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3. Entrepreneurial Learning under Institutional Context: The Effectiveness of Education

3.6 Conclusion

This research makes new contributions to the understanding of entrepreneurial learning with the novelty of data input from African countries of Ghana and Kenya. Results from this research may help policy makers get insights into factors stimulate entrepreneurship outcomes resulted from different sources of entrepreneurial learning in African context. Two batches of variables grouped into formal and informal institutional factors are used in the study with further descriptive analysis conducted on perception of entrepreneurs toward these items. Findings from empirical results show more informal institutions have impact on entrepreneurs’ capacity in hiring employees than formal institutions, especially in the case of Ghana.

There are certain limitations for this study. Firstly, data are cross-sectional and limited for the capital cities of Accra and Kenya. A larger scale of similar study with stratified samplings and time variant would bring more robust results and satisfy more external validity. A panel data approach is costlier but more convenient in computing conventional growth rate instead of using compounded growth rate in this paper. Secondly, the questionnaire is designed in a favour of quantitative measurement and lack qualitative approach to better understand further results drawn from empirical analysis in this paper. For example, a follow-up survey with qualitative questionnaire items would clarify why entrepreneurs with working experience for family members have slower growth of employment in comparison with others who do not have similar experience.

Further research could dwell into extension of further factors of entrepreneurial learning, such as management styles and critical learning events. A more comprehensive study

could use alternative measurements of entrepreneurs’ performance such as sale and sale growth of the business. In general, the prospective for research in the field of entrepreneurial learning, especially in the case of Africa, is open and widely need further studies of its kind.

4

The Effect of Parental Role Model on

Entrepreneurs’ Entry Age, Start-up Size, and

Business Development: Empirical Evidence from

two Developing Countries

4.1 Introduction

There is mounting empirical evidence showing that there is a positive link between having self-employed parents and entrepreneurial intention (Laspita, et al., 2012; Colombier & Masclet, 2008; Dunn & Holtz-Eakin, 2000; Niittykangas & Tervo, 2005)1. The literature identifies several channels underlying this relationship. This is transfer of entrepreneurial intentions, via entrepreneurial traits, personality and genes (Nicolaou, et al., 2008; Chlosta, et al., 2012; Schröder & Schmitt-Rodermund, 2006; Crant, 1996; Thurik, 2015), human and non-human capital transfer (Lentz & Laband, 1990; Fairlie & Robb, 2007; Georgellis, et al., 2005; Aldrich & Kim, 2007; Parker, 2009), propensities (Meager & Bates, 2004), taste (Halaby, 2003), values (Wyrwich, 2015) and risk (Dohmen, et al., 2006). Intergenerational transmission of entrepreneurship can be a crucial source of the self- perpetuation of entrepreneurship and the formation of an entrepreneurship culture (Hayton, et al., 2002; Slavtchev & Wyrwich, 2017), which itself is a crucial source for economic development (Glaeser, et al., 2015; Fritsch & Wyrwich, 2017). Most of the previous literature on the effects of parental entrepreneurship among intention and start- up activity among kids is on developed countries. To the best of our knowledge, our study is first one investigating this pattern in developing countries in Africa.

Studies on entrepreneurship conducted with primary data in Africa generally focus on descriptive outcomes regarding constrains and challenges in forming and running

businesses, (Bowen, et al., 2009; Mabe, et al., 2013; Martey, et al., 2013), motivation (Chu, et al., 2007) or performance and growth (Appiah Fening, et al., 2008; Setsoafia, et al., 2015). Two of the very few but notable works on intergenerational links in Africa are Pasquier-Doumer (2013)’s study on transmission of self-employment status in the informal sector with data from seven West African countries, and Nordman & Pasquier- Doumer (2015)’s on the role of family networks in West African labor market. It is of importance to understand intergenerational transmission of entrepreneurship in the African context since entrepreneurship is a crucial source for achieving economic development in developing countries, particularly in Africa (Global Entrepreneurship Monitor, 2015; World Bank, 2011; Ayyagari, et al., 2014).This is quite important in contexts like Africa where it might be difficult for entrepreneurs to acquire external resources. Furthermore, it is also important to understand the drivers of successful business development in in the African context. It is crucial to learn about how to develop sustainable entrepreneurship in Africa, given the survival rate for young firms is especially low in the region (Bowen, et al., 2009).

