Minority Entrepreneurs in East Africa: An effectual approach for Norwegian start-ups in Kenya

Abstract

With the economic growth in the emerging markets surpassing the growth in industrialized countries, an increasing number of entrepreneurs are grasping this opportunity by establishing new ventures in such markets.Through a four months field experiment in one of these emerging markets, Kenya, this thesis concludes that entrepreneurs from the industrialized-Western hemi- sphere, with a proper understanding of the local culture and its customs, have a competitive advantage over native East-Africans. This is due to the network effects between minority entrepreneurs and the valuable role social capital plays in these untransparent markets. Through the methodology of action research, the study also shows that the effectual approach to business development is suited to quickly test a business model with limited prior knowledge about the market.This is a case study conducted on RESolar, a Norwegian start-up company that sells solar power plants to corporate customers in the tourism sector in Kenya.The classic effectual approach is refined with additional elements from resource- based theory, social capital, network theory and the lean start-up approach before it is tested out in the field experiment. The competitive advantage enjoyed by minority entrepreneurs is enabled due to the nature of the Kenyan market. The customers and other key players in the market are in many ways in a similar situation. They are foreigners that have developed companies in a broad range of sectors. New growth companies are often started by minorities. Social capital and the effects of the minority entrepreneur network therefore play a bigger role in this market than usual and should be utilized to the full extent.The authors also recommend future entrepreneurs to use the unified effectual framework that this thesis creates as a model for their business development in foreign markets.