Local competence building and international venture capital in low-income countries

Abstract

Purpose The purpose of this paper is to shed light on the changing pattern and characteristics of international financial flows in the emerging entrepreneurial ecosystems of Sub-Saharan Africa (SSA), provide a novel taxonomy to classify and analyze them, and discuss how such investments contribute to competence building and sustainable development. Design/methodology/approach In an exploratory study, the authors analyze the characteristics of international venture capital investors and the start-ups receiving funding in Kenya and map their interaction. The authors proceed by developing a novel taxonomy, classifying investors according to their main rationales (for-profit-for-impact), and start-ups according to the locus of needs and markets addressed by the start-up (local-global) and the locus of the start-ups capacity and knowledge (local-global). Findings The authors observe a new type of mainly western investors who support innovative ideas in SSA by identifying and investing in domestically developed technical innovations with the potential to address global market needs. The authors find such innovations to be mainly developed at the intersect of global and local knowledge. Originality/value The authors shed light on the – up to now – under-researched emerging phenomenon of international high-tech investments in SSA, and develop a novel taxonomy of technology investments in low-income countries, guiding further research on the conditions, impact, practical, and policy implications of this new form of finance flows.

To bridge or buffer? A resource dependence theory of nascent entrepreneurial ecosystems

“…Some studies are beginning to explicitly examine the role of resources in nascent EEs. For instance, in Kenya's "Silicon Savanna," Hain and Jurowetzki (2018) examined how a specific type of financial resourceforeign direct investmentcould spur entrepreneurship and innovation. Dana and Ratten (2017) focused on resource-rich landlocked African countries, including Botswana, Zambia and Zimbabwe, and argued that because of their resource composition, to compete in the international marketplace, the EE in these countries need to focus on cultivating informal networks and on their differentiating cultural attributes.…”

Quality standards, crime management and the efficiency of manufacturing firms in middle-income economies

“…The MIEs findings, however, may apply to low-income countries. Hain and Jurowetzki (2018) and Habibov (2011) indicate that the MIEs and low-income economies are structurally similar.…”

Digital transformation in West Africa: a two country, two-sector analysis

“…Lately, few studies explored impact of various socio-political and institutional aspects on entrepreneurial activities in SSA. One of these is study by Hain & Jurowetzki (2018) emphasised the importance of foreign direct investments into the entrepreneurship ecosystems of SSA. In particular, such investments are found to increase longevity of the start-ups and contribute to resources and capabilities enhancement in the entrepreneurial businesses that provide technical innovations of global significance.…”