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How business owners in Africa can increase their chance of success

Visiting Professor of Organisational Behaviour Michael Frese contributes to new report

Most international government meetings put Africa in the foreground because Africa has been the only continent whose wealth has not consistently increased, but often decreased during the last 25 years.

Most economists assume that one of the most important functions of good governance in developing countries is to increase the number and the quality of enterprises that exist in those countries. London Business School’s Visiting Professor Michael Frese et al. now look at one important missing piece in this equation: what can business owners in African countries do to increase their chances of success?

The answer, in short, is to plan more in detail and to plan more proactively. Planning proactively means that one prepares for future opportunities in the market and for future problems now. Planning more in detail means to think of the most important issues of one’s long term goals. It is often argued that in the chaotic environment of African economies it is not that useful to plan. This seems to be wrong, however.

Quite clearly planning is related to success in three African countries, as Frese et al. have shown in one of the most sophisticated analyses of African business people – a three country study in South Africa, Zimbabwe, and Namibia. Often planning may enhance dealing with unexpected events because planning helps business owners to know more about what can happen and therefore look out for these problems and maybe prepare for these problems so that they can deal with them once they appear.

Who are the people who plan well and plan for the future? It seems to be mainly people, who have the right motivation, the right mental preparation, as well as the right cognitive abilities. Economists often assume that once the economic conditions of a country are right, firms will prosper. Frese et al. show that the psychological conditions have to be right as well.

How often does the World Bank give money to entrepreneurs in Africa without knowing whether the right psychological conditions are met? The paper also quotes an article in preparation that shows that planning well and planning for the future can be taught profitably to owners in Africa and in Germany. Thus, while planning may lead to bureaucracy in big firms, it is something that is very useful in small business in difficult economic environments.

The report, ‘Business owners’ action planning and its relationship to business success in three African countries’, appeared in the Journal of Applied Psychology, 2007, 92, 1481-1498. 

It was written by Frese, M., Krauss, S.I., Keith, N., Escher, S., Grabarkiewicz, R., Luneng, S.T., Heers, C., Unger, J., & Friedrich, C. 

Created: Wednesday 19 December 2007

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