capital, family firms, and entre-preneurship research in general, there is still con-siderable scope for Africa to receive greater attentionas a context for exploring these dynamics (Bruton,Ahlstrom, & Obloj, 2008; Khavul et al., 2009).
Political, economic, and governance complex-ities of market entry. Political, economic, and gov-ernance complexities of market entry have beenexplored most recently in the context of businesscourtship between China and sub-Saharan Africa.Examples of Chinese multinational subsidiariessubsequently feature heavily in African manage-ment research (Cooke, 2014). This reflects the in-creasing foreign direct investment from China,whichwas recently recorded at a stock of $26 billion,making China Africa’s largest trading partner (UnitedNations Conferences on Trade and Development,2015). By the end of 2013, there were nearly 3,000Chinese overseas enterprises recorded in45 countriesin Africa, making it the second largest destination forChinese enterprises after Asia (National Bureau ofStatistics of China, 2013). Despite the growth ofoutward foreign direct investment by firms fromemerging economies such as China, theoretical ex-planations of these decisions and their implicationsremain limited.
Strategic partnerships can yield benefits withinAfrica, as suggested by studies on joint ventures. Astudy of 210 firms in Morocco showed that localmanagement, majority ownership by foreign part-ners, and mutual efforts to adapt to the managementstyle of each party were key success factors behindhigh-performing joint ventures (Argente-Linares,Victoria Lopez-Perez, & Rodrıguez-Ariza, 2013).Acquisitions can also represent a stepping stone formultinationals looking to access complementary re-sources, thus permitting firms to reshape their scopeto accelerate growth. Often these “brownfield ac-quisitions” require a high degree of organizationalrestructuring at the corporate level (Barkema &Schijven, 2008), and are most suitable for projectsthat are integrated with the parent’s global opera-tions, where local firms areweak and institutions arestrong. Different market entry modes may also allowfirms to overcome different kinds of market in-efficiencies related to resource and institutional
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contexts. In weaker institutional contexts, jointventures are used to access many resources, but, instronger institutional contexts, they become lessimportant as “greenfield” acquisitions can presentbetter alternatives for accessing intangible and or-ganizationally embedded resources (Meyer et al.,2009).
In sum, an overview of all articles published onAfrica between 1990 and 2015 presents multiplethemes worthy of further analysis, as well as pro-viding insights into the frontline challenges faced byindividuals and organizations. Questions about or-ganizational responses toweak institutions, resourceconstraints, and unequal market access; about man-agerial capacity building, employee behaviors acrosscontexts, and reconciling corruption with ethicalbusiness practices; and, finally, about market entry,governance choices, andmarket building in informaleconomies all present fruitful avenues for furtherscholarly inquiry.
FUTURE RESEARCH DIRECTIONS
By reviewing extant literature, we see how recentresearch on Africa is beginning to bring new per-spectives to management theories. There are twopromising directions to pursue from here. First,scholars can examine how phenomena of relevanceto management in Africa extend or modify ourexisting management theories. Second, scholars canexplore how such phenomena enable us to generatenew theory and frameworks that can shed new lighton pressing problems that are prevalent in, if notspecific to, Africa. Below, we highlight a few prom-ising directions for research.
Leadership and Governance
The Mo Ibrahim Foundation, established in 2006to propagate the critical importance of leadershipand governance in Africa, suggests that governanceprogress is in fact stalling. The foundation usesa proprietary index that combines 93 indicators from33 independent African and global data institutionsto provide an annual assessment of the quality ofgovernance in African countries. It estimates theconditions of four areas of governance, encompass-ing safety and the rule of law, participation and hu-man rights, sustainable economic opportunity, andhuman development. Covering the period from 2000to 2014 for 54 African countries, the index shows 21countries recorded weakening overall governance(Mo Ibrahim Foundation, 2015). This trend has
multiple implications for management scholarship.In terms of leadership research, previous studies aswell as anecdotal evidence suggest that ethicalmanagers of both domestic and multinational orga-nizations can serve as role models in the local soci-eties (Ngambi, 2011). Leadership in the Africancontext is complicated not only by lack of under-standing of cultural differences but also by short-term motivations for investment that often includeexploitation of valuable resources and mistreat-ment of local workforces. Research on leadershipand governance could identify practices that alloworganizations to be successful in the local environ-ment in the long term. A particularly interestingarea for research is the broader implications of lead-ership practices in the African context. As multi-national firms increasingly integrate their localoperations into their global networks, the ways theylead in Africa may have consequences for their re-lationships with their worldwide customer base, in-vestors, and home communities.
