Emotional Intelligence and Success of Immigrant-Owned Small Businesses in South Africa

By Fatoki, Olawale | Academy of Entrepreneurship Journal, December 2019 | Go to article overview

Emotional Intelligence and Success of Immigrant-Owned Small Businesses in South Africa


Fatoki, Olawale, Academy of Entrepreneurship Journal


INTRODUCTION

Small and medium and micro enterprises (SMMEs) play a significant role in the economies of many countries. SMMEs contribute approximately 40% of the gross domestic product (GDP) and 60% of total employment of developing countries. In South Africa, SMMEs makes up 91% of all formalised businesses and account for about 34% of GDP and 60% of all employment (World Bank, 2018; Banking Association of South Africa, 2018). The small business space in many countries including South Africa consists of both native and immigrant entrepreneurs. A native entrepreneur is an individual that was born in a country and starts business in that country. An immigrant entrepreneur is an individual that was born in another country, relocates and starts a business in the host country (Osorio et al., 2015; Omisakin, 2017). A vibrant and sustainable migrant entrepreneur sector is important to employment creation and economic growth of a host country. Immigrant entrepreneurs contribute to the development of South Africa by providing jobs for both natives and immigrants and by participating in the supply chain (Kalitanyi & Visser, 2010; European Economic and Social Committee, 2012; Tengeh & Nkem, 2017).

Immigrant entrepreneurs face many challenges that negatively impact on their performance. These include crime, xenophobia and aggressive competition from native small business owners. Other impediments affecting immigrant entrepreneurs are inaccessibility to formal debt and equity markets due to lack of credit history and collateral security, poor financial management skills, lack of knowledge of the local language, which restricts effective communication with customers (Asoba, 2014; Ngota et al., 2018).

Palzelt & Shepherd (2011) point out that substantial literature exists about the positive emotional outcomes of entrepreneurship such as happiness, excitement, satisfaction, independence and passion. These studies provide considerable information of positive emotions but do not really explain the negative emotions experienced by the self-employed. Evidence suggests that self-employment can be associated with many negative emotions. High levels of risk-taking, responsibility, required work effort and income and job uncertainty can lead to significant negative emotions such as loneliness, anxiety, fear and mental strain. Entrepreneurship can lead to work-family conflict and stress with negative impact on the entrepreneur's quality of life. The associated job demands associated with immigrant entrepreneurship such as long working hours can be very stressful. This can negatively affect the performance of immigrant entrepreneurs (Lin & Tao, 2012; Padovez-Cualheta et al., 2019).

A stream of research on the success of entrepreneurial ventures relates to the impact of affect (feelings and emotions) and how emotions can positively affect entrepreneurial creativity, opportunity recognition and success. Positive motions may influence an entrepreneur's ability to deal effectively with business challenges and turn previous experiences into present solutions through heuristic processing (Baron, 2008; Boren 2010). Multiple intelligences are needed for leadership and successful business owners are required to have more than just high intelligence quotient (IQ). Intelligence is a multidimensional construct that includes rational and logic based verbal and quantitative intelligence, cultural intelligence and emotional intelligence (Alon & Higgins, 2005; Fakhreldin, 2017). Entrepreneurial success can be influenced by cognitive abilities and social skills such as self-awareness, self-management, social awareness, and relationship management (Wong & Law 2002; Baron & Markman, 2003). Many of these skills are encompassed in emotional intelligence (EI). According to McLaughlin (2012), EI includes skills that can lead to the appraisal and expression of emotion in oneself and in other people, the effective regulation of such emotion in oneself and others and its use to motivate and achieve goals. …

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