Subsistent Entrepreneurship in Ghana

Abstract

Entrepreneurship is critical to the economies of developing countries as it is the main source of employment. This is because people in these contexts are often inadequately prepared to pursue any other employment options, nor are other options – such as wage employment – available to them. They therefore take on self-employment out of necessity. However, due to its low barriers to entry, the easily observable nature of businesses, and the multitudes of people needing to engage in entrepreneurship, this form of entrepreneurship often creates little value, due to a reliance on replication and the resultant over-competition. Regardless, due to its significance in these contexts, it is imperative to understand why subsistence entrepreneurs enter into self-employment, how this unfolds over their careers, the types of obstacles they face, and what guides their choices. By interviewing twenty (20) self-employed Ghanaian entrepreneurs in March 2017 about why they decided to pursue self-employment and what guided their choices, I isolated three factors influencing their entrepreneurial choices. Firstly, “Life-obstacles” such as unemployment and lack of education unexpectedly thrust them into self-employment. Secondly, “venture-specific influencers” such as social capital and their desired goals from entrepreneurship influenced the type of ventures that could be pursued. And finally, “Life-events” like relocation, marriage, divorce, and pregnancy led to a continual cycle of entry, exit, and re-entry into entrepreneurship.

Central to these findings is that subsistence entrepreneurship is shaped by external forces, Hence to influence and positively impact those engaged in this type of entrepreneurship, these outside influences should be confronted. To encourage profitable ventures, it is recommended that free education, self-help groups, and skill-development programs be introduced, which should prepare entrants for success.