Alongwith recent calls for research on governance(Tihanyi, Graffin, & George, 2014), scholars can in-vestigate the role of organizations in improving thegovernance of local societies as well as establishingeffective internal governance models that meet orexceed local needs. The struggle or, often, the in-ability of many African states to deliver political,economic, and social goods to their citizens providesopportunities for firms and their managers to im-prove social welfare. For instance, research could gobeyond standard practices of CSR known from pre-vious studies in the Western context by exploringhow some organizations participate in human de-velopment, fight against gender discrimination,support welfare services, and contribute to the im-provement of education. More research is needed onprocesses andmechanisms to strengthen the internalgovernance of organizations, including both multi-nationals and domestic firms, in the face of localstates’ failures to support the rule of law, account-ability, and human development. These shortcom-ings in state governance highlight the need foreffective organizational governance that includesidentifying and establishing evidence-based systemsfor selecting, training, developing, and supportingorganizational members in both the corporate andnon-profit sectors, to ensure they have the skillsneeded to operate in such environments as well as toinstill the values that can help them to navigate thoseenvironments both ethically and effectively.
Conflict is an added threat: 20 of the world’s 36fragile states are in Africa (African Development
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Bank, n.d.: 1). Ongoing conflicts in these statespose major challenges to both multinational anddomestic firms, ranging from managing supplychains and distribution channels in unsafe and tur-bulent regions to making difficult decisions aboutwhen to stay the course in a conflict-riven regionversus withdrawing and cutting investment losses.The importance of embeddedness in local networksthat can both offer warnings of security risks andprovide protection from them is another salientconsideration.
Managing Human and Natural Resources
Natural resource management is a longstandingarea of concern for Africa, and its importance iscontinuing to grow. It is also an area inwhich there isconsiderable scope for management scholarship toboth test existing theories and generate new ones.The challenges of managing natural resources holdparticular importance in countrieswith complicatedinstitutional legacies and poor governance, whereconcerns such as the social embeddedness of naturalresources and their importance for the social fabric ofpredominately rural communities are acute (George,Schillebeeckx, & Liak, 2015). Scholars are in-creasingly recognizing the need to study challengessuch as stakeholder management in key industriesthat rely on natural resources, such as mining(Henisz, Dorobantu, & Nartey, 2013), as well as theimportance of regulatory standard setting and orga-nizational adaptation responses (Gisore & Matina,2015). Still, there ismorework to be done to examinethe impact of corporate natural resource manage-ment practices on local ecosystems (e.g., water andair quality, natural habitats) as well as on localcommunities (e.g., population resettlement, HIV/AIDS among mine workers).
A related set of challenges for many Africancountries results from the explosion in populationgrowth and the accompanying acceleration in ur-banization. These trends create enormous opportu-nities for business, both domestic and foreign, asconsumer markets grow and concentrate and thedemand for goods and services increases. Manage-ment research, particularly in the areas of entrepre-neurship and human resource management, couldinvestigate how firms can efficiently serve this emer-gent customer base and develop effective employee-training practices, and how governments can createincentives for small- and medium-sized enterprisesto provide employment opportunities to a newlyskilled workforce.
Many African countries have seen a rush of in-vestment from China, particularly in much-neededurban infrastructure. These investments provide theplatform for others to build businesses, but also raisequestions about global strategic dependencies thathave implications for governance and sustainability.Some of the many research opportunities these in-vestments by Chinese and other firms can provideinclude studies on local employment and subsidiarymanagement practices, cultural differences, and in-vestment motivations could make valuable contribu-tions. Since many Chinese firms are state-ownedenterprises, it would be interesting to contrast em-ployment and production practices between thesefirms’ domestic operations and African subsidiaries.Another interesting aspect of global strategic de-pendencies is the effects of changes in home in-stitutions and market conditions on the ways foreignfirms are involved in local business transactions andinfrastructure development. For example, shifts ininstitutional logics in the home country (e.g., centralplanning, market system, or state capitalism) may af-fect the nature of investment, subsidiary ownership,and corporate goals in Africa. While such shifts mayinfluence investment behavior in a wider range ofinternational settings, we believe the African contextprovides a valuable opportunity to examine their ef-fects in an environment of great institutional diversityand rapid infrastructure investment.
