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Keywords:

  • Africa;
  • missing middle;
  • Zambia;
  • SMEs

Abstract

This paper is the result of the analysis of 200 interviews with Zambian enterprise owners during the summer of 2006. It examines the reasons for the lack of growth of micro and small firms and the resulting ‘missing middle’ in Zambia. The study finds that most enterprise owners are risk takers, have bounded rationality in terms of their understanding of market structure, conduct and performance and rely on inappropriate channels for their information. A second group of enterprise owners who are less risk preferring, and do not have aspirations in terms of firm growth is also identified. Most enterprises in these two groups do not operate on a growth trajectory. Finally there is a very small group of enterprise owners who are truly entrepreneurial. Policy recommendations address issues concerning the need for differentiated targeting to support firm sustainability and growth. Copyright © 2007 John Wiley & Sons, Ltd.