The nexus of social capital, coping ability and employment creation in African immigrant-owned small businesses

Immigrant entrepreneurship, like other facets of entrepreneurship, contributes towards a country’s productivity, partly through employment creation. However, the specific factors, in the form of social capital, that lend themselves to this employment creation potential, remain largely unknown. It is against this background that this study sought to determine if the variables of language proficiency and networking ability bear an association with the employment creation ability of African immigrant entrepreneurs. This quantitative study was executed from a positivism philosophical standpoint. Relying on the population of African immigrants in the small business sector in South Africa, Swaziland and Mozambique, the non-probability sampling techniques of convenience and snowball sampling were used to identify 2,500 participants. Data were collected in a cross-sectional manner, with self-administered questionnaires and an effective 33% response rate was realized. Findings reveal a statistically significant relationship between language proficiency and employment creation, while that between networking ability and employment creation was not significant. Nonetheless, most of the studied African immigrant entrepreneurs across the countries agreed that language proficiency and networking ability have helped them cope with the rigors of operating their businesses. These findings signal the need for interventions for building language proficiency and networking ability for African immigrant entrepreneurs. Eresia-Eke Chukuakadibia (South Africa), Okerue Chijioke (South Africa) BUSINESS PERSPECTIVES LLC “СPС “Business Perspectives” Hryhorii Skovoroda lane, 10, Sumy, 40022, Ukraine www.businessperspectives.org The nexus of social capital, coping ability and employment creation in african immigrantowned small businesses Received on: 10th of May, 2018 Accepted on: 27th of July, 2018


INTRODUCTION
The unemployment rate in South Africa is estimated to be at 27.7% (Statistics South Africa, 2017).These rates are arguably high and the trend seems to be the same across a number of countries in the Southern African region, as Meyer (2014, p. 67) contends that countries such as Zimbabwe, Namibia and Lesotho may even have higher unemployment rates.High rates of unemployment in any country can be a bane to its people.This is partly why in South Africa, the government has prioritized the SME sector to increase opportunities and reduce the high unemployment rate.To this end, the role for immigrant entrepreneurs who have shown to also provide jobs for locals (Kalitanyi & Visser, 2010, p. 387) cannot be ignored, as they may be one of the useful allies that the government needs, to ensure that the high rate of unemployment in society is reduced.
Immigrants are widely perceived as being entrepreneurial and important to economic growth and innovation (Fairlie & Lofstrom, 2015, p. 1).Accordingly, many countries have established special visas and entry requirements to attract immigrant entrepreneurs (Schuetze & Antecol, 2007, p. 107).These special visa entry requirements have possibly been borne out of a belief that immigrants can contribute socio-economically and otherwise to the development of these countries.For instance, the Australian immigration policy is one of the main contributors to the job-creating activities in the country (Mahuteau, Piracha, Tani, & Vaira Lucero, 2014, p. 62).The immigrant entrepreneurs operate in diverse areas of business, including retail, real estate, finance, media, manufacturing, and some sell ethnic products (Collins, 2008, p. 51).Evidence has shown that 90% of all immigrant entrepreneurs are small scale businesses (Azmat & Zutshi, 2012, p. 66) and they play a major role in job creation, since about half of the work force in Australia are employed by small businesses (Collins & Shin, 2012, p. 19).
In South Africa, the government has prioritized the SME sector to increase opportunities and reduce the high unemployment rate, which is currently estimated at 27.7% (Statistics South Africa, 2017), however, despite the importance of the SME sector, the failure rate of SMEs in South Africa is estimated to be between 70% and 80%, and this is arguably high (Fatoki, 2013, p. 209).This might also be the case with immigrant-owned businesses, as Tengeh (2013, p. 248) argues that immigrant businesses are prone to failure within the first 3 years of existence.Juxtaposed against the projection that immigrant-owned businesses can contribute meaningfully to the development of countries in which they are located, this failure rate is troubling.It is instructive to note though that despite the high rate of failure of businesses owned by immigrant entrepreneurs, studies by Rogerson (1997), Kalitanyi and Visser (2010), as well as Fatoki and Patswawairi (2012), point to the fact that immigrant entrepreneurs create jobs in South Africa for South Africans and contribute to the economic development of South Africa; a case which may not be dissimilar in neighboring countries in the South African Development Community (SADC).
While immigrant entrepreneurs have become an important variable in the socio-economic development equation of different nations (Radipere, 2012, p. 109), there are factors that continue to inhibit their performance.These factors include, stiff legal and regulatory environments, unfavorable business environments, poor access to market, inaccessibility to finance, tax burden, lack of business management skills, lack of proper education, cultural differences, rent, language challenges, crime and xenophobia (Fatoki, 2013;Basu, 2011;Tengeh, 2013), amongst others.However, despite these challenges, immigrant entrepreneurs typically remain optimistic and look towards the possibilities of expanding their business enterprises (Rogerson, 1997, p. 14).Indeed, surviving in the perilous small business environment is technically indicative of the reality that immigrants possess the entrepreneurial quality of perseverance (Kalitanyi & Visser, 2010, p. 382).This is unlikely to be the only attribute that immigrant entrepreneurs rely upon to surmount what Oliveria (2008) refers to as numerous obstacles that obstruct their pathway to better business performance.This is the context in which it was deemed significant to investigate variables related to social capital that possibly imbue the African immigrant entrepreneur with the ability to continue to operate a small business in selected countries in the SADC region and possibly create employment for others.
The underlying motive being that a discussion of such elements would enable African immigrant entrepreneurs and policy-makers invest more in specific variables as a necessary precursor for better performance in the cohort of small businesses that are immigrant-owned.The aims of the study are therefore: 1.To determine the extent to which African immigrant entrepreneurs consider the social capital variables of language proficiency and networking ability to be instrumental to their ability to cope with running their businesses.
2. To establish if the social capital component variables of language proficiency and networking ability on the part of African immigrant entrepreneurs correlate with employment creation in their businesses.

