Family Businesses in Sub-Saharan Africa

This chapter presents a review of six of the widely used theories in the family business literature to explain the uniqueness of family businesses and why they outperform non-family businesses. The theoretical perspectives are systems theory, agency theory, stewardship theory, the resource-based view of the firm, stakeholder theory, and the socio-emotional wealth perspective. The chapter then links the applicability of these theories to the institutional and socio-cultural environments in sub-Saharan Africa in which sub-Saharan African family businesses operate. It is argued that the applicability of the theories to sub-Saharan African businesses is contingent on the institutional and socio-cultural environments in sub-Saharan Africa.

This chapter reviews and assesses the literature on family businesses in Africa with special emphasis on what has been studied and what the studies tell us about the state of family business research. We conducted a content analysis of family business studies that were published in peer-reviewed journals. The findings indicate that there is low productivity of research on family businesses in Africa and that the research lacks depth in terms of the topics covered and breadth in terms of the regional/countries covered. The findings further show that there were problems with the definition of family businesses and the use of theory in the studies. However, the quality of the studies was high, as demonstrated by the methodologies used and publication outlets.

This study examined the mediating role of perceived organizational support (POS) in the relationship between perceived organizational justice and employee task effectiveness using data from 118 employees in 29 family business organizations in Uganda. The bootstrap procedure suggested by Preacher, K.J., and Hayes, A.F. (2008) Asymptotic and resampling strategies for assessing and comparing indirect effects in multiple mediator models. Behavior Research Methods, 40(3), 879–891), was utilized to estimate the indirect effects of procedural, distributive, and interactional justices on employee job effectiveness (JEF) through POS. The findings indicate that POS fully mediates the relationship between perceived interactional justice (IJ) and employee JEF. Although perceived distributive justice (DJ) influences POS, which, in turn, influences employees’ JEF, the relationship between DJ and employees’ JEF is not mediated by POS. Moreover, perceived procedural justice influences employees’ job performance directly and not indirectly. The contributions, implications, limitations, and suggestions for future studies are presented.

This chapter examined the effects of human resource management (HRM) and market orientation strategies on competitive strategy and firm performance in family and non-family firms. It also examined how these effects varied across family and non-family firms in Ghana. Data for the study came from two different respondents within each of the 122 manufacturing firms sampled in Ghana. The results indicated that the market orientation strategy was positively related to both cost leadership and differentiation in both family and non-family firms. However, the impact of market orientation strategy on competitive strategy was not different between family and non-family firms. While HRM participation was significantly related to both cost leadership and differentiation strategies only for family firms, the impact was stronger in terms of the differentiation strategy only for family firms. Market orientation strategy was not directly related to performance for both family and non-family firms. However, the HRM strategy of human resource (HR) participation was directly related to profitability only in family firms, and the impact was stronger for family firms than for non-family firms.

Women entrepreneurs are a major economic driver in Africa. The rate of women’s entrepreneurship in Africa is higher than any other region of the world. This chapter focuses on women-owned family businesses and their opportunities, challenges, and future. Studies on women-owned family businesses in Africa are divided into South Africa, Central Africa, East Africa, West Africa, and North Africa, and then by country. By examining specific conditions and support systems in each area of Africa, a better understanding of the African situation for women-owned family businesses emerges. Implications for the further development of policies to promote women-owned family businesses are put forth to better understand the barriers women entrepreneurs face with their own families as well as with the environment they operate in and the solutions that work best. In conclusion, women-owned family businesses in Africa have the highest potential in the world, and with further assistance, that potential will become a reality.

This chapter examines how innovative capability influences performance directly and indirectly through competitive strategy in family businesses. We used data from 321 micro and small family businesses in Ghana and the bootstrap procedure suggested by Preacher and Hayes (2008: Asymptotic and resampling strategies for assessing and comparing indirect effects in multiple mediator models. Behavior Research Methods, 40, 879–891) to test our hypotheses. The findings indicate that innovative capability directly influences the performance of micro and small family businesses. However, the mediation analyses show that only the competitive strategy of differentiation mediates the relationship between innovative capability and performance. We found no relationship between cost leadership strategy and the performance of micro and small family businesses in Ghana. Implications are discussed.

This study examines the effects of social capital, developed as a result of the social networking relationship with top managers of other firms and community leaders, on productivity growth in family businesses in Ghana. It further investigates how market competition moderates the relationship between social capital and productivity growth. An analysis of the data from 54 family businesses over two time periods indicates that (1) social capital from the social networking relationships with top managers of other firms helps the productivity growth of family businesses, (2) social capital from the social networking relationships with community leaders is beneficial to family businesses by facilitating the growth of productivity, and (3) the benefit of social capital from both top managers from other businesses and community leaders to family businesses is moderated by market competition. The relationship between social capital and productivity growth is tempered by the intensity of competition in the market environment.

This chapter examines how manufacturing strategy influences both competitive strategy and performance in family firms (FFs) and nonfamily firms (NFFs). It also examines the differences in the impact of (1) manufacturing strategy on competitive strategy and (2) manufacturing strategy on performance between FFs and NFFs. Using data from 122 FFs and NFFs in Ghana, we find that delivery manufacturing strategy has a stronger influence on cost leadership strategy for FFs than for NFFs. The findings further show that flexibility manufacturing strategy has a stronger influence on differentiation strategy for FFs than for NFFs, while cost manufacturing strategy has a stronger effect on differentiation strategy for NFFs than for FFs. The findings also show that FFs experience greater performance benefits than NFFs when they use delivery manufacturing strategy, while NFFs benefit more from the utilization of flexibility and cost manufacturing strategies than FFs. Implications are discussed.