Providing Aid to Developing Countries by Helping to Establish Family Firms

Providing Aid to Developing Countries by Helping to Establish Family Firms

Monika Nova (Univerzita Karlova v Praze, Czech Republic)
DOI: 10.4018/978-1-7998-8426-2.ch010
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Abstract

The chapter would aim to pinpoint and depict some specific features of family firms in developing countries and to examine social and economic consequences that they might have for the families involved. Precisely targeted selection of the families to be researched resulted in choosing four families conducting business in the local conditions for three years or longer and supported by foreign donors. All the families were domiciled in the Republic of Malawi. The qualitative research presented in the chapter will examine support given to the family firms. Having summarized and discussed results, the authors found this type of enterprise to be a new valuable tool of development cooperation capable of creating job openings, encouraging intergenerational experience sharing, and reducing ill-considered migration in search of work. Family firms do not rest on only their economic potential. Their non-economic repercussions make the businesses unique and of profound consequence to local communities.
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Introduction

Development cooperation should not just raise the living standard in developing countries, but it should primarily aim to extricate families from economic stagnation and push them towards self-reliant economic growth. Achieving this goal in specific countries requires mainly effort and motivation.

Nowadays, it is generally believed that the official development assistance should best be focused on the private sector. In 2010 Easterly, an important author, maintained that the sub-Saharan Africa depended directly on the African private sector and private entrepreneurs, on active civil society and political reformers, not on “ineffective, bureaucratic and frequently misinformed western community”. (Easterly, 2010)

The experience that this paper´s author gained during her several years of working in the developing countries of Africa, of managing health & social NGOs in Uganda and running some social enterprise projects in Malawi and Zimbabwe leads her to fully subscribe to the Easterly´s opinion. Her practice taught the author the importance of supporting the creation of new job opportunities at the local labor markets of developing countries. Profiting by her experience specified above, three years ago the author decided to help building family firms by collecting money and raising funds from foreign companies and individual donors. This effort resulted in establishing four prosperous family firms described below through the results of our research.

The author´s decision to support family firms was driven by expert opinions of economists who mentioned a number of projects which worldwide succeeded in applying market tools to effectively solve social problems. She was also interested in a variety of models and tools already beneficially applied in western countries and in the ways through which the models and tools could be converted into means of assistance offered especially to the local communities.

The role that family firms play in the global economy is vital - they are responsible for 50 to 90 percent of world´s Gross Domestic Product (Kenyon-Rouvinez and Ward, 2016). Moreover, the firms´ benefits do not confine to purely economic matters - it is also the non-economic factors that make the establishments unique and socially very desirable. (James, 2020)

Their impact and history notwithstanding, family firms operating in the developing countries still wait to be investigated in researches and to have the research results published. This is particularly true of the firms´ potential as tools of assistance provided by foreign investors.

The chapter would aim to pinpoint and depict some specific features of family firms in developing countries and to examine social & economic consequences that they might have for the families involved. Our research has also attempted to prove or disprove the assertion that support provided by foreign donors and individual philanthropists or companies constitutes an effective tool of international aid.

The research agenda has been enshrined in a generally formulated research question: What are the specific ways of behavior exhibited by the family firms?

Our precisely targeted selection of the families to be researched resulted in choosing four families conducting business in the local conditions for three years or longer and supported by foreign donors. All the families were domiciled in the Republic of Malawi.

The qualitative research we are going to present in the chapter will examine support given to the family firms. Using the research results, we will demonstrate that foreign assistance rendered to one specific family may improve the life quality of not only the family itself but also of their community and entire neighborhood. We will exemplify good practices side by side with poor strategies which should better be avoided. Having summarized and discussed our results, we have found this type of enterprise to be a new valuable tool of development cooperation capable of creating job openings; encouraging intergenerational experience sharing; and reducing ill-considered migration in search of work.

Key Terms in this Chapter

Start up: A startup or start up is a company or project initiated by an entrepreneur to seek, effectively develop, and validate a scalable business model.

Family Firm: firm that has individuals, who are related by either blood or marriage, as the majority-owners.

Employee-Oriented Innovations: A pure innovation whose added value contributes to a better life for employees in enterprise.

NGO: Non-profit non-governmental organization which that was not founded for profit.

Family-Centricity: The belief that family is central to wellbeing and that family members and family issues take precedence over other aspects of life.

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