Managers and their Entrepreneurs:Power and Authority in

indigenous Private manufacturing firms in

nigeria

Power and Authority in indigenous Private

manufacturing firms in nigeria

Before 1990s, most business people concentrated in trade not manufacturing

“industrial elite”: Today, more wealthy indigenous moving into medium to large manufacturing

Are they capable of creating and sustaining an industrial base for nigeria?

Before 1990s, most business people concentrated in trade not manufacturing

“industrial elite”: Today, more wealthy indigenous moving into medium to large manufacturing

Are they capable of creating and sustaining an industrial base for nigeria?

Study determines how relationships between owners and managers in private manufacturing businesses facilitate or handicap the chances of survival of the firm

Study determines how relationships between owners and managers in private manufacturing businesses facilitate or handicap the chances of survival of the firm

Profiles of managers and owners

Profiles of managers and owners

Managers generally highly literate

Most College educated Many have multinational business experience

Managers generally highly literate

Most College educated Many have multinational business experience

ownersowners

generally have little formal education

Only a quarter have a college education

Education does not determine level of success of an entrepreneur

generally have little formal education

Only a quarter have a college education

Education does not determine level of success of an entrepreneur

Power and authorityPower and authority

Owners wield power over managers and workers

Power not based on expertise or knowledge rather on who the person is

Managers have authority over workers

Authority based on position and expertise

Owners wield power over managers and workers

Power not based on expertise or knowledge rather on who the person is

Managers have authority over workers

Authority based on position and expertise

Sympathetic recruitment of

managers

Sympathetic recruitment of

managers Two types of recruitment: sympathetic and conventional

Sympathetic: entrepreneurs hiring unemployed managers to help them out

Conventional: based on objective criteria related to requirements of the position

Two types of recruitment: sympathetic and conventional

Sympathetic: entrepreneurs hiring unemployed managers to help them out

Conventional: based on objective criteria related to requirements of the position

Typical managers’ complaints of ownersTypical managers’

complaints of owners Lack of decision-making powers given Absent owners Positions filled by unqualified family members

Lack of trust in handling company accounts

Low salaries Dead-end jobs with no clear paths of promotions

company money used for personal expenses

Lack of decision-making powers given Absent owners Positions filled by unqualified family members

Lack of trust in handling company accounts

Low salaries Dead-end jobs with no clear paths of promotions

company money used for personal expenses

Managers commitment to company

Managers commitment to company

Sense of obligation due to sympathetic hiring despite dissatisfaction

Lack of opportunities elsewhere

Sense of obligation due to sympathetic hiring despite dissatisfaction

Lack of opportunities elsewhere

Problems facing businesses

according to managers

Problems facing businesses

according to managers Inadequate operational resources

Financial problems due to excessive borrowing and high interest rates

Unreliable supply chains Firm continuity: who will take over business when owner dies

Inadequate operational resources

Financial problems due to excessive borrowing and high interest rates

Unreliable supply chains Firm continuity: who will take over business when owner dies

Managers’ suggestions for enterprise durability

Managers’ suggestions for enterprise durability

Sell shares to public Decentralize and delegate authority

Provide more work resources Improve working conditions

Sell shares to public Decentralize and delegate authority

Provide more work resources Improve working conditions

Entrepreneurs’ mistrust of managers

Entrepreneurs’ mistrust of managers

Resources used for personal gain

Fear that knowledge of company operation and strategy may be used against them

Culture of secrecy

Resources used for personal gain

Fear that knowledge of company operation and strategy may be used against them

Culture of secrecy

Suggestions to improving business success

Suggestions to improving business success

Importance of job rewards Post employment security (pension) Government legislation that encourages or mandates firms to build such security

Recognition of mutual interests on the part of owners and managers to long term success of company

Importance of job rewards Post employment security (pension) Government legislation that encourages or mandates firms to build such security

Recognition of mutual interests on the part of owners and managers to long term success of company

Trade and the politics of informalization in bissau, guinea-bissau

Trade and the politics of informalization in bissau, guinea-bissau

Roots of informalization

Roots of informalization

newly independent state created socialist oriented society

People’s stores throughout country collected agriculture from peasants

Prices fixed by state

newly independent state created socialist oriented society

People’s stores throughout country collected agriculture from peasants

Prices fixed by state

problelmsproblelms

Not enough people’s stores to supply all population

Inefficiency and shortages of goods widespread

Eventual loss of Government political and economic credibility

Not enough people’s stores to supply all population

Inefficiency and shortages of goods widespread

Eventual loss of Government political and economic credibility

Disengagement of population

Disengagement of population

Producers unwilling to cooperate and sacrifice for the state

Producers evaded sales to official outlets in favor of selling at higher prices through clandestine networks

Producers unwilling to cooperate and sacrifice for the state

Producers evaded sales to official outlets in favor of selling at higher prices through clandestine networks

