Psychological success factors of small and micro business owners in Southern Africa [Elektronische Ressource] : a longitudinal approach / vorgelegt von Stefanie Isabel Krauss
373 Pages
English
Downloading requires you to have access to the YouScribe library
Learn all about the services we offer

Psychological success factors of small and micro business owners in Southern Africa [Elektronische Ressource] : a longitudinal approach / vorgelegt von Stefanie Isabel Krauss

Downloading requires you to have access to the YouScribe library
Learn all about the services we offer
373 Pages
English

Description

PSYCHOLOGICAL SUCCESS FACTORS OF SMALL AND MICRO BUSINESS OWNERS IN SOUTHERN AFRICA: A LONGITUDINAL APPROACH Inaugural-Dissertation zur Erlangung des Doktorgrades der Philosophie des Fachbereiches 06 Psychologie der Justus-Liebig-Universität Gießen vorgelegt von Stefanie Isabel Krauss aus Gießen 2003 Dekan: Prof. Dr. Joachim Stiensmeier-Pelster 1. Berichterstatter: Prof. Dr. Michael Frese 2. Berichterstatter: Prof. Dr. Christian Korunka Tag der Disputation: Mittwoch, 10. September 2003 TO MY SON BEN TO MY FATHER AND The greatest ‘result’ of my time in Who taught me to pursue my dreams Zimbabwe ACKNOWLEDGEMENTS First of all my thankfulness goes to my mother and to Clive for all their support and for bearing with me when times (and my mood) became difficult. Special thanks also go to Michael Frese and Christian Friedrich for making the project in Zimbabwe possible and for guiding, supporting, and motivating me throughout the research process. Furthermore, my work benefited greatly from discussions with Andreas Utsch, Hans-Georg Wolff, Nina Keith, Doris Fay, Eric Bloch, Andreas Rauch, Ruth Kanfer, Winfried Hacker, Benjamin Schneider who provided inspirational suggestions and ideas.

Subjects

Informations

Published by
Published 01 January 2003
Reads 34
Language English
Document size 16 MB

Exrait








PSYCHOLOGICAL SUCCESS FACTORS OF SMALL
AND MICRO BUSINESS OWNERS IN SOUTHERN
AFRICA: A LONGITUDINAL APPROACH






Inaugural-Dissertation
zur
Erlangung des Doktorgrades
der Philosophie des Fachbereiches 06 Psychologie
der Justus-Liebig-Universität Gießen






vorgelegt von

Stefanie Isabel Krauss
aus Gießen





2003






































Dekan: Prof. Dr. Joachim Stiensmeier-Pelster
1. Berichterstatter: Prof. Dr. Michael Frese
2. Berichterstatter: Prof. Dr. Christian Korunka
Tag der Disputation: Mittwoch, 10. September 2003






TO MY SON BEN TO MY FATHER
AND
The greatest ‘result’ of my time in Who taught me to pursue my dreams
Zimbabwe






ACKNOWLEDGEMENTS

First of all my thankfulness goes to my mother and to Clive for all their support and for
bearing with me when times (and my mood) became difficult.
Special thanks also go to Michael Frese and Christian Friedrich for making the project in
Zimbabwe possible and for guiding, supporting, and motivating me throughout the research
process.
Furthermore, my work benefited greatly from discussions with Andreas Utsch, Hans-Georg
Wolff, Nina Keith, Doris Fay, Eric Bloch, Andreas Rauch, Ruth Kanfer, Winfried Hacker,
Benjamin Schneider who provided inspirational suggestions and ideas.
I also want to thank David Harrison, Sarah Campbell, Admire Chirowodza, and Mufaro
Chinyanga from Human Resources (Pvt.) Ltd., Harare, Zimbabwe as well as Klaus Martin
Nickel, Susanne Escher, Rafal Grabarkiewicz, Jens Unger, and Simone Rief who were all of
great help in collecting the data. I am especially grateful to Jens Unger for detecting
interviewer cheating thus preventing me from seriously biased data.
Furthermore, I appreciatively acknowledge the funding of this research through the Deutsche
Forschungsgemeinschaft (German Research Community, project no.: FR 638/13-2).
Last but not least, I want to thank all interview participants who shared their business
experiences with me. This research would not have been possible without the friendly and
patient cooperation of numerous business owners in Zimbabwe and South Africa.

