Academic journal article Academy of Entrepreneurship Journal

Entrepreuneship and Ethics under Extreme Conditions of Poverty: Exploring the Ethical Realities Faced by Entrepreneurs

Academic journal article Academy of Entrepreneurship Journal

Entrepreuneship and Ethics under Extreme Conditions of Poverty: Exploring the Ethical Realities Faced by Entrepreneurs

Article excerpt

Economic and Financial Coping Strategies

Economic impediments were identified as being at the hub of business operations by all firms in the case studies, and there were common coping strategies that were used by these firms. Cost cutting measures such as resorting to cheaper packaging, modifying products by substituting imported raw materials with local ones and where possible reducing quality, were common in all four cases. However, firms in cases C and D were more reluctant to modify their packaging and product formulation because of the standardisation requirements for their products required of them by their MNC head offices.

All firms in the case studies invested in generators and boreholes to ensure uninterrupted supply of electricity and water. However, cases C and D had invested more in this equipment than cases A and B, who mentioned that they had limited resources to undertake infrastructure investment at similar levels. Case D obtained used, but reliable, big capacity generators from its sister company in South Africa. Firms in all the cases imported their own fuel which provided them with some security in terms of their ability to distribute their products.

There was evidence of firms in all the case studies using alternative methods to raise capital for their operations. The chief of these was through participation in the money markets, in particular the Zimbabwe Stock Exchange (ZSE). Case B's annual financial figures indicated that money market activities contributed at least 45% of the total revenue for their business in 2007. The other three cases also confirmed a similar trend although access to their figures was not possible since they were not publicly listed. Firms in all four case studies reported placing customers on cash trading terms to militate against hyperinflation and to generate cash for their stock exchange investments.

Governance and Political Coping Strategies

Governance and political impediments posed challenges which required all firms in the case studies to devise situational coping strategies. Although there were common forms of coping strategies in all the cases studies, there was some reluctance to discuss strategies in detail, especially in areas such as dealing with corruption. All the firms in the case studies condemned the practice and indicated that it was official company policy to dismiss any employees involved in corrupt practices.

All the firms in the case studies were members of industry organizations such as Confederation of Zimbabwe Industries (CZI), Zimbabwe National Chamber of Commerce (ZNCC), Affirmative Action Group (AAG) and Food and Personal Hygiene Manufacturers Association (FPMA). These bodies were used to lobby for raw material access, foreign currency and price increases because the firms believed it was beneficial to have a united voice when approaching the government. A variety of other networks were also used to manage relationships with government. Use of connections was both at an organizational and an individual level, where firms entered into working arrangements which were driven by the relationships among the individual executives. The networks that were used were diverse, although common ones included the old boy alumni network, and ethnic grouping networks often referred to as the 'homeboy' networks. These were based on the rural areas from which the executives came. These were prevalent in all the case studies and were augmented by new networks created at social events such as at golf clubs.

Price controls were cited as a key governance impediment and firms in all the cases used multiple coping strategies to avoid them. These included industry lobbying and product diversification, whereby the firms concentrated on manufacturing products which were not on the controlled price list. For example, firms did not bake ordinary bread since this was on the controlled list but opted to produce confectionary which was not controlled. …

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