Effect on governmentEffect on government

Deprived it of taxes and export products

Decline of foreign exchange Decline of domestic revenue Eventual rise of external debt

Deprived it of taxes and export products

Decline of foreign exchange Decline of domestic revenue Eventual rise of external debt

The urban eliteThe urban elite

State officials and employees in state stores benefited from chronic food scarcity

Smuggling of goods in order to charge high prices in black market

Private fortunes amassed using informal channels of circulation and their privileged positions

State officials and employees in state stores benefited from chronic food scarcity

Smuggling of goods in order to charge high prices in black market

Private fortunes amassed using informal channels of circulation and their privileged positions

Majority of the population

Majority of the population

Forced to survive outside the wage and state market system

Petty trading as a way of survival

Government backlash against informal economy

Forced to survive outside the wage and state market system

Petty trading as a way of survival

Government backlash against informal economy

The informal boom in the adjustment era

The informal boom in the adjustment era

Under pressure of donors the informal sector was decriminalized and considered important to economy

Liberization of economy Two sub-spheres within the informal trade sector emerged: accumulation and survival

Under pressure of donors the informal sector was decriminalized and considered important to economy

Liberization of economy Two sub-spheres within the informal trade sector emerged: accumulation and survival

Informalization for AccumulationInformalization for Accumulation

State bureaucratic class became commercial bureaucratic class

Enjoyed protection and access to the state and formal institutions

Ability to operate within the formal and informal sector to its benenfit

State bureaucratic class became commercial bureaucratic class

Enjoyed protection and access to the state and formal institutions

Ability to operate within the formal and informal sector to its benenfit

Informalizationfor survival

Informalizationfor survival

Urban households rely heavily on informal trade for income

Trade of food items most widespread

Most are one-person enterprises

Beyond the control of government

Urban households rely heavily on informal trade for income

Trade of food items most widespread

Most are one-person enterprises

Beyond the control of government

Problems for most traders

Problems for most traders

Inflation of prices in general Most not able to save Most income spent on food Decreased scale of operation and longer working hours

Lower purchasing power of customers High competition hostility towards informal traders despite changes in official policy from officials and large merchants

Inflation of prices in general Most not able to save Most income spent on food Decreased scale of operation and longer working hours

Lower purchasing power of customers High competition hostility towards informal traders despite changes in official policy from officials and large merchants

Trade credit in zimbabwe

Trade credit in zimbabwe

Important source of short-term liquidity for business

Terms comparable to those in industrialized countries

Large firm advantages: credit for longer periods at lower interest rates; more likely to be offered cash discounts

Important source of short-term liquidity for business

Terms comparable to those in industrialized countries

Large firm advantages: credit for longer periods at lower interest rates; more likely to be offered cash discounts

Trade credit approval based onTrade credit

approval based on

Formal screening Statistical discrimination Reputation Aquaintance Trail bases for new customers

Formal screening Statistical discrimination Reputation Aquaintance Trail bases for new customers

Reputation effects are most important for large firms

Relationships are important to medium and small firms

Microenterprises typically have neither

Reputation effects are most important for large firms

Relationships are important to medium and small firms

Microenterprises typically have neither

Problems facing african firms

Problems facing african firms

found to be less likely to obtain trade credit

Disconnect between african entrepreneurs and the white-and-asian-dominated business community (bankers and suppliers)

Perceived as less reliable in loan repayment

Less well-connected and have few acquaintances in banking and business

found to be less likely to obtain trade credit

Disconnect between african entrepreneurs and the white-and-asian-dominated business community (bankers and suppliers)

Perceived as less reliable in loan repayment

Less well-connected and have few acquaintances in banking and business

Sources of financeSources of finance

Supplier credit: widely used by all businesses

Non-bank financial institutions

Bank overdrafts

Supplier credit: widely used by all businesses

Non-bank financial institutions

Bank overdrafts

Providing trade creditProviding trade credit

Filling out credit application form and provide bank references

For large firms reputation is enough

Having prior relationship with supplier important for small and microenterprices

Filling out credit application form and provide bank references

For large firms reputation is enough

Having prior relationship with supplier important for small and microenterprices

Cash discountsCash discounts

Offered for early payment African firms less likely to offer

Used to entice early payment by problematic customers

Offered when cash is needed

Offered for early payment African firms less likely to offer

Used to entice early payment by problematic customers

Offered when cash is needed

Policy recommendationsPolicy recommendations

Credit delivery programs should focus on teaching rules of business to loan recipients

Help entrepreneurs graduate into medium size firms

Create more opportunities for business contacts between black and white entrepreneurs

Encourage established firms to experiment with black subcontractors

Credit delivery programs should focus on teaching rules of business to loan recipients

Help entrepreneurs graduate into medium size firms

Create more opportunities for business contacts between black and white entrepreneurs

Encourage established firms to experiment with black subcontractors