ABSTRACT
The performance of entrepreneurial firms has recently attracted much attention in both academic and applied circles and in particular in the context of developing countries. The massive failure of parastatals in generating sustainable growth in most developing countries has rejuvenated the interest in the private sector, both modern and formal, as an engine of economic growth. Theoretically, these entrepreneurial firms, consisting of mostly small-scale firms, are more flexible, better managed, and more competitive and hence can operate more efficiently. These assumptions have led to a widespread effort by developing countries to provide the socio-economic environment suited better for the growth and prosperity of these entrepreneurial firms. The extensive government-embarked structural adjustment programs implemented under supervision of the World Bank were primarily aimed at this issue. The aim of this section is to provide a closer look at these entrepreneurial firms, both in terms of their characteristics and performance. Entrepreneurial firms are defined as those owned by one or a few private individuals. They are therefore explicitly distinguished from state-owned enterprises, and subsidiaries or firms of which the ownership is dispersed over a large number of people (Sleuwaegen and Goedhuys, p. 2). The Share of Entrepreneurial Firms in the Sample We first present the distribution of entrepreneurial and other types of firms in our sample of seven sub-Saharan countries. Table 4.1 provides the distribution by type of organization of both the number of firms and the proportion of employment. It appears from this table that sole proprietorship and limited liability are the predominant legal forms of the entrepreneurial firms. With the exception of Kenya and Tanzania and to a lesser extent Ghana, a rather small percentage of entrepreneurial firms are formed as partnership.