Our paper adds to the parental entrepreneurship literature by studying the link between self-employed parents and age of entry, initial business size, and post-entry business development among the offspring. Despite various papers on mechanism in explaining entrepreneurship intention and business success based on parental role model, the role of parental self-employment for entrepreneurial entry age and initial size of business is neglected in mainstream research.

On one hand, entrepreneurial age is studied largely as a determinant of start-up decisions (Levesque & Minniti, 2006; Backman & Karlsson, 2017; Miller, 1984; Uusitalo, 2001; van Praag & van Ophem, 1995; Blanchflower, et al., 2001; Wyrwich, 2013), while the link between self-employed parents and children’s entry age to business has not been thoroughly explored. Lentz & Laband (1990), observed that second generation of entrepreneurial family tradition achieve greater success than the first generations, because the later generation is able to found their businesses at younger age with higher

amount of human capital, however the authors did not formally econometrically test the descriptive statistics with available data.

On the other hand, initial size of the business is studied largely as a component to predict firms’ future performance (Cooper, et al., 1994; Hart & Oulton, 1996; Klaesson & Karlsson, 2014). Several research have linked entrepreneurs’ background with initial business size (Sandberg & Hofer, 1987; Cooper, et al., 1989; Barkham, 1994; Chrisman, et al., 1998; Mata, 1996; Colombo, et al., 2004; Capelleras & Hoxha, 2010; Hvide & Møen, 2010; Coad, et al., 2014). However, only a few researchers consider parental self-employment a determinant of start-up size (Chrisman, et al., 1998; Melillo, et al., 2012).

The lack of analyses is surprising for two reasons. First, if entrepreneurial parents affect entrepreneurial choice via entrepreneurial resources such as financial assets, one should also observe higher initial business sizes as compared to entrepreneurs without self- employed parents. Firms that start larger can achieve the minimum efficient size to survive in the market earlier (Audretsch, 1995). Second, parental support may affect entry age. It is a well-established fact that start-up decisions over the lifecycle follow an inverted U-shape (Backman & Karlsson, 2017; Uusitalo, 2001; Stangler & Spulber, 2013; Levesque & Minniti, 2006). So, entrepreneurial propensity first increases with age while it decreases in later stages of working age. This pattern is driven by entrepreneurial resource accumulation in terms of skills and finance. If the kids of entrepreneurial parents are better equipped with entrepreneurial resources, they should be able to systematically start their venture at younger ages. Therefore, parental entrepreneurship should affect the age distribution of the future generations of entrepreneurs.

Younger entrepreneurs act as role models encouraging other peers of the same age to try in entrepreneurship. This is the prediction of the extensive literature on entrepreneurial role model effects (Sørensen, 2007; Bosma, et al., 2012; Van Auken, et al., 2006). So, understanding the link between parental entrepreneurship and entry age is particularly interesting in countries with a high share of population in younger ages like in Africa (United Nations, 2012; International Monetary Fund, 2014).

Our analysis relies on a representative survey of entrepreneurs in Ghana and Kenya. We treat self-employment status of parents as an exogenous variable since kids have no control over previous decisions of their parents. Since age cannot be influenced by respondents as well, we are able to establish a causal relationship between parental entrepreneurship and entry age. Similarly, having self-employed parents and entrepreneurs’ initial size of business also indicate a causal relationship, as the latter is occurrence of the former. We also investigate how parental self-employment affects business development.

The structure of the chapter is as followed. In section 4.2, we review literature on parental role model, transmission of entrepreneurship intention, entrepreneurs’ age and business size. Section 4.3 briefly describes methodology. Section 4.4 presents the results and the last section concludes the findings of the paper.

4.2 Literature Review: Parental Role Model and