Analysis of Solidarity Mechanisms Affecting the Performance of Ethnic Minority Business Groups in Africa
Abstract
:1. Introduction
2. Context, Theory, and Hypotheses
2.1. Context
2.2. Business Groups and Competitive Advantage
2.3. Social Embeddedness in Ethnically Homogeneous Minority BGs
2.4. China’s BGs in Africa: Newcomer Exceptionalism
3. Methods
3.1. Data Source
3.2. Variables and Measurement
3.3. Analysis
Export intensity = α + β BGA + β Control Variables + industry and time controls + ε | (1) |
Product Innovation = α + β BGA + β Control Variables + industry and time controls | (2) |
+ ε | |
Export intensity = α + β BGA + β African + β Indian + β Middle Eastern + β European | (3) |
+ β Asian + β Control Variables + industry and time controls + ε | |
Export intensity = α + β BGA + β African + β Indian + β Middle Eastern + β European | (4) |
+ β Asian + β BGA * African +/− β BGA * Indian +/− β BGA * Middle Eastern +/− β | |
BGA * European + β BGA * Asian + β Control Variables + industry and time controls | |
+ ε | |
Product Innovation = α + β BGA + β African + β Indian + β Middle Eastern + β | (5) |
European + β Asian + β Control Variables + industry and time controls + ε | |
Product Innovation = α + β BGA + β African + β Indian + β Middle Eastern + β | (6) |
European + β Asian + β BGA * African +/− β BGA * Indian +/− β BGA * Middle | |
Eastern +/− β BGA * European + β BGA * Asian + β Control Variables + industry and | |
time controls + ε |
3.4. Results
4. Discussion
4.1. Limitations
4.2. Recommendations for Further Research and Policy Implications
5. Conclusions
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Conflicts of Interest
1 | Researchers associated with the Regional Programme for Enterprise Development (RPED) in sub-Saharan Africa, the forerunner to the WBES, recognized that indigenous Africans were also segmented along ethnic identity. However, researchers decided ‘to keep things simple and straightforward as possible we use very broad categories based on race alone’ (Fafchamps, 2004). Note that the categorization has three advantages: First, race is most of the time readily identifiable via physical features and name. Race information is, therefore straightforward to collect. Second, race is a relatively objective dimension of ethnicity. Third, ‘ethnic identity is often a matter of subjective assessment and…there is often tension around the issue of ethnic identification in Africa… It can be counter-productive to ask respondents to define their own ethnicity publicly” (Fafchamps, 2004, p. 360). Despite the empirical pragmatism of this categorization, the result has produced selection issues in research on minority entrepreneurs in Africa, an issue that we return to in our section on endogeneity and selection. The category ‘other’ primarily denotes individuals of mixed ancestry. We excluded this category since we cannot identify the owner’s minority identity. |
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Variable | Definition | Source | |
---|---|---|---|
DV. | Export Intensity | Sales exported directly as percentage of total sales. | WBES |
Product Innovation | During the last three years, has this establishment introduced new or significantly improved products or services? | WBES | |
INV. | Business Group Affiliation | Dummy indicating whether firms are part of larger enterprise. | Calculated from WBES |
Mod. V. | Ethnicity | The ethnic identity of the current owner. | WBES |
Control Variables | Firm size | Number of permanent workers: small = less than 50, medium = 50–100, large = more than 100 employees. | WBES |
Firm Age | The number of years between the firm’s founding year and the year of its interview. | WBES | |
Foreign Own. | Ownership of private foreign individuals, companies or organizations. | WBES | |
Managerial Experience | How many years of experience working in this sector does the top manager have? | WBES | |
Training | Formal training programs for permanent, FT employees ran in last fiscal. | WBES | |
GDP/Export | Exports as a percentage of GDP. | The Global Competitiveness Report (GCR) | |
DBR_ (DTF) | Doing Business distant to frontier score. | Ease of Doing Business (World Bank Group, 2015) | |
Fragile Index | Fragile States Index: 0–120_higher more fragile. | Fund for Peace Fragile States Index (2015) | |
Labor Regulation | Percent of firms choosing labor regulations as their biggest obstacle. | Calculated from WBES | |
Political Instability | Percent of firms choosing political instability as their biggest obstacle. | Calculated from WBES |
Variables | Obs. | Mean | Std. Dev. | (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | (9) | (10) | (11) | (12) | (13) | (14) |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(1) Export | 1794 | 3.629 | 14.61 | 1.000 | |||||||||||||
(2) Innovation | 1803 | 0.413 | 0.492 | 0.036 | 1.000 | ||||||||||||
(3) BG | 1803 | 0.497 | 0.5 | −0.013 | 0.265 | 1.000 | |||||||||||
(4) Ethnicity | 1803 | 2.101 | 1.622 | 0.073 | −0.168 | 0.033 | 1.000 | ||||||||||
(5) Firm Age | 1803 | 19.53 | 16.91 | 0.094 | −0.052 | −0.162 | 0.139 | 1.000 | |||||||||
(6) Firm Size | 1803 | 1.95 | 0.757 | 0.169 | −0.091 | −0.295 | 0.107 | 0.179 | 1.000 | ||||||||
(7) Foreign Own | 1780 | 4.113 | 14.36 | 0.050 | −0.039 | −0.147 | 0.089 | 0.039 | 0.191 | 1.000 | |||||||
(8) Mang. Exper. | 1757 | 15.60 | 10.17 | 0.083 | −0.059 | −0.197 | 0.110 | 0.330 | 0.152 | 0.059 | 1.000 | ||||||
(9) Training | 1678 | 0.399 | 0.49 | 0.098 | −0.042 | −0.073 | 0.071 | 0.091 | 0.256 | 0.093 | 0.093 | 1.000 | |||||
(10) GDP/Expo. | 1803 | 31.38 | 15.11 | 0.018 | 0.048 | −0.079 | 0.028 | 0.020 | −0.004 | 0.093 | 0.056 | 0.033 | 1.000 | ||||
(11) DBR_DFT | 1803 | 54.30 | 10.46 | 0.070 | −0.223 | −0.068 | 0.367 | 0.145 | 0.083 | 0.021 | 0.158 | 0.170 | −0.026 | 1.000 | |||
(12) Fragile | 1803 | 86.53 | 15.33 | −0.063 | 0.179 | 0.091 | −0.361 | −0.164 | −0.070 | −0.058 | −0.168 | −0.146 | −0.329 | −0.842 | 1.000 | ||
(13) Labor Regulation | 1793 | 3.828 | 6.514 | 0.042 | 0.156 | −0.070 | −0.094 | 0.042 | 0.006 | 0.051 | 0.039 | −0.003 | 0.253 | −0.329 | 0.227 | 1.000 | |
(14) Political Instability | 1793 | 4.026 | 4.016 | 0.024 | −0.240 | −0.117 | 0.189 | 0.083 | 0.124 | 0.156 | 0.115 | 0.166 | 0.300 | 0.610 | −0.765 | −0.279 | 1.000 |
Hypothesis 1 | Hypotheses 2 and 3 | |||||
---|---|---|---|---|---|---|
Variable | Model 1 (OLS) Export | Model 2 (Probit) Innov. | Model 3 (OLS) Export | Model 4 (OLS) Export | Model 5 (Probit) Innov. | Model 6 (Probit) Innov. |
Firm Age | 0.04 * | 0 | 0.038 | 0.036 | 0.001 | 0.001 |
Firm Size | 2.309 *** | 0.037 | 2.246 *** | 2.27 *** | 0.025 | 0.038 |
Foreign Own | −0.015 | 0.002 | −0.023 | −0.016 | 0.003 | 0.002 |
Mang. Exper. | 0.045 | 0.001 | 0.042 | 0.047 | 0 | 0 |
Training | 1.447 * | −0.064 | 1.426 * | 1.32 * | −0.026 | −0.046 |
GDP/Expo. | 0.061 | 0.006 * | 0.071 * | 0.064 * | 0.006 * | 0.007 * |
DBR_DFT | 0.176 * | 0.024 ** | 0.189 ** | 0.174 * | 0.026 | 0.026 *** |
Fragile | 0.15 * | −0.002 | 0.192 ** | 0.150 * | 0.004 *** | 0.001 |
Labor Regulation | 0.119 | −0.052 *** | 0.204 | 0.126 | −0.044 ** | −0.051 *** |
Political Instability | −0.056 | 0.01 | −0.08 | −0.078 | 0.007 | 0.007 |
BGA | 1.285 * | 0.927 *** | 1.238 * | 0.567 | 0.884 *** | 0.915 *** |
African | - | - | - | - | ||
Indian | 0.465 | −0.66 | 0.401 ** | 0.277 | ||
Middle Eastern | 4.74 ** | 3.20 | −0.0170 | 0.090 | ||
European | 1.82 * | 1.179 | −0.116 | 0.142 | ||
Asian | 0.058 | −5.64 * | 0.678 *** | −0.115 | ||
BG * African | - | - | ||||
BG * Indian | 1.620 | 0.071 | ||||
BG * Mid. Eastern | 3.075 | −0.259 | ||||
BG * European | 0.790 | −0.597 ** | ||||
BG * Asian | 7.56 ** | 1.10 *** | ||||
Constant | −26.33 * | −2.507 * | −30.41 ** | −25.85 * | −3.198 ** | −2.948 ** |
Industry control | Yes | Yes | Yes | Yes | Yes | Yes |
Year control | Yes | Yes | Yes | Yes | Yes | Yes |
Observations | 1597 | 1584 | 1597 | 1597 | 1584 | 1584 |
Adjusted/Pseudo R2 | 0.113 | 0.294 | 0.115 | 0.141 | 0.306 | 0.316 |
F | 6.088 | 5.69 | 5.68 | |||
Chi-square | 630.135 | - | 656.00 | 673.51 |
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Tajeddin, M.; Carney, M. Analysis of Solidarity Mechanisms Affecting the Performance of Ethnic Minority Business Groups in Africa. J. Risk Financial Manag. 2025, 18, 183. https://doi.org/10.3390/jrfm18040183
Tajeddin M, Carney M. Analysis of Solidarity Mechanisms Affecting the Performance of Ethnic Minority Business Groups in Africa. Journal of Risk and Financial Management. 2025; 18(4):183. https://doi.org/10.3390/jrfm18040183
Chicago/Turabian StyleTajeddin, Mahdi, and Michael Carney. 2025. "Analysis of Solidarity Mechanisms Affecting the Performance of Ethnic Minority Business Groups in Africa" Journal of Risk and Financial Management 18, no. 4: 183. https://doi.org/10.3390/jrfm18040183
APA StyleTajeddin, M., & Carney, M. (2025). Analysis of Solidarity Mechanisms Affecting the Performance of Ethnic Minority Business Groups in Africa. Journal of Risk and Financial Management, 18(4), 183. https://doi.org/10.3390/jrfm18040183