LITERATURE REVIEW
Many policy-makers agree that entrepreneurs (including immigrant entrepreneurs) and the new businesses they establish play a critical role in the development and well-being of their societies (Global Entrepreneurship Monitor, 2012, p. 12).Several studies directed at the influence of entrepreneurship on economic growth confirm that entrepreneurship contributes to economic growth (Hisrich & Brush, 2009 2) state that some of the factors that may pull immigrants into the establishment of small businesses include the existence of ethnic communities, which may provide a self-sustaining economic environment.The third school of thought referred to as the 'ethnic enclave theory' includes mainly those who are bound by ethnicity, an ethnic community's social structures and geographical location (Zhou, 2007, p. 280).The ethnic enclave theory states that immigrant entrepreneurs typically find entrepreneurial opportunities within immigrant communities (Greve & Salaff, 2005, p. 9) and proceed to exploit them.On the basis of these three theories, immigrant entrepreneurship is likely to remain a constant feature of the economic landscape of countries, wherever immigrants are present, across the globe.
In the United States of America, immigrant entrepreneurs play a prime role in developing the economy and creating employment for the locals (Jennings, 2013 Like in most African countries, Mozambique is a multilingual and multicultural country. Portuguese may be the official language, however, there are other languages spoken in Mozambique, which belong to the Bantu language group.They are indigenous languages and constitute the major language stratum, both with regard to number of speakers and in terms of language distribution (Lopes, 1998, p. 441).The post-apartheid constitution of South Africa officially recognizes eleven languages (nine local African languages, English and Afrikaans), however, English appears to be the popular language of economic exchange and therefore the language of access and power (Setati & Adler, 2000, p. 247).While Swaziland has two official languages (Siswati and English), English tends to be associated with employment opportunities, as it is also the language of government and administration (Kamwangamalu, 2013, p. 162).
This may therefore suggest that immigrants who speak English may find it easier to adapt to the business environment in both South Africa and Swaziland, but may be disadvantaged in Mozambique, since they may have to learn the official language, which is Portuguese.Even when the immigrant is proficient in the official language, learning and speaking a popular local language could also give the immigrant entrepreneur an important advantage in business transactions, culminating in levels of performance that inevitably create employment for others.While recognizing this trail of thought, this study elects to hypothesize in the null form that: H 01 : There is no relationship between the African immigrant entrepreneur's local language proficiency and employment creation in the business.