Organizational and Social Resilience
The same population growth and urbanizationtrends also create massive turbulence and pressureson societies and economies, as they put increasingpressures on countries’ natural resources as well ason the infrastructure needed to support them.Addedto this are the challenges arising from climate changeand environmental disasters (Howard-Grenville,Buckle, Hoskins, & George, 2014). These raise theneed for more research on how to strengthen thecapacities of countries, and organizations withinthem, to combat their effects, including how tomanage emergency relief efforts (e.g., Majchrzak,Jarvenpaa, & Hollingshead, 2007), increase droughtresilience, run effective food security and nutritionprograms, and help at-risk populations to buildsustainable livelihoods.
Beyond the interests of particular firms, there arecritically important management questions arisingfromthechallengesofbuilding resilience invulnerablecommunities (van der Vegt, Essens, Wahlstrom, &George, 2015), including increasing food and nutrition
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security, providing health care to remote and un-derserved communities, strengthening education atall levels and ensuring its inclusiveness, andmyriadother socioeconomic challenges. Management schol-arship has the potential to learn from and the abilityto meaningfully contribute to understanding of theimplications of these vast needs for organizationdesign, organizational agility, and interorganiza-tional collaboration.
Another area inwhich greatermanagement insightis needed is the realmofmanagingdisease, includingepidemics such as the Ebola outbreak as well aspersistent diseases like HIV/AIDS. Many organiza-tionswith varying roles and capabilities are involvedin working together to support those at risk and al-leviate the socioeconomic impact of such diseases.How they coordinate and manage their work is anarea of critical importance for the lives of millions ofpeople in Africa. Public–private partnerships ofteninteract with international aid agencies and localNGOs, and local networks can be critical forspreading information and supporting interventionprograms, butmore research is needed tounderstandthe organizational arrangements, routines, and re-sources that are most appropriate and effective inparticular situations.
Institutional Capacity, Labor Mobility, andEntrepreneurship
Scholars in fields such as anthropology and de-velopment economics have often regarded Africa’scontemporary difficulties as a result of colonial leg-acies, when all but two countries in Africa werecolonized by foreign powers during the “scramblefor Africa” (Collier, 2008; Collier & Gunning, 1999).The enduring effects of institutional legacieson national and community infrastructure is anunderexplored area with great potential in a con-text such as Africa (Greve & Rao, 2014). Theselegacies include the ability to educate, employ,and service a rapidly growing labor force that isincreasingly moving away from traditional ruralcommunities, subsistence agriculture, and tribalsocial structures, and creating pressure for jobs aswell as unprecedented demand for better trans-portation infrastructure, housing, health care, andbasic utilities, including power, water, sanitation,and other services.
The 450 million new workers who will join theAfrican working population between 2010 and 2035will form a vast labor pool, but will also pose enor-mous challenges for job creation. One response
to these challenges is to encourage and supportlocal entrepreneurship, an area management re-search has already started to explore. In part, this en-trepreneurship is andwill continue to be rooted in thegrowing informal sectors of many African countries,where challenges include access to lines of credit formicro-, small-, and medium-sized enterprises. Bank-ing penetration still remains as low as 36% in some ofthe larger African economies (KPMG, 2015). The factthat commercial banks’ reach—in terms of branchesandATMsas aproportionof thepopulation—remainswell below global averages contributes to a wide gapin lending.
To bridge this gap, banks have started to explorealternative operating models, including mobilebanking, mobile branches, and using third-partyagents. Indeed, information and communicationtechnology is one of Africa’s biggest success stories,as “mobile money” allows customers to leapfroglandlines for mobile networks, enabling the emer-gence of many otherwise unviable small-scale en-trepreneurial businesses. There is great potential formanagement scholars to examine these new busi-ness models and shed light on their implications forestablished models that are being leap-frogged bythese innovative approaches, as well as for thecommunities in which they are taking root. In themore formal sectors, the availability of venture cap-ital funding and, perhaps more importantly, entre-preneurial experience and expertise are currentconstraints on growth in even the most advancedAfrican economies that must be overcome. Researchon how potential funders can identify, evaluate, andnurture opportunities that may be far from homeand lack the supportive ecosystem of Silicon Val-ley or other innovation hubs would be valuable inthis effort.
