What really drives startup success in Africa? “Skills” simply aren’t enough
But how should entrepreneurs be developed? Dr Ken Onwu has just won the Morne Mostert Award for a Futures-related PhD at Stellenbosch Business School. His research finds that a series of factors impact entrepreneurial success on the continent.
Globally, tech startups begin their operations and strategic business initiatives with high expectations of success, but 90% of them collapse within their first year of operation. In most developing countries, that number is closer to 95%. This painful reality is reportedly said to be due to the lack of understanding of what capabilities to foster and the degrees to which each one should be focused on.
Onwu explores the drivers of entrepreneurial orientation and innovation capabilities in African internet startups during his PhD journey at Stellenbosch Business School. His research investigates which capabilities are necessary to foster innovation and entrepreneurship in tech startups and how these capabilities influence startup performance.
In many countries of Africa, this knowledge gap has led to low levels of sustainable innovation and entrepreneurial activity, which pose a potential threat to employment creation and economic productivity. In addition, Onwu found that external capabilities, like infrastructural capabilities or macro-economic capabilities, are constantly changing and peculiar to different business environments, making it very difficult for startups to develop.
He adds that startups that develop the appropriate internal capabilities may better understand to what extent investments into specific capabilities, may foster their ability to achieve their internal business objectives.
“Startups have often looked at capabilities in isolation as drivers of success. Consequently, such limited focus may not provide a comprehensive overview of the necessary capabilities to drive success in an increasingly digitised business climate. Consequently, a comprehensive overview of the capabilities deemed necessary to drive success is lacking,” he says.
A sample of 254 individuals employed in tech startups across four countries – Nigeria, Ghana, Kenya and South Africa – was surveyed for his research.
Dr Onwu was awarded the Morne Mostert Award for a Futures-related PhD in Business Management and Administration. Presenting the award, Dr Morne Mostert (also the inventor of the Mindet Index) said: “The warmest congratulations to Dr Onwu on receiving his achievement. I am honoured by his acceptance. His work is set to disrupt the future of entrepreneurship education and challenge the prevailing mindset of entrepreneurship in Africa.”
The study contributes to existing tech startup literature in four ways:
- It provides a comprehensive view of the dynamic capabilities that tech startups need to increase their likelihood of success, something isolated approaches have struggled with in the
- It directly links these capabilities to organisational performance and illustrates how the key mediators of innovation capabilities and entrepreneurial orientation contribute to organisational performance.
- The findings also help better understand the combined mediating effects of innovation capabilities and entrepreneurial orientation – previously often studied separately – on fostering firm performance.
- The model was tested in an emerging market context where there is a paucity of research and insight into the factors contributing to startup success.
Importance of research findings
During his research, Dr Onwu used Teece’s SST (sense, seize, transform) dynamic capabilities-based approach. This approach was premised on using capabilities employees and entrepreneurs of tech startups identified as relevant, meaningful and thought-provoking for tech startups looking to drive success.
The study’s significance is that the SST model’s application suggests that it is likely to give startups and their founders better performance indicators that have the potential to influence their culture, mindset, behaviours, and ability to succeed, where so many seem to have failed before.
Access the full research on SUNScholar’s portal: https://scholar.sun.ac.za/handle/10019.1/123898
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