Networking
Networking is the process of meeting people, building relationships that can benefit all those involved, sharing information and ideas and getting one's business on the map (Burke & Segaloe, 2003, p. 7).Spenelli and Adams (2012, p. 148) opine that networks can be a stimulant and source of new ideas, as well as a source of valuable contact with people.This may suggest that a network with people of similar experiences could help to encourage the immigrant entrepreneur.In agreement, Johannisson (1990, p. 41) argues that the personal network of entrepreneurs is the most strategically significant resource available to them and could therefore play an important role in their businesses.
To emphasize the usefulness of networks, Sequeira and Rasheed (2006, p. 361) found that immigrant entrepreneurs acquire resources from two major sources, which are own families and social networks in their ethnic enclaves.Fatoki and Oni (2014, p. 287) support this finding by alluding to the fact that in the respondent population for their study, none of the new immigrant entrepreneurs interviewed was able to obtain resources from the official networks.The prevalent trend was that resources were obtained through social networks, friends, relatives and family.However, they were able to get resources from the business/manage-rial networks (suppliers, business associations) at a later stage or at a more established stage of their businesses.This discussion seems to fertilize the idea that networking ability can enable rather than disable business performance that translates into the creation of employment opportunities.
Nonetheless, this study's null hypothesis is that: H 02 : There is no relationship between the African immigrant entrepreneur's networking ability and employment creation in the business.

RESEARCH METHODOLOGY
This study followed a research design strategy that commenced with the exploration of extant literature as a necessary prelude for the conduct of the formal study.This is in line with the thoughts of Cooper and Schindler (2011, p. 140) to the effect that the formal study begins at the terminal point of the exploration effort and often starts with the hypotheses or research questions, while adhering to specific scientific processes and data requirements.
This research is a cross-country study and covers six cities in three countries in the SADC region.The target population therefore comprises African immigrant entrepreneurs with businesses in the small business sector in Johannesburg or Pretoria (South Africa), Manzini or Mbabane (Swaziland) and Maputo or Boane (Mozambique).These cities have been selected, because they are arguably commercial centers in their respective countries.
Unfortunately, there was no compendium of African immigrant entrepreneurs in the selected cities, but the researchers project that more than 5,000 African immigrant entrepreneurs may be found in these cities.According to Leedy and Ormrod (2005, p. 207), if the population size goes beyond 5,000, a sample size of approximately 400 respondents could be deemed as adequate.The non-probability sampling techniques of convenience sampling and snowballing were utilized to identify and select potential study respondents.
Primary data were collected in a cross-sectional manner for the study with the use of self-admin-istered questionnaires.The questionnaire was predominantly made up of five-point Likert scale items with measures ranging from 'strongly disagree' to 'strongly agree'.In all, a total of 2,500 questionnaires were distributed and 976 questionnaires were returned, which is indicative of a 39% response rate.However, for purposes of statistical analysis, a conscious decision was made to exclude questionnaires with missing values or data errors.
Due to this, 147 questionnaires were eliminated, leaving a total of 829 valid questionnaires.This translates to an effective response rate of 33%.This can be considered to be acceptable for studies of this nature based on the position of Curran and Blackburn (2001)  As a precursor for statistical analysis, it was necessary to evaluate the measurement scale for the variables of interest contained in the questionnaire.The effort culminated in the elimination of some questionnaire items that had low factor loadings.Seven of the sixteen items related to language proficiency, networking ability and employment creation had factor loadings lower than 0.5 and were therefore excluded from further statistical analysis.

