Structure and Management of Formal and Informal Business Activities in Entrepreneurial Family and Small Firms in Africa

ABSTRACTThis article focuses on the meso-micro levels of entrepreneurial family-owned and small firms operating in Africa’s informal economy. It examines how these firms manage formal and informal business activities, and how entrepreneurs manage business risks associated with market imperfections. After a brief review of the literature on the structuring and management of these firms in the context of the informal economy, we present and illustrate the Octopus business model showing the strategic apex, tentacles, and the location of formal and informal business activities along the firm’s value chain. We use a composite sample of 31 case studies and managers’ stories from publicly published sources to illustrate and test the Octopus business model and locations of formal and informal business activities in distinct parts of the value chain. Preliminary results show that in structuring and managing their firms, entrepreneurs make deliberate and at times strategic decisions in their choices and locations o...