Cross-cultural Management and the Informal Economy in Sub-Saharan Africa: Implications for Organization, Employment and Skills Development

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Cross-cultural Management and the Informal Economy in Sub-Saharan Africa: Implications for Organization, Employment and Skills Development
  1 Cross-cultural Management and the Informal Economy in Sub-Saharan Africa: Implications for Organization, Employment and Skills Development Terence Jackson Correspondence: Terence Jackson PhD Professor of Cross-cultural Management Middlesex University Business School The Burroughs Hendon London NW4 4BT UK Tel. +44 208 411 5250 Email. Pre-refereed version Full citation: Jackson, T. (2012) Cross-cultural management and the informal economy in sub-Saharan Africa: implications for organization, employment and skills development, The  International Journal of Human Resource Management  , 23(14), July, 2012,  2 Cross-cultural Management and the Informal Economy in Sub-Saharan Africa: Implications for Organization, Employment and Skills Development  Abstract The informal economy has grown in importance within sub-Saharan Africa, yet there are debates about its role within national economies that appear not to take cognizance of the interests and the weak power base of those working within the informal economy. The current article argues that a cross-cultural perspective should be taken in understanding the geopolitical context of informal organizations, the power relationships involved and how the contributions and future of skills development, employment and organization within the informal and wider economies can be better understood and researched. It initially alludes to the informal sector being closer to local communities, and more appropriate to developments in Africa, but draws on Postcolonial Theory to better understand the nature and role of such organization within an interface of structural and phenomenological influences that question the nature of the ‘indigenous’ as an artefact. Some of the parameters of research in this area are drawn within this work while recognizing that further development is needed in both theory and methods. The article thus attempts to lay the foundations for a cross-cultural conceptual framework leading to a methodology that can inform both practice and policy in this neglected but important area. Key Words Cross-cultural Management, Sub-Saharan Africa, Skills and Employment, HRM, Entrepreneurship, Informal economy.  3 Introduction Critics of Western and colonial influences in sub-Saharan Africa have argued that institutions, including the firm, were imposed on African communities and continue to remain separate from community culture and traditional institutions (Ayitter, 1991; Dia, 1996). To support this assumption Jackson (2004) has reported African employees feeling that they are stepping out of their culture when they go into work in the morning, and stepping back into their own culture when they go home at night. If Western-style work organizations are contrary to local cultural norms, others claim that entrepreneurial activity is dampened by traditional African culture, making it difficult for entrepreneurs to develop and  prosper in African communities (Dondo & Ngumo, 1998), and presumably to construct different types of organization. Yet, Jackson et al (2008) point to the Western inflection these auth ors put on entrepreneurship as ‘ a highly individualistic, wealth seeking activity, rather than a community-  based activity…  they see communal and collective values as a barrier  because these encourage conformist behaviour and discourage individualistic wealth creation’ (p. 402). However, Mbigi (1997: 32) ass erts that in ‘ Afrocentric cultures and tribes, individual entrepreneurship is encouraged, nurtured, harnessed, celebrated collectively and highly respected, almos t to the point of canonisation’, while Wild (1997)  provides much evidence and examples in the 1990s and before of entrepreneurial activity and success in Zimbabwe. It is also the very nature of strong family and community bonds and networks in African societies that provide leverage for success in entrepreneurial activity within the informal economy (Khavul, Bruton, & Wood, 2009). There is no doubt that much of the entrepreneurial activity in sub-Saharan Africa is within the informal economy, as is employment and skills development. Barratt Brown (1995) believes the informal or ‘ second economy ’  to be huge, working in parallel and often in cahoots with the formal sector, normally ‘concerned with petty  production, using very simple, labour intensive techniques with a minimum o f capital’ (p.207). The objectives of the current article are to:  4    explain why the informal economy in sub-Saharan is important, particularly to the development of skills and as a provider of employment, yet under-researched at the level of the individual, the firm and their communities;    show the connections between policy and attitudes towards the informal sector, which appear not to be well informed by research and often not helpful to the development of contributions towards employment, employability and skills development, as well as to longer term sustainable human development;    make the case for cross-cultural research and its contributions towards understanding the appropriateness, as well as the effectiveness, of local practices such as traditional apprenticeships within the informal economy;     provide initial guidelines for research in this area which attempts to overcome some of the problems of representation of those working in the informal economy, as well as their agency in effecting the way they are researched and represented in policy decisions. In doing this, this work seeks to develop a cross-cultural conceptual base from which methodology can be developed, and to point to a research agenda that can inform both  practice and policy. To achieve this it is necessary to take a cross-disciplinary approach. Much has been written on the informal economy in the economics, sociology, and development studies literature, yet at organizational level within the management literature there is a noticeable dearth. Similarly, the conceptual base draws on theories that have been developed outside management studies and HRM, although more recently applied to organization and management studies (e.g. Jack and Westwood, 2009). The first part of this article discusses the importance of the informal economy within sub-Saharan Africa, and particularly its contribution to employment and skills development. It also discusses the impact of policy on the informal economy together with the often negative  perceptions from governments, policy makers and the formal sector. Although the current work draws examples from sub-Saharan Africa, this may have parallels in other regions of the world.  5 The second part of the article takes a more conceptual approach as it attempts to provide a critical re-reading of previous work, mainly looking at this through the lens of Postcolonial Theory. In doing so it provides a tentative cross-cultural methodological base from which an informed research agenda may be developed. In view of the lack of empirical research on the informal economy at the level of community, organization and individual, and the contribution that this sector makes to livelihoods, employment, training and skills development, this is the main scholarly contribution that this works attempts to make: to stimulate informed and critical research in this area, and to develop a literature on the nature and contribution of the informal economy within management studies and HRM. Why the Informal Economy is Important Based on ILO figures, Verick (2006), writing for the United Nations Economic Commission for Africa, estimates the average size of the informal economy as a percentage of gross national income (GNI) in sub-Saharan Africa as 42.3 percent. This ranges from under 30  percent in the continent’s largest economy,  South Africa, to almost 60 percent in Nigeria, Tanzania and Zimbabwe. Again, basing his figures on those reported by the ILO in 2002 he estimates that as a percentage of the labour market in sub-Saharan Africa the informal sector represents about three-quarters of non-agricultural employment, and approximately 72  percent of total employment in sub-Saharan Africa (78 percent if South Africa is excluded). After Chen (2001) he also reports that 93 percent of new jobs created in Africa during the 1990s were in the informal sector. He suggests this reflects the impact of globalization, economic reforms and competitive pressures on the labour market during this time (Verick, 2006). He also discusses Xaba, Horn and Motala’s (2002) findings, reporting for the ILO, that show that informal employment in Kenya and Uganda exceeded that in the formal sector; in Zambia 43 percent of urban employment was estimated to be in the informal economy; in
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