RESULTS
The demographic profiles of the respondents reflect the extent of diversity of the immigrant entrepreneurs who participated in the study.The profile covers the countries from where the respondents were drawn, the respondents' gender, their grouped ages and their level of education.The distribution for gender by country, grouped age and highest level of education is presented in Table 1.The result shows that 62.7% of the respondents were male and 37.3% female.Differences in the distribution by country are evident.
The total respondents from South Africa were 313, of which 55% were male.Swaziland recorded 218 respondents in total, of which 55% were male.There were 298 respondents from Mozambique and 76.5% of them were male.
The results show that more male immigrant entrepreneurs responded across countries, but Mozambique at 76.5% recorded a relatively higher percentage of male respondents.Indeed, across all the dimensions considered, males repeatedly achieved higher percentages as compared to females, except for the dimension of proportion of immigrant entrepreneurs with vocational education culminating in a certificate.Along this dimension, the percentage of females was 62.3%, while that associated with their male counterparts was 37.7%.The study sought to determine the perceptions of the studied immigrants, as it concerns the issue of whether the social capital variables of interest helped them cope with running their businesses.The analysis of variance (ANOVA) was employed as the statistical tool for the investigation.The results of the analysis are shown in Table 4.
All the means for the independent variables of LP and NA were above 4, except the LP mean score for immigrant entrepreneurs in South Africa, which was 3.87.The results indicate that immigrant entrepreneurs across countries, to a large extent, agree that the variables independent variables of LP and NA are instrumental to their ability to cope with their business.
The Tukey HSD test, as depicted in Table 5, shows that significant differences are evident across countries for the LP variable, as the results indicate that the perceptions of immigrant entrepreneurs on the importance of language in aiding their ability to cope with their businesses differ when compared across countries.The results are similar for the NA variable, except for the case of perceptions of immigrant entrepreneurs in Mozambique and South Africa where no statistical difference was evident judging by the value of 0.916 realized with the Tukey HSD test.
Part of the aim of the study was also to investigate if the hypothesized relationships between employment creation and the social capital elements of language proficiency and networking have any statistical basis.The regression analysis results are presented in Table 6.

Table 6. Results of analysis of relationship between independent and dependent variables Hypotheses Results
H 01 There is no relationship between the African immigrant entrepreneur's local language proficiency and employment creation in the business p = 0.015 H 01 is rejected There is no relationship between the African immigrant entrepreneur's networking ability and employment creation in the business p = 0.379 H 02 is accepted At a 95% confidence level, the regression analysis results show the existence of a statistically significant relationship (r = -0.47,p = 0.015) between language proficiency and employment creation in immigrant-owned businesses.A study by Gebre, Table 4. Country-specific ANOVA results for the variables of language proficiency (LP) and Networking ability (NA) Maharaj, and Pillay (2011, p. 31) of immigrant entrepreneurs in South Africa revealed that the inability of some immigrants to speak English or any other local language has compelled them to live a segregated life, which may have some ramifications for their business.This is more so for immigrants that arrive from countries, where English language is not the official language.Curiously, while proficiency in the local language may be associated with employment creation, the relationship is actually a moderate and inverse one.
Networking ability did not show any statistically significant relationship (r = 0.22, p = 0.232) with employment creation in immigrant-owned businesses and so hypothesis H 02 was accepted.This result is not necessarily in harmony with the findings of the studies undertaken by Johannisson (1990, p. 41), as well as Fatoki and Oni (2014, p. 284), who opine that the personal networks of entrepreneurs are the most strategically useful resources available to them.Immigrant entrepreneurs need information, capital, skills and labor for business operations and it is sometimes necessary to complement these resources with others that are accessed through their contacts.While acknowledging their position, this study asserts that the networking ability of the African immigrant entrepreneur may enable ease of access to other resources, but it does not correlate with employment creation in the immigrant-owned small business.

