Contextualizing Entrepreneurship in Emerging Economies and Developing Countries
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Contextualizing Entrepreneurship in Emerging Economies and Developing Countries

Edited by Marcela Ramírez-Pasilla, Ethel Brundin and Magdalena Markowska

Entrepreneurship in emerging countries presents us with a unique set of working attitudes, modes of thinking, social practices and processes. This book explores these characteristics, focusing on the conceptualization of entrepreneurship ‘in-between’. It highlights top-down and bottom-up initiatives as well as driving forces for entrepreneurial activities in emerging economies and developing countries, presenting the diversity, nuances and multiplicity of facets of relevant but unexplored contexts that we need in order to expand our dominant and traditional understandings of entrepreneurship
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Chapter 19: New firms’ survival in Rwanda: an analysis of institutional and social contexts

Samuel Kamugisha

Extract

Entrepreneurship is the mechanism that will be used to steer emerging economies and developing countries forward as they grow to be major economic forces. These economies are expected to play a significant role in the future of the global economy since they hold a substantial portion of the world population (Bruton et al., 2008). However, despite this perception of the developing world, it is surprising that there is limited research on new firm survival. Extant literature on new firms has largely applied established theories which have been developed and tested in developed economies. Findings from this research are incompatible in the context of developing economies because these are characterized by unique and dynamic contexts which are crucial for understanding entrepreneurial activities in such settings (Bruton et al., 2008). Despite the fact that empirical research on new firms has been carried out in the context of developing economies (for example, Bruton et al., 2008; Tobias et al., 2013; Zoogah et al., 2015), such studies are limited and insights that can be drawn from them are inadequate. In the case of post-genocide Rwanda, there have been a number of changes in institutional and socio-cultural practices to promote new firms. The Government of Rwanda introduced a comprehensive set of entrepreneurial-oriented reforms whereby government corporations were privatized, the economy liberalized and direct foreign investments increased. This led to the economic growth rate shooting to 8 percent (Tobias et al., 2013). Presently, Rwanda boasts of a considerable reduction in national poverty rates by almost 18 percent (NISR, 2015). New firms are now considered substantial engines of economic growth and development. However, it is not clear why the private-led sector is almost non-existent. A majority of the new firms in this sector die as soon as they are started (NISR, 2015), with the surviving ones close to the ‘living dead’ (Zahra and Wright, 2011). A majority (90 percent) of these firms are young; they are still in the start-up or growth phases and in the process of developing ideal systems and organizational structures (Gathani and Stoelinga, 2013).

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