Portfolio entrepreneurs in Malawi: the role of risk and the environment in the process of portfolio creation and growth
Malfense Fierro, Antonio Cornelius
Fierro, Antonio Cornelius Malfense
Focus/research gaps Entrepreneurship is seen as being vital to the creation of wealth in society and as such, a crucial mechanism for the alleviation of poverty in the developing world. Most research in Africa, however, has concentrated on the role entrepreneurship in the informal sector in largely rural contexts. There has been little research on how entrepreneurship relates to larger formal businesses in developing/emerging countries especially those residing within urban environments. This thesis focuses on larger scale multiple business owners, or portfolio entrepreneurs within the capital city of Lilongwe in the country of Malawi. Malawi is a poor but fast growing landlocked Southern African state evincing many of the characteristics of developing nations in Africa and elsewhere. Of particular emphasis in this study is the focus of how risk and the environment play a role in the creation and growth of the groups of companies owned by portfolio entrepreneurs. Risk and the environment are little studied concepts when it comes to portfolio entrepreneurship in high-risk and uncertain environments, which are characteristic of many other developing/emerging economies in Africa (and elsewhere). Of the work that has been done, there is little to no coverage of the growth process by which new business formation occurs or does not occur by larger scale portfolio entrepreneurs in developing/emerging markets in Africa. The thesis addresses these research gaps by exploring processes of portfolio diversification (growth, non-growth and contraction) by portfolio entrepreneurs in a developing/emerging market context and the effects of two little studied variables: risk and the environment in this process. Method Twenty-four prominent portfolio entrepreneurs have been sampled, owning a total of 122 individual firms. These entrepreneurs (as a whole), turnover more than 200 million dollars annually and employ over 8000 people. The methodology was qualitative in nature combining a longitudinal study (that followed as group of the entrepreneurs over periods between two to five years), with semi-structured interviews with each entrepreneur. The analysis looked at both individual-level and external firm-level determinants to portfolio diversification, using risk and the environment as explanatory factors. The analysis combined a number of qualitative data analysis techniques. Results and Implications The findings suggest that risk-aversion is a crucial factor in explaining how and why portfolio entrepreneurs create and grow business groups. Risk-aversion and risk-mitigation are found to be crucial elements to adapting to the identified, enabling and hindering conditions of the environment to venture creation, operation and growth. The findings suggest that these portfolio entrepreneurs within Malawi can be considered growing, high-impact entrepreneurs and consequently a focus for policy. A number of policy recommendations concerning the environment for business creation and operation are suggested for government and non-government institutions. In addition a number of strategic recommendations are made for entrepreneurs already/ or looking, to operating in high-risk, uncertain environments, pursuing growth and success. For scholars, the research identifies a future agenda for those interested in the role of risk, the environment and growth in the process of portfolio entrepreneurship.