Bringing Africa In: Promising Directions for Management Research

Africa is beginning to capture the imagination of entrepreneurs, corporate executives, and scholars as an emerging market of new growth opportunities. Over 15 years, the continent has experienced an average growth rate of 5% (World Economic Forum, 2015: v). Out of its 54 countries, 26 have achieved middleincome status, while the proportion of those living in extreme poverty has fallen from 51% in 2005 to 42% in 2014 (African Development Bank, 2014a: 49). Although there are regional differences, the primary drivers of growth have been rapidly emerging consumer markets, regional economic integration, investment in infrastructure, technological leap-frogging, and the opening up of new markets, especially in the service sector. African economies also face commensurate challenges. Across the continent, economies remain largely agrarian, underpinned by resource-driven growth and still dominated by the informal sector. But what is it about the context that makes Africa such fertile territory for management scholarship? Disciplines Management Sciences and Quantitative Methods This journal article is available at ScholarlyCommons: https://repository.upenn. edu/mgmt_papers/185 Bringing Africa In: Promising Directions for Management Research Gerard George, Singapore Management University Christopher Corbishley, Imperial College London Jane N. O. Khayesi, University of Essex Martine R. Haas, University of Pennsylvania Laszlo Tihanyi, Texas A&M University Published in Academy of Management Journal, 2016 April, 59 (2), 377-393. http://doi.org/10.5465/amj.2016. 4002 Africa is beginning to capture the imagination of entrepreneurs, corporate executives, and scholars as an emerging market of new growth opportunities. Over 15 years, the continent has experienced an average growth rate of 5% (World Economic Forum, 2015: v). Out of its 54 countries, 26 have achieved middleincome status, while the proportion of those living in extreme poverty has fallen from 51% in 2005 to 42% in 2014 (African Development Bank, 2014a: 49). Although there are regional differences, the primary drivers of growth have been rapidly emerging consumer markets, regional economic integration, investment in infrastructure, technological leap-frogging, and the opening up of new markets, especially in the service sector. African economies also face commensurate challenges. Across the continent, economies remain largely agrarian, underpinned by resource-driven growth and still dominated by the informal sector. But what is it about the context that makes Africa such fertile territory for management scholarship? The greatest challenge to business in Africa stems from the persistence of institutional voids, understood as the absence of market-supporting institutions, specialized intermediaries, contractenforcing mechanisms, and efficient transportation and communication networks (Khanna & Palepu, 2013). In order to be successful, the private sector that generates 90% of employment, two-thirds of investment, and 70% of economic output on the continent needs to cope with the challenges presented by undeveloped market institutions and missing infrastructure (African Development Bank, 2013: 34). Nevertheless, several new trends in recent years have been changing the ways business is done in Africa. The rapid expansion of information and communication networks—specifically, mobile technology—has provided tremendous new opportunities. By 2025, half of the people on the continent will have Internet access, connecting them to services in health care, education, finance, retail, and government (McKinsey Global Institute, 2010). Instead of playing catch-up, entrepreneurs in Africa are “hacking” existing infrastructure gaps through technology, connecting Africans to new goods and services (e.g., mobile applications for activities ranging from private security in Ghana and monitoring patients in Zimbabwe to cattle herding in Kenya and connecting dirty laundry to itinerant washerwomen in Uganda). Inventive approaches to delivering new sources of value creation go hand in hand with Africa’s surprising demographics, where over half of the continent’s 1.1 billion population are currently under the age of 25. This unprecedented population growth will lead to a projected increase in the workforce of nearly 450 million between 2010 and 2035. The diversity of the African context is captured in Table 1, which outlines some of the human, economic, and institutional development indicators in a select set of countries. TABLE 1: Human, Economic, and Institutional Development in Ten Countries from Africa’s Five Regions Region and Country Populationa GDP per capitaa GDP per capita growth (%)a Openness (trade)a Human dev. (rank)b Econ. freedom (rank)c Political rightsd Civil libertiesd Corruption (rank)e