Beyond entrepreneurship, most companies of anysubstantial size operating in Africa experiencea dearth of highly trained workers as a major barrierto growth. This labor force weakness stems fromoften-inadequate education and training systems allthe way through high school and universities. Inmany cases, what seems to be needed is more tech-nical training, but, in the absence of greater or moreeffective government investments in building theskills of their labor forces, the burden is on compa-nies to train workers in-house. However, the risk oftrainingworkers at considerable expense just so theycan leave for a higher-paid job at a competitor dis-courages such investment. Another aspect of laborforce management is equally challenging: manymultinationals bring in expatriates from Europe,
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Asia, the United States, or elsewhere to help buildlocal knowledge and train local managers, yet theseexpatriates often struggle to succeed in their un-familiar environments or fail to transfer their exper-tise to local managers. For management scholars,there is scope to examine and better understand howcompanies operating in theAfrican context canmosteffectively use expatriates to bolster and build localmanagerial capacity, as well as how they can betteridentify promising hires and train, support, and re-tain their workers over time, especially the mostskilled ones. And, lastly, twomore (often connected)labor-related trends of concern for many Africancountries are relations with unions and the in-creasing flows of labor migrants both within andacross borders. In South Africa, for example, laborunrest in the mining industry is a major threat toprofitability; one important source of this unrest isrivalry between ethnic groups. There is scope herefor research on the effects of strong versus poor laborrelations, as well as the conditions that strengthenas against weaken those relations in the Africancontext.
Managing across Cultures and Countries
While there are considerable needs for researchwithin themanycountries that constitute theAfricancontinent, there are also intriguing managerialchallenges that span countries and regions. Africantribes and ethnicities differ, with a wide variety ofsubcultures, rites, and norms. Organizations work-ing across national boundaries also cross culturaland ethnic boundaries. These differences raise in-teresting questions of managing and motivatingemployees to perform, as well as challenge the as-sumptions and boundary conditions that underpinconstructs such as trust, justice, and identity. Mul-tinational firms entering new markets face work-place practices, regulations, and processes that varysignificantly across countries, and how organiza-tions adapt to these variations, accommodating andcustomizing their practices to local contexts, caninspire important questions for both research andpractice.
In many African countries that are held back byrelatively smallmarket sizes, domestic producers areunable to achieve economies of scale. As a result,African and multinational firms seek to benefitfrom regional economic integration, which requiresbuilding economies of scale, increasing competi-tion, and fostering economic diversification (UnitedNations Conferences on Trade and Development,
2015). In addition to addressing the opportunitiesand challenges posed by cross-border flows of bothskilled and unskilled labor, more research is neededto understand the benefits and risks of operatingvalue chains that cross national borders and attemptto realize thepotential for farmers to bringproduce tomarket, for consumers to access goods and publicservices, and for more efficient use of naturalresources.
CONCLUSION
Africa offers great potential as a context for man-agement research, and more empirical and con-ceptual work is warranted to explain the richness ofthe opportunities on the African continent and ad-dress the challengeswithin them.There is a greatdealmore to learn from Africa than social development—exciting opportunities abound in these fast-growingeconomies, strong and entrepreneurial workforcesunderpin desire for social change, and the presenceof valuable natural resources augur well for the fu-ture. Despite the challenges of leadership and gov-ernance and the need to build resilient social andeconomic institutions, there is remarkable optimismaround Africa and its prospects. Managementscholars have the opportunity to provide empiricalevidence and guide business executives and policymakers alike on the road ahead.
Gerard GeorgeSingapore Management University
Christopher CorbishleyImperial College London
Jane N. O. KhayesiUniversity of Essex
Martine R. HaasUniversity of Pennsylvania
Laszlo TihanyiTexas A&M University
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Gerry George is dean and professor of innovation andentrepreneurship at the Lee Kong Chian School of Busi-ness at Singapore Management University. He also servesas the editor of Academy of Management Journal (AMJ).
Christopher Corbishley is a doctoral student at ImperialCollege London. His research interests include organiza-tional design inbase-of-the-pyramid contexts, inparticularthe coordination of health care and energy services in low-income and weak institutional environments.
Jane N. O. Khayesi is a lecturer in management at EssexBusiness School. She holds a PhD degree in managementfrom the University of Lausanne, Switzerland. Her re-search interests are in leadership and entrepreneurshipdevelopment, and she conducts empirical research in de-veloping economy contexts of Africa.
Martine R. Haas is an associate professor ofmanagement atthe Wharton School of the University of Pennsylvania. Sheis an associate editor of AMJ, covering the topics of knowl-edgemanagement,multinationals, and organization theory.
Laszlo Tihanyi is professor of management at Texas A&MUniversity. He is an associate editor of AMJ, covering thetopics of international business, multinational firms,emerging economies, and institutional theory.
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