The role of social embeddedness and coopetition in creating competitive advantage between migrant entrepreneurs in urban areas

Abstract

Foreign owned businesses are reportedly more successful than local owned businesses in South Africa within the SMME sector, which is said to be attributed to the use of their social networks and the practice of coopetition. This study thus aimed to understand how migrant owned SMMEs in South Africa make use of their social embeddedness and coopetition as a means of gaining competitive advantage. The study adopted a qualitative, exploratory approach to understand how foreign owned businesses in urban areas of South Africa make use of their social embeddedness and coopetition strategies in order to gain competitive advantage. Fourteen interviews were conducted with Pakistani, Indian, and Bangladeshi migrants in the Gauteng area, using semi-structured interviews. Each interview was sorted in terms of codes, which were then grouped into categories from which key themes emerged. This study found that foreign owned businesses in South Africa seldom make use of social embeddedness and coopetition to gain competitive advantage. Their social embeddedness is limited to personal matters and does not feature in business related matters unless mutual benefit is to be obtained. Business tactics such as hard work, low prices, and customer satisfaction were found to be the key drivers in obtaining competitive advantage. Interventions designed to facilitate and promote business start-up and success for South African entrepreneurs should therefore consider education on business tactics and an emphasis on hard work