TABLE OF CONTENTS
PREFACE I
CHAPTER 1
Introduction 1
1.1 Entrepreneurial Orientation 1
1.2 Strategy Process Characteristics 3
1.3 Informal and Formal Businesses 6
1.4 Research Objectives 7
1.5 References 8
CHAPTER 2
Entrepreneurial Orientation: A Psychological Model of Success
Among Southern African Small Business Owners 11
2.1 A Psychological Concept of Entrepreneurial Orientation 11
2.1.1 Learning Orientation 15
2.1.2 Achievement Orientation 16
2.1.3 Autonomy Orientation 16
2.1.4 Competitive Aggressiveness 17
2.1.5 Innovative Orientation 17
2.1.6 Risk-Taking Orientation 18
2.1.7 Personal Initiative 18
2.1.8 Overall Entrepreneurial Orientation 19
2.2 Studying Small Scale Business Owners in Southern Africa 20
2.3 Method 21
2.3.1 Sample 21
2.3.2 Procedure 23
2.3.3 Operationalization 24
2.3.4 Statistical Analyses 28
2.4 Results 29
2.5 Discussion 36
2.5.1 Strengths and Limitations 38
2.5.2 Practical Implications and Conclusion 41
2.6 References 41
CHAPTER 3
Entrepreneurial Orientation, Psychological Action Strategy Characteristics,
and Business Performance: A Longitudinal Analysis among Zimbabwean
Small Business Owners 47
3.1 The Theoretical Model 48
3.1.1 Psychological Strategy Process Characteristics 50
3.1.2 Strategy Process Characteristics and Business Performance 53
3.1.3 The Psychological Concept of Entrepreneurial Orientation (EO) 57
3.1.4 EO and Business Performance 58 3.1.5 EO, Strategy Process Characteristics, and Business Performance 59
3.2 Studying Small Scale Enterprises in Zimbabwe 60
3.3 Method 61
3.3.1 Sample 61
3.3.2 Procedure 63
3.3.3 Operationalization 63
3.3.4 Statistical Analyses 69
3.4 Results 70
3.5 Discussion 80
3.5.1 Strengths and Limitations 85
3.5.2 Implications for Future Research 86
3.5.3 Conclusion 86
3.6 References 87
CHAPTER 4
A Longitudinal Analysis of Employment Development in Zimbabwean
Informal and Formal Sector Small Enterprises and a Sector-Specific
Classification of Their Owners 93
4.1 Informal and Formal Sector: Conceptual Issues 94
4.1.1 Contradictory Views on the Informal Sector 95
4.1.2 Advantages of the Informal Sector 95
4.1.3 Advantages of the Formal Sector 97
4.1.4 Distinguishing Formal from Informal Business Owners 98
4.1.5 The Transition from the Informal into the Formal Sector 102
4.2 Method 102
4.2.1 Sample 102
4.2.2 Procedure 105
4.2.3 Operationalization 105
4.2.4 Statistical Analyses 107
4.3 Results 108
4.4 Discussion 112
4.4.1 Strengths and Limitations 114
4.4.2 Future Research and Practical Implications 114
4.4.3 Conclusion 115
4.5 References 115
CHAPTER 5
Conclusion 118
5.1 Measuring Psychological Determinants of Entrepreneurial Performance 118
in Southern Africa
5.2 Psychological Determinants of Entrepreneurial Performance 120
5.2.1 The Unitary Concept of Entrepreneurial Orientation 121
5.2.2 Entrepreneurial Orientation, Strategy Process Characteristics,
and Business Performance 122
5.2.3 Informal and Formal Businesses 123
5.5 References 124
APPENDIX Preface I




PREFACE


The research for this dissertation was conducted within the project ‘Psychological
1Success Factors of Small Business Owners in Zimbabwe: The Role of Goals and Strategies’ .
2 3Under the supervision of Prof. Dr. Michael Frese and Prof. Dr. Christian Friedrich , the pro-
ject started in May 1998 and ended in December 2002. While entrepreneurship in Zimbabwe
was the main research focus, smaller studies were carried out in South Africa and Namibia.

