Social networks provide entrepreneurs with invaluable resources, from finding funding and building a customer base to sourcing suppliers and specialists. The right social network not only reduces start-up risk, but it’s the foundation of every entrepreneur’s market and brand.

But increased partisan tensions around the world seem to be narrowing the networks vital to entrepreneurs.  We’ve known for a decade that political affiliation increasingly affects Americans’ everyday lives, including where they live, whom they befriend, and whom they welcome as in-laws. A recent Cato Institute survey revealed that nearly a third of Americans worry that voicing their political views could even harm their employment.

The answer to bridging these growing social divides might just lie in societies where this environment has been the norm for decades—like Kenya. A new study, published in the Strategic Entrepreneurship Journal, takes local professionals’ experience navigating entrenched ethnic boundaries and provides practical guidance for entrepreneurs attempting to develop professional ties across social boundaries everywhere.

What Can We Learn from the Social Context Entrepreneurs Navigated in Kenya?

“Kenya provided a fruitful ‘extreme context’ to study how entrepreneurs develop business ties in divided societies,” said Christian Busch, one of the study’s authors and an associate professor at USC’s Marshall School of Business. “Kenya is a hub of entrepreneurial activity in Africa and an ethnically fractionalized country that recently faced a profound institutional change that made ethnicity more salient.”

Busch, and co-author Robert Mudida of the Central Bank of Kenya, followed four Nairobi-based IT companies over seven years, beginning with the country’s devolution in 2013. The transfer of power from a central government to 47 local entities intensified ethnic affiliation, as most localities aligned with tribal communities. As one of the IT company founders described it:

“In devolved environments, a lot of things have been localized…It all depends on the

relationships. In a tribal society such as ours, that carries a lot of weight, people feel that they will give the work to one of our own. They say, why should they support someone else?”

How the Market Context Intensified Social Boundaries

Most of these companies previously partnered with the central government, working with bureaucrats that specialized in communications and IT. As those partnerships disbanded, decentralization created a new digitization push at the county level, opening business opportunities for large IT infrastructure projects. However, county government officials typically lacked experience with complex IT projects, which made selling based on product features challenging. As one entrepreneur put it:

“In this country, it is very difficult to win a tender fully by merit…everyone will default to a survival mechanism where you try to build informal networks.”

The IT company founders found ways to signal their ethnicity in conversations where they shared commonality with the government officials, or they leveraged the ethnicities of their partners or spouses. One founder gave the example of calling his wife (a Luo) when he was in a Luo-dominated setting, using a few Luo words loudly enough so that they could hear him, which “makes business easier.”

How Kenyan Entrepreneurs Transcended Ethnic Affiliations to Build Business Ties

Researchers found that the IT entrepreneurs used two main tactics to transcend ethnic affiliation: finding a different social connection or turning the focus away from ethnicity.

Reframing the In-group:

Finding a way to connect with the county government officials other than on an ethnic basis was more difficult, but not impossible. For the entrepreneurs that succeeded, some of the tactics included:

  • Connecting over parenting
  • Talking about sports interests
  • Discussing other non-work interests
  • Connecting based on faith communities

Defocusing from Ethnicity

Some tactics, like using first names to keep from signaling tribal affiliations, are time-held strategies across multiple societies. Immigrants have long ‘Anglicized’ their first or last names in American society to signal affiliation. The tactics with broader application typically centered around building trust for products and services, including:

  • Avoiding small talk in favor of discussing product benefits
  • Emphasizing where a prospect’s self-interest aligns with offered services
  • Obtaining and advertising multiple third-party certifications
  • Collaborating with established, neutral third parties like business schools
  • Offering pro-bono IT services
  • Leveraging the entrepreneurs’ network to solve a business problem not related to the prospective project

The researchers note, however, that the founders’ prior experience with cross-ethnic relationships gave the four IT companies in the study a particular advantage for creating inter-ethnic business ties. Each founder was married to a partner from a different tribe, and many also had mix-ethnicities or inter-ethnic, cosmopolitan upbringings. It is perhaps their willingness and ability to conceive of social connections along lines apart from ethnicity that makes their success forging these alliances possible.

Many of the tactics applied in the study can help entrepreneurs, and private individuals, navigate partisan divides productively. It suggests that the ability to think beyond social boundaries and an openness to creating relationships on multiple bases could be the key to broadening social networks. It also serves as a lesson for globalizing companies that understanding the social and ethnic context of a region could be pivotal to lunching a product successfully.

Find a full explanation of the study and how the Kenyan entrepreneurs developed social ties both within and outside their ethnicities in the full text, available in the Strategic Entrepreneurship Journal.

Published Date
17 January 2024

Article Type
Article Press Release, Article Summary/Abstract, Journals News

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