CONCLUSION
The study shows that the average age of the studied immigrant entrepreneurs in South Africa, Mozambique and Swaziland is in line with the position of GEM (2015).Males also seem to predominate the immigrant entrepreneurship sector, possibly due to the patriarchal nature of the African society.The disparity in gender representation in the immigrant entrepreneurship pool of this study for Swaziland and South Africa (55% for male; 45% for female) appear small relative to that of Mozambique (76.5% for male; 23.5% for female).There is therefore a need to encourage more female immigrants to venture into the small business terrain across the SADC region, but even more urgently so, in Mozambique.
There were statistically significant cross-country differences in the perceptions of the studied African immigrant entrepreneurs, as it relates to the instrumental role of language proficiency and networking ability to their ability to cope with their businesses.The mean scores obtained across the countries, however, reflect the fact that most respondents agreed that an African immigrant entrepreneur's coping ability would benefit from language proficiency and networking ability.This clearly demonstrates the premium placed by the respondents on these two variables in the social capital construct.
The study findings show that LP rather than NA is related to employment creation in the immigrant-owned small business.In the business world, communication is important to the success of any business.In the SADC region, different languages apart from the official languages are spoken.In South Africa, for instance, the situation is complicated by the fact that the country has eleven official languages.Even in Mozambique, where the Portuguese language is predominant, other local languages are commonly used.The situation is hardly different for Swaziland, despite the prominence of SiSwati.The collage of languages often spoken in these three countries obviously has some implications for the findings of this study.This is because the study shows that the local language proficiency of the immigrant entrepreneur does not positively correlate with the employment creation potential of the immigrant-owned business.This may be because of the plethora of languages in the region, which implies that the customers of the business of the African immigrant entrepreneur may not necessary speak the same language and so the entrepreneur may only enjoy some edge if he/she is a polyglot.Besides, in the absence of local language proficiency, immigrant entrepreneurs tend to employ people who can speak the local languages in order to facilitate business transactions with locals.This in itself amounts to the creation of employment.In cases where the immigrant entrepreneur becomes well-versed in the local languages, the need to employ locals becomes substantially eroded.
The story is not notably different in Netherlands, where the government, having recognised the role of immigrant businesses, have developed policies aimed at promoting small businesses, especially immigrant entrepreneurship(Kloosterman, 2003, p. 168).Interestingly, due to the policy support, the number of immigrant entrepreneurs in the Netherlands increased and this helped to reduce unemployment among the immigrant population, as they were able to create employment for themselves and others (Kloosterman & van der Leun, 1999, p. 665).Immigrant entrepreneurs have also contributed to the economy of Australia by creating employment and enabling the growth of certain sectors(Kloosterman &  Rath, 2002, p. 27) in which they participate.iables in the overall equation for job creation and increased TEA in South Africa, as well as the entire SADC region.Undoubtedly, much of this will be dependent on the emergence and performance of the African-owned immigrant businesses.
, p. 2).The Fiscal Policy Institute (2012, p. 1) report revealed that 18% of small business owners in the United States were immigrants and this was higher than the immigrants 13% share of the population.Fairly (2012, p. 8)found that in the United States of America, the rate at which immigrants start new businesses grew by more than 50% between 1996 and 2011.During the same period, business formation rate for the native-born declined by 10%, providing further evidence of the capacity of immigrant businesses to create jobs.Southern Africa has a long history of intra-regional migration, which dates back to the mid nineteenth century.Migration was probably the single most important factor that tied together all of the various colonies and countries of the sub-continent into a single regional labor market during the twentieth century (Crush, Williams, & Perbedy, 2005, p. 1).It is perhaps in keeping with this trend that more African immigrants are beginning to find residence in the region.However, unlike the temporary workers who came to work in the mines and agricultural sectors, less is known about migrants who come from places with established informal and small business economy experience(Timberg, 2005, p. 4), like those from other regions in Africa.The part that such immigrant entrepreneurs can play in entrepreneurship development and job creation in the SADC region may be crucial given the findings of the 2015 Global Entrepreneurship Monitor (GEM) report.While Mozambique and Swaziland have not participated in GEM studies, South Africa, on the other hand, has been a constant participant and its TEA rates have been 7.(Global Entrepreneurship Monitor, 2014, p. 22).Against this backdrop, immigrant entrepreneurs from other parts of the African continent with higher levels of TEA might become important var-

Table 1 .
Gender profile of respondents

Table 2 .
The data show a higher number of immigrant entrepreneurs within the age group of 30-39 years.This finding is in line with the age distribution of early entrepreneurial activity that, according to GEM (2015, p. 26), takes place among individuals in the age bracket of 25-44 years.This age group is considered to be in their early and mid-career stages.

Table 2 .
Age groups

Table 3 .
Descriptive statistics for age by country