SMALL BUSINESSES IN ZIMBABWE
An entrepreneur is “[…] the revolutionary of the economy — and the involuntary
4pioneer of social and political revolution ”.
Zimbabwe became independent from the former colonial power Great Britain in 1980.
Since then, indigenous entrepreneurship increased tremendously. Entrepreneurs who started
out small with the vision of leading Zimbabwe into the next millennium facilitated the coun-
try’s economic as well as social prosperity. Zimbabwe’s probably best known representative
of this new generation of entrepreneurs is Strive Masiyiwa, the founder of Econet Wireless
5Telecommunications . In 1993, Econet Wireless was one of many small start-ups in Harare.
After four years of legal battles with the Zimbabwean government, in 1998 Strive Masiyiwa’s
persistence secured the first private-owned GSM mobile telephone network license in Zim-
6babwe . In 2000, Econet moved their headquarters to South Africa and are presently (2003)
7the third largest Pan-African telecommunications provider . Econet Wireless operates in 15

1 Funded by the German Research Community (Deutsche Forschungsgemeinschaft, project no.: FR 638/13-2).
2 Justus-Liebig-University, Giessen, Germany; Visiting Professor at the London Business School, United
Kingdom.
3 University of Applied Sciences, Giessen, Germany; Visiting Professor at the University of the Western Cape,
Cape Town, South Africa.
4 Schumpeter, J. A. (1934). Theorie der wirtschaftlichen Entwicklung (Theory of economic development). (4th
ed.). Berlin, Germany: Duncker & Humblot, p.130.
5 http://www.econetwireless.com/
6 Wachira, N. (2001, 15 March 2001). One man's fight to wire Africa, [online article]. Wired News. Available:
http://www.wired.com/news/business/0,1367,41407,00.html [2003, June].
7 Staff Reporter. (2002, 21 February 2002). Econet names new boss for Zimbabwe, [newspaper article]. Financial
Gazette, Zimbabwe. Available: http://www.africaonline.com/site/Articles/1,3,45786.jsp [2003, June]. Preface II
countries in Africa, Europe, and the East Asian Pacific Region. The achievements of entre-
preneurs like Strive Masiyiwa do not only foster economic development directly through the
advancement of innovative technologies and the attraction of foreign investments; successful
entrepreneurs also model the path and encourage others to follow. Many small business own-
ers I interviewed explicitly named Strive Masiyiwa (as well as Nigel Chanakira from King-
8dom Securities and Kingdom Financial Holdings, Harare ) as their role model, as a person
who influenced their decision to become and/ or remain a business owners.
Almost simultaneously to my first research sojourn in 1998, Zimbabwe headed into an
economic depression which continues to this date (2003). While Zimbabwe was previously
considered one of the most promising African economies, the inflation rate compared to the
9previous year had reached 70% by the end of 1999 and is currently (2003) estimated at
450%. At the same time, the annual GDP growth of 2.4% in 1997 became negative in the year
102000 (-4.9%) as well as in 2001 (-8.4%) . In 1997, the economic recession was sparked off
by the government’s announcement of a new land designation policy and unbudgeted pension
payments to the veterans of the liberation war in the 1960ies and 1970ies. A further reason for
the economic decline was Zimbabwe’s deployment of troops in the Democratic Republic of
Congo in 1998. According to local economists, the political events in both 1997 and 1998 led
11almost instantaneously to a sharp devaluation of the Zimbabwe Dollar . While in 1995 the
12official exchange rate of the US$ compared to the local currency was below US$1:Z$10 , it
13amounted to US$1:Z$12 by 1997, to US$1:Z$21 by 1998, and to US$1:Z$55 in 2001 , the
time I last visited Zimbabwe. Throughout this period, the parallel foreign exchange market
flourished and expressed a more realistic value of the Z$ than the fixed bank rates. In 2003,
the parallel market’s exchange rate to the US$ is approximately US$1:Z$2,500 (official rate:
141:824) .
The recent economic developments have severe implications for the Zimbabwean
15population. “Everything is in short supply but hope.” Since 1998, prices have increased

