How entrepreneurship ecosystem influences the development of frugal innovation and informal entrepreneurship

Abstract

This article critically analyses how the entrepreneurial ecosystem and institutional environment influences the development of frugal innovation and informal entrepreneurship. There is a dearth of empirical research on African entrepreneurship ecosystems and complementors that produce innovations in the informal sector. We address this gap, by examining why and how informal businesses operate and evolve. Based on a qualitative approach, interviewing 20 business owners in Nigeria, two focus groups meeting with 5 and 7 business associations leaders, respectively, we examine the role of institutional environments, how entrepreneurs operate and overcome the barriers to entrepreneurship. The results reveal a model of determinants of frugal innovation and informal entrepreneurship ecosystem comprising formal/informal rules, access to market, and family as important elements that act as a means to effective knowledge flows, networking, capital, and resources sharing.

Public–private entrepreneurial financing partnership model in Nigeria

“…The contextual complexity of entrepreneurship research requires suitable research methods and an epistemological framework (Igwe et al, 2020). This research relied on primary data collection through the conduct of interviews of digital firms, formal and informal financing institutions and government financing programme who have provided finance for the SMEs development in Nigeria.…”

“…The list of participants was sourced from firms' websites, enterprise documents, business magazines, media articles, other literature and archives, while the latter took the form of in‐depth interviews with founders and senior managers of the SMEs, bank officials, government officials angel investors and VCs involved in establishing and financing SMEs. Therefore, a purposeful and convenience sampling procedure was used to select experienced business owners and financial consultants who were available and expressed their intention to participate in the research (Igwe et al, 2020). The selection of participants was by simple random sampling.…”

“…According to Nguyen and Canh (2020) informal finance refers to small, unsecured and short‐in‐maturity funding capital sourced from (a) private moneylender(s); (b) the relatives and friends of the business owners; and (c) other enterprises. Access to capital depends heavily on the institutional structure and regulatory framework prevalent in an environment (Igwe, Odunukan, Rahman, Rugara, & Ochinanwata, 2020).…”

“…The main sources of finance for SMEs include the owner's savings, government institutions, cooperate organizations, individuals, relatives and friends, and moneylenders (Akingunola, 2011). In Nigeria, the formal financial services exclude about 65% of the economically active population (Igwe, Newbery, Amoncar, White, & Madichie, 2018, 2019, Igwe et al, 2020). Taiwo, Falohun & Agwu (2016) state that banks in Nigeria have been very reluctant to grant loans to SMEs, which they regard as a high‐risk sector.…”

Determinants of Household Income and Employment Choices in the Rural Agripreneurship Economy

“…Finally, the data are drawn from a survey of rural farmers (heads of households) from South-eastern Nigeria selected purposefully from a list of farmers registered with the State government Ministry of Agriculture. The South-eastern region of Nigeria is also known for its agricultural activities, as well as a high level of entrepreneurial and small business activities (see, Igwe et al, 2018Igwe et al, , 2019Igwe et al, and 2020.…”