‘We don’t deal with courts’: Cooperation and alternative institutions shaping exporting relationships of small and medium-sized enterprises in Ghana

Abstract

Through an investigation of small and medium sized enterprises (SMEs) exporting in contexts which lack a formalised institutional environment in a less developed country, this article shows how entrepreneurs cope with institutional deficiency. By drawing on an analysis of 12 SMEs exporting from Ghana to other West African countries, the findings reveal how entrepreneurs and their organisations avoid recourse to the courts and instead, use culturally specific relationships to settle disputes when exporting. Institutional forms operating in parallel to the formal legal system are examined. These are shown to be hybrid forms drawing on traditional cultural institutions such as chieftaincy and religion, combined with forms of corporations and cooperatives. Assumptions around the different roles of family and kinship also are explored. The study contributes to the ongoing development of a theoretical understanding on trust and relationship building in international entrepreneurship, and the importance of understanding cultural context.

Norms and Trust-Shaping Relationships among Food-Exporting SMEs in Ghana

“…SMEs may therefore use networks as sources of both opportunities and complementary resources (Ferrary and Granovetter, 2009;Jämsä et al, 2011). SME entrepreneurial networks may be developed based on social relations such as religion, family, friends and acquaintances, as well as links with suppliers, customers and distributors (Drakopoulou-Dodd, 2011;Amoako and Lyon, 2014). Networks could be argued to be particularly important for enterprise development in countries characterized by less developed formal institutions (Welter and Smallbone, 2006;Prashantham and Dhanaraj, 2010).…”

“…Networks with customers have been found to enhance the competitiveness of micro-enterprises in the agri-food sector (Brinkmann et al, 2014). Recent studies also provide examples of how networks built on norms and trust could facilitate internationalization in diverse spatial and cultural contexts such as China (Luo, 2003), India (Chetty and Agndal, 2007), Malaysia (Zain and Ng, 2006), Brazil (Rodrigues and Child, 2012), Eritrea (Ghauri et al, 2003) and Ghana (Amoako and Lyon, 2014). However, social networks may also constrain SME internationalization (Ellis, 2011).…”

“…Norms underpinning ties embedded in contracts (Macneil, 1980;Sobel, 2008), family and kinship (Granovetter, 1985;Drakopoulou-Dodd, 2011), religion (Dana, 2010;Drakopoulou Dodd and Gotsis, 2007), trade associations (Lyon and Porter, 2009), credit relations (Amoako and Lyon, 2014) have been driving entrepreneurial relationships in various contexts. However, it is possible that, for example, norms of gender and religion (Munshi and Rosenzweig;Essers et al, 2013) as well as loyalty and strong reciprocity within certain networks (Lyon and Porter, 2009) could constrain enterprise development.…”

“…Norms of weak ties from family/kinship and friends have been known both to facilitate and to constrain entrepreneurship (Drakopoulou-Dodd, 2011) and these contradictions have been described in the specialist literature as the 'paradox of the family' (Amoako and Lyon, 2014). These contradictory norms are found not only in Ghana but also in other cultures.…”

“…The internationalization of food-exporting SMEs in Ghana therefore presents an interesting case for exploring the processes related to how norms shape trust building and cooperation in entrepreneurial networks in an African context. These factors were found to have important implications for the survival and growth of smaller food exporters and agricultural food systems in Ghana (Lyon and Porter, 2009;Amoako and Lyon, 2014).…”