Informal property rights and innovation in marketing practices among emerging-market micro-entrepreneurs
Micro-entrepreneurs constitute the most common type of business in the world and marketing is the primary means by which they earn their livelihoods. In emerging markets there are a significant number of micro-entrepreneurs and many live precarious lives, characterised by poverty and potentially devastating exogenous shocks. Using detailed data on the marketing practices of grocery retailers in a large slum in Cairo, Egypt, this research examines why some micro-entrepreneurs deploy innovation in their marketing practices – and hence perform better – while others fail to do so.
This research highlights the effect of a key factor in the use of innovation in marketing by micro-entrepreneurs: informal property rights. Because few of the micro-entrepreneurs studied in this context have access to formal property rights, the threat of expropriation looms large in their lives. Those who possess their stores (without owning them) are substantially less likely to innovate in their marketing than those who lease them. The study makes use of a shock to property rights rules to assess the causal impact of informal property rights on innovation in marketing practices.
Understanding these marketing practices is of profound importance: how the micro-entrepreneurs conduct their marketing and how well they do are questions that have wide economic, social and political repercussions.
This paper offers a quantitative assessment of marketing practices among micro-entrepreneurs and represents an initial attempt to address significant gaps and opportunities in the literature.
- Magda Hassan, Assistant Professor of Marketing, University of Manchester
- Jaideep Prabhu, Professor of Business and Enterprise, University of Cambridge
- Om Narasimhan, Professor of Marketing, London School of Economics and Political Science
Rajesh Chandy is Professor of Marketing at London Business School and Academic Director of the Wheeler Institute for Business and Development. Rajesh’s current research focuses on the intersection of business, innovation, entrepreneurship and development. His recent projects have covered the impact of business skills among micro-entrepreneurs in South Africa, novel financing approaches in Ghana, property rights in slums in Egypt, innovation among farmers in India, highways and private education expenditures in India, and using big data for development outcomes.