Doing Business Under the Hot Sun: How Small Firms Do Business and Process Conflicts in Kenya
45 Pages Posted: 22 Sep 2011
Date Written: September 20, 2011
Abstract
Considerable amounts of money have been spent on reform projects aiming to strengthen institutions supporting business transactions in developing countries. To be able to evaluate the type and extent of reforms needed, this article presents a thick description of business practices among smaller businesses in Nyanza Province, Kenya. Entrepreneurs in developing countries form long-term relational contracts with a very limited number of suppliers, with whom disputes are rare and generally resolved without third party involvement. However, when entrepreneurs are unable to rely upon relational contracts with their customers, disputes are common and often remain unresolved. Due to the limited availability of suitable fora, firms are cautious to expose themselves to riskier transactions. Private mediation options have emerged in certain locations, but have, at present, limited reach. This article expands our understanding of business practices among smaller businesses in Africa and highlights institutional gaps, which if addressed, could prevent disagreements and facilitate dispute processing.
Keywords: dispute resolution, business practices, small businesses, Kenya, Africa, empirical legal studies, contractual relations, jua kali
JEL Classification: D82
Suggested Citation: Suggested Citation