East Africa: Extended Families with Many Rights
Smith, Garry D., Entrepreneurship: Theory and Practice
The study by Khavul, Bruton, and Wood was an attempt to shed light on informal family businesses in East Africa, a group seldom studied. By applying the tenets of grounded theory the authors were able to successfully provide some insight into family business in this region. This commentary provides insight into the research by discussing the findings in light of the three-dimensional model of family business and attempts to limit agency costs based on cultural-based rights of the extended family. Also discussed here is a finding that may indicate a gender-related issue in opportunity identification and exploitation.
Khavul, Bruton, and Wood (2009), in their paper "Informal Family Business in Africa," use grounded theory, a small sample, and a case study approach to study the formation and operation of informal businesses in Kenya and Uganda. As one of the first studies of very small family businesses in Africa the research provides insights that might otherwise be missed on micro business operations and family firms in less developed countries. The nuances of the methodology and the findings deserve careful consideration, especially if one contemplates doing research outside of North America and Western Europe.
This commentary extends Khavul et al.'s study by discussing its results in the context of two theoretical frameworks that have received much consideration in family-business research. It also offers an alternative explanation for another finding of the study that is not considered in the article. In each of these three areas the implications of Khavul et al.'s findings will be discussed along with some suggestions for additional research. Before beginning the discussion on the theories a brief review of some salient parts of the culture in Kenya and Uganda is needed.
Cultural Aspects of Owning a Business in East Africa
Many researchers have called for family-business research to be conducted in different contexts than those in North America and Western Europe (Zahra, 2007). Certainly East Africa offers a strikingly different context. To begin, the family in East Africa is defined differently. Distant relatives in East Africa are treated more like siblings are treated in North America and Western Europe. When this is combined with the large number of children per parent, kin who are treated as siblings may number into the hundreds. The definition of family stretches the boundaries of Western definitions.
Beyond the extended size of families in East Africa there are additional "rights" of family membership. While these are discussed in the paper, it takes reflection to grasp their significance. For instance, a cousin can ask for a job, money, or other resources and expect to get them in the East African culture. A fourth cousin whom the family does not really know can show up at a business and say, "You have ten goats and I have none. I would like one of your goats." Cultural norms would indicate that the business owner share his goats. In Western culture this would be akin to the owners of a trucking firm giving a truck to a cousin simply because he asked for it. In most Western-style family-owned businesses the moocher cousin would likely be shunned and all the relatives warned to avoid him. This cultural difference is central to understanding the paper.
Added to the size of the family and the expected largesse toward family members is the inheritance system. Women cannot inherit property. At the death of a man, any male relative can claim the property of that individual. If a husband and wife start a business and the husband dies leaving three small children, his adult fourth cousin has more right to the business than the widow and children. Think of this in Western terms. Suppose a husband and wife start and operate a successful restaurant and the husband dies. Further, suppose that a cousin of the husband that is virtually unknown to the wife attends the funeral and says to her, "Give me the keys to my restaurant and don't come back. …