8 http://www.kingdom.co.zw/
9 Robertson, J. (2003, 2003). Robertson Economic Information Services, [public domain]. Available:
http://www.economic.co.zw/ [2003, June].
10 The Development Data Group. (2001, April 2003). World development indicators database, [public domain].
The World Bank. Available:
http://devdata.worldbank.org/external/CPProfile.asp?CCODE=ZWE&PTYPE=CP [2003, June].
11 Robertson, 2003.
12 Robertson, 2003.
13 Directorate of Intelligence. (2002, 19 March 2003). The world factbook, [public domain]. Central Intelligence
Agency (CIA). Available: http://www.cia.gov/cia/publications/factbook/geos/zi.html [2003, June].
14 Shaw, A. (2003, 29 June 2003). Rich elite prosper in Zimbabwe's economic crisis, [newspaper article].
Associated Press. Available: http://www.zwnews.com/print.cfm?ArticleID=7101 [2003, June].
15 Mbaga, 2003. Preface III
16steadily while the average consumer has had little or no increase in income . For example, a
tube of toothpaste was Z$1,000 in the year 2001 whereas the average worker’s monthly wage
was only about 5,000Z$. The price of petrol was about Z$74 per liter in 2002. In 2003, the
price went up to Z$450 per liter. Yet, petrol is actually not available because the country can
17no longer pay for its imported fuel supplies . Consequently, the black market, where a liter of
18petrol costs Z$2,000, is booming . Maize meal, the basis for the staple Zimbabwean diet
Sadza, is also unobtainable in the shops. On the black market it costs Z$3,000 per 10kg bag
19— 30 times as much as it used to cost . For small business owners, the economic decline is
devastating. Importing businesses are obliged to apply to the Reserve Bank of Zimbabwe for
foreign exchange allocations. However, there are no foreign currency reserves at the Reserve
Bank and allocations are scarcely available. Companies as well as the Zimbabwean banking
system are forced to source foreign currency on the parallel market. Thus, imported supplies
(e.g., hair care products for hairdressers) are no longer available or unaffordable. Exporting
businesses (e.g., in the mining industry) are no better off as they have to share large propor-
tions of their foreign currency income with the Reserve Bank and cannot retain their foreign
currency based profits. Due to constant petrol shortage, goods cannot be transported, employ-
ees cannot get to work, and people are forced to sleep in their cars and queue for days —
unless they can afford the parallel market prices. Government imposed price controls, for in-
stance on bread, force bakers to sell their products below production costs, while at the same
time government threatens to take over the companies should they stop producing. Albeit,
Zimbabweans make a plan: A raisin or two turn normal bread into special bread — which is
not price controlled. Or family members who live abroad smuggle some hair care products
when they visit. Zimbabwean entrepreneurs have become experts at improvising.
This brief outline of the currently difficult Zimbabwean situation emphasizes the cour-
age and dedication necessary in order to secure a livelihood as an entrepreneur in Zimbabwe.
I am grateful to have met so many admirable business owners, most of whom never lost their
20spirit nor their sense of humor . I want to thank all study participants for their time and effort
that made this dissertation possible. I hope to return some of the generosity I experienced by
contributing to the body of evidence on entrepreneurial performance and, thereby, helping to

16 Robertson, 2003.
17 Mbaga, 2003.
18 Mbaga, 2003.
19 Mbaga, 2003.
20 ”A guy goes shopping with a wheelbarrow full of Zimbabwe Dollars. On the way to the shop, he is mugged –
the muggers overturn the barrow, tip out the cash and make off with the wheelbarrow.“ (Mbaga, 2003). Preface IV
promote a healthy and functioning small business sector at some point in time in the future
when conditions have improved.

THIS DISSERTATION
The overall subject of psychological success factors contributing to entrepreneurial
performance is addressed in three studies that are by and large independent empirical ap-
proaches to the main topic (Chapters 2-4). Therefore, the chapters of this dissertation can be
read independently from each other and are autonomous in so far as they contain separate
theoretical introductions as well as separate reference sections.
After a brief introductory overview on the main theoretical concepts of this disserta-
tion (Chapter 1), Chapter 2 presents a cross-sectional analysis of individual-level entrepreneu-
rial orientation in Zimbabwean and South African business owners as well as the concept’s
relationship with entrepreneurial performance. The causal relationship between entrepreneu-
rial orientation and business performance is examined longitudinally in Chapter 3. Further-
more, Chapter 3 accounts for the owners’ action strategy characteristics and analyzes media-
tor and moderator effects. The third study (Chapter 4) is also longitudinal and attends to the
employment creation by Zimbabwean enterprises in the formal and the informal business
sector, the distinction of formal and informal owners through personal characteristics and
abilities, and the likelihood of business formalization throughout the business lifecycle. Fi-
nally, Chapter 5 will address methodological issues of measuring psychological determinants
of business performance in the entrepreneurial process and summarize the results of the stud-
ies presented in the Chapters 2 to 4.
For research transparency, the appendix contains the complete measurement instru-
ments, a sample description of all participants at T1 and T2, a manual of scales that entails all
scales composed for T1 and T2, interrater reliabilities for all T1 and T2 variables, and a de-
tailed description of the psychological entrepreneurial orientation concept’s measurement
including exemplary answers of the participants. Additionally, the appendix also contains a
summary of this dissertation translated into German.

Giessen, June 2003
Stefanie I. Krauss