Kenya widely receives acclaim as a hotbed for entrepreneurship. Not only do we come up with unique innovations such as in the financial technologies and development economics spaces, but also involve copycat ventures that then outperform the first movers into a sector.
While many millions of us choose entrepreneurship as our main economic activity, millions more of us also choose entrepreneurial side hustles even if we are gainfully employed in the formal job sector. Side hustles range of course from farming to shops to consultancies and everything in between. We cover all the bases.
In Kenya, we are by our very nature and culture a very hopeful and optimistic people. This contrasts to some of our neighbours, such as Ethiopia, where researchers find high degrees of fatalism feeling that there is little one can do to change one’s lot in life and therefore must just face the realities dealt to them. But in Kenya, we actively strive and angle to enhance our economic futures and that of our families.
Commensurate with our entrepreneurial vigour comes a plethora of research from academics on the success rates of business startup ventures in Kenya and around the world.
While determinants of entrepreneurship success, entrepreneurial satisfaction, and entrepreneurial orientation are indeed valuable learnings and are replicated by hundreds if not thousands of aspiring graduate students across East Africa annually, the topics and concepts do not get to the heart of why most people enter entrepreneurship in the first place.
Inasmuch, we stand to fall into the microfinance research trap. For decades from the 1980s through the 1990s and into the 2000s, most observers assumed that if micro business loans given through microfinance institutions were repaid, then that repayment success correlated with better personal life outcomes.
However, by the 2010s when researchers actually started looking into the effects of micro businesses taking on these high interest microfinance loans, only about 25 percent of these business owners had better lives as a result of the loans, while 50 percent had their lives stay at about the same, and a shocking 25 percent of microfinance loan takers were measurably worse off because of taking the loan. So, it turned out that repayment rates did not actually correlate with better lives.
In entrepreneurship, we face the same dilemma. Just because someone is entrepreneurially oriented and their business survives, it does not necessarily mean that they are better off.
In a brand new very high-profile research study that was just published by Maria Tamontseva, Scott Seibert, Jos Akkermans, and Wouter Stam, it looked at a more logical approach to entrepreneurship by investigating perceived career success.
Many entrepreneurs start business ventures because they see the value as creating career success for themselves.
Across the world and right here in East Africa, people are choosing entrepreneurship as their main career with higher and higher frequency. When entrepreneurs see prospective career success through their entrepreneurship, then it cascades into other areas of their lives.
Importantly, entrepreneurs do not experience career success merely when their businesses perform well. They experience success when business performance advances the goals that matter personally to them.
While the existing research shows a widespread tendency to measure every entrepreneur through turnover, profit, employee numbers, or business survival, this is not what matters most to the entrepreneurs themselves.
Even though financial performance does matter greatly, entrepreneurs instead tend to really pursue entrepreneurship due to the aspects of autonomy, having meaningful impact, being able to personally master a skill or craft, greater lifestyle flexibility, better recognition from their communities, the ability to have family continuity, or leaving legacy to their children and grandchildren.
Therefore, in summary, an entrepreneur who earns the most and with the most business success may not necessarily possess the most successful entrepreneurial career. So, researchers, incubators, financiers, and government policymakers need to instead look at what matters most to entrepreneurs themselves and not fit them into one straitjacket.