Entrepreneurial failure in agribusiness: evidence from an emerging economy

Abstract

PurposeThis article extends the literature on agricultural entrepreneurship and entrepreneurial failure in Ghana, a country in sub-Saharan Africa by exploring failure in a cohort of firms. As engines of economic growth, the performance of micro, small, and medium-sized firms is important. Agro-based enterprises, in particular, are vital because entrepreneurial failure in agribusiness affects food security, and is disruptive to social and economic stability.Design/methodology/approachUsing qualitative data from interviews, we identified reasons for the failure of a group of entrepreneurs associated with a novel agribusiness activity in an otherwise economically attractive market in an emerging economy. The data for the study came from 69 respondents who started and exited aquaculture, a form of agribusiness within a period.FindingsThe results of this study show that there can be negative effects of social structure on entrepreneurial behavior and outcomes. The strong social ties that emerged among the farmer-entrepreneurs led to excessive peer-to-peer copying and knowledge sharing, leading to premature closure of the search for nonredundant ideas. One consequence of that was the narrowing of the pool of available knowledge, which if broadened, may have improved the chances of success of these businesses. Also, the results demonstrate that a lack of institutional support in the form of training in the appropriate management of a new technology adversely affected the farmer-entrepreneurs and their businesses. It is important for governments that introduce a new economic activity to provide the scaffolding, including an understanding of the value chain, to enhance the chances of the economic success of ventures. Entrepreneurs for their part need to broaden their search for new ideas outside their peer groups to increase their chances of accessing non-redundant knowledge.Research limitations/implicationsThe sample size is small, limiting the generalization of findings and the recollection of events may fade with the passage of time, especially since most of the farmers did not keep written records.Practical implicationsFirst, entrepreneurship and economic development, long held as a panacea for moving developing countries out of poverty, may require consistent government support. Second, entrepreneurs venturing into business need to understand the particular challenges associated with a novel activity. Finally, entrepreneurs need to recognize that interconnectedness should not necessarily lead to the convergence of ideas and behavior.Originality/valueThe study extends and contextualizes the literature on agricultural entrepreneurship and entrepreneurial failure. Besides, the study focuses on entrepreneurial failure in Sub-Saharan Africa, an under-researched setting.