What founders in developing countries learn about organizing microenterprise growth

2015

Katharina Anna Poetz Nico Carsten

Entrepreneurship holds significant potential for advancing developing countries but there is increasing recognition that these effects will not only depend on easing capital constraints and institutional support but also on entrepreneurial talent and learning. Based on analyzing nine case studies of microenterprise growth in Tanzania, this study therefore investigates what microenterprise founders learn about effective resource orchestration (RO) from organizational process experience. Our findings suggest that they first learn to orchestrate relatively simple and informal ‘micro-programs’ for gathering resources. Only upon organizational growth, they experience an internal ‘organizing shock’ that draws their attention to more effective RO. However, due to environmental conditions, this experience can take place comparably late in the growth process, thereby increasing the chances of unnecessary and costly organizational failure. In this regard, we find that only those founders that rapidly make sense of ineffective processes, gain management knowledge from different sources, and devote time and energy to managerial tasks, manage to sustain organizational growth by learning to make ‘fixes’ for internal problems and diversify more strategically. The findings lead to a set of propositions about founders’ learning from organization process experience in opportunity-rich, growth-constrained environments, and are integrated into a framework for